Coffee heat rising

Economy

Blowin’ in the wind…

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Well, it’s time to nail some suspenders onto the old oaken barrel, since that’s what we’ll be wearing now that our shirts are lost.

Called the redoubtable financial advisors this afternoon. It must be said that they sound pretty nonplussed over there. On the other hand, even though they allow that conditions are unprecedented, historic, and weird, they continue to insist that cashing out whatever pittance you have left in the market is a bad idea. One of the senior partners remarked that if the market continues to drop at today’s rate, it will only take about 14 days for it to arrive at zero.

“Is that a logical possibility?” he asked rhetorically.

“No,” he answered himself. If that happened all the stock in the land would be worthless. You could pick up an IBM certificate off the street, for free. This, he believes, does not compute. He and his colleagues are convinced the fall will stop sooner or later and the market will bounce back up.

We shall see.

The answer to another question is also blowing in on the wind: the University Academic Committee is having a little emergency meeting come Monday morning to discuss how to cope with a 20% budget cut. I’m told this is the first step toward the rumored layoffs.

We shall see about that, too. Personally, I no longer care what they decide. I’ve done all I can to protect myself should any such layoffs actually occur: applied for a half-dozen jobs that look like good fits, laid out a plan to pay off the Renovation Loan, and developed a strategy with the financial advisors to weather a period of unemployment.

Interestingly, though, I’ve spoken with a couple of auld acquaintances who, I discovered, happen to be on that committee. They tell me no announcement regarding layoffs of any specific job class was made, nor do they believe my particular set is likely to see blanket layoffs.

There’s not a thing I can do about whatever action the Great Desert University takes. And I am not going to get myself exercised over something I can do nothing about.
Thaes ofereode,thisses swa maeg.

Dumb tax

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F’cryin’ out loud. In the “I can’t believe it’s possible to be that stupid” department, here’s a memo: when the binger goes off to tell you the bread dough has finished rising, get up and attend to it!

Yesterday afternoon I was dorking around on the Internet, my favorite time-waster, when I heard the breadmaker hollering “beeeep beeeeep beeeeeeeep,” signifying the dough was kneaded and risen, so I should retrieve the stuff, put it in a pan, and preheat the oven while the bread made its second rise. Did I get off my duff? Ohhh noooo. As I recall, what I did was mutter “please. shut. up.” Then forgot all about it.

Forgot it, that is, until I walked into the kitchen and found the stuff had continued to bubble up, overflowed the container, run down into the breadmaker’s innards, and then, its yeasties exhausted, collapsed back on itself.

That was a fine mess to clean up.

Determined not to lose five cups of flour plus the ancillary ingredients, I had the bright idea of adding a little more yeast, turning the stuff back into the freshly cleaned breadmaker, and letting it knead and rise again.

Sounds good, doesn’t it?

Lemme tellya: it doesn’t taste good! The result was a large blob of bread dough with a strangely rancid, bitter flavor.

At first I thought I could pass it off as sourdough. On second taste…well, no.

Into the garbage with it.

So, I had to mix and bake a whole new batch of bread dough. This occupied my attention until about 9:00 p.m., annoyingly enough. Dumb tax!

Isn’t it interesting how many of the stupid things that happen TO us are actually stupid things that happen BECAUSE of us? Consider how much of the present financial chaos falls into that category.

Now, I will say: I didn’t vote for our present national leadership and thought anyone who did was nuts; I did not get myself into debt over my head; I do not even run a balance on a credit card.BUT…yes, but: stupidly I left the bulk of my retirement money in the stock market, even as I could see the out-of-control train racing up the tracks. If I was smart enough to think of investing monthly savings (meant to pay off a small loan) in the money market, howcum I wasn’t smart enough to think of transferring at least some of my stock holdings out of Vanguard’s Wellington and Windsor II funds into the same Vanguard Premier Money Market fund?

Right now that moron Bush is on the air saying sure, he knows people are losing their retirement savings, “but I think in the long run they’re gunna be fine.” Long run? That illiterate, bird-brained idiot. When you’re 65, 75, 85 and retired or (as I’m about to be) laid off, there IS NO LONG RUN!

We appear to be a nation of morons who have followed a moron into predictable disaster. I will not disown my personal contribution to the national dumb tax fund, nor, I suppose, can any of us. Our dough has bubbled up, spilled over the bowl’s edge, collapsed back onto itself. The breadmaker alarm has been binging for a long time, while we have muttered “please. shut. up.”

Does any of this have meaning for individuals?

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Hard to tell, isn’t it?

I just checked my Vanguard funds. Though they lost a little, it’s not enough to drive one out the high-rise window. Doesn’t mean things won’t be worse tomorrow, of course…still, I think it’s best not to study the day-to-day rises and falls of your investments but to keep your eye on the long view.

A pretty murky view just now, it must be admitted.

This morning I spent almost five hours on the application for the new job; still have to write the cover letter.

And I wrote a set of spreadsheets preparatory to meeting with my financial advisor about how to deal with the coming layoff. I wanted to lay out all the relevant factoids: current gross & net pay, projected Social Security entitlement, cost of Cobra ($471 a month! Up from $25), estimated unemployment payments (amazingly piddling–possibly not even worth the hassle of applying), RASL (the amount GDU has to pay for my unused sick pay, an astonishing $17,230), and the estimated amount of my total savings.

Today I learned that GDU has to pay me my hourly rate for 264 hours of unused vacation time: something over $7900. That will help!

Not only that, but I’m also owed 32 hours of use-it-or-lose-it time, for which I will not be paid. So I think I’ll take four days of vacation time starting this week…and not think about GDU even once during the entire period!

With these figures in hand, I calculated several possible scenarios, ranging from retiring today to getting some sort of job. If I can’t get work (and at my age it’s unlikely), things are going to be difficult, indeed.

Oh, well. That’s a bridge to cross later. Maybe not much later…but later.

IMHO, the current stürm und drang will take a while to come home to you and me: not until we see our jobs disappear, credit dry up, and the huge chains that have pushed out local businesses close down—shrinking supplies of food and manufactured goods. That may take some time. With a large helping of luck, it’ll never happen.

What a sad spectacle our country’s grasping, small-minded, doctrinaire partisan politics have spawned. For shame!

The Continuing Saga…

1.Unemployment for Christmas?
2.Does any of this have meaning for individuals?
3.Rumors start to fly
4.On the trail of the elusive job
5.Beating the layoff stress
6. How low can I go?

Financial Advisor to Investor: Don’t panic!

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Below, an exchange that started with an update from my financial advisor.

Beloved youngish partner of Financial Dudes, LLC, to Funny about Money:

To enhance our ability to remain patient with respect to our long-term investment strategy, we raised the cash level in your portfolio again, by trimming allocations to specific securities.

In addition, we initiated the process to upgrade the quality of our client’s money market holdings to a U.S. Treasury based money market to avoid the turmoil swirling around some money market funds. If you were not in a U.S. Treasury money fund, you will see some activity in your affected accounts in the next day or so.

There certainly has been a tremendous amount of news to digest lately, and we are navigating these markets with your long-term goals in mind. We have seen, and likely will continue to see, short-term volatility in the value of many investments that we hold.

If you have any questions or concerns, simply give us a call.

Funny to BYPoFD:

Thanks, John–

I have about ten or twelve grand in Vanguard’s Prime Money Market fund. VG is claiming it’s not invested in Lehman or related unhappy sites, & so I’m guessing it’s OK to leave the money there… Would you advise moving that money to a different fund? Or into a credit union money market, which just now earns a grand 1.88 percent?

best, –vh

BYPoFDto Funny:

We just moved it to be on the safe side and don’t think there will be any issues with the money market. We will move it back at some point. I wouldn’t really fret the Vanguard money market as they are normally on the conservative side and I don’t think there will be any issues.

Funny toBYPoFD:

Good. I’d pretty much reached the same conclusion.

Doesn’t appear to be much safety anywhere in the current storm, eh?

BYPoFD to Funny:

Not really. Even putting it under your mattress you run the risk of someone stealing it. Eventually we will work through all the problem companies and the ones that survive will be the big winners like in the early 90’s. This seems to be happening with BofA.

The long and the short of it:

Don’t dive out of your money market fund. Especially if it’s with Vanguard. Stay the course.

Another bullet dodged

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So, once again I’ve escaped the attention of upper management. In the current “reorganization,” eighteen chairs and two deans were demoted, twenty-eight administrative and support staff were laid off; and an unknown number of unannounced layoffs continue to lay waste to the custodial crew.

My dean, thank all the gods on Olympus, remains in place, and so do I.No hiring freeze was announced, so the search for the replacement for the director of the program whose graduate students staff my office continues apace.This means I have a job (probably) at least until the end of my current contract, next June. By then I can retire with no serious harm, although, like Bartleby the Scrivener, I would prefer not.

Whew! I could practically hear that slug whistling through the air past my noggin.

Times are getting bad, possibly worse than most of us realize. La Maya reports that in California her niece, who has been working for the booming prison industry at a very nice salary, just learned her pay would be cut to a little over $6 an hour — minimum wage! Picture trying to live in California, anywhere in California, on that!

If you’ve got a job and you can hang onto it, cling for all you’re worth. This is not a time to make reckless moves.

Be afraid. Be very afraid.

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Great galloping ZOT! Did you read Stephen Mihm’s article in last Sunday’s New York Times Magazine about Nouriel Roubini, the guy who predicted the housing meltdown, the fuel price shock, the decline of consumer confidence, and a recession? They laughed when he sat down at the piano…but few are scoffing now.

Roubini, who is pictured looking very worried, glancing skyward as though he were expecting an asteroid at any moment, has more to say about the future of the US and world economies. A “permabear” who considers himself a realist, he has been predicting for months that the current recession will be the worst since the Great Depression. And speaking of the national debt, as we were quite recently, Roubini has said that foreign investors will stop financing the U.S. national deficit and abandon the dollar, quite possibly leading to the demise of the American empire. As Mihm explains:

For months Roubini has been arguing that the true cost of the housing crisis will not be a mere $300 billion — the amount allowed for by the housing legislation spons0red by RepresentativeBarney Frankand SenatorChristopher Dodd— but something between a trillion and a trillion and a half dollars. But most important, in Roubini’s opinion, is to realize that the problem is deeper than the housing crisis. “Reckless people have deluded themselves that this was a subprime crisis,” he told me. “But we have problems with credit-card debt, student-loan debt, auto loans, commercial real estate loans, home-equity loans, corporate debt and loans that financed leveraged buyouts.” All of these forms of debt, he argues, suffer from some or all of the same traits that first surfaced in the housing market: shoddy underwriting, securitization, negligence on the part of the credit-rating agencies and lax government oversight. “We have a subprime financial system,” he said, “not a subprime mortgage market.”

Roubini argues that most of the losses from this bad debt have yet to be written off, and the toll from bad commercial real estate loans alone may help send hundreds of local banks into the arms of theFederal Deposit Insurance Corporation. “A good third of the regional banks won’t make it,” he predicted. In turn, these bailouts will add hundreds of billions of dollars to an already gargantuan federal debt, and someone, somewhere, is going to have to finance that debt, along with all the other debt accumulated by consumers and corporations. “Our biggest financiers are China, Russia and the gulf states,” Roubini noted. “These are rivals, not allies.”

Some argue that this view is unduly negative, and that Roubini’s apparent prescience about the present turn of events is coincidence: “Even a stopped clock is right twice a day,” says economist Anirvan Banerji in a stunningly unoriginal turn of phrase that inspires little confidence in the thinking behind it. And Roubini himself does not diet exclusively on gloom and doom: he’s been predicting, with the rest, that oil will drop below $100 a barrel and supports the government’s strategy to bail out overextended lenders. He believes that whenever the current mess is cleaned up, the economic outlook will improve.

Nevertheless, when you consider that we have made our country dependent on sovereignties that are not our friends, you have to allow: the guy has got something there.

Check out Roubini’s blog, where the man speaks eloquently for himself.