Inconspicuous Consumption

What can be said when we need a magazine with the name REAL SIMPLE to help us to have at least the illusion that we can manage just fine with a lot less? Real Simple was started in 2001, in a period when people seemed engulfed in buying more and more stuff. About a decade before that, there had been a mini-backlash against conspicuous consumption, but there was no heart in it. Now the push to Less is More not only has heart, it has teeth.

And there the magazine is now, staring at you, simply; mocking you as you wait on the checkout line, because if you need a magazine to tell you how to live simply, you’re too far gone.

It is not just a Gift to be Simple. It is now a necessity.

Spend or Save................again

Once again, we are being told we should spend money to help the economy. Will this really help the U.S. economy --long-term--or will saving lead to a recovery on firmer footing? Consumer spending is what drives the economy but saving somehow feels safer. And should we be spending what we don't really have? (Imagine if we all had huge budget deficits.)But where is the incentive to save when interest rates for savers are so low as to be practically zero?

Speed, III

It seems that these days, as far as our economy is concerned, bad news can be good and good news can be perceived as bad, and we don’t have time to really assimilate it, let alone to do anything with or about it. One company’s earnings are bad but they are not as bad as analysts had predicted so the negative earnings become good news and the stock price rises. Another firm’s good news is perceived as negative since the good news is not as positive as analysts had calculated. So that firm’s stock falls.
The Internet, of course, is what makes this recession (if that’s what this depressing state of affairs is) different from the others. We learn about possibilities, scenarios—worst-case, best-case, disaster, etc—as soon as the theories leap from someone’s keyboard or mouth. There is a race to see who can get what information that has even a remote possibility of being something new—out there the quickest. Then wait a nanosecond for a reaction and then go on to the next exclusive. Now, this is how news gets publicized, and that’s the way it works, of course. But when it comes to markets and investors, each nuance can have an echo effect, or even an aftershock, that can actually cause what has been predicted. At least, that’s what we heard the past few months. And it is a bit unsettling.
Internet use has, obviously, been growing. Leading up to and during the 1990-1992 recession, the Internet didn’t play an important a role in the dissemination of information, misinformation and rumor, as it does today. According to Pew Internet and American Life, in mid 1995 about 14% of people in the U.S. were online. During the recession of 2001-2003, which was the result of the dotcom bubble burst, about 60% of people in the U.S. used the Internet. That 60% pretty much was a plateau of sorts during the period from Aug-Sept 2001 thru Feb 2004, with only a slight increase, followed by a small dip and then a rise to around 75% by the end of 2007.) http://www.pewinternet.org/trends/Internet_Adoption_3.18.08.pdf And here we are today drenched in as much information we can get.
And how to know if we really are a recession? It used to be that we had to wait for the official word from the National Bureau of Economic Research to tell us. They are still the official arbiters but now, we have almost as much information as they do. Whether that is good or bad, depends on what we do with it, I guess.

[Thank you to Aaron Smith, Research Specialist with the Pew Internet and American Life Project based in Washington, D.C. for providing us with the Internet use data.]

The Days After

Here is the set up.
Disaster is looming--- you know it and the rest of the audience that has been paying attention knows it. But the principals involved laugh it off and don’t believe it. Nonsense, they scoff. This can’t happen. Impossible. Don’t be ridiculous. All you have is a theory. There are safeguards to prevent this sort of catastrophe. Go home and let the experts do their jobs.

Finally, little by very little it starts to sink in. How much time? “Six to eight, tops” “Eight months? That cant be…”
“….That time scale isn’t in months, it’s weeks.”


Is this a description of the first 40 minutes of the 2004 film “The Day After Tomorrow” or the first 4 months of the Financial Meltdown?

Hedging Against Stress

Over the years, 100 Women in Hedge Funds, a global association of more than 10,000 professional women, has sponsored various events for its members. Their aim is to “make a difference in our industry and community with unique educational programming, professional leverage initiatives and philanthropy.”


In the recent past they have invited members to events like:

Best Practices for Hedge Funds in an Ever-Changing Regulatory Environment


Women and Powerful Conversations: How to Negotiate Your Career, Expand Your Role and Increase Your Compensation

Oil Prices and Global Financial Mark

Distressed Debt Investing: Finding Opportunities after the Subprime Debacle

It is another telling sign of how things are now that the next event is:

Managing Stress and Living Well amid the Financial Crisis
Can meditation really make a difference in managing stress?

Lessons not Learned

If the economy is the Titanic, just how many lifeboats are there, and just who gets saved? And who decides?

It’s All About Perspective

While everyone watching the markets sweating that the Dow has fallen off, if not forever, then for a long time, from the 10,000 + mark, it might be a good time to look back at where the Dow has been over the decades.

For a complete, informative and detailed look, go to, for instance:

http://www.djindexes.com/mdsidx/index.cfm?event=showavgDecades&decade=1970

“Dow 1000: Finally in '72”

“Cheers rang out on the floor of the New York Stock Exchange when the Dow Jones Industrial Average crossed the 1000 mark on Nov. 14, 1972.
If ever there was a psychological barrier for the Dow industrials, 'Dow 1000' was it. The average had knocked on the door of 1000 repeatedly for six years, but could never close above that 'magic' level.
For example, the industrials closed at 995.15 on Feb. 9, 1966, and at 985.21 on Dec. 3, 1968. There were also close calls in May 1969. But no cigar -- until the euphoria of 1972.
Many investors active today will remember 1972. Richard Nixon was president, ''The Godfather'' was packing them in at the movies, and Americans were tuned to ''All in the Family'' on television. The Watergate scandal, which later destroyed the Nixon administration, was only a cloud on the horizon. The Vietnam War was a major problem, but on the day the 1000 barrier fell, North Vietnam had agreed that its representative would meet with U.S. negotiator Henry Kissinger for a new round of talks aimed at ending the war.
The re-election of Mr. Nixon over George McGovern had occurred a week earlier. And the economy was doing well. Economic growth was unusually strong, inflation was moderate and interest rates were low.
In the stock market, it was the heyday of the 'Nifty Fifty,' stocks that were so popular that it was said they were ''one decision'' stocks: Buy them, and never worry about selling. Among the most popular stocks of the day were Xerox, Avon, IBM and McDonald's.
Not long after the industrial average punctured the 1000 mark, a recession occurred and the brutal bear market of 1973-74 set in, pushing the average all the way down to 577.60 in December 1974. It would be late 1982 -- a full decade after the 1000 milestone was first passed-- before the industrials rose above 1000 to stay.”

For a look at the next decade click on:
http://www.djindexes.com/mdsidx/index.cfm?event=showavgDecades&decade=1980

“...it was only a little more than 12 years before, on Jan. 8, 1987, that the average first hit 2000.
You remember 1987. Michael Douglas starred that year in the movie ''Wall Street,'' portraying the greedy Gordon Gekko.
But the real fireworks in 1987 took place on the real Wall Street. The industrial average started the year at 1895.95, then staged one of the most impressive advances in history, surging nearly 44%, and peaking at 2722.42 on Aug. 25. In the fall it turned around and suffered one of the biggest declines on record, dropping nearly 1,000 points in two months. The selling cresendo peaked on Oct. 19, with a 508-point, nearly 23%, crash, the worst one-day drop ever.
When the Dow industrials surpassed the 2000 mark, almost no one foresaw the pyrotechnics to come. The prevailing feeling was that, having climbed to 2000, the average would need to rest for a while.
Alfred Goldman of A.G. Edwards & Sons in St. Louis predicted 'a victory celebration and then a headache.' New York money manager Robert Stovall predicted a 'groundhog day' effect in which the market would ''see its shadow, and promptly duck down again.'' Mary Farrell of PaineWebber predicted a trading-range market hovering between 1800 and 2200.
Nor did many people guess at the time that seven additional millenary milestones would fall in little more than a decade. After all, it had taken the industrial average about 76 years to reach 1000, in 1973. Then it took nearly 14 years for the average to climb to 2000.
Of course, it's easier and easier to hit each 1,000-point milestone, because each point gain becomes smaller on a percentage basis as the index rises.
'I'm excited. This is history,' exclaimed trader Jack Baker, then with Shearson Lehman Brothers in New York, the day the 2000 barrier was snapped. 'I caught 1000 and 2000 and I hope to live long enough to catch 3000.'' Mr. Baker captured the prevailing mood. But though hardly a soul suspected it at the time, the 3000 mark was only four years away.' "

“How Long it Took"

"When the Dow Jones Industrial Average reached each of eleven 1,000-point milestones"
[from the Dow Jones site: http://www.djindexes.com/mdsidx/index.cfm?event=showavgDecades&decade=1980 ]


1,000 Nov. 14, 1972 76 years
2,000 Jan. 8, 1987 14 years
3,000 April 17, 1991 4 years
4,000 Feb. 23, 1995 4 years
5,000 Nov. 21, 1995 9 months
6,000 Oct. 14, 1996 11 months
7,000 Feb. 13, 1997 4 months
8,000 Jul. 16, 1997 5 months
9,000 Apr. 6, 1998 9 months
10,000 Mar. 29, 1999 12 months
11,000 May. 3, 1999 1 month

All of this and more very helpful information can be found on the Dow Jones site. Learning about the history of the Dow and the history of the markets can only help put it all into perspective. With money and investing, it is always wise to know what has worked in the past and why and if what worked in the past will hold true for today, given the massive changes brought on by instant access to virtually any and all information.

Still another opinion....

From Matt in Mass.

".... haven't read exactly what it consists of yet. The one thing I do feel though is that NONE of the ceo's or cfo's that helped ruin these companies should get one dime of a bonus or buy out or however it is dubbed. The other thing is [that this is not really] another failed policy of George Bush since it was Bill Clinton and Barney Frank who set this in motion during Clinton's presidency......"

More thoughts from readers on the Bailout

From MB, who lives in PA

Obviously, I'm pissed like most middle to lower class citizens that I need to use my money to bail out all those rich people.

All the financial heads seem to walk away with hundreds of millions when they should be in jail!

I don't ask for much, I just want the price of gas lower and my mutual funds to be worth at least what I put in, not less!

More opinions on the bailout proposal

In favor of the bailout? From a fellow in his 40's in Oregon:

"Yes, I think it’s a good idea and I agree with Bernanke and Paulson that it should be unencumbered. However, the key to success is in the valuation of the assets. This should be done in a way to allow for fair current valuation, not the value the bank has it booked at. The taxpayer should have a reasonable, but not guaranteed, chance of making a profit on the purchase. The final bailout cost will be the purchase price minus the sale price minus administration and transaction fees. This will likely resemble the amount the taxpayer was on the hook for following the S&L debacle, or around 100 to 200 Billion."

More Opinions from readers on the Bailout

From AB, trying to make a living in FL

NO BAILOUTS!!!!!
There comes a time when the piper must be paid. The individuals who have caused this set of circumstances should be tried and punished and the CEOs should return their ill gotten goods.

Opinions from Readers on the Bailout

From "DAC - Montclair, NJ:


Even before Ronald Reagan, supply side economics and the "trickle down" theory of economics have proven time and time again to be disastrous for the American people, producing massive national debt, rampant corporate greed with unaccountability and massive American taxpayer bailouts.
Yet, Republicans continue to point to Democrats over and over again as providing too much government and too much regulatory oversight as the problem. It may be true that this government bailout is necessary to save the American financial from it's own manufactured demise, but responsible government leaders must HEAVILY regulate the deal. They must make sure those responsible for reckless corporate management do not profit in any way (including through previously negotiated compensation contracts) and that the American taxpayer PROFITS from any benefit. And may all Americans recognize that we are looking at the end result of what Republicans propose for private Social Security accounts - corporate greed, corruption and another massive taxpayer bailout when it comes crashing down.

Let's learn something for a change!

Palin and Pit-Bulls...and Pitfalls

First:"Is the media covering Palin fairly?"

Why wasn't this question asked about press coverage of Hillary Clinton when she was being basted in the press during the Primary? It seemed that nothing was off limits then.
Palin is running to be Vice-President. Questions need to be asked. What’s going on privately within her family—her children—is not really our business and shouldn’t be our focus. But, if her opinions and her beliefs could affect how she might govern and represent this country, then we had better know where she stands.

Second:

Palin's "Pit Bull with Lipstick" quote? Either she isn't familiar with the American Staffordshire Terrier breed or she plans on doing whatever she's told to do. ASTs are known for being faithful to their owners and obeying them. (That's why the press’s coverage of "pit-bulls" is off-base. Attention should really be focused on the dogs’ owners. It is the people who relentlessly make the dogs mean.)

Third:

Like in 1992, “It’s [still] the economy, stupid.” We should be very concerned that no one is paying much attention to the economy. Issues/distractions like abortion and evolution—what year is this again? Are doing a good job of taking the spotlight off what is draining all or us day by day--the economy and how it is being mishandled. Ignore it, and it won't go away. It will just get worse.

Tomato Trouble

Perhaps the most jarring aspect of the widespread salmonella outbreak brought to us by certain varieties of tomatoes is that where the offending tomatoes came from cannot be determined. What does that say about the food chain? No one knows where these tomatoes originated? Looks like another argument for buying locally and just being content with whatever produce is in season in your area.
There have been numerous accounts of how the supply of fruits and vegetables for consumption far and wide is negatively affecting the environment. We want strawberries in December? They have to be shipped in from someplace that can produce them and that someplace may not have the same environmental regulations that we have here. But it is another case of "I want it and I want it now, and I can afford it, so there".
I’m not suggesting we go back to the Prairie Days when we could consume only what was grown in our own gardens or nearby. But having it all whenever we want it dilutes the appreciation for, not only the environment, but for that strawberry or kiwi we are putting into our mouths in December in Manhattan.
Take a look at a New York Times article on the subject:
http://www.nytimes.com/2008/04/26/business/worldbusiness/26food.html?sq=foods%20from%20other%20countries&st=nyt&adxnnl=1&scp=14&adxnnlx=1213837355-A9IThZTI85shCW1hw3Buzg

Social InSecurity

Notice the growing numbers of competitors vying to lock up your identity—for a fee-- so that it is forever protected from nefarious thieves? No doubt—identity threat is a real and serious and growing problem. But what is to blame for the spiraling number of cases? The seeds of this kudzu vine were sown decades ago when, almost insidiously, more companies and entities started asking for Social Security numbers. Were we not always told, “Do Not Use Your Social Security Number for Identification Purposes”? Over time, however, more of us have been asked more frequently for our social security numbers---colleges, medical practitioners (including dentists), banks (understandably—but this started long before 9/11) utility companies, veterinarians, all want to know the number we were told we should never give out.

You can refuse in some cases but you have to be aware of this option. Here is what the Social Security websites states:

You should be very careful about sharing your number and card to protect against misuse of your number. Giving your number is voluntary even when you are asked for the number directly. If requested, you should ask:
Why your number is needed;
How your number will be used;
What happens if you refuse; and
What law requires you to give your number.
The answers to these questions can help you decide if you want to give your Social Security number. The decision is yours.

http://www.socialsecurity.gov/pubs/10002.html#protect

Un-Buffeted by Over-Indulgence

Granted, many are using their credit card for used Mother Nature never intended—buying groceries and gas—and how else to get these things when paychecks and interest rates are not keeping pace with the costs of basic living? But as more and more people continue to expand their revolving debt (credit card—think stuck in a spinning revolving door) for stuff they really don’t need, but perhaps have grown accustomed to during the recent spend, splurge and spoil years, kind of like a New Age Roaring Twenties, it is almost refreshing to read how someone who could probably buy half the world feels about such expenditure.

Here are some excerpts from an interview conducted by Christoph Pauly and Janko Tietz and published in Der Spiegel this weekend [ http://www.spiegel.de/international/business/0,1518,556114,00.html ] . Among other things, Warren Buffett explained why he doesn’t feel the need to live large:

SPIEGEL: You have pledged about half of your fortune to the Bill & Melinda Gates Foundation. What happens with the other half?

Buffett: In addition to the Gates Foundation, I have pledged money to four other foundations. So far, 80 percent of my stock holdings have been firmly committed to these five organizations. I have promised that I would ultimately donate every one of my shares in Berkshire Hathaway. My will clearly specifies what will happen to the remaining shares. But I can still change this decision while I'm alive.

SPIEGEL: You are the richest man in the world…

Buffett: … maybe not anymore…

SPIEGEL: Let's not argue about a few billion. How does your immense wealth affect your everyday life?

Buffett: I have everything I need. But that's also the way I felt at 25, when I didn't have that much money yet. I have a wonderful family. I have a job that I love and wonderful people who help me with it. It can't get any better than that.

SPIEGEL: You have no interest in a new mansion in Omaha, or perhaps a luxury house at the beach? After all, you've been living in the same house for decades.

Buffett: I don't need 15 houses. Owning real estate doesn't mean much to me. I don't like to think about things like that. I don't need 12 boats, or even the world's largest boat with a crew of 80. I'd have to take care of them, to worry about them. I get a lot more fun out of life without all the bells and whistles.


Yep, those bells and whistles seem to eventually rust and fall apart so maybe it is just better to not get too used to them. Just stick with the basics. The basics are priced pretty much like luxuries these days anyway.

Charge it! (Words by Tim Curry)

I keep hearing that Americans are still buying as much gas for cars. It is as if we are in denial—but then, not everyone can take public transportation. It may not exist for our itinerary. Does that mean more of us are charging it—putting off until tomorrow what we can’t pay for today?

Let the song speak:


You can Telex my accountant

Call up Tele-Credit, too

I know they sent a monthly statement

But I never read it through

You say you won't accept my Visa

Or American Express

And the computer is suspicious'

Cause I've got no fixed address



Lady, that's a valid document

Check out the way I'm dressed

You know the way I'm feeling now

I'd take a lie-detector test

Paradise lost for capital gain

Traded for a ticket on the gravy train

I can amortize the cost with a minimum of pain

But I need it for a write-off

Can't take another night off

You know I never carry change



I just Charge It

Where do I sign?

Charge It

Show me the dotted line

Charge It

I don't have the time to waste.....

I consume, therefore I am………………….broke

Consumer. Producer. Consumer. Producer. These days I find myself cringing when I think about making a purchase—any impulse to buy any item that is really and truly outside the realm of a staple. I think “CONSUMER”-- a kind of never satisfied monster devouring more goods ever day. A financial version of Jabba the Hut with a wallet.

And it seems as if there are more and more ways to spend money. Every other ad on television is either for a car or a restaurant or fast food place. Sprinkled among these calls for consumption are ads for beer or cosmetics and pharmaceuticals—“Hey—let’s all get made-up, get drunk, pig out and pop a few pills! But make sure you’ve filled up the tank in the new car because the price of a gallon of gas is going up 25 cents a day.” Here I am about to consume and what exactly is on the other end of that increasingly scary spectrum—PRODUCER? Where are more and more of these things being produced? Not here. Not anymore. I’ll get to the statistics but you know what you see when pick up a bag of broccoli or an umbrella or a pair of shoes or a shirt you can pretty much name it…..and you read where this stuff is made. And just suppose, those countries decide, for whatever reason—political, financial, or the wrath of nature—they can no longer send us all this STUFF either at all or for so few dollars?

Maybe it is time to take a step back and have second thoughts before buying. It really shouldn’t be a hobby.

Desperately Seeking.......What?

So, let’s see, the best use of the Internet is to….........make fun of celebrities, as if we were mean and desperate 3rd graders looking to make ourselves feel better by making someone else with maybe more exposure/aptitude/talent/luck look bad?

Here are some recent puerile examples :

Msn.com tagged BJÖRK as being a fine example of one of the “Worst Fashion Flubs.”
First Impression—
--- Do we all want to look the same? So what if she surrounds her head with tennis-size puff balls in every hue of the rainbow and then some? This is who she is. Isn’t she a singer anyway? This wonderful weirdness is what she is known for…should she look like everyone else?
Second Impression:
Why do we care about this? What about the worst Financial Flubs? What about hedge fund managers making obscene amounts of money hedging bets that the rest of us will have to eventually pay?

A nastier example—one of many, I’m sure-- can be found on “Trusted AOL partner” TMZ’s site—“You make the stars…We make them real,” they announce proudly. Uh-huh. Real subjugated.

Accompanying a photo of Sarah Jessica Parker:
SJP: You're So Vein
Posted May 13th 2008 11:03AM by TMZ Staff
"Sex and the City" isn't the only thing being brought back to life -- so are Sarah Jessica Parker's hands!
The 43-year-old trendsetter stepped out in London on Sunday sporting the latest It accessory of the summer -- a pair of Frankenstein hands! Carrie Bradshaw doesn't need a man -- she's got man hands!

Is this something anyone cares about? Does this make others else feel a lot better about themselves? This person has a job as an actor and okay, to some extent she puts herself out there since that is part of the fame game. Two sides to that coin. But these people aren’t walking PIÑATAS. And it makes journalism, or whatever this is, look really really bad.

The Economy by Any Other Name......

So—Are we or are we not in a recession? Like many issues having to do with anything financial, it depends on whom you ask.

Our President says we are not in a recession. Times are hard, but…(The less said about that and the rather discomfiting news conference earlier today, the better. ) Many economists think we are, indeed, in a recession and at least one financier went so far as to allude to “depression.”

Why can’t anyone agree whether we are in a recession?

As respected economist Bernard Baumohl, Managing Director of The Economic Outlook Group, based in Princeton, NJ, explained, “The main reason you are not going to get any agreement whether we are in a recession right now is that none of the pundits can officially declare it. The group that formally declares whether the economy is in a recession is a group of academic economists who are part of a non partisan organization called the National Bureau of Economic Research based in Cambridge, Mass. Led by Martin Feldstein, they might get together at the earliest in the Fall, more likely at the very end of the year when all of the economic data has been revised and updated. They will then look back at what happened from the end of 2007 and what took place in 2008 and make an official declaration as to whether economic activity in fact contracted. They are the official arbiters—the referees on the economy.”

But can a recession be determined only after it has ended?

Baumohl believes that “employment numbers are bad enough to suggest that we are in a recession. We now have at least three months of net job losses from payroll numbers so far this year. The payroll numbers include government hiring, which I don’t like to include because the government doesn’t really care about profit and losses—they’ll hire whenever they need to hire people—so I take a look at the part of the jobs report that focuses only on hiring and firing in the business sector. That’s one of the more important economic indicators for me. The others that are critical are industrial production (and if that’s shrinking, that’s certainly an indicator), consumer spending and housing. So there are a lot of things we need to consider. I know the common definition people use to define a recession these days is 2 consecutive quarters of negative growth. But that’s one of those ‘finger in the wind’ definitions.

The recession, in my opinion, most likely began in December, and will probably last through the second quarter. That’s based on the economic evidence we are getting. Having said that, on Wed., April 30, we will get the first quarter GDP. That’s the first set of numbers for 2008. So we’ll see right then and there whether there’s negative growth.”

How would Baumohl sum up things right now?

“I think there are just enough economic indicators to tell me that this economy is in real jeopardy and there’s probably a recession underway right now. It certainly feels like a recession regardless whether it is one technically or not. Most people are not going to be able to tell whether we are in a recession or not. It still is going to feel awful for most Americans if the economy grows by 1% or whether it shrinks by 1%. It’s going to feel essentially the same.”

In other words, a recession by any other name would be very painful.

http://www.economicoutlookgroup.com/

THE ECONOMIC OUTLOOK GROUP
Princeton Junction, New Jersey 08550