Coffee heat rising

Down the Tubes by 1200 points…

Did I tellya so or not? The biggest sell-off in history, for cripes sake. I hope you were braced.

My financial guy hasn’t had a word to say…he’s probably still dodging flying bricks down at his office. We’re pretty well diversified, but IMHO diversity ain’t much help when everything, everywhere is skateboarding toward Hell. Any of us who has any money in the market at all has lost a fair amount of our proverbial shirt.

Well, one good thing about it: this time I can’t lose my job. One bad thing about it: I don’t have a job to lose. 😀

As The Economist‘s Leo Abruzzi observed a few weeks ago, it’s time. Surely another recession is no surprise to careful observers. I will say that a vast, brain-banging market crash is a bit jolting…but with the regime that we have in charge of the country, I suppose it’s not surprising, either.

We have 3½ years before we can clean out the White House. Even if Trump is impeached — one would not like to see  harm to happen to another human being, but one would welcome a successful move to evict the man — we would still end up with Pence and Ryan. Unlike the present incumbent, Mr. Pence is not a freaking fool. And that makes him far more dangerous than the Orange Buffoon. Ryan is smarter than Trump, but he also is a bat-sh!t extremist who would like to drag this country back into the 1950s, socially and culturally if not militarily and economically.

He and Pence are peas in a pod that way

You could reasonably argue that America has not faced such great existential danger since the start of the Civil War.

Even if we manage to clean some of the crazies out of Congress in the 2018 mid-terms, it will not change the fact that our leadership and our nation are dysfunctional to the point of stalling out.

Meanwhile, we proles face a more immediate danger: How we are going to eat, what we are going to do if still more jobs are lost to us, and what chance do we have of attaining to or surviving through retirement if most of our savings go down the toilet?

At this point, it sure as hell doesn’t look good for yours truly: without a job and now too old to get a job, I depend on my savings and Social Security to live. SS covers less than half my living expenses. And the government forces me to take a “required minimum drawdown” from my IRA, which means enforced selling of shares at a time when I can’t get what they were worth a week ago. Fortunately, I don’t have to take that until later this year…but if memory serves, it took one helluva lot more than 10 or 12 months for the economy to recover from the Great Recession.

Mean-meanwhile, if my son loses  his job, he may very well lose his home. My house is paid for, but his decidedly is not. I can no longer afford to help him with the mortgage payments, which he took over quite some time back. If his father can’t fill the gap, he could very well be magnificently screwed.

What to do? If you still have a job, hang onto it but don’t assume you can do so for long. Make nice to the boss, rise and shine, but stash every spare penny into savings, build a side gig if you don’t already have one, and pay off as much debt as you can.

And for godsake, VOTE IN THE 2018 ELECTIONS.

In case you missed it:

“Trump was pitching the economic benefits of the GOP tax law in Cincinnati as the drop in the market intensified. The Dow fell 500 points while Trump touted rising wages and accused Democrats who refused to applaud him during the State of the Union of being ‘treasonous.’

“All three major cable networks showed the falling stock ticker on screen during Trump’s speech, and Fox News cut into his remarks when the Dow’s drop on the day hit 1,000.”

—Sylvan Lane, “Dow Falls More Than 1,000 Points in Biggest Daily Point-Drop Ever. The Hill, February 5. 2018


AMEX Windfall…Disappointing and Not Disappointing

The annual rebate from Costco’s American Express arrived late last week. It was only $157, the lowest kickback I’ve ever received from that august credit card company. Compare with last year’s refund of $337, and the $210 they sent in 2009. Pretty pathetic.

Of course, what it says is that in 2010 I cut spending way, way back. The only major purchase I made was for M’hijito’s dryer—since he pays for everything in cash, we charged it on my card and he reimbursed me so I could get the kickback. If it hadn’t been for that purchase, the rebate would have been even less.

In one respect the small check is not so disappointing: it means I succeeded in cutting my budget to unheard-of low levels. Of course, that happened because I had to cut back: I had no money.

Like everyone else, evidently. Spending dropped drastically across the country as more and more Americans fell victim to layoffs, forced “retirements,” furloughs, and pay cuts.  Reports tell us we’ve seen a recent  uptick in consumer spending, with an increase of 4.4 percent in fourth-quarter 2010. That’s good for the economy, I guess. One could speculate about pent-up need, though: at some point along the line people simply have replace cars that crap out and household infrastructure items that break—such as M’hijito’s clothes dryer. As experience tells us, all these things are engineered to break at once. Will people keep on buying after they’ve replaced the things they can’t do without?

Oh well. I could’ve used a larger kickback. On the other hand, a couple of other windfalls blew in: the RASL payment and a couple of new jobs from new and old clients. So, what the heck. I’ve learned to limit spending, and don’t expect to increase it for the sheer joy of seeing a few extra pennies in the annual AMEX rebate.

How about you? Now that you’ve tightened your belt, do you intend to loosen spending if and when times get better, or will you continue to cultivate your new frugal habits?

The (Not So) Good Old Days

Just finished the chest freezer’s first defrosting job. The thing doesn’t collect very much frost, but after enough months pass, it does need to be chipped free. This summer’s humidity caused enough frost to grow that it was threatening to interfere with closing the lid, so, reluctantly, I finally moved myself to action.

To my surprised delight, it didn’t take anything like as much effort or time as expected. Only about a half-hour with a hair dryer defrosting the glaciers, plus another half-hour of winnowing out the hopelessly aged items and organizing the survivors.

The reason I dreaded this chore and put it off as long as I could is that I can remember what it was like to defrost a Frigidaire. O God!

Defrosting the icebox’s freezer was a half-day job. In the first place, the freezer compartment started to build layers of frost from the instant you plugged in the refrigerator. Frost built up on everything: every surface of the machine and every surface of anything you put into the freezer.

First, you’d wait until your family had gone through most of the food in the freezer and the refrigerator. Turning off the freezer in older models entailed turning off both compartments. Later, you could shut off just the freezer, but even then, since the job would take a long time, you didn’t want to leave much frozen food sitting in the refrigerator or sink.

In those days, women didn’t have hand-held hair dryers. A hair dryer was a lash-up with a plastic bonnet on the end of a hose connected to a contraption that looked a little like…I don’t know…a drag-around vacuum cleaner. It never occurred to anyone to try to use one of those things to speed defrosting, if that were even possible.

On the day you decided to defrost and clean the freezer, you’d turn on the soaps to keep you company. The soap operas would start around 10:00 or 10:30 in the morning. So if you started with the first soap, which I recall was Days of Our Lives, you would clean through As the World Turns, The Guiding Light, The Edge of Night, and finish about the time The Dumb and the Feckless came on. If you worked steadily, you’d finish around 12:30 or 1:00 p.m.

It was a messy, foot-aching, back-aching, endless job that entailed boiling water, pouring it into flat pans, setting them into the freezer compartment to melt the two- and three-inch thick ice, wiping up the mess, and repeating. Over and over and over. Then you had to clean up the mess you’d made on the floor and kitchen counters. So, as you can imagine, I wasn’t looking forward to doing that with a chest freezer that would add bending over to the list.

Moderns suffer way too much nostalgia for the good old days. One thing that concerns me about both this bottomless recession and the sometimes silly sentimentality inherent to the environmental movement is that both of these forces are tending to push back our standard of living.

To my mind, not having to stand in front of a freezer for two or three hours pouring, chipping, scrubbing, sponging, and mopping comes under the heading of “standard of living.” So does having a freezer at all. So does running an air conditioner and electric lights and an indoor stove. So does walking into a supermarket and having a choice of all the fruits and vegetables that grow in any season of the year, somewhere on this earth or in some agribusiness’s greenhouses.

One of the problems with the locavore movement is that, taken to its logical end, it means that you eat whatever is in season in your local area. Whatever does not grow in your immediate vicinity and is not in season, you don’t eat.

While that sounds very romantic and green, its reality is far plainer and far simpler than most locavores would relish: malnutrition.

Enthusiasts tell us that “most Americans should not expect to have tomatoes in January” and that “to eat truly locally means learning to live without those foods that won’t naturally grow in your own backyard, or in your local farmer’s fields.” Be careful what you wish for.

My mother grew up in upstate New York during the 1910s and 20s. She lived with her grandparents on a small subsistence farm. During the summer and fall, they ate what they could grow or gather in the forest. During the winter, they ate what they could store.

My mother grew up with rickets. Thanks to poor childhood nutrition, all of her teeth had been removed from her head by the time she was 45.

She told me that an orange was a rare treat. Citrus was expensive, too expensive for people who lived off their own land, and even if you could afford them, oranges were rarely available. During the winter, she said, oftentimes all they had to eat was beans and potatoes her grandmother had put up, served in bowls of hot milk taken from their cow.

That’s locavore eating. Do we really want to take ourselves back to 1918?

Consider, too, the bright ideas intended to save water and energy. Front-loading washers, for example: there’s a throwback to the “good” old days, if ever there was one. They work very much like the old Bendix my mother and I used in the early 1950s. Put a tablespoon too much detergent in the thing, and it would bubble up and flood the service porch. This is why washer hookups in 1950s houses are often outside, on the back porch or in the garage. It’s a lot easier to clean up the concrete garage floor or the back porch slab than to have to scrub an interior floor every third time you do the laundry.

I remember that damn thing overflowing, and I remember my mother racing to wipe up the mess with a mop and on hands and knees with rags. As if she didn’t have enough physical labor to do!

And I remember both of us bending over with aching backs to haul the heavy wet laundry out the front side the thing—even a little girl can get a back-ache, believe it or not. The Bendix induced back pain in users of all ages and sizes.

Why on earth do we think reverting to the 1950s is a good thing?

Then we have the repercussions of the present economic depression. How many of us are putting off buying appliances and other tools that make our lives more tolerable? I, for one, can’t afford to replace my dangerously overheating clothes dryer. It will run on “air fluff,” but that cycle doesn’t dry clothes. Most of my laundry can be hung out. But what happens when I need to wash the down comforter? That has to go through a dryer, and it can’t go into an ultrahot commercial dryer.

If I didn’t have a dryer, I wouldn’t own a feather comforter. I’d be doing the same thing my mother did: hauling heavy woolen blankets and bedspreads to the dry cleaner once a year. When we unwrapped them and put them on the beds, we’d sleep in toxic fumes for two weeks, until the stink dissipated.

How “green” was this? Well, take a look at a map of the Superfund sites in your area, and note how many pieces of land contaminated with dangerous chemicals once housed neighborhood dry cleaners.

While I can stand to hang out my clothes on a line, the truth is that having no working dryer puts one foot back in the 1950s, when most people didn’t own dryers. Or dishwashers. Or electric stoves and ovens. Or televisions. And no one ever heard of a microwave.

We no longer have the Russians to bomb us back into the Dark Ages. The Chinese are too busy turning themselves into the world’s economic superpower to bomb us into the Dark Ages, and the Iraqis are in no position to return the favor just now. But we seem not to need any help: we appear to be taking ourselves there on our own.

Don’t get me wrong: I’d like to see the developed world and everyone else consume less fossil fuel; spew less gunk into the atmosphere; quit polluting air, land, and water with toxic chemicals; quit bulldozing farmlands and blading the desert to make way for square mile on square mile of sprawl; stop torturing animals in grotesque factory “farms”; live well but not so large; and all such good things.  I just don’t think we should do it at the expense of our health. Or at the expense of the positive factors that make us a “developed” country.

How Has YOUR Dollar Done This Decade?

Be afraid, my friends. Be very afraid. If you have no fear, click on the image above for a larger, clearer picture of what’s slouching toward Bethlehem.

That thing came in a report from my money managers today. It tracks the value of a dollar invested in my portfolio from June 30, 2000 forward.

Now, if you take a ruler and lay it horizontally across the page so that it passes through the start point on the left-hand side of the page and stays parallel to the x-axis, you will see something alarming. In all that long, eventful decade, only a tiny little nubbin pokes up above the top of your ruler.

That’s right. A dollar invested in my vast holdings was worth a dollar or more for two out of ten years, between third-quarter 2005 and third-quarter 2007. For the other eight years, it was worth less than a dollar. Sometimes significantly less. In third-quarter 2001 it was worth about 68 cents. At the end of June 2010, when this report was generated, that year-2000 dollar was worth about 85 cents.

Suspicions confirmed. Some time ago, it occurred to me that the amount in my investment account was about the same as the amount I recalled coming away with from the divorce, some 20 years ago. Statements from those days have been packed away, and offhand I couldn’t say where they are. They may even have been discarded. But the figure that sticks in my mind is…well, just about the figure on the bottom line of the statement that comes in the mail once a month.

Still think long-term investment in the stock market is the way to grow your savings? Read on…

On the phone with the investment guru:

“Is there a reason to believe keeping money I will need to live on for the rest of my life (which we may sincerely hope will be short) in the stock market is a good thing to do? Unless these funds grow or at least quit losing money, there won’t be enough for me to live on. I can’t keep on forever putting in 16-hour days, 7 days a week to scrabble together $15,000 a year, which is what happens when  you’re ‘self-employed.’

“Should we be considering some other investment strategy? Maybe we should take a chunk of dough and pay off that damn mortgage on the downtown house, so I don’t have to worry about where 10 grand a year is going to come from to pay for it. If M’hijito pays rent to me, then about $600+ a month would come from him to me, instead of me having to fork over $800 a month. After the kid moves on, I could probably rent that place for $1,000 a month. Or sell my house and move into it, banking $235,000 in the exchange.”

Well, of course, the very idea is anathema to an investment manager. Put your money in real estate, and he doesn’t have anything left to manage!

The conversation that ensued was eye-opening. The firm has moved large amounts of funds into income-producing instruments, which my guy says are returning 7 percent just now. So even though the apparent value of the securities appears to drop, they’re still bringing in cash.

Couldn’t prove that by me, but then you can’t prove much by me.

He then said that the consensus among his partners is that the future of investing is off-shore; that effectively the U.S. economy is done, and smart money is going to emerging economies. He believes China’s economy will surpass America’s within ten years. The jobs we have lost in construction and manufacturing—where the bulk of job losses have been—will never come back. Jobs in the service sector, which is where most of the remaining employment resides, are poorly paid and will never be anything but poorly paid.

If you thought the middle class in this country is disappearing, you thought right. A young person, he suggested, would do well to look for employment overseas. Americans are in demand in Hong Kong, he said, although given Americans’ reluctance to learn languages other than English, Canada or Australia is probably a better bet. He would, he added, seriously consider moving to Canada if he were younger (and hadn’t yet started his family and career) or older.

Not scared enough? Well, put on your 3-D glasses and look up your address on Zillow. For jacking up your adrenalin level, that beats any chainsaw movie.

My house, whose value held steady through the bubble-burst at $235,000, has suddenly dropped to around $200,000. The downtown house house is between $50,000 and $60,000 underwater. Real estate values have not stabilized; they continue to drop steadily. When I mentioned this to Investment Dude, he said yeah, his place also had fallen in value even more than it already had, which was plenty; he and his wife managed to get a refinance, but only because no appraisal was required—the lender accepted a recent valuation. If they’d had to have the house appraised, they could never have gotten a new loan.

So…how has your investment dollar been doing? Dollar, heck… Can you spare a dime?

State of Arizona Employ: Goodbye, so long, adios!

Arizona’s bumbling state legislators, faced with a budget deficit that would challenge far better men and women, approved a 5 percent cut in pay for state employees.

This will more than negate the 6.2 percent increase they generously ladled out a couple of years ago. You have to understand, every raise for state employees is accompanied by what we call a “retroraise.” A retroraise happens when you get a raise but then your employer jacks up the cost of benefits so that your take-home pay actually drops. Often a state of Arizona pay increase is in actuality a retroraise.

For GDU employees, that 6.2 percent increase was quickly erased by GDU’s decision to inflict a $770 per year parking fee and by the switch from bimonthly to biweekly pay, which effectively meant a pay cut in 10 out of every 12 months. For me the change to biweekly meant a $480/month drop in gross pay.

Well, goodbye to all that! Just imagine: if I continued with GDU past the end of this month, the 5 percent pay cut would have worked out to a $3,275 drop in gross annual income.

If I didn’t have enough reasons to be happy they threw me in the layoff brier patch, there’s another one! If they keep that up, before long my salary would be the same as my cobbled-together postretirement income.

Repurcussions of the fall

Talking with people about the collapse of the economy, you gain some unexpected insights and hear stories you hadn’t thought about.

DCP_2671This afternoon I dropped by a pricey optical boutique in hopes that they could adjust my glasses frames and get them right. Background: Three or four years ago, I bought a pair of stupefyingly expensive Silhouette frames, mostly because my former best friend had a pair (yah, I know…monkey see, monkey do!). Their design really is neat. The lenses are completely rimless, not even any wire or nylon line around them, and the temple and nose pieces are so light and airy you hardly notice you have a pair of glasses perched on your schnozz. They have no hinges: the temple piece is made of a sproingy substance that can be folded, sort of, but springs back to its original shape.

Because they’re expensive, not every optical dispenser carries them. And because they’re kinda exotic, opticians who don’t sell them sometimes are a little flummoxed about repairs and adjustments to the frames. When they get bent, which can happen if you sit on them (ahem!), the repair job is not something for the happy handyperson—you end up having to take them to an optician who knows how to deal with them.

The other day, for no good reason, one of the temple pieces snapped off its lens. So I schlepped them downtown, not a hideously long drive but off my beaten path and so a bit of a nuisance. The woman who’s now running the place announced that the warranty had expired (say what? thôt they had a lifetime warranty!) and it would cost $85 to repair them. Exasperated, I ponied up the money to have her ship them back to the factory to be fixed, eight-five bucks being significantly less than the price of a new pair of the cheapest, ugliest glasses in the shop.

When I went to pick them up, she had me stick them on my face, took one look at me, said “that looks fine,” and out the door I went. No adjustment. Soon as I got home and glanced at myself in the bathroom mirror, I realized one lens was higher than the other. I looked like some sort of wacked-out comedienne…not exactly the image one likes to project when standing in front of 25 hypercritical students.

Hence the visit to the high-fashion optical boutique: it’s a lot closer to my house, and they dispense this variety of overpriced glasses.

The proprietor adjusted the frame so it sits straight on my nose, remarking (in passing) that the lenses had been drilled incorrectly and the temple pieces are too short for me.

This fall, before I’m canned, I’m going to need to buy a new pair of glasses. I’d planned to buy the cheapest junk I could get, just as a back-up.

“Well,” said he, “Before you buy something you won’t want to wear in public, take a look at these: I have a whole showcase full of frames marked way down. Four of my suppliers have gone out of business, and I need to move this stock.”


Indeed, the prices were marked down from stratospheric to about mid-level expensive. And some models were very, very handsome, obviously top of the line, with high-quality construction. Much nicer than the pair of glasses I was dragging around town to get adjusted correctly.

He said that the last part of 2008 and first part of 2009 were the worst period he’d ever been through, in twenty years as an optician. Not only was there no traffic through the store, but suppliers were collapsing all around him, some of them leaving him high and dry. “The outfit that made these,” he said, indicating a drawerful of jewelry-like frames, “stiffed me for $4,000!”

Over the past three months or so, however, things have been getting better. He said that right now his business is just about back to normal. People are starting to buy again, and he feels better about the prospects for the future.

Opticians pushed to the wall by the recession. Who would’ve thunk it? With so many people half-blind, aren’t glasses a necessity? On the other hand: it’s not surprising. Even low-end glasses are pricey, and “insurance” programs to help you buy the things are right up there with dental insurance: they don’t cover much. The industry has aggravated the problem by lobbying successfully for regulation forbidding you from buying a pair of glasses unless you’ve had a $70 eye exam in the past year. Add tax, and voilà! A $300 pair of glasses morphs into a $400 gouge. At Arizona’s 8.3 percent sales tax, even a cheaper $150 pair ends up costing you $240—and has to be replaced in a couple of years. Who has that kind of money laying around the house?

I wonder how many Americans are putting off glasses, dental care, and nonemergency medical care, feeling they can’t afford it? Are you delaying vision, dental, or health care because of the recession?