Where We Are Going

I have been thinking about this in various forms for awhile. Maybe the world will go all Mad Max and we will be killing each other over cans of dog food but almost surely not. Maybe there will be a massive long term global economic implosion brought on first by the total collapse of the Euro Zone then hyperinflation in America and the total collapse of the US Dollar. I hesitate to try and quantify this one. It is more likely than a Mad Max scenario but less likely than say higher taxes, increased crime, inflation of significant but not hyper levels and a generally bad economy for some time to come.

I have been thinking about positive things an individual can do to improve their situation. Also real world quantifiable stuff that is likely to affect us. Of course common sense stuff like having food, water, arms and savings applies but I talk enough about those.

I am seriously concerned about the long term prospects of those in the 40-60 age range. My Grandparents (more or less the "greatest generation" did pretty well for retirement. Most of them spent a long time at one job and got a defined benefits retirement which coupled with social security and various personal savings left them comfortable. They generally bought, stayed in and paid off modest homes and were pretty good savers. I fear that my parents generation (the Baby Boomers) are in a far worse spot.

They generally do not stay for their whole working life with one company. Few companies offer a lot in the way of retirement anyway these days. The only folks offering defined benefits plans (great for the worker, bad for the company) are a few huge corporations, union jobs and government at various levels. Unfortunately this generation seem to have saved like they had a defined benefits style retirement coming when in reality they sometimes had a 401k match. Thanks to modern health care they are going to live for a long time.

Where my grandparents generally bought one house, paid it off and stayed in it they move a few times, often up sizing and or using their equity like a Visa card. Instead of a paid off home at retirement age Boomers often have a relatively expensive not paid off house. I watch the financial adviser shows and laugh my head off when somebody wants to retire and still has a mortgage or two. How the heck do they think that will work.

Even if they want to just continue working that might not be an option. Workers in their mid to late 50's are in a rough spot. They are generally expensive to employ as they have a lot of experience at something. Also as their experience is pretty specific they can have a hard time finding a new job. Plus their health care costs are higher and they are sick more often. The old back up plan of just working a couple more years to help the retirement numbers is not something that should be counted on. Many organizations have a strong incentive to replace them with younger less expensive workers.

So I fear many in my parents generation may economically need to work past when they would want to retire but be unable to do so. That means a lot of folks are going to be hosed. If I was a 50 something I would be doing the math to see where I was for retirement without social security. Without some X factor the best I can see (from the retiree perspective) is them getting paid in increasingly less valuable dollars based on progressively more and more cooked CPI numbers.

One interesting thing is that people did not used to really "retire" but they also lived far shorter lives and were part of a 3 generation household with a fairly large degree of self sufficiency and low taxation. People were usually pretty healthy, got sick and then died. Thanks to modern medicine people live far longer than a hundred years ago. However we haven't really been able to extend the plateau of "good years" much. 

As a young person I see a lot of families becoming 3 generation households. I will likely be one of them but not for economic reasons. Young people might want to have an informal talk with their parents about this. If just to see if they should look at tacking on another bedroom to their house.

For us younger folks I think it is going to be a crazy decade or two. The only good thing for us is that we are young and have the ability to ride something out and recover afterwords. I see the scenario for low skill "blue collar" workers as particularly bleak. These folks are either going to need to either change paths or reside themselves to a life which is below the "middle class".

As for my generation. I think that for us the differences in outcomes based on choices of jobs and money management will be the starkest since the Great Depression. Those who get marketable skills will be in a decent place. Cash talks in a bad economy. However people who decide to have 2 expensive cars with loans to match and a credit card bill that costs a buck and a half to ship then buy a house with a payment that is 40% of their pre tax income will fail miserably. Wages will not necessarily grow at old rates. Relying on home equity growing fast and forever to bail them out won't work either. As people change jobs at least a few times in a working life those with payments to the hilt will have issues.

Those who stay out of debt and live within their means will do OK. They always have and always will if just relative to the situation. It is probably going to be a wild ride but those with  available resources will be able to best position themselves for it. Folks with payments up to their eyeballs don't have many available resources. Good choices beget more good things and bad choices beget more bad things.

If nothing else those spare resources can be put toward building a bedroom for the parents.

Family Confesions

My Great Grandfather  was a rum runner. During prohibition he had a fleet of boats but didn't seem to fish. One night he woke the family up in the middle of the night and they moved states for 3 months. Great Grandpa owned a business later but didn't do a whole lot after prohibition ended. After he died Great Grandma continued to live in a nice house and never worried about money though she outlived him by 30 years.

The American Dream

My recent post on Savings and Debt plus the follow up lead us down an interesting path. I have gotten my mind stuck on this topic for a few days. In order to fully grasp my thoughts you might want to skim through these past posts (1, 2). Now that I have referenced myself a lot lets get to semi new thoughts.

I think most of us grew up on more or less the same American Dream. Do the right thing and study hard then get a good job. By doing this you will be able to do a bit better than your parents did, assuming equitable career choices. Somewhere along the line you get married and buy a nice house with a white picket fence. Get a lovable dog and a good (not necessarily flashy but not shabby either) family vehicle. Join the local Rotary club or the Kiwanis or Lions or Moose lodge (in order depending on how much you actually want to help people and how much you like to party:) have 1.8-2.4 kids who also do the right thing and study hard. Maybe get a water ski boat or a  hunting cabin or a time share in Hawaii. A few more years down the road and then a gold watch and a comfortable pension. Now you have time to make ships in bottles or spend winters in Arizona and of course enjoy the grand kids.

So where are we now? Some folks would say that the American Dream is dead. I would not say that it is dead but I would say that it is realistic for fewer people than it was 40 years ago and far less realistic than 60 years ago. What were some factors that let then, well be then.

If we look at 60 years ago we see 1950. Things were pretty darn good. A lot of this was because the rest of the world was basically blown to bits and missing a big chunk of two generations of workers, under the iron grip of Communism or both and the rest of the world was still largely undeveloped.

40 years ago the nations largest employer was General Motors and wages started at the equivalent of  $17.50. Someone could graduate from high school or get out of the Army and walk into a good job with the kind of wage where you can afford the American Dream. Most jobs also had pretty good stability in addition to health care and pension plans.

 So why are things not going so well now? I think it is a combination of a lot of different factors. Lets look at some of them:

First as noted pretty much everywhere real wages are going down for a lot of jobs. Most notably manufacturing which used to be the ticket for a minimally educated and skilled person to have a solidly middle class American Dream life has taken a real hit. A nice young man can't graduate from high school and get a job at the plant with a secure future for him and a family anymore. The same sorts of folks are often getting the same sort of jobs; those jobs are just buying less.

Also what we consider to be "normal" has gradually trickled up. Homes are bigger and not surprisingly more expensive. We also fill our homes with all manner of expensive gadgets and electronics. People in 1970 did not have $150 a month IPhone and Blackberry packages or tv's that cost as much as a decent used car. As with anything else when the cost rises it means fewer people can afford it.

The above two reasons are the biggest issues at hand but a couple others are in my opinion notable.

Interesting credit and debt have also been factors, if smaller ones.  I am under 30 and I distinctly remember a time when many stores and shops did not accept credit cards. Debit cards were still a dream for some time after that. It is pretty hard to rack up debt when you can't buy stuff on credit. Of course stores have had payment plans and such but not too long ago most people only borrowed money for homes and cars.

Along with the long period of Greenspanian artificially low interest rates, an explosion in home prices, Fanny, Freddie (and eventually derivatives) home mortgages as well as other debt started becoming more and more available to less and less qualified people. I guess when it started bankers were confident that the long and reliable increase in home prices made them getting their money back a sure deal. Later on bankers made their quick money and sold the loans off anyway.

Somewhere along the lines it became more socially acceptable to be further and further in debt. Home prices were a huge factor in this. Getting that 3 bedroom 2 bath with a decent yard got a lot more expensive, but it was still the dream.  People used to have to wait until they could buy something or a reasonable person who was concerned about getting their money back (from them, not in general) would give a loan. For the reasons listed above the grip on reality in our economy loosened a bit and then just plain took a vacation for a couple years. Also to make matters even worse as it got more acceptable to be in debt the American Dream got even bigger.

So people were having a harder time and trying to reach bigger goals to boot. Also folks were were getting further into debt trying to get the American Dream. Somewhere along the line maybe a nice slightly idealistic idea turned into an unrealistic, unsustainable and warped vision of its former self, at least for some.

As Mayberry noted "EVERYONE is force fed the "American Dream" virtually from birth." Our parents, family, teachers and friends as well as the ever present media say this is a good thing and we should want it. I certainly would not say that (at least in the slightly more retro interpretation) it's not a nice idea. However sometimes the dream isn't for everyone, at least not today.

Tomorrow I will talk about defying the norms.

quote of the day

"Let us never forget that government is ourselves and not an alien power over us. The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country." -- Franklin D. Roosevelt

This Was Interesting

Anti-Gold Conservatives by Gary North

quote of the day

"Mises argued that the gold standard had arisen as a market phenomenon because gold is the most marketable commodity."
-Lew Rockwell

Mortars and Money: My Day and End The Fed IPR

I have all sorts of stuff in my head but am tired, hungry, thirsty, in the middle of an awkward freezing/ thawing cycle and scatter brained. Also I made a sort of promise to myself to write every day if possible, I didn't say anything about it being organized or good.

Today I got to shoot mortars a bunch which was pretty awesome. We had 60's and 81's and rounds a plenty. First we layed the section in, registered it and all the normal adjust fire stuff but we also did hip shoot and direct lay. I particularly enjoyed shooting the 60mm mortar hand held.

One of our instructors said this is the only way they shot mortars in Iraq. It is by far the least accurate way to shoot a mortar since you are just pointing the tube at the target. The apparatus on the top of the trigger allows you to measure distance which is essential as the lobbing trajectors would be just about impossible to Kentucky windage unless all you did was handheld firing of mortars. The reason hand held is so widely used is that it is by far the lightest configuration with just the tube, a tiny base plate and rounds versus the tube, a big base plate and the bipod legs. Also maybe more importantly it is very very fast. No FO and FDC or adjustments or leveling bubbles. You put the mortar tube onto the ground, put a round with the right charge in it, point it at the target, get the right range and shoot. One could easily be driving around, take fire and be putting rounds downrange in well under a minute. The limitations are that you have to be able to see the target, the target has to be pretty close (probably under 1k) and it is not particularly accurate.

If in addition to the section sized PSD element I have on request I could get a section of mortars with an FO to be on call to fire an FPF and a couple priority targets that would be great. 

I have worked most of the way through End The Fed. I am enjoying it a lot and learning significant amounts about hard money and getting an intro to The Austrian School of Economics. The book is a tad repetitive but I am learning enough stuff and hearing various amusing Ron Paul stories that it is enjoyable. This book is much more technical and complicated than The Revolution. Partly because of this and partly because I have been busy and it is harder to free up a few hours in one shot to read a somewhat technical and such than one which is easier to digest.

If I had to sum up End The Fed in a sentence that wasn't "Ron Paul really wants to abolish the Federal Reserve." it would be that "Ron Paul believes the Federal Reserve coupled with fiat currency have caused most of not all of the financial problems the US has."
 
If I had to sum up the theme of this book (aside from the obvious stated above) it would be connectivity. Fiat currency is related to banking practices which are related to the FDIC which is related to moral hazard which is related to the Federal Reserve which causes Inflation which leads to other stuff which affects the previously mentioned stuff. To be honest I really don't see the connections between some of the stuff Ron Paul attempts to connect in the book but I sure see a lot of them.

I would say more but I have to save some for the final Review. 

I am going to eat a big dinner, drink a gallon of water and go to bed early.

Unconventional Living Situations: Moving For Work

First of all you might want to swing by Hermits place and give him some positive wishes. Tomorrow his wife and 20 something children are headed down to Florida to find work. Kids moving to find work and social stuff isn't anything new but well established and highly qualified adults (still can't consider us 20 somethings 'adults') needing to change states to find jobs is disturbing. It is one thing to need to make a long drive but it is another to move hours away.

I fear that unconventional living situations because of finances and moving to seek employment is a trend that is going to continue in the months and maybe years to come. Remember the roving groups of men who were searching for jobs in the Great Depression? I think this time will be a lot different because most couples are dual income. I don't have stats from that era but I imagine most households were not dependent on both people being able to work to stay above water.

What does this mean? Back then assuming you had a place to live the family could more or less stay intact in their community. Unless a family lost their residence and ended up doubling up with some relatives they could at least stay in the same place while the man went onto the road. For families with young children one parent needing to relocate in search of work could very well upset the somewhat precarious 'Dad takes the kids to school in the morning, mom picks them up from daycare at 5:00 after she gets off work' sort of situations.

Also since both partners need to work that is double the vulnerability to potential job losses. Yes it also means there is double the odds that one job will survive but for most people that is not enough. If a family needs 80% of their total income to survive (I am being generous there for most it is probably more like 90% or more) and all of a sudden they are making 50% while they won't starve to death there will probably be serious issues.

As for answers really wish I had some amazing solutions nobody has thought of. If you've got to go someplace to work you've got to go someplace to work.

It would probably be wise to minimize the expenses of a trip if you don't have a sure thing job there. The only thing worse then not being able to find a job would be not being able to find a job and spending $500 on lodging. If there is someone you may be able to crash with for a couple weeks that would be a good option. If you are asking them in a clear way with a definite ending time the odds that you will get a couch to crash on are higher. Something like 'I am going to look for a job for three weeks. After that time has passed I will either be headed back home, paying you rent or getting my own place.' will probably be better received then ' um I am going to look for a job and stuff when I get there. Can I stay with you?'.

Also don't forget about trying to work through friends in other places. The cliche that who you know is more important then what you know has a lot of truth to it. Obviously you need to be somewhat qualified (excluding engineers, doctors, etc) but a friend putting in a good word is often the difference between getting a job and not. I don't look at this as nepotism (unless taken to extremes) but that the odds someone who a friend vouches for will be a fuck up are lower then the odds that candidate #4 will be. If nothing else lots of places hire through word of mouth instead of big advertisements and such. A friend (especially in a similar job field) hearing stuff will often be at least as useful as the classifieds.

Based on these things if all other factors were close to equal I would choose a place where I knew some people over one where I didn't.

Once you get a job somewhere think outside of the box. Having that second income get going again but with another household full of expenses is not that much of a benefit to the family balance sheet. Maybe the traveling worker can find a few people to rent a little place with. Some jobs include housing and food which would be a big plus. If the goal is to send as much money home as possible having 5 guys in a 3 bedroom place makes sense. Instead of getting an apartment maybe you can rent a room in a house. Living in a little travel trailer makes sense also. Yeah these living situations can be kind of a pain but the goal is to make money. Working more hours or fewer longer days (4x10, 3x12) will let you make money and maybe go home every or every other weekend.

In these trying times I suggest that you lean more on friends and family and be willing to let them lean on you. The more we work together the better off everyone is. Maybe having a friend or two sleep in the living room for a month isn't your idea of fun but in a years time situations may have changed and it could be you calling them needing a favor. Often folks are too proud or whatever to ask for help.

Help friends and family if they need it and don't be afraid to ask them for help if you need it.

Untarnished Truth as Steve sees it.

During the Great Depression of 30's most people did not own homes,there were no home equity loans,no credit cards,no 14 trillion in debt, we had a trade surplus not $700 billion trade deficit, we were not fighting two losing wars which are now at 2 trillion cost, we weren't running 1 trillion budget deficits per year, back then we had a manufacturing base along with a gold standard(not able to print dollars with abandon). Today we have a trade deficit of 700 Billion, a national Debt of 14 trillion, a banking system that will need an additional 2 trillion bailout money, foriegners owning 3 trillion of our debt, zero percent interest and a currency headed to the toilet! This is why you need to have a long term food storage plan, shelter and water along with GOLD and SILVER for future bartering needs!! Good Luck! Steve

Awake

Red Eye flights suck. I slept less then a half hour last night and this evening at about 7 I was nodding off in front of the TV. Wifey said I should go to bed and after cramming some food down my throat I did just that. The downside of going to bed at 7:30 without being under the influence of something or being sick is that you wake up in the middle of the night. I haven't been watching much news recently so it is kind of nice to get caught up.

Mayors and Governors seem to be holding their hats out for a handout from Daddy Fed. I do not blame then too much because their job is to do the best they can for their constituents. At the same time should Daddy Fed be spending more money, probably not. Yeah yeah Keynesian economics blah blah blah but it can be argued with some success that WWII was what finally got us out of the Great Depression.

In particular Daddy Fed should not be spending money he does not have. Last I looked while his suit and shoes are nice his pockets are almost empty. Infrastructure is great (and I don't mean museums, golf courses and pools) but HOW DO WE PAY FOR IT? While the federal government is big it still needs to pay for things at some point. If someone has a plan to improve our national infrastructure that is funded in a way we can collectively stomach then lets do it.

I am going to wrap this up and eat some cereal now.

quote of the day

"The economy might be crashing but at least we have booze this time."
-Some chick on the radio today.