I was hanging around the New Wineskins blog and responded to the latest global warming observation there. I admit that I prefer to read things I am inclined to agree with, and the posting about the record cold temperatures of the last year was just the sort of thing to warm my heart.
Regular readers (hello, you two!) of this blog know my feelings about the AGW fad and its resemblance to a religion. These days, we are supposed to feel guilty about our carbon footprint; the rest of our behavior is not relevant. Our carbon footprint is linked entirely to the fact that we live in a developed society, ie we are consumers of material wealth.
So the collective and the personal have been completely switched. We now must feel guilty about our material lives, because the material world is collective. But we need feel no guilt about our morality, because morality is strictly personal.
Silly me. I always thought that property was personal and morality was collective.
Wow, this is flattering. Most weeks I think I am the only one who reads this blog. And now I have been tagged by JR at Just Right.
The challenge? Share six non-important things/habits/quirks about yourself: Just 6? Here goes.
I believe I could live on peanut butter and raspberry jam sandwiches as long as there was also some orange juice nearby. And a decent Barossa Shiraz, come to think of it. And maybe some 3 year old Balderson Cheddar and some Wheat Thins. Survival stuff, really.
At work I can tell that people sometimes don't understand me, especially when I wax philosophical. It's ok, sometimes I don't understand me either.
I like getting rid of things more than I like acquiring them. Beats me where all this stuff came from.
I have come to believe that my mission is to make people laugh, thereby preparing and enabling them to think better. There is no evidence that this is working.
I regularly describe myself as a shy extrovert.
I don't forward chain letters and I am hereby going to break the chain in this tagging thing.
But enough about me. Let's talk about you. What do you think of me? (Beaches, 1988)
One of my favorite US Blogs, Maxed Out Mama, reports that the Bank of America has a pretty cozy plan to deal with bad mortgages. Here is an excerpt.
A brief summary:
BofA will buy the Congress Critters. It is an election year and money is tight, so it will get them at a deep discount.
The Congress Critters will pass a law saying that the Federal Government (that's you) will buy bad mortgage loans at a "deep discount".
Then the Federal Government will write the loans down to where the people can afford to pay them (you will pay the unaffordable excess of their mortgage balances.) Don't forget to keep paying on your own mortgage while you are paying theirs!
The borrowers will keep their homes, but now they will owe less because you will have paid it off to where they can afford it.
The federal government (that's you!) will now guarantee the loans so they can be sold back to the banks at FMV. If the new loans go bad, the federal government (that's you!) will pay the noteholders off. If they perform, the noteholders (not you) will get the profit.
If you read to the bottom of her post, you will find an infinitely more prudent solution.
Half way through a two day retirement planning session with my wife, a couple of highlights have emerged.
There is no answer to "how much do you need?" that exists separately from "what will you do?"
Retirement can be defined as "ceasing work in order to collect the pension." If you don't have a pension to collect, all you have done is quit work, regardless of your age.
These days the biggest fear is outliving the savings, followed by poor quality of life after approx age 85. To overcome the first fear, divide your budget into necessities and fun stuff, and spend none of the capital that is needed to fund the necessities. To overcome the second fear, well, that requires more philosophy than I have the energy for tonight.
Have a real plan. Saying your priorities are "travel" or "family" is not specific enough.
In retirement, feel free to fly first class. Otherwise, your heirs will.
Here's a theory that will confound traditional thinking.
I think we are headed into a period of inflation AND deflation. Call it economic bipolarity.
If you look at prices in bubble-inflated sectors of the North American economy, all of which have been supported by loose credit (housing and consumer spending top my list), we are well into a corrective phase which will include falling prices and the perception that if we wait before buying, things will get even cheaper. I can imagine this taking a couple of years or so to work itself out. On the far side of it we will find more prudent borrowing and lending practices, which would be a good thing.
Meanwhile, there is a prosperity-driven boom going on in the developing world as hundreds of millions of people in China, India and Southeast Asia start to move up the economic ladder. This will lead to a boom in commodities and food, as people want more infrastructure, more basic consumer goods and a more varied diet, commensurate with their sense of increasing prosperity. I see the price of commodities rising, and many analysts refer to historic 13-17 year upswing cycles in commodity prices, with 2008 being about year 7 of the current upswing.
And as a further "meanwhile", transportation and industrial infrastructure in the developed world is reaching a renewal point in its life cycle. Increasing frequencies of pipeline leaks, bridge collapses and major refinery revamp projects are indicators of a growing need to reinvest in what we already have. These corrective measures are far from glamorous, but they are necessary and society will support them.
So we should see a declining demand, and declining market valuations, in housing and consumer discretionary spending, at the same time as the price of energy, food and basic material commodities continues to rise.
This will reveal some weaknesses in the way that inflation is reported, since the average will consist of more disparate elements than before. The old analogy of the guy with his head in the oven and feet in the freezer comes to mind. On average, he's comfortable. But in reality he won't be comfortable at all, as the value of his house drops while his utility bills rise.
The prudent investor will have no consumer-related debt. She will invest in firms whose prospects relate to discretionary spending abroad and non-discretionary spending at home.
There is a lot of fear in the markets these days, and people underestimate the mass and inertia of the world economy, just as they overestimate the sensitivity of the global climate to rising CO2 levels (but I digress). People still eat, shave, get to work and enjoy the basic comforts of civilized life. These pleasant habits will go away only if western society is overthrown, not when the economy and the stock market go through their periodic spasms. Call me naive, but I don't see civilization as we know it ending any time soon.
"I'm afraid she's gone" said the young vet to us, rather woodenly, as she felt old Colacat's heart stop. "I'll leave you with her; take as much time as you need."
Euthanasia is part of her job. It's all new territory for us.
Colacat was 21, ancient in cat years, and plucky till the end. The tumor and infection had distorted her face and made her both uncomfortable and uncharacteristically unwilling to eat. Half her body weight had drifted away over the past few months, and the frail carcass left on the table before us was just a shadow of her vital self.
She had been an intrepid and uncomplaining traveler, a warm purring comfort to anyone who held her, a playful hunter in the house, and a natural born killer outside when given the chance. Pretty much all one could expect from a cat.
Farewell, you plucky old thing. We will weep now, and again when it is time to scatter your ashes in your beloved outdoors. But our tears are a measure of the joy you brought us.
We hope our decision yesterday brought you peace, old trout. It was the hardest thing we have done in a very long time.
...is the name of the company that provided the fans for the Punta Cana airport. The fans in the departure lounge moved so much air that the waiting passengers were putting coats on, even though the air temperature was about 80F / 26C.
The credit and liquidity mess in the US is going to get worse.
Bond insurers (eg Ambac) protect bondholders from the credit risk associated with their holdings. But if the insurer fails, then the real risk associated with the bond has to be accounted for. This real risk is so serious that what currently counts as capital will no longer qualify as capital in many cases.
Ambac and its peers are in trouble. This means that banks who rely on bond insurance are exposed. A lot of dominoes are poised to fall. Read this analysis if you want a supporting analysis of the gathering storm.
Gold, as always, appears to be a safe haven if the outcome of the mess is rampant inflation. Debts will become less onerous as they can be repaid using devalued dollars. But if the outcome turns out to be Deflation (see Japan in the 1990s after THEIR bubble burst), then assets like gold will not be attractive. In deflation, cash is attractive, commodities lose their dollar value and debt is absolutely crippling as the obligations must be repaid with higher value dollars.
What turmoil may lie ahead! Fortunes will be made or lost. And for every family and investor, a dose of harsh reality, perhaps overdue. Debts are always covered, either by the borrower or the lender.