I have neglected my blog for a while now amidst many changes in my world – job hunting/finding, weddings, dog drama. However, there are certain things in one’s sphere that cannot go unnoticed. Wednesday night, President Barack Obama was the first sitting US President in history to give a commencement speech to a graduation class. This passage would be notable unto itself, but it was made more amazing by the response of the Arizona State University chairs who decided that President Obama’s body of work was not yet complete, and was therefore undeserving at this time to be presented with an honorary degree as is the university’s custom for noted speakers. I’m not going to go into the idiocy of a response like that — I think the Daily Show did a beautiful job of making ASU look like asses (which I provide to you here in case you missed it).

One of the things I really like about Obama, though, is his unyielding ability to make lemonade out of lemons. The way he turned the controversy into a larger speech about our individual responsibilities to not rest on our laurels throughout our entire life is a lesson for everyone on navigating sticky, potentially explosive situations. He is a diplomat, first and foremost, and we all need to take a queue from this guy, whether it be in dealing with family members, in business situations, complaining about the food at a restaurant, blogging, whatever. A line in one of my favorite movies comes to mind: You may not like him, Minister. But you can’t deny it – Dumbledore’s got style.”


I woke up this morning like I did on Christmas morning when I was a child – early, excited, full of anticipation, yet having to wait for Mom and Dad to wake up to start ripping open the goodies under the tree.

Christmas morning came with a massive excitement hangover at about 11 AM, though, when all of the presents were open, torn wrapping paper filled the space around the tree, and reality set in.  The long 365-day wait for Christmas morning next year had just begun.

As I aged, Christmas became less and less important and the possibilities of New Year’s Eve and Day held more magic.  The idea that, as the calendar year flipped, we could each resolve to start over in some way – to change the way we have acted, or thought, or treated others, or treated ourselves.  As we know, most resolutions end up losing steam and falling by the wayside.  But the high is still there, the excitement and anticipation are still there, and the hangover takes much longer to realize.

This morning is not Christmas morning, or even New Year’s morning.  No, it’s Inauguration Day.  And it’s better than Christmas or New Years.  Today is my new New Year’s Eve 2009.  Midnight is 10 AM EST (8 AM MST), and the countdown has begun.  In place of drunken champagne toasts and Dick Clark New York countdowns, I and my loved one will be curled up on the couch, likely drinking herbal tea and eating Cheerios, watching the MSNBC feed of Barack Obama’s swearing in as the new President of the United States of America.  Ahhh.  Just writing that gives me butterflies.  Get the tissues ready.

I know so many people in this country are excited that we are electing the first African-American President, and so many people are filling Capitol Mall to watch history in the making.  I am also proud of that.  Moreover, though, I am excited that we have elected an intellectual and a visionary.  Someone that I actually trust will keep the promise to America that started over 200 years ago — that the leader of this country be a servant to the people.

Americans chose hope and optimism over fear and xenophobia.  We chose measured intelligence over folksy charm.  We chose to act and be treated like adults rather than petulant children who needed a temporary pacifier shoved in our mouths to shut us up.  We chose to choose over having the choice made for us.  Our collective consciousness has been awakened — maybe there is hope for us yet. . .

I wish, this new New Year’s Day, peace, happiness, patience, tolerance, and hope for you, your’s, and our global community.  For me, I feel one step closer to breathing more freely and sleeping more soundly for the next 4 years.

Four years ago this morning, my heart sank and my stomach was sick. After living through 4 years of George W. Bush, there seemed to be people who weren’t paying attention.

I love my country.  But this morning, for the first time in 8 long years, I can finally say I am PROUD to be an American.  Not only because we, as a collective people, elected a black man for president, but also because we, as a collective people, seem to have finally made the right decision.  I guess change really is possible.

Among the many things that bothered me about John McCain’s performance in last night’s debate was this exchange:

I voted for Justice Breyer and Justice Ginsburg. Not because I agreed with their ideology, but because I thought they were qualified and that elections have consequences when presidents are nominated. This is a very important issue we’re talking about.

Senator Obama voted against Justice Breyer and Justice Roberts on the grounds that they didn’t meet his ideological standards. That’s not the way we should judge these nominees. Elections have consequences. They should be judged on their qualifications. And so that’s what I will do.

I believe McCain was referring to Obama voting against Justice Alito (or was it Harriet Miers), because Obama was not an elected official in 1994 when Justice Breyer was nominated and could not have possibly voted against his appointment to the bench.

McCain has a history of misspeaking when he should be more thoughtful and deliberate (like when he mistakenly referred to Spain as a Latin American country).

He may know what he’s talking about and can’t express it accurately under pressure (a trait many share), but the job of President of the United States is a job rife with pressure.  If he can’t get the simplest facts straight when speaking to an American audience, how can I trust that he will get them right when negotiating with foreign countries or solving big problems?  His habit of speaking erroneously is not a trivial matter.

John McCain said something during last night’s debate that made my ears perk and my blood boil:

MCCAIN: Just again, the example of the eloquence of Senator Obama. He’s health for the mother. You know, that’s been stretched by the pro-abortion movement in America to mean almost anything.

That’s the extreme pro-abortion position, quote, ‘health.’

Wait a minute.  Did I hear this right?  Concern about the health and safety of a woman is “extremist”?  Since when is that “pro-life”?  Since Senator McCain and the rest of his followers who claim to be pro-life really don’t know the meaning of either “pro” or “life”, let me set them straight.  Real Pro-Lifers are:

  • for protecting the lives of a women, not just the unborn, because women are alive now.
  • against the death penalty, because prisoners are alive now, too.
  • environmentalists, because clean air and clean water are the foundations of a healthy and safe life.
  • anti-war, because war kills life.
  • pro-gun control, because guns threaten life.
  • for mandated health care programs, because the poor and the not-so-rich deserve healthy and disease-free life.
  • for good and well-funded education, because living a good life requires the tools and the knowledge to sustain that life.
  • for good and well-funded social services, because abuse, rape, and violence threaten life and the path to a safe life .  (Aside:  If we had more “pro-lifers” in congress, we wouldn’t need services like CASA.)

So, why don’t we all just drop the “Pro-Life” moniker and call it what it is – Pro-Birth.  Because, these Pro-Birthers really could give a damn about what happens post-birth.

Lots of talk of change in the air.  The Santa Fe weather has finally decided to turn into Fall.  In the last month, I have officially submitted my resignation from law school, performed as the lead singer of a band at a Santa Fe nightclub (a feat I swore I would never attempt), and I turned down what otherwise might have been a lucrative, stable job offer to open my own business and succeed or fail on my own terms.  All things to be talked about in another post on another day.

No, it is difficult to go on as usual without acknowledging the real economic problems we face this morning and the Chicken Littles who are determined to make everyone feel like the Apocalypse is just around the bend.  Talk of The Great Depression and “bank runs” and “global meltdowns” do seem dire, but we must remember the sources of all of these  – both the actual events and the people determined to remind us (wrongly) of them.

There is a building I walk through each day whose lobby is populated by a large security station and a very large flat panel television that is alternately tuned to Fox News, MSNBC, and CNN, depending on tastes of the guards on duty.  As I walked past yesterday, a voice caught my attention.  Lou Dobbs, CNN.  The market closed below 8600 points, and he was berating other financial experts on other channels who recommend that people hold steady in the market and ride out the storm.   “These people are insane!” he screamed. “It’s absolutely irresponsible!” he cried.  Frozen in my tracks, I watched this rant, mouth agape, for about 5 minutes.  He was advocating people panic, pull their money out of the markets, and then panic again, in that order.  I got mad.  This guy doesn’t get it, and he’s spreading his fear and ignorance to his viewing audience when he should be spreading information so that people can decide what to do for themselves.  So, let me fill in the blanks that Mr. Dobbs so effortlessly neglected to mention.

This Week’s Stock Market Crash in Real Terms, Part 1

Many people hear the cry of the NYSE trading at 8500 points and panic.  It was trading at 14000 points in January and now it’s lost over 5000 points!  But let’s look at what that means in real terms.

The stock market was trading at 8500 points in 2003.  2003.  5 years ago.  Not 20 years ago, or 50 years ago, but 5 years ago.  What I make of that is (A) 5 years ago wasn’t so long ago, and I’m still alive, so 8500 points isn’t the death knell that it is being made out to be, and (B) perhaps the 14000 point level was artificially high – pushed by the housing boom and easy credit – and we just experienced an unsustainable bubble, much like the bubble we reached in 2000 at the end of the tech boom.  People who “played” the markets then won big or lost big.  But those of us sitting on 401(k)s until retirement 30+ years in the future didn’t lose a thing.  It was Play Money to begin with.

The Lesson: Unsustainable increases (and decreases) in market values tend to self-correct over time.  This is not a cause for panic.  Consider it comfort for what is to come.

This Week’s Stock Market Crash in Real Terms, Part 2

As of this morning, I have lost 38.8% of the value of my 401(k) since Jan. 1st of this year.  It will likely go lower today.  But let’s look at how my 401(k), which is probably much like your’s, breaks down.

I am young and I invest aggressively.  I am in 100% stocks spread evenly over foreign, contra, and large/mid/small cap domestic funds.  I have 12% of my paycheck deducted pre-tax and shoved into my retirement fund, my employer matches up to 6% of my salary.  Over the years and as my account grows (or doesn’t), I get all sorts of bonuses – growth of the shares I own, dividends that are reinvested, interest, the works.  So, I figure that my current fund is now comprised of about 60% my money, 30% my employer’s money, and 10% “other” from the reinvestments.  In this light, if I have “lost” 38.8% of my account’s value, then I am still playing with someone else’s money – a combo of my employers and dividend money.  My own contributions, so far, have remained untouched.

But then let’s look at the number of shares I own.  At the start of Jan. 2008 (End of Quarter 4, 2007), I owned a combined total of 195.071 shares in my various fund groups.  At the end of Sept. 2008 (Quarter 3, 2008), I owned 588.999 shares.  With this current market sell off, I will own more.  Granted, I will own more shares of stock that is worth less than it used to, but when the stock market kicks into gear again (oh, and it will, believe me), I will be well positioned to make a small killing.  Buy low, sell high.  Those people who are pulling out of the market (and are many years away from withdrawing the money) are engaging in the equivalent of buying a house at the peak of the housing market, watching house prices fall, panicking, and selling their house when the market is the lowest.  It makes bad financial sense.

The Lesson: If you are many years from retirement, sit on your hands and do not touch your retirement accounts (except to go “riskier” and reap the benefits a few years from now).  If you are close to retirement, you should not have had your life savings in the stock market to begin with.  Pull out now and put it into cash and low interest bonds until things start settling down.

The Current Market Crash and the Great Depression

Comparing the current market crash to the Great Depression is my favorite scare tactic of the current popular press.  Most of us learned about the Great Depression through our history classes, through iconic images of men in suits standing in bread lines and women sweeping porches of ramshackle homes on the cover of Life magazine, and through the lovely writings of John Steinbeck.

What did you learn about the causes?  Do you remember?  Probably something about a stock market crash in 1929 putting an end to the flapper era and everyone losing their jobs.  Oh yeah – and WWII got us out of the Great Depression.  Stock market = bad.  War = good.  Right?  Am I close?  If I am, it’s because these are the lessons that I remember, too.  That is, until I did some investigating into the causes of the Great Depression when the 9/11 attacks were threatening another Great Depression.  This is what I learned:

  • The Great Depression was caused by an awful lot of factors – corporate greed, government incompetence, public panic, large personal and commercial debt as a result of free access to easy and abundant credit.  Sounds similar to now.
  • The US economy was primarily a farming (commodities) and manufacturing economy in the early 20th century.  These two sectors rely on massive reserves of human capital (i.e. labor).  When these sectors are hit, they lay off a lot of people.  During the height of the Great Depression, unemployment was about 30%, made up mostly of laborers.
  • US farming was hit by a massive Dust Bowl era, brought on by a drought (though no more severe than was typical for the region) and poor farming and land management practices.
  • The US economy operated on a gold standard, which severely limited the ability of money to change hands and to compound.
  • As a response to the economic downturn and resulting belt-tightening across the nation, the government instituted a number of disastrous reactions, which included (among others) placing higher tariffs on exports, resulting in a backlash of foreign country-raised tariffs on US goods.  This served to slow both international trade and the potential for the US to sustain the flush of international money it enjoyed during the Industrial Revolution.

My conclusion was and is that the conditions that created the Great Depression of the 1930’s simply are not evident today.  Our economy is more diverse (including the advent of the “knowledge worker”); technology and industrial diversity has lessened the effect of any one industry’s collapse on national unemployment rates; and regulations and programs put in place after the Great Depression (i.e., Social Security, unemployment benefits, and Welfare), though imperfect, ensure that a great many out-of-work citizens continue to have a certain amount of buying power that slows, but not halts, the economy.

Under these circumstances, the cry of the next Great Depression is greatly exaggerated.  I’m not saying that another Great Depression couldn’t happen in some other fashion, but current comparisons of our current situation to that which happened almost 80 years ago is disingenuous at best, and fear mongering at worst.

The Lesson: People who try to scare you want something from you – your viewing time, your vote, your money.  Be smart.  The internet is a wonderful tool for finding truth.  If something doesn’t sound right (or is morbidly calamitous), let your fingers do the walking and find out the real truth for yourself.

We all need to remember to breathe.  While it may seem that the sky is falling, look up, trust your eyes, see that it is still blue up there, and take a deep breath.  Altogether, now:  Inhale.  Exhale.

With the 2008 Presidential campaign racing at Formula 1 speed and the current financial crisis at space shuttle speed, I think it’s time to review a book that I read over the summer, titled Where Does the Money Go?

Where Does the Money Go? is a layman’s guide to the US Federal budget by the non-profit, non-partisan group Public Agenda.   Now, I am not ashamed to admit that I didn’t know much about the federal budget before I picked up this book.  This book, though, made me realize that not only did I know nothing at all, but I truly believe that most people who speak in words of “entitlements” and “appropriations” and “government waste, fraud, and abuse” don’t really know what they are talking about, either.

In plain language, the authors carefully step through the government spreadsheets, explaining what each type of expenditure means to the average American and raising the issues and controversies surrounding the financing or elimination of the major government programs.  Some things that I learned:

Social Security, Medicare, and the Gigantic Pickle We are In

Together, Social Security and Medicare are a big problem.  No, I don’t think I stated that accurately enough.

Social Security and Medicare are a BIG PROBLEM!!!

First, because, today, they combine to make up about 30% of the budget.  Second, because they are entitlement programs as opposed to needs-based programs – you reach a certain age, you automatically get the money.  No questions asked.  It doesn’t matter how much money you already have in your personal coffers or how long you have been paying into the system; you get a check from Uncle Sam anyway.  Third, because the Baby Boomers (the largest generational population) are coming of age, average life-expectancy has risen, more medical care is needed as people age, and medicine in general is getting more sophisticated and expensive. It doesn’t take a genius to see where this is going.

Currently, there is a collection surplus to pay for all those drawing Social Security (due in large part because the majority of Boomers are still in the workforce). The real problem is that the surplus is supposed to go into a separate account so that there is money for the rest of us when we need it. However, for the last 4 decades, the government has borrowed from this SS fund to pay for government overruns. “Borrow” typically implies that someone will end up paying this all back. Not so. The government has been using the SS surpluses as part of general operating funds for the better part of 40 years. The SS fund, in large part, has been paying for our excesses.

It occurred to me this way – Gens X and Y are screwed. I will likely pay increased taxes into a system that I will likely see little benefit from.  At the same time, I will be saving and investing money into retirement accounts that I have (cross my fingers) diversified enough so that the money will grow large enough to live on, but be protected enough in case the kinds of major investment emergencies we have seen lately come to pass again as I inch closer to retirement (home prices falling, my 401K losing 21% of its value, as of this writing).   I will likely delay my own retirement until well into my 70’s, perhaps my 80’s, to be able to support myself.

In a strange twist, immigration could help us with this Social Security crisis. New workers coming in and having their wages taxed would infuse a “false generation” into the mix.  But immigration is even more controversial than SS, and it won’t solve all of the problems. A solution must be found and soon!

The Appropriated War on Terror

The current War on Terror is not being funded by the federal budget, but by appropriations.  Therefore, it doesn’t even show up in the general budget as a line item or category.  Appropriations and spending are generally tracked by the Government Accountability Office, but even they have a hard time following the many breadcrumbs that can give them a clue into how much we have actually spent in Iraq and Afganistan.  If we are so committed to the Global War on Terror, we’d better be truthful with how we plan to allocate money for this — or stated more bluntly, what we have to cut in order to pay for this.

The Old Waste, Fraud, and Abuse Lie

And we can’t “eliminate government waste, fraud, and abuse” our way out of this, either.  Working at a government agency, I see some waste, no fraud, and very little abuse.  The waste and abuse that I have seen, and that has been widely reported in the news media, amounts to tens of thousands of dollars – bad yes, but a drop in our $2.2B annual bucket.  Most of the people I work with take their jobs seriously and care about taxpayers money.  They talk openly about it in meetings and such.  It is often the rally cry for some mucky-muck who is trying to kill another mucky-muck’s pet project, so we hear about “safeguarding the taxpayer’s money” a lot.

If my experience is true across most government agencies, then I feel secure in the authors’ assertion that there simply isn’t enough waste, fraud and abuse committed within government agencies to make up the annual deficit, much less the $9T-and-counting debt.  Counting money in the thousands at this level is like losing pennies in the washing machine.  Yeah, if you collected enough of those pennies, you could probably buy yourself a nice cup of coffee over time, but you’re not going to save enough spare change to buy yourself a house on the coast or a nice 30-year retirement.

This week’s news of a potential $1T bailout of the financial markets is a much more disturbing development in the waste-and-abuse argument, in my opinion.

No Free Lunch

As you hear things throughout this campaign about fiscal reform, about how the candidates are going to expand or start new programs to help people with their credit or mortgage problems, bail out corporate giants so that the entire global economy doesn’t collapse, take care of our seniors (and eventually ourselves) by securing Social Security and Medicare, protect pensions, stay in Iraq, consider military action on Country Di Jour, etc., while simultaneously cutting taxes, be very afraid.

Basic checkbook balancing principles are in play, here.  If you don’t have enough income and you have bills to pay, your choices are to:

1. cut back on spending
2. earn more income
3. borrow money from lenders at interest

That’s it.  Don’t be duped into thinking we can heal the federal budget by cutting, say, the National Endowment for the Arts ($300M) or NASA ($20B) or by cleaning up your favorite wasteful government agency.  With an income of $2.66T, expenditures of $3T, and a debt approaching $10T, we are up a creek if taxes (in one form or another) are not raised.

In a nutshell, buy this book and read it before election day.  It is an easy read, it brings up issues that you probably haven’t thought of, and will expand your knowledge of the most basic and most primal government power so that you can follow the discussion and know when a public official’s idea is full of crap.

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