Friday, January 30, 2009

We're Broke (It's a Secret)

Most speculative bubbles produce something everyone wants to own that is way out of proportion. Housing was overproduced. This was an extreme misallocation of resources. The problem, the economy can't shift it's focus of production overnight. A second bubble was loaning money to anyone who wanted to buy a house or car. Label this one a misallocation of financial resources.

Now the country has several problems. There is a surplus of homes for sale and a very large amount of failed bank loans that are uncollectable. Each home seller got real cash for the home. The new owner borrowed funds from the bank. Now, most of the major banks are bankrupt and the government is bailing them out.

The US had over 17 trillion dollars worth of savings. The banks probably loaned out 7 trillion that will never be paid back. Someone got that money and saved it or spent it (consider it spent and gone). Now the government wants to borrow 4 trillion dollars (two years worth of taxes) to bail out the system. Add the up the bill, 7 + 4 equals 11 trillion dollars worth of IOU’s.

The FDIC insurance stops people from making a run on the banks. Their money is safe. They have peace of mind. Normally a run on the bank would force liquidation of home loans. This has been accomplished without a run on the bank, the homeowners took a walk.

There is a problem with retirement funds. As long as money coming in, is greater than that going out, the game can continue. What people save on their taxes by contributing to these funds keeps the game in play. Retirement funds and mutual funds look extremely suspicious right now. It seems quite likely that these unregulated institutions should have a good share of bankruptcies, more so than the banks. Bernie Madoff cleaned a plow or two!

It appears likely that between 5 to 15 trillion dollars has been spent on fast cars, homes, and all sorts of toys. Those with money spent it, those who had none, borrowed it.

Congress is going to try and get the economy going by borrowing and spending 4 trillion dollars? Just who is stupid enough to loan the government that amount of money at these pathetic rates? Question two, what if there isn’t 4 trillion dollars available to borrow? Interest rates will have to increase drastically.

Now we have a lot of people being laid off. These people are going to dip into their savings and then into their credit cards. The solution for Joe Sixpack and government is the same “Spend what you don’t have in the hopes that things will get better.” The rational behind the concept is “You have nothing to lose!” This has Barnum and Bailey written all over it, a real circus act!


Gary said...

Congress is going to try and get the economy going by borrowing and spending 4 trillion dollars? Just who is stupid enough to loan the government that amount of money at these pathetic rates?

1. Ben Bernanke

2. We're doomed

Jim in San Marcos said...

Hi Gary

I choose 2

It's kind of like giving a heroin addict a fix--You have no idea where you are going next.

It is going to get real, real fast.

Thank you for your comments

Anonymous said...

Since all our money has been lost for us, I guess we'll just have to toil again to earn it back.

It's a little like slaving for 20 yrs to build a pyramid. Once it's completed, instead of being set free like promised, the pharaoh orders the slave to build him another pyramid.

This time bigger and grander.

Once the second pyramid is completed, if ever, there won't be much of a life left to enjoy, provided the slave can get out of building the third pyramid.

I refuse to be a slave once more. I'd rather starve.

Fellow slaves: You guys will have to trudge on without me. The pharaoh really needs those pyramids for his extended family.

Anonymous said...

"Just who is stupid enough to loan the government that amount of money"

You/ we all are. They simply print the stuff. They print the missing trillions, the lost money magically drags down the intrinsic value of the saved remaining 10 trillions, and the savers and pensioners pay for the porches and the condos of those who lost self control and blew the cash in the first place.

The very idea that idiots should pay for their own mistakes goes out the window and a generation learns that greed is good - some other sucker is going to pay your bill.

Democracy in action.

Anonymous said...

Hello everyone

I'm going to have to say that I choose 2 as well. Here in Nova Scotia things are heading down the same road as in States. I am still amazed at the level of ignorance amongst the public in regards to what is happening. Right now the spenders are trying to screw the savers at a dance that I didn't even want to attend. Case in point I just received my assessment which my municipal taxes are based on and it has jumped over 50% in one year. Gotta hand it to govenment because when I call to complain they seem to think I should be patting myself on the back because of my new found wealth. I don't feel richer. Better plan for me would be to stand with my back against the wall at least I won't get jumped from behind. As I said before Jim love the blog keep up the good work. I do like the sense of humour. We might as well laugh about our predicament as it looks as if there is not much we can do to change things.


Rob from Nova Scotia

p.s. and yes it is cold here now.

Anonymous said...

Rob again

Once Bank gets wind of my windfall I suspect I'll be getting call about increase in my home equity line of credit of around 50 grand. Mmmmmm I wonder if I should cash out some of that money and buy that boat I always wanted. Any advice about what I should do...........

AngryTaxPayer said...

Hi Jim,

Our beloved Congress and the Newbie are about to dole out $1t crisp new bills (from where is anybodies guess). Many have tried, but let me also put that number in perspective.

As of this week, there are currently 4.7 million unemployed. Instead of giving out $1t for pet projects like trick-or-treat candy at Halloween, lets just give it directly to the unemployed. Isn't the shortest distance between two points a straight line?

Hmmm... how much would each get you ask? Lets see...

$1,000,000,000,000 / 4,700,000 =

$212,756.00 each!

If the average salary of the unemployed is around $14/hr then this amount would be enough to pay each person's salary for over 7 years! SEVEN years!

So this money is for creating jobs and to jump start the economy, bla, bla, bla... STOP, just give it to them already! It's better spent money and I'm pretty sure these folks would be very happy about it. The Newbie and Congress could call it the Nationalized Jobs Bank Program.


Jim in San Marcos said...

Hi Anon 12:23

The only trouble I see with these pyramids is that they tend to be rather unstable when you build them upside down.

We've had pyramid one Ponzi, pyramid two Madoff was a dusey, I can hardly wait for three--they've probably spent money I haven't even earned yet. Could that be possible???

Jim in San Marcos said...

Hi Anon 1:56

You hit the nail on the head. The only problem is, try and explain that to the average guy on the streets it can't be done.

It's a little like playing for money with some card sharks. You're not going to walk away a winner.

Anonymous said...

In another year or two, citizens will be setting up guillotines outside the Capital Building. Obama and his administration will be behind heavy security. The National Guard and military will be lined up and guarding most government buildings (especially the White House).

Citizens will become very critical of their past and present leaders (as well as The Fed Reserve and certain Wall St. and corporate CEOs) and they will want justice, punishment and revenge.

Job riots, food riots, fuel and energy riots, etc.

Shay's Rebellion all over again on a national scale.

It's gonna happen people. It is happening.

And per history, epidemics usually occur when a population becomes morose and depressed from economic failure. A current example... Zimbabwe had its financial collapse, despair is rampant, and now here comes a cholera epidemic.

How did it go? "It was the best of years and it was the worst of years."

Wake up America. Get out of denial and complacency. Prepare for what is coming.

This is important and should be shared... WHAT IS YOUR PERSONAL SOLUTION FOR THE FUTURE?

An Inquiring Mind

Jeffrey said...

Has anybody projected the effect of boomers being forced to sell their homes when they start retiring in mass within the next couple of years? For example, if half of the 75 million homes are encumbered by a 30 year mortgage that was refinanced within the last few years (meaning there is at least 20 years left on the mortgage), and these homeowners retire, won't most be forced to sell given meager social security payments, the declining role of employer pensions and the declining value of IRA/401k balances? How does "stimulating" the boomers' continued consumption prepare them for such a future?

Jim in San Marcos said...

Hi Rob

I wouldn't buy any toys right yet. They could get a lot cheaper next year. I'm tempted to get a sail boat if the price is right.

The only thing I would suggest is keep a couple of weeks worth of food on hand and in your case a lot of firewood. If your married, ask the wife what to stock up on, women don't consider alcohol a food.

Take care.

Jim in San Marcos said...

Hi Angry Taxpayer

Your plan sounds great, I'll vote for you. I think that the State of Insanity is entitled to two Senators. Is anyone else interested in running?

There could be a problem with this new money. Our financial system has gone electronic. What if the credit card companies go belly up and you see a sign in the window "Cash Only no Credit."

Now might be the time to put a couple thousand cash in a safe deposit box. I doubt that there is enough currency in circulation if we go to cash and carry.

Anonymous said...

Jim Thanks for advice I'm not worried got lots a food and wife that likes red wine and home cooking. We're going to ride this out but I sometimes feel bad for ignorant masses they aren't going to know what hit them, sometimes that is...

rob in nova scotia

Anonymous said...

My opinion is that boomers will mostly all need to downsize. When the dependents are all gone, when it is time to retire (or attempt to retire) and live on a fixed income... it will be time to downsize and sell. Altho many will realize, and many already know, that they won't be able to retire and will need to keep working (yet, they'll still want to downsize so they can save more for the possibility of a deferred retirement). Many won't have any equity and will walk rather than give their lender a check at the close of escrow. The collapse of an nationalization of most pensions that will occur over the next few years will take the wind out of the sails of many retirees and wanna be retirees.

But the upshot of all of this is... the glut of home inventory will be added to again by this phase of boomer downsizing, on top of foreclosures and walkaways, and this will put even more downward pressure on home prices.

It is a self fueling collapse.

Americans are doomed unless they: are in good shape now (no debt, savings, quality assets, etc.); are busily preparing for the coming tsunami; know how to profit in down markets; have their own viable business; etc.

What is your plan?

An Inquiring Mind

Anonymous said...

Hey Jim:
What is your plan? To hunker down the rest of your years at Fort Pendleton under marine protection?

But be careful, they'll throw you in the brig if they find your alcohol stash!

Then again, 3 hots and a cot will be what many people will be wishing they had, once the tsunami has done its job.

Levity aside, all of you readers and posters, we should be proactive and share our personal plans and strategies for getting through the sh*t storm that is coming. I think it would be helpful for all.

So... what is your plan?

Jim in San Marcos said...

Hi Anon 3:25

I don't really have much of a plan other than to keep working and put my son through college.

I'm more or less kidding about being doomed. Nothing is being destroyed in this disaster except for my life savings. If that doesn't happen, I'll have a big smile on my face, so I am prepared for the worst.

A majority of people will now have to make a choice on consumption. The "I want it now generation" has been hit by a mac truck.

Houses will become affordable once again, but there will be no easy money jobs, you'll earn every penny. The fast food industry will collapse as people learn how to cook at home. Government waste and fraud should decline as we learn to live with less.

The next two years will be very difficult for the unemployed. The government needs to address this problem. It will cost some big bucks. It looks like the government will tax our savings to pay the bills (inflation). It will keep the young employed with government programs and the retired living on less and less.

The thing to be understood here is that when government attempts to solve one problem they create another. This financial bubble is deflating. Adding it to the national debt can only postpone the inevitable.

When you try to make a financial move the government changes the rules. So staying put for now is my only plan.

Jim in San Marcos said...

Hi Jeffery

There has been a lot of discussion on this. The major point is that most baby boomers looked at their home's value as money in the bank. Right now it's kind of like owning a bank and having it robbed on a daily basis.

You're right there will be a lot of homes for sale, the seniors will be downsizing. Look for housing prices to fall further.

Inquiring Minds post above nails it down pretty good. As much as I agree with him, I remember back to all of the articles on how housing prices could only go up. There is a certain uncertainty about life. It's not exactly as you expected.

Anonymous said...


Rob again I hate to be taking up too much space on your blog but I really think the only thing that is doomed is the expectation that we can have it all and have it right now. I live in modest bungalow that should be paid for by the time I'm 50. Then it won't matter how much it is worth as the last time I leave this house it will be feet first to be planted in ground.


rob in Nova Scotia

p.s. gotta get ready for super party any good dip recipies out there.

Anonymous said...

Most Americans believe the government will ease and eventually end the crisis. Not going to happen.

The government is now between a rock and a hard place...

It will attempt heroic efforts (via massive borrowing) to subdue and end the crisis. They will fail. The people will see that the government's efforts are only deepening and prolonging the crisis.

The government won't be able to print money to continue bailouts, etc. because they know that once our foreign creditors see inflation they'll be gone in a flash and that will be the end of the creditors that keep them alive and allow them to pay their bills.

So... the government will eventually step back and allow the crisis to run its course and allow the toxic assets and bad debt to disappear, the bankruptcies to occur, etc. etc.

After the purging of toxic assets, unpayable debt and the unworkable (and/or corrupt) components of this system is over, a reconstruction can begin. Unfortunately we'll look back and realize that the reconstruction could've begun much earlier had the government not attempted to "save us".

Most Americans don't realize that it's inevitable that we will have huge business failures, bankruptcies, unemployment, homelessness, asset devaluation all on the largest scale ever seen in our history (commonly known as a depression). The whole economic and social landscape of America will change.

Also, if we don't repair, reorganize ourselves and get back into a growth mode, we may lose our position as the world super power.

Wake up America. Obama is just a politician (an inexperienced one at that). His people are all the usual suspects. Washington and politicians are part of the problem, they are not the solution. It's the same old same old. Nothing ever changes.

When Americans stop relying on politicians and start relying on themselves, then and only then will we have a chance of building a strong and healthy foundation built of personal freedom, personal responsibility, values, productivity and prosperity; a foundation that our country can firmly rest upon.

An Inquiring Mind

Jim in San Marcos said...

Hi Enquiring Mind

I agree with you but there is one thing that is not being looked at. If we had a failure of the financial system, there would be no incentive for a grocery store chain to ship product into a large city like LA. This could result in riots and looting resulting in massive losses for retail outlets.

Logistical support of the infrastructure needs to be held in place. Transportation of product with the expectation of a profit keeps our cities functioning. If the banking system locks up, commerce and trade could shut down for weeks.

I'm just guessing, but I think that this issue is a big one that government is well aware of (I hope). Time will tell. This is a very complex mess.

Joseph Oppenheim said...

Question two, what if there isn’t 4 trillion dollars available to borrow? Interest rates will have to increase drastically.<<<<

Yes, that is a real risk.

However, we still have that "window", where if we don't spend enough in the right places, things will freeze up even more and result in much more unemployment. Just look at state budgets, without an infusion of federal money, layoffs will be massive. When Arnold was elected CA governor, he said he would have an audit and see where there was waste. Well, he did have the audit, and the result was that the waste was only a small percentage.

The way financial markets work is to go to extremes, both on the up side and the down side, and the extremes go further if left to wind and unwind to themselves.

Because we didn't intervene on the upside, sure, we do need a pretty big unwinding on the downside just to get back to some form of normality, but not to intervene now is worse.

Some of the things done so far are good, some are just plain wasteful. But, there are still some good things which could be done.

As for potential eventual currency collapse and high inflation, I do think that is a risk, however the way to keep that in reasonable check is that we also come up with a concrete plan to get to a balanced budget and begin paying down the national debt. I do think that is in the works, from what some have said.

Yes, we have a "window", the challenge is to use it wisely, but to ignore it, would be worse.


Anonymous said...

Wow, a real optimistic bunch. Did the deliveries of prozac not make it this week? People who are too optimistic are indeed naive. People this pessimistic are just the flip side. You all believe yourselves to be way more important than you really are...

Jim in San Marcos said...

Hi Anon 1:52

Your last sentence "You all believe yourselves to be way more important than you really are..." doesn't make much sense none of us is claiming to be in charge. I think you've got us mixed up with the White House.

As for Pessimism we are pretty much middle of the road.

Jim in San Marcos said...

Hi Joseph

I think that government needs to make choices, bail out the banks or bail out state governments. I would go for the state bail out. It would preserve unemployment and government services. I'm not sure what bailing out the banks really accomplishes.

The California state legislature is pretty much dysfunctional. And as for Congress rising to the occasion to try to pay off the national debt, sounds more like material for Saturday Night Live.

I don't see a government financial solution to what is happening, but they do have the ability to preserve law and order. Given time it should work itself out.

Thank you for your comments.

Rob in Nova Scotia said...

To Anon 1:52

I really don't think any of us are pessimists. For me I've come to realize over past couple of years following this economic trainwreck that as long as one has his/her health and is willing to work everything will be fine. I won't be retiring when I'm 55 but neither did my father and my grandfather worked till he was in mid seventies. So if I have to work until I'm 70 or so then I'll punch that ticket.



Anonymous said...

Anon 1:52

There are optimists... there are pessimists... and there are realists.

What does being an optimist or a pessimist have to do with an external situation? Nothing. Whether your hopeful or not isn't going to change the situation at hand or its consequences.

"Hey look! I'm optimistic and as a result the national debt just got paid off, all the bankruptcies reverted, the auto industry is booming and all the banks and our financial system are ok. All the problems just vanished because I was optimistic." Geesh.

People have become so timid, fearful and unable to confront the "isness" of the world around them that they just can't face bad news. It's not politically correct. That's how they act on all the financial and news shows too... always gotta be upbeat and positive, don't upset the natives, don't rock the boat. Boy if that isn't the middle-class-culture intellect.

The moment a logical person points out the wrongness and the projected consequences of it, they are all of a sudden a "pessimist" or a "doom and gloomer".

They are neither, they are a "realist". Only the realists survive.

Joseph Oppenheim said...

Well, Jim, I don't think it is a matter of choices, between the banks and the state governments, the only real choices are about how to tackle each.

This week's Time magazine has a pretty good article about how our banking system is already insolvent. But, we simply can't let it collapse on its own. Like it or not, we need a banking system. The whole world does and one thing which makes this mess different from all others, is the global aspect of it, and how interdependent we all are. It will take a global effort, with the US leading the way and working with other nations.

As for your comment about not wanting the government being part of a financial solution, it has to. Government is was ties together a society. Sometimes it fails completely, like with Germany and Japan 60 or so years ago. But, we just can't give up on it.

At least Obama is surrounding himself with some of the sharpest financial minds around. I'd rather have that kind. By the way, Larry Summers was key to the Clinton team which made it job one, to set up a plan to eventually balance the budget and start paying down the national debt. And, they did. So, at least the markets are somewhat calmed down, because there is at least some reason for hope. If you remember, the deficits were the main issue in the 1992 presidential election. Sure, the job is tougher now, but I think he is at least a guy with the right thinking. Plus, I don't know if many are aware, but his family name was originally Samuelson. He is from a family of Nobel prize winning economists. In fact, when I took econ in college many decades ago, his uncle's text was what we used. Plus, Summers is a literal genius, having entered MIT at age 16. Intelligence and achievement, I like that combination.


Anonymous said...

Anon 1:52

To me it would seem that the optimists and the pessimists are the ones on prozac. And the realists don't take any meds so that they can continue to just look life straight in the eye.

I think the more ascended view is that of Krishnamurti. He said, "It does not matter to me what happens."
He wasn't saying that he was in apathy, he was saying that good and bad are just values that you assign to experiences or incidents in life. He was calm and peaceful within himself and was willing to accept and experience whatever came his way.

The modern day equivalent would be "What happens to you is not important, it is how you respond to what happens to you that is important. It is all about your attitude."

Another viewpoint, which I have adopted is that this crisis is an opportunity and I'm going to make the best of it.

More people become wealthy in hard times than they do during good times. I look at this as an opportunity to build my wealth. I'm making and saving as much $ as I can now so that when real estate finally hits bottom I'll be able to scoop up beautiful income properties for pennies on the dollar to add to my investment portfolio.

This whole clean out and purging of the system is great. All the politicians, leaders, corporate execs, etc. being exposed as incompetent and traitorous is a good thing. The mindset of the people will shift as a result to putting importance on merit, experience and good statistics.

It's all good to me.

Anonymous said...

Joseph. I beg to differ...

Only reason the budget was balanced during Clinton's administration was because of all the revenue that came in from investments: like stock market capital gains. And that "boom" period was not even a true boom. It was the asset inflation which finally wound us up where we are today!

Nobel prize winning economists. Wow! I'm impressed. They've sure done a great job of making the country a strong, stable, productive nation that doesn't spend more than it makes, saves, reinvests, and facilitates innovation and prosperity (the first lessons you learn in high school Economics 101).

Pay off the debt?! How? We can't even pay the interest on the debt. The debt will never be paid off.

A person who continuously spent hundreds of thousands of dollars more than they made each year and then borrowed money to pay their monthly bills would be considered insane. Well, that is exactly what our government does.

Tell me how a government with a national debt that is as big as its GDP... that has to borrow to JUST TO PAY THE INTEREST on the debt... whose tax revenues are decreasing... whose economy is in deflation... who has unemployment shooting upwards... who has corporations and businesses failing and disappearing... is going to pay off any debt?

Obama is surrounding himself with some of the sharpest minds? These are all the guys who caused or condoned all of the crap that created this mess over the last 25 years. Geithner was the governor of the NY Federal Reserve... he works for the banker! He supports the whole central bank/Federal Reserve system with its fractional reserve banking (the root cause of our problems). Everybody he has, including himself, are people that are part of the system that made this mess. They won't solve anything. That is like asking an arsonist to help put out the fire. Or putting a screen door on a submarine.

You are living in a pink cloud of optimistic never never land my friend because you are programmed with data and viewpoints from white washed sources.

Step outside of the box.

The government and the banks are not your friends.

Tyrone said...

People who are too optimistic are indeed naive. People this pessimistic are just the flip side.

Somebody said to me the other day, "Wow, you're the optimist, aren't you." (sarcasm)
My reply:
Don't confuse optimism or pessimism with realism. If you look at all the horrible data, that is our reality.

Joseph Oppenheim said...

Anon 4:37 said:

I beg to differ...

Only reason the budget was balanced during Clinton's administration was because of all the revenue that came in from investments: like stock market capital gains. And that "boom" period was not even a true boom. It was the asset inflation which finally wound us up where we are today!<<<<<<<<<<<

Too bad you can't back up your opinion with facts.

Unemployment at record lows, poverty reduced from about 11.9% to about 8.6% - a huge reduction in poverty, dramatically increased productivity, reduced inflation, reduced crime, a higher % of college graduates, etc. Those are real facts.

Plus, even with the Internet Bubble, that was one bubble which was OK not to pop prematurely, as real improvement in productivity resulted, with real genuine new great companies created - a shakeout was fine with the strong getting stronger. In fact, even when there was a recession, it was a very mild one, merely lasting a few months. Plus, the accompanying communication bust (Worldcom, etc) made it possible for India to buy communication infrastructure at 10 cents or so on the dollar, setting the stage for their part of the global boom which followed, with a lot of laid off Indian Silicon Valley engineers going back to India and bringing on the economic emergence of Indian companies.

By the way, some respected analysts expect that whenever the world comes out of this recession/depression, maybe in about 4 years or so, India has a chance to lead the way. India has more upside potential than China, for example. And, the main reason is because of a lot of opportunity provided them when our Internet/Communications bubble popped around 2000-1.

Heck, even an Indian film is a leading Oscar contender for best movie this year, having already won many top awards. Keep your eye on India.


Jim in San Marcos said...

Hi Rob

I'm with you, I'll hope I can work until I'm 70 or better God willing. Having a real purpose in life is better than sitting in a rocking chair. It gives you self esteem and confidence.

My dad had to go back to work at the age of 65 when he lost everything in the 1987 crash.

I'll admit that I am somewhat of a pessimist, but I have always contended that a pessimist is an optimist with experience.

Take care

Anonymous said...

Clinton didn't cause the huge job expansion in the private sector nor the "boom" in the stock market during his term in office. But his administration surely benefited from it all in the form of tax revenues which allowed him to do what he did. He slowed the national debt down a bit but it still climbed upwards.

Clinton was lucky to have a boom during his time just as Hoover was unlucky to have a bust during his time. Neither of those presidents caused the economic situations that existed during their presidencies.

Anonymous said...

When SocSecur was implemented, people were dying between 65-70. It was only expected that a retiree would get payouts for a few years. (Social Security came from Marx's Communist Manifesto).

Retirement is a bunch of hooey. It was created by brokerage firms and it created an industry. Look at the money they made pushing that line of crap through the years. (I'm glad to see that most of those big boys finally got theirs and went bust in 2008.)

One should die "in harness". People should be productive until the day they die. That is what gives a person dignity and something to live for... his/her contribution to society. (Look at all the wisdom and experience—not to mention ethics and character—that the workplace loses by automatically kicking people out of the workforce when they reach a certain age.)

The idea of dropping out of society and fishing or playing golf for the rest of your life is a falsehood. That is why so many retirees die early. They shouldn't be hung out to dry.

Jim in San Marcos said...


The argument at hand is how do we pay for this. I think you are way off topic.

Have you ever seen a farmer print food, a car manufacture print cars or a TV manufacturer print television sets?

The government is going to attempt to borrow 4 trillion dollars and if they are successful and pay it out as wages, what are you going to buy with it? Nothing has been produced to be consume with this new money.

The money the bank paid out to home sellers is tucked away. The money they loaned out is gone.

If the present game plan sounds so plausible to you, then ask yourself one question "Why do we have to pay taxes if the government can raise money in an easier way?"

This whole thread boils down to one issue. We don't have the ability to fund and repay what we are presently doing. Trying to borrow our way out of this is pure madness.

If you look at this Post you will see that our problems are just starting. The government bubble is bigger that all the rest.

Thank you for your comments and take care.

Joseph Oppenheim said...

Jim said:

I'm with you, I'll hope I can work until I'm 70 or better God willing. Having a real purpose in life is better than sitting in a rocking chair. It gives you self esteem and confidence.<<<

Well, that is certainly an OK way to look at life.

Personally, I retired at 48, but I only call it retirement because that is the way many in society might look at it.

Working, per se, was fine, though other than earning money and liking my work environment -company and co-workers, it was really not the best use of my time, especially after I had already learned so much and hopefully the company benefited too. But, there really is more to life than that. I always looked at my life as stages, basically moving from one phase to the next.

Heck, if I owned a business and just managed my employees, I just don't see that any different than owning part of a company or companies, shares of stocks, managing the portfolio, and essentially just have those company workers pay me, through dividends and potential capital gains.

Plus, only picking companies I think are moral ones, not tobacco companies, arms companies (I'm not a pacifist - Hitler proved that is impossible - but I don't want to earn money from other people dying - I'd rather exert my military positions at the voting booth), etc, it just gives me a sense of contentment.

Heck, what was all the purpose of my education, decent career and life experiences? Just more work, no, not for me. Though if someone wants that, that is OK with me.

My career was in computers. I picked it because computers were new at the time and I wanted to be part of the future. When computers advanced so that even 15 year olds could do it, I knew that phase of my life was worth ending. Better to use what I learned with computers, for me, and my loved ones and move on to other things.

Heck, not that I use a rocking chair, but I think that is fine. There is, after all, a purpose for a rocking chair. There just comes a time in one's life when even a rocking chair is actually a good thing. If someone wants to criticize my approach to life, that is fine with me.

Barbara Walters once had a program where she traveled the world asking different people what their idea of Heaven was, from failed suicide bombers to priests, etc, etc. The one thing which stuck with me was when the Dalai Lama said Heaven can exist while one lives, it's all about how one looks at things and how one reacts. I actually believe that and I feel I have experienced it, and will do so from now on. If everything collapses, so be it, I've done my best. That just is the way life works. The one really great thing about being "retired", is that one doesn't have to worry about any impending layoffs.


Jim in San Marcos said...

Hi Anon 8:02

Your right, when Social Security was passed, most people died before they reached the age of 65. The program was a promise to pay for the hamburger you got today sometime in the future. 95% of the population would never live to collect it using 1935 actuary tables of mortality. The government was able to increase taxes on a premise of future guaranteed retirement benefits.

What Congress has added onto the program in the last 85 years has made the program unrecognizable. It cannot survive in its present state for many more years. The money is just not there.

I agree with your quote, "People should be productive until the day they die. That is what gives a person dignity and something to live for... his/her contribution to society. (Look at all the wisdom and experience—not to mention ethics and character—that the workplace loses by automatically kicking people out of the workforce when they reach a certain age.)"

Thank you for your comments.

Joseph Oppenheim said...

Jim said:

Have you ever seen a farmer print food, a car manufacture print cars or a TV manufacturer print television sets?<<<

No, but I've seen farmers produce food, car manufacturers make cars, etc in order to receive dollars printed by our government, even dollars that are only backed by a faith in the government.

Jim in San Marcos said...


My point was this, if no one is producing product, you can print as much money as you want and it will buy absolutely nothing.

Money is proof that you produced something. If you destroy that assumption, the money is worthless.

Rob in Nova Scotia said...


First I would like to congratulate you on being able to retire at 48. I hold no grudges or have any opinion on it. It will not be my reality but I don't mind working.
As for the current thread the party is over and waiter is standing at table with check. Nobody wants to pay it. The bankers who created the money out of thin air are quietly excusing themselves to washroom and only ones left is the government and people. We all know that these two things are one in the same. So we can borrow the money which is the first choice of our leaders or print the money which will appease the masses with a game of bait and switch. Either way there is going to be decrease in standard of living for the majority of us. When you accept that you can move on.
The government is just planning the next pyramid, we are just being asked what kind of ramp should be built to put on the Keystone. At least the government asks us, that is my friends, democracy in action.



Joseph Oppenheim said...

Jim said:

My point was this, if no one is producing product, you can print as much money as you want and it will buy absolutely nothing.<<<

Yes,that is true, though I would add services to the mix, not just products. Medical doctors are just one example.

But, about the printing of money. Yes, the government has done that by inserting money into the banking system, essentially monetizing lots of private debt.

However, I am somewhat heartened by recent government talk of not monetizing Treasury debt (buying Treasuries). Like I say, we have a window. Right now, there is a massive demand for Treasuries, so it is a perfect time to issue more Treasuries, as long as the money raised is well spent. So, actually by issuing Treasures at this time we are creating real money - the world is giving us their cash. Why? Because they think it is a good investment. Like I say, that window won't stay open forever, maybe not even more than 6 months or so, but for now, there are some of our financial leaders who seem to be on the right track, even if they make some stumbles along the way.

Anonymous said...

You just seem to keep missing the point of this blog and its threads.
There are fundamentals being violated here by our government and financial leaders. The proof of it is our current condition. The fact that those fundamentals aren't being changed or corrected obviously bodes for more trouble.

Rob in Nova Scotia said...


Whether one begs borrows or steals it is still someone elses money. Issuing treasuries or just printing the money accomplishes the same thing. It will be the people like you thru your retirement investments and I thru my labour who will pay for this mess.
Borrowing the money for this right now seems like a good idea as rates are low. However when rates reset, as they will, we are just left with another ALT-A disaster. Twenty years from now the trains will still be running and stores will still be full of food but we might be eating potatoes instead of french fries.


Joseph Oppenheim said...

Rob of Nova Scotia wrote:

Issuing treasuries or just printing the money accomplishes the same thing.<<<

It most certainly doesn't. Plus, timing is the key to when is better or worse for either/or-both.

Debt can be a good thing. For instance, taking on a mortgage, at ridiculously low interest rates, to buy a home in 1998 in San Diego, rather than paying cash for the home and instead using the cash to get a medical degree for your child, for example. Now, it is a necessary thing, for the government, given the window of a demand for Treasuries, to issue Treasuries.

Hey, probably while you were obsessing over the current debt situation, you might have missed the good news during the last couple of days, that being the relatively peaceful and successful elections in Iraq, which, at least for now, portend a faster US troop reduction there, and maybe even the reasonable hope of the Iraqi economy actually doing well, including increased oil supplies on the world market. Certainly, there is reasonable hope that we will need less debt to finance that war than expected, hence that "window" maybe opened up a little further, in just the last day or two, to issue debt for the current financial crisis.

As for your other comment about us having a lower standard of living, yes that is a fact we will have to adjust to, at least until this recession/depression comes to an end. But, I would say America had some unreasonable expectations about that. So, this can actually be a good time for our society to re-evaluate what is most meaningful in life. I would say having a child better educated is a more important value than living in a McMansion, and I do sense a tipping point reached with our electorate relating to such values, judging by the results of the past presidential election, also a pretty recent event.


Joseph Oppenheim said...

Jim said:

if no one is producing product, you can print as much money as you want and it will buy absolutely nothing.<<<<

Wrong. It can buy labor to make the product or provide the service.

It is all about what a worker thinks the money is worth. If the worker thinks the money will have no purchasing power by the time he/she produces the product or service, the worker would not accept the money.

Right now, there is a window, where such a worker is willing to take that risk.

Might that window close? Sure, but it is open now.

Normally, there is about a 100 day "honeymoon" for a new president. Recent polls have indicated because of the enormity of the problems, people, including those around the world, are willing, at least for now, to give Obama, etc perhaps a year long "honeymoon" before losing all hope and closing the window which is open now.

There are a lot of crosscurrents, most are negative, but to ignore the positive ones, is really not seeing the whole picture.


Anonymous said...

What a great debate. I will add this...right now you may want to "short" the U.S., but, my friends, don't do the opposite. Go LONG!

From disaster also comes opportunity. The past was far from perfect. And while the future cannot be predicted, the most important time is NOW.

Let us bury the past and look upon this upheaval as the opportunity to set the stage for the next 200 years of America. For our grandchildren's grandchildren...

NOW. Here is my wish list in no particular order...

1) Let's ditch Big Oil once and for all. It's dirty, poisonous and profits our adversaries. No matter how you look at it LONG term it Fails.

2) Go Electric. Let's go all in for electricity. Nuclear. It can be done safely. The waste is an issue, but can be contained. LONG term electric is the future

Go Wind, Solar and anthing we can think of to make electicity. Renewables are best for the LONG term.

3) Science and R & D. Go LONG baby! Science is our friend (really W it is). Let's cure cancer. Develop products from Carbon Nanotubes! Zero resistance electrical transmissions. Micro windmills. Investing here makes LONG term sense. The next Silicon Valley is soooo close!

5) National Rail System to connect our cities via high speed rail. Safe. Cost effective. Better and cheaper than flying.

6) Free College Education (or at least very cheap). What good is knowledge if it can't be obtained by the masses? Artificial barriers to acquisition of knowledge (like SATs and college accredication requirements) are counter productive. Ignorance is not bliss.

Let's take the 5 best professors for every subject and let them develop an online/video/DVD course. They can copyright it and own it and sell it like a book at Borders. A kid picks up the book, works at his or her own pace. Takes the exams online and upon completion receives a certificate, signed by one of the the best professors in USA for that particular subject.

Universities and colleges are just costly waste dumps of inefficiency. (Can you tell I didn't care too much for many of my college professors?) Obtaining education should be easy and low cost...and also prepare you for a future job.

Instead of shipping the kids off to Big State School (or little private school), they can work (earn money, invest in their future), live at home and still get a great education. Sounds crazy, huh?

So what if my alma matter has to close its doors, I might shed a tear, but...if educating people is truly a priority...then brick and mortar is such a waste...

Have faith...


This is all going to work out. will.

"Don't Worry Be Happy"

Joseph Oppenheim said...

Gee Anon Monday, February 02, 2009 9:47:00 AM, tell me something about yourself. I couldn't have said what you said, any better than you did.

There is nothing at all I disagree with.

Heck, I find another window opening. It is like Obama has unleashed the scientists. Stem Cell research most recently, just in the last few days.

By the way, my latest area of interest is DNA stuff. I just recently had my DNA analyzed
by 23andMe, and the results are really amazing, how much info is now available. Heck, I have a genetic marker showing that if I had been breastfed, my IQ would likely have been 4-5 points higher. Interesting stuff.

If I was a young guy, I probably would consider majoring in genetics.


Rob in Nova Scotia said...


If what your saying is true then the people of Zimbabwe should be the happiest people on earth.



Anonymous said...


This is what I'd say to Obama.

With the next big infusion of cash to the banks this time you're going to ensure that they account for it (no bonuses, no office renovations, etc.) and that they lend it. Very smart.

Q: Why don't we find out what happened to the first 350 billion and hold people accountable for its misuse? How is it the US Treasury doesn't have to abide by the FOIA and let us know what they did with our money?

Q: Great, force them to lend. The banks are dying and need to re-capitalize by rebalancing their balance sheets (add more assets to overcome their liabilities). They are going to hold onto whatever they get for basic survival reasons. They won't lend to businesses because they are afraid they'll go bankrupt. Plus, people don't want to borrow... they can't make the payments on their mortgages, cars and credit cards as it is. And small business doesn't want to borrow... they are laying off and streamlining in hopes of making it through this recession/depression. What business owner in his right mind in this current economic environment would want to take on more debt obligations? It violates common sense.

Q: A bad bank, eh? Make the tax payer buy toxic assets? Have to hire tens of thousands of more government employees to untangle and administrate all of these assets? A lot of the assets are real estate you know, and it is a big job and costly job taking care of real estate. Great... more gubmint employees, buildings for them to work in, business and office materials and supplies, pensions and health care. Oh, I see where this is going. Make the gubmint bigger! So you are going to turn tax payer's cash into trash basically by buying toxic assets and administrating them.

Q: Why did you hire Geithner as your Treasury Sec? He was the governor of the NY Fed Reserve Bank. He works for the bankers and the Fed. Is this a conflict of interest? Maybe you don't know that the Fed Res is not a part of our government and is the reason for all of our troubles.
Q: Why is Geithner's deputy a guy that before this new job lobbied for banks?

Q: Why is Bernanke still here? Greenspan caused much of this and Bernanke was at his elbow throughout. Mr. Depression expert caused this and then pretended that he didn't see it coming.

Q: You spent more on your campaign than any other president in US history. I guess you have a lot of favors and debts to pay back for all the campaign money that you got to ensure you won the election, eh?

Q: What about your Marxist, Socialist, Big Government comments you made earlier about the constitution being antiquated? You lied when you took oath and promised to defend the constitution didn't you?

Q: What happened to all of your campaign promises that you made? As if you didn't know before that we were in the toilet economically, banks and businesses would fail, and Americans standard of living was going to have to drop.

Q: Who are you really working for? Could it be that the power elite put you up to this, used a black man in order to win over the democrats too so that they could move forward with their plans to bankrupt the USA? Are you the guy they appointed to do the job of calming us down as we lose our standard of living and make us all tighten our belts and sacrifice and face the fact that hard times are coming and they will be protracted times (even tho it was the government and Wall St. that destroyed our economy). Americans, the taxpayers, are going to be hung with the responsibility for what the actual bad guys created? Are you that guy?

Mr. Pissed Off

Anonymous said...

Oh and a couple other things...

Q: You don't think that we don't realize that you are just bailing out all the banks using Fannie Mae as a slush fund, and they will dump bankrupt Fannie Mae on us?

Q: You think we believe the fact that billions into home foreclosures is going to change anything? Forcing banks to change contractual agreements creates total instability and mistrust for business contracts. You're a lawyer you know that. It is underming safety and security of investment. But more importantly: modifying loans won't help... who is going to keep a house if the loan balance is now 200k more than the value of the home? Homeowners are going to turn their keys in and walk... they don't care about their credit rating anymore... who is going to buy a new home or car in a depression anyway?

Q: Who do you think you are fooling? The American people? Oh... right... well... I guess you are. Because 98% of Americans don't understand any of this and are just cattle being led to the slaughter. They've been too busy working and trying to earn a living and give their family the American Dream, and they trusted you. They haven't had the time to keep up on what is going on because the dad and the mom have to work their asses off just to make ends meet and they can't afford to look up, or read. Don't you feel creepy being part and parcel to the rape of America?

Mr. Pissed Off

Rob in Nova Scotia said...

Mr. Pissed Off

All one has to do is lay low for a while and postpone buying flat screen TV's or boats. Once the dust settles you can stick your head up. For now best keep your head down and kiss the ground while the bullets are flying. The politicans in our countires, I live in Canada, are going to do what they have always done and try to save their own skins. Best to do the same. It may not be fair but that is life. One has to realize that the vast majority of people have no idea what is going on and will only get upset if their check bounces at the supermarket or liquor store. I don't claim any understanding of economics just the smarts to survive to see another day.



frakrak said...

The retirement comments are a wonderful anecdote to all this uncertainty, if you consider retirement as a means to withdraw from being a contributing member of the economic system (by means of relinquishing employment), then I believe the age for retirement has just been substantially lowered! I am currently pondering the inevitability of my seventeen year old son being forced into early retirement, along with many other members of my family (nothing like a depression to bring on an early retirement eh)!
Joseph I like your comments, we do need a functioning government and a plan, it would seem that Obama has both at this point in time. My instincts say don’t print the money, but my fear at not having some control with the rapidly accelerating toboggan ride down the slippery slope says, “Fire up those printing presses”, perhaps not hitting the pile of crap at speed will make the inevitable wreck repairable? I personally don’t feel that I am empowered in the process at this point anyway, so if Obama wants to stave off the imminent, by printing money then my resolve will be the same as before,
.... as a passenger I am part of the ride, I am now seeing a pile of crap approaching at speed, and as a passenger, if the driver wants to accelerate or brake what can I do? Think I will light up a cigarette, close my eyes and feel the wind whistle thru my rapidly graying hair, gravity is such a wonderful th……..

Jim in San Marcos said...

Hi Mr Pissed Off (Pardon the salutation)

I share your frustration, but I think your anger is misguided.

We the people did this to ourselves. Congress listened to us when the US wasn't competitive in banking in the 1990's. It was kind of like the excuse for doing something your kids give you "Their parents let them do it." Government isn't really to blame for this mess, greedy and wannabe rich people did this to us.

Government enjoyed the boom and taxed the hell out of it. Congress welcomed the extra revenue and counted on it to continue several years out and spent accordingly.

I had to quit selling real estate because I couldn't look someone in the eye and tell them it was a great time to buy.

The government is trying to "do something" because it is expected of them to try. I severely question the bailout maneuver, it's a tax on our savings indirectly by inflation.

We will still continue on to the final destination of having everything marked to market, it's just going to take a little longer. In the mean time you have time to diversify your assets if you have any left.

As I have stressed before, there is no government solution. You can bet your bottom dollar that when we get out of this mess some political party will try to take credit for it.

We will have to face up to the fact that we did this to ourselves without much government help.

Fannie Mae and Freddie Mac were set up with very grand ideals. The trouble is, there is always a loophole that allows the system to be abused on a royal scale, and it happened.

We the people will end up paying for this mess. Maybe it's time for a constitutional convention that would rewrite our guiding document.

I do think you will agree that it is better to be pissed off than pissed on, take care, and thank you for your comments

Joseph Oppenheim said...

Frakrak wrote:

if you consider retirement as a means to withdraw from being a contributing member of the economic system (by means of relinquishing employment), then I believe the age for retirement has just been substantially lowered!<<<<

If that comment was directed at me, just to let you know, the way I "retired", was by volunteering for a layoff. The company offered a monetary bonus for any volunteers. Plus, since I volunteered, in the process I saved someone else from being laid off, so my "retirement" actually saved a job, pleased the company, and me. It was win-win-win.

Plus, my job was a mental one, not physical, so I still used by brain to earn money, even after I "retired". Plus, I guess you haven't heard, Republicans love those kind of people. Not that I'm a Republican, but heck, like Obama, I try to be nice to them.


Anonymous said...

Joseph, you've been smoking too much Keynesian ganga.

People less disingenuous as you know and admit that the Clinton admin manipulated stats to get the numbers you cite.

The Obamaniacs are the same band of misguided fools and crooks that polluted the Clinton and Bush regimes.

They will run the government for themselves and their cronies.

That you try to argue otherwise suggests to me either you're one of them or you're on crack.

frakrak said...

Joseph the retirement comment was not aimed in your direction. I feel that Obama should be given a go with a remedy for your countries ills, so I agree with you. I just can’t understand why he would take on the job if he didn’t have a solution for what would appear to be, at the very least, a very desperate situation, so my assumption is the man has a plan, logic would support this supposition, and this is where I agree with you again! Perhaps he is a step ahead, and knows the economy will tank no matter what, and his focus is on keeping American society from a total melt down and upholding democratic values! He may be the right man to keep a modicum of social cohesion in a dire time, where others would struggle!
On another issue does anyone know anything about Islamic banking? I heard an interesting report on the BBC about France breaking down regulatory barriers (at break neck speed) to allow these banks to operate, apparently three will be up and running in a few months (France) and the UK is looking at ten to be operational in their country also. They are apparently awash with petro dollars from the recent decades; they have good liquidity and have trillions in accounts! They have not been involved with the more speculative investments that have undone many western banks, although the report said that their accounts have been savaged also by deflating real estate values world wide, but have faired better than western banks. ??

Anonymous said...

Obama doesn't have a plan. He's fumbling in the dark with all the rest of them. It's all pretense. Which is all you get from all "experts" such as academics, politicians, economists, doctors, etc. It's a circle that goes around and around and around, as history shows. And the gullible masses think that "this time it will be different, this time they'll be effective and they are really looking out for the good of the people".

The only plan that is going on is the plan of the power elite and international globalists. And Obama is unwittingly a part of THEIR plan.

Oh, and this Joseph guy posting here...

And Joseph is either brainwashed or a shill for the military-industrial-complex; The Federal Reserve; CONgress; Keynes; Democratic Socialism; and the rest of the corrupt government that we as Americans have allowed to fester and grow to unmanageable levels.

Anonymous said...


Because it is so incredible. Not many understand that only a small handful of men (about a dozen), you can call them INTERNATIONAL BANKERS, are actually exercising tremendous control over this planet. They play meaningful roles in all of the economic incidents that occur. They put pressure on governments and influence policy on a national and global level.

Because people don't want to be ridiculed for having a "conspiracy theory" and because it is so incredible, so hard to believe, they are able to operate right in front of our faces.

You don't know them or their names. They aren't in the news. They are quite invisible. Altho some of them are involved with the Bank of England, IMF, etc. you wouldn't know it.

They are behind most wars, recessions, depressions, etc.

They just want power and control of the whole globe. It isn't any sort of a crusade or specific conviction about anything. There is no real deep significant reason other than... they just want the power.

Anonymous said...

Yes! And this is why there is always turmoil in our world (poverty, war, etc.).

This is why we always feel governments and leaders are ignorant, slow, evil or whatever.

They are not. They have just as much common sense as the regular guy on the street. But they are caught up in the system and the system is heavily run (and almost owned) by the global power elite.

Morrissimo said...

Before we get to the guillotines, lets send a message that we will not go quietly into the night -- that WE are still determined to hold the leash on our federal government, NOT the other way around.

Check out New Hampshire -- they are leading the way with HCR 6.

Anonymous said...

It's only money. It can be replaced. You can work for it and make more. Invest it and make more.

But all of this banter has me thinking...

If it's the guys at the top ripping off everyone else...why not just tax the heck out of them. Luxury taxes would work. 25% tax on any home over $1.5M. 30% tax on any car over $65k. Would they stop consuming? Hail No. The same Type A gene that makes a guy think about working all the time makes a guy want to show off the swag and bling. So they will...(females too).

Then use the revenues to eliminate taxes on the middle class and invest in education and renewable, clean energy.

Sure they stay rich and mostly corrupt, but they have to pay for the privilege.

Joseph Oppenheim said...

Frakrak, about your comment about Islamic banks, after googling, it seems the main reason for more usage of them, where Britain has been a leader, is because they offer an ethical form of banking - staying away from usury, only dealing/investing with ethical businesses, etc. So, with panic during this financial crisis, many people feel they offer a safer and more moral place to park one's money, especially with all the crookedness in the whole banking system.

I would be suspect to any claim of Arab/Muslim nations having tons of petro-dollars after the collapse in oil/commodity prices. These nations are so dependent on this narrow stream of wealth, plus the governments are generally so closed with their media even mored controlled that they are hesitant to admit to the mess they are in. Heck, Prince Alaweed, long touted as some kind of financial "wunderkind" is known to be taking a bath during this mess. Plus, Russia is in a real mess, even though they had benefited so much before oil collapsed.


Anonymous said...

The government solution (THAT WE THE PEOPLE ARE ALLOWING THEM TO IMPLEMENT) to bail out banks, bail out home owners, create a "bad bank", print money, monetize the debt through buying treasuries, initiate these stimulus packages, etc. etc. etc. is a solution on the level of wetting your pants in order to stay warm.

The public awareness is coming up. A small group of the citizenry are becoming aware of what the Federal Reserve, fractionalized-reserve banking, monetizing the debt, Keynesian economics, etc. actually is and how no real stability and progress can be made until these issues are dealt with.

If I were a multi-millionaire I would hire the appropriate people to create a powerful DVD that explains this all and then I'd distribute it on a level until there was one DVD in every American household.

Once the public had their blindfold removed and understood what the source of our problems really were, they would answer to a call to arms and vote this crap right out of existence.

Anonymous said...

Mr. Pissed Off to Jim:

Jim you are right. We are responsible for it all. So... I direct all of those questions to you and me and everyone else on this blog.

How do we change this?

Anonymous said...

Oh yes. They've got plenty of petro dollars. How can you make billions and billions per year and not have mucho money?

They are going to create their own Arab currency shortly. Parallel to the EURO.

Who know who will be the next world reserve currency once the USA goes down. Euro? Yen? new Arab currency?

It got to be someone. Unless the globalists get their way and create an international currency.

Hmmm... merge Euro with Arab currency with Amero and you've got... AN INTERNATIONAL CURRENCY!

Scared shitless.

Joseph Oppenheim said...

About Anon 9:05's comment:

If it's the guys at the top ripping off everyone else...why not just tax the heck out of them.<<<<

Although I doubt marginal tax rates will rise in the near term for the wealthy, you can count on it eventually, as part of a plan to close the deficit after there is some sort of initial economic rebound.

During the Great Depression marginal rates on the wealthy eventually reached very high rates, I think about 70%. I don't think they will get that high this time, but for sure back to what they were before the recent tax cuts enacted around 2001.

Plus, there really is a potential windfall to help in this crisis, that is the large estates of the Baby Boomers, the wealthiest generation ever in this country. Since they are beginning to die off, with much more coming in a steady stream, look for federal estate taxes which are due to be eliminated completely around 2010, to be re-instated to maybe no taxes up to about $5M, but sizable taxes above that level. Plus, states will be even more pressed to cash in on this "windfall" opportunity.



Anonymous said...

Maybe we will have to tear down a bunch of those multiroofed, oversized, empty homes at start planting crops. Not sure if we will have enough water to grow them, though....
What are the best foods to stock up on? Any suggestions. I have only come up with beans and rice & spices. Guess I should learn how to can stuff. I freaked out about 3 years ago, and fenced off my property and planted a bunch of fruit trees, which are now producing moderately well.

Rob in Nova Scotia said...

Joseph with respect to your above comments

I'm going to use your own words to prove my point.

Plus, states will be even more pressed to cash in on this "windfall" opportunity.

This is exactly how we are going to get poorer and could you tell me how is this a windfall anyway, it is our money. One way or another it will be Joe Sixpack that pays for all the mistakes the government and Wall Street have made.
You seem to get off point in regards what Jim is trying to say. We're broke (It's a secret)should give you a clue as to bind we are in right now. You prove his point with each post you make on this thread.



Anonymous said...

Joseph you are deeply programmed by the authorities. You're a Socialist. Your a shill for BIG BROTHER.

What right does government having taking anyone's inheritance? That is taxing the same dollar AGAIN. That is theft. As is income tax.

How did you ever get on this blog? You don't belong here. Please go away. This blog is contrary to viewpoints like yours.

Don't forget now... take your prozac, watch the news, read TIME magazine, go to church, pay your taxes; vote for more welfare, bailouts, etc.

As for your previous statements about Obama picking such brilliant minds. Well, 3 of his picks have had to withdraw due to shady business deals and connections and unpaid taxes. Geithner slipped in despite his tax evasion. Funny how the legislators who make the rules will put Joe Sixpack in jail or take his house for one small income tax infraction. But do THEY pay their taxes? A deep searching investigation of all Congress members would be a very enlightening thing. You'd find that most aren't eligible for positions of authority due to their past transgressions and sleazy ways. That's why they are called CONgress. It's the BIG CON. Yeah, your smart hero Obama's call for a more responsible government and government leaders is really being answered. Look at the people he is picking. The insiders that we want to get out of government!

Rob in Nova Scotia said...

Anon 11:28

Although I disagree with everything Joseph has to say I do think he belongs on this site. It is the don't worry be happy crowd that will be burning tires in the streets when the shan hits the fit. I doubt Joseph is going to change his point of view. If he is right then great but I'm not going to hold my breath...



frakrak said...

Thank you Joseph, that gives a little more perspective on I.B., I think I maybe at a point of “outing” my conspiratorial side here, but will keep it under wraps! The US is still the only game to focus on, we have a saying in this country “America sneezes and we get pneumonia!” nothing like self interest eh? The US still has another recourse that makes it unique in the world, so I don’t think it is game over. On a personal note (hope you don’t mind Jim) the USAF saved my meager life about 30 years ago, so the term “big brother” is said with a certain amount of fondness in referring to your country……

Anonymous said...

wow retirement bashing...
I gotta tell ya, it may not be for everyone
but I would consider it a joy..
first, as a nurse, i can tell ya that 1/2 of
us are going to be dead by 78 and the
other half will start having some health problems in their 50s and significant health problems in their 60s...
so being able to have the time to schedule all the doctor's appts might be nice...
and if I could have 15 years of productive time for ME that would be great...
sleep in till 8am...have coffee...have time to keep my home clean and cook as I activities...grandchildren activities...volunteering...and yes, golf....gardening...oh come on...there is more to life than work...people...
also keep in mind that the majority of us have jobs we can't do into our later back aches now...try being a nurse for more than 40 years...62 for me
we don't put on a suit and sit at a desk all day- alot of us have jobs that are physically exhausting...and we will need retirement...
besides...we have to step aside so our children can have those productive jobs...for a smaller population...
retirement just may be about MORE downsizing than we thought...( and a little part time easier job supplement )
but I would rather live in a cute little one bedroom at 70 and be able to enjoy my creative self my last few years than to kill myself till the end...
we don't need as much as we think we do in our older years- shelter-food-meds-wine (if we are graced by God to be able to drink and not have it interact with our new med regime)
and family and friends...
RETIREMENT PLAN- pay off all debt possible as soon as possible...
so unlike some of you, I intend to still ask God for this wonderful gift- I am not giving up on this dream...
not yet...
Catholic girl
PS I know most of the world does not live this lifestyle- I am not unaware- but you know, it is HUMANE and it is the way the world should work...and it is American... we aren't socialist- we don't owe our last drop of blood to the state...

KJ said...

I'm not surprised Joseph worked in the computer biz. He really likes Windows :)

Re: optimism/pessimism -- those are concepts that describe a person's emotions. They don't describe anything objective. Was it Mark Twain who said "Some people see the glass as half full. Others see it as half empty. I just see a glass that's twice as big as it needs to be."

B. Madoff said...

The "messiah" will save us.

frakrak said...

Catholic Girl this is the comment that I couldn't find any disagreement with, and what I believe to be the US greatest resource, their Christian faith! You have had many "floundering fathers" of late to reason that leadership in your country will be the only thing that will bring you thru this! In my humble opinion another great asset America has is its citizens capacity to do great kindness in the world, not your government! Your country is built on individualism that can and does make choices that are vicarious, am I naive or misinformed? I see great hope for your country....

Anonymous said...

If people defaulting on debt payments is what caused us to get int this mess, how could giving them more debt possibly get us out?

People already borrowed all they could and now there debt to income is too high.

No amount of easy money can cure an illness caused by easy money.

Not sure why this isn't obvious.

Anonymous said...

If we as Americans don't become educated about basic finance and money management (and apply it to our lives first). If we don't learn about the economic history of countries and empires of the past. Then we can't envision what the ideal scene for our economy should be, thus we can't see the outpoints and departures that need to be corrected or removed in order to reach the ideal scene. We need to become educated as a nation and then from a point of understanding reform this country via the ballot box.

An Inquiring Mind

Jim in San Marcos said...

Hi Pissed Off

This is kind of like a death in the family. It will take a while to get over.

There is nothing to really change,given time, it will fix itself.

Jim in San Marcos said...

Hi Gargamel

Welcome to the blog. I guess that common sense is just not that common anymore. You're spot on.

Thank you for your comments.

Jim in San Marcos said...

Hi Inquiring Mind

I knew people who went through the Great Depression. That era of history taught a lot on finance to many.

Class is about to begin again. Somebody once said "Experience can be a cruel teacher." We as a nation get to learn about finances the hard way.

The learning is about to begin whether we like it or not. Are you ready?

Thank you for your comments.

Jim in San Marcos said...

Hi Catholic Girl

Great comment, I would disagree that you need to quit work to retire. The ability to feel like you are contributing to society makes life worthwhile and fulfilling, whether it be church or volunteer work. Otherwise all you have is your coffee mug and the TV, you are ready to be buried in a box. You will find it very boring.

When you quit the workforce you lose your feeling of importance and self esteem. Thats just me talking (my opinion from experience).

Thank you for your post and take care.

Joseph Oppenheim said...

Inquiring Mind wrote:

If we as Americans don't become educated about basic finance and money management (and apply it to our lives first).<<<

Believe it or not, such a capability only requires about an eigth grade education.

People who are successful handling money, usually began so when they were very young.

Plus, it also isn't always about knowledge, a lot depends on how a person values money. Ingrained in people, are certain attitudes about money. Some, think of it as some sort of self-worth, some as security, some as a tool to be independent, some just to buy the newest, coolest things, etc, etc.

Heck, look at economists with doctorates. They frequently have radically different opinions after seeing the same data.

The basics come much earlier. Plus, a lot has to do with one's family's cultural roots, plus taking advantage of an opportunity when it presents itself. I recommend Malcolm Gladwell's book, "The Outliers". Why are Asians good at math? Gladwell has some interesting thoughts about that. Plus, he lists the wealthiest 75 people in history, adjusted for inflation, including people like Cleopatra. Again, some interesting thoughts.


Anonymous said...

Some great thoughts here. Individual rights versus the rights of the state. How Greek.

Listen, there is nothing new under the sun. It's all been done before. Human nature is what it is...clearly imperfect. And just because someone is diametrically opposed to what you believe, doesn't mean you should shun him. In fact, maybe...just maybe you could learn from him. We have much more in common than we have that distinguishes us (relatively,individualists and communitarians).

Stay Joseph and add your thoughts; provided Jim doesn't pull the plug on this experiment.

Joseph Oppenheim said...

Anon 1:16 wrote:

Listen, there is nothing new under the sun. It's all been done before. Human nature is what it is...clearly imperfect.<<<<<

Sorry, but every second things change. It's called mathematics. Same with people, none are exactly the same. Almost the same, Ah, but those slight differences!

By throwing in some science, too, of all human genetic traits, the one which has changed most over time is intelligence. Interesting how so many people during this economic mess want to run away from science, while others want to embrace it.

As for your other comments, I don't know whether to take them as compliments or criticisms, and whether Jim thinks they fit or not, really doesn't matter. This board has helped me extend my thoughts as I see them as relates to this financial mess. If I reach just one person, that would be great, but even if I don't, I learn a lot and if not here, somewhere else.

Jim in San Marcos said...

Hi Joseph

I think Anon 1:16 was referring to mankind as a group. We behave now just like we did 500 years ago. It could be argued that we are more educated today, but I think its wrong to assume that people back many hundreds of year ago were inferior in their economic decisions to the present mortals walking the earth.

A lot of books about the mess in the 1930's suggest that it couldn't happen today because we are smarter. I think that is a mistaken assumption. It sounds great and offers implied hope, but I don't buy it.

As you have suggested, this part of the blog is an interactive learning experience. I would like to point out that writing has no implied emotion like speech. So now and then what is said can be interpreted in a different light than what it was meant. Its like a little kid saying to mommy " I love you," verses a depraved 95 year old man saying the same thing to the waitress pouring his coffee.

Criticism in the true form of the word, means praise the good and point out the bad. You are doing OK, have fun and keep on posting.

Thank you for your comments.

Anonymous said...

As an individual you have a right and an obligation to resist the state, no matter who is in charge.

The state is an artificial organism that loves to grow bigger and stronger, just like all other organisms in the universe.

Unfortunately the state can only grow at the individual's expense.

So if one wants to preserve a measure of freedom for his family and for himself, he must resist the state's expansion.

The trend portends an increasingly ominous future. The state exploits the current crisis to multiply its size.

If we're not yet doomed as free people, we will be. Economic slavery "serfs" us right, sadly.

Yet despite the gloom, all hope is not lost for the individual. Change your lifestyle so only require a modest income to live well.

It would be difficult for the state or anyone to squeeze a man who lives modestly.

Anonymous said...

I am sensing that we will see a significant rally in the markets in the next few months, only to see them drop much more than they already have.
I also sense the housing markets still have a long way down - at least here in canada.
The UK is from what I can gather, now bankrupt.
The bailouts and bad bank stuff are going to fail miserably. I hope I am wrong, but I think I am more correct.
Maria in Canada

Anonymous said...

Think that 2008 was bad? You haven't seen anything yet. 2009 will be worse... a LOT worse.

Housing will continue to drop for years. (Foreclosures will not be significantly stemmed by government. Alt-A, prime and jumbos are going down next.)

Commercial real estate is the next to crash, and it has already begun (and this will be a bigger crash than residential because CRE is much more highly leveraged). Retail stores, office buildings, warehouses, etc. are crashing down.

Many bank failures on the menu for this year. (The CRE and residential real estate will see to that.)

Unemployment will continue to rise for years.

Get ready for some tax revolts. (It has already started: California counties are revolting against the state government. The public will soon follow. It's happening in Ireland and the UK too.)

Meanwhile government is trying to save Wall St. Why? Wall St. has sucked the life out of Main St. and greatly helped to cause our predicament.

Economic history readers know that it was Main St. that made America great. Not Wall St.

I'm very happy about all this. I've always wanted a depression / correction to put balance, values and decency back into the American lifestyle.

Back to Yankee frugality; the end of suburbia and happy motoring; lawns and backyards being converted to crop gardens; mom and pop stores opening up again; living, working and functioning right where you live; end of materialism; prices of homes and cars equal to incomes; quality on the rise and cheap Wal-Mart/Target/McDonalds gone; people having to have real skills and value to have a job... and they really have to work to earn their salary; etc. etc.

This "crisis" is an opportunity for us to get back to basics and balance our lives out.

Yippee! This is all good news. The more collapse, the happier I get.

An Inquiring Mind

Anonymous said...

Yes, that is true.

What do we care about Wall St.?

Let them go under.

Main St. doesn't need Wall St.

They are robbing us blind.

Maybe this unprecedented rip off and squeezing of the average little guy will get bad enough so that we really will have a sort of revolution in this country.

Anonymous said...

" Render unto Ceasar that which is Ceasar's
Render unto God that which is God's "

We do not have to nor are we under a moral obligation to resist the state unless they directly ask us to do something immoral -defined as God's moral law i.e. Judeo Christian ethics/morality... taxes etc don't count... in fact we are to obey the authorities over us so that God will bless us...

just another view... :) Catholic girl

Anonymous said...

A recession is the result of a bit of overcapacity... nothing structural. It has to do with the flows in the economy. Inventory has to be cleared off the shelves, belts have to be tightened, business streamlined, some layoffs, etc. Then things soon pick up and a growth cycle resumes.

What we have here is STRUCTURAL. What we have here is CREATIVE DESTRUCTION doing its job. These aren't flow problems, these are structural problems. Trillions of dollars of asset values are going away; millions of jobs are going away; business/service is too big... demand has dwindled off and won't be coming back soon. Wall Street is gone (the investment banks are gone). The banking industry is gone. So is the auto industry and airlines. The US consumer-economy model is not functioning and has collapsed. It will take many years to retrain, retool, absorb all the resources, and get things working again and everyone able to work for a salary within businesses that actually profit. It took 20 years to restructure after the Great Depression. Would've taken longer if it wasn't for WWII.

The while the government is busy spending trillions trying to revive a corpse, they are standing in the way of change.

No people, this isn't a recession. This is structural. This is a...

An Inquiring Mind

Anonymous said...


I am bestowing you with the Nostradamus Award. You predicted a depression and your time target was right (2006, or a couple three years later).

People thought you were a silly gloom and doomer a few years back. Well, they'll have to eat crow now.

Well, Jim... we've arrived.

We are in a depression.

P.S. Obama and his crew will inform us of this in about another year (these experts and government boys have always been a little slow).

Jim in San Marcos said...

Hi Anon 7:29

Thank you, I too believe that we have arrived. It is not a happy moment for me to predict this mess, but at least we have our ducks in a row, ready for whatever comes next.

Take care

Jim in San Marcos said...

Hi Inquiring Mind

You are right we focused our resources on producing homes and cars to an unreasonable level and now we will have to pay for it.

Most people think that famines in third world countries are a function of droughts. In some cases, it is the misallocation of resources. You raise too many cattle to the point that you cannot afford to feed them. Then the pyramid collapses.

Six months from now we might all agree that this is a depression. Hope I am wrong.

Thank you for your comments.