Michael Snyder Might Actually Be Onto Something...

I continue to subscribe to "The Economic Collapse Blog", even though Michael's "The stock market will crash next month" "Oh, wait, it didn't, but it will surely crash next month" predictions can get a little tiring.

The Fed finally raised interest rates for the first time since 2008, and sure enough, the market responded.

If the stock market crash of last Thursday and Friday had all happened on one day, it would have been the 7th largest single day decline in U.S. history.  On Friday, the Dow Jones Industrial Average was down 367 points after finishing down 253 points on Thursday.  The overall decline of 620 points between the two days would have been the 7th largest single day stock market crash ever experienced in the United States if it had happened within just one trading day.  If you will remember, this is precisely what I warned would happen if the Federal Reserve raised interest rates.  But when news of the rate hike first came out on Wednesday, stocks initially jumped.  This didn’t make any sense at all, and personally I was absolutely stunned that the markets had behaved so irrationally.  But then we saw that on Thursday and Friday the markets did exactly what we thought they would do.  The chief economist at Gluskin Sheff, David Rosenberg, is calling the brief rally on Wednesday “a head-fake of enormous proportions“, and analysts all over Wall Street are bracing for what could be another very challenging week ahead. 

When the Federal Reserve decided to lift interest rates, they made a colossal error.  You don’t raise interest rates when a global financial crisis has already started.  That is absolutely suicidal.  It is the kind of thing that you would do if you were trying to bring down the global financial system on purpose. 

Surely the “experts” at the Federal Reserve can see what is happening.  Junk bondshave already crashed, just like they did in 2008.  The price of oil has crashed, just like it did in 2008.  Commodity prices have crashed, just like they did in 2008.  And more than half of all major global stock market indexes are already down at least 10 percent for the year so far.

I'm not convinced the majority of investors have any more of a clue what they're doing than the Federal Reserve does.

Supposedly, the crashing price of oil is a bad thing. For me, as a consumer, it's a great thing. I can remember just a few years ago when it cost me $45 to put gas in the 13 gallon tank of a Kia Soul.

I can fill the truck I'm driving now for about $30 when the tank is low at current prices.

When I first got to the area I'm living now, 2 year ago, gas was $3 a gallon. I drove past BJ's gas station this afternoon, and it was $1.66. The Fasmart I usually stop at close to my house was $1.79.

Keep gas low. I want to see it go back to under $1 a gallon like when I was in high school. I could pull a few dollars in change out of the couch and buy enough gas to run my dad's Hyundai Excel all freaking day.

Apparently, Black Friday Was A Bust

Michael Snyder at the Economic Collapse Blog takes a break from blogging that the collapse will happen next month to comment on Black Friday.

I'd never even heard of Black Friday until I met my ex-wife in 2000. I used to get dragged around for that shopping until I finally started refusing to go.

I was amazed this year at how little people and traffic there were around yesterday. I have my children this Thanksgiving, and decided to take each of them out to breakfast alone. I took my oldest to McDonald's yesterday, which in past years would have been almost a suicide mission. But it wasn't very busy. Then I had to run to Wawa (a mega gas/convenience store) for something, and passed Wal-mart. I've NEVER seen that Wal-mart parking lot that empty, ever. And when I absolutely have to get something at Wal-mart, I go very early on a Saturday morning before the average Wal-mart shopper is out of bed.

I even took my boys to Game Stop, and while there was a line, it was nowhere near as busy as it was on Black Friday last year.

Perhaps it is time for retailers to rethink Black Friday, which seems to get earlier and earlier every year. I was afraid Black Friday sales would start after Halloween before too long, then move all the way to Independence Day.

Besides that, whenever I hear about "great bargains", that just makes me think the crap is overpriced the rest of the year.

Aaron Cleary, The Fed Funds Rate, and Economic Growth

It's almost religious dogma among the neo-Keynesian economists who determine economic policy that lowering the Federal Funds Rate is supposed to spur economic growth.

Aaron Cleary, an economist in his own right, took on this assumption. He found no data to support it .

The economists running our economy have no idea what they're doing. They are making it up as they go along.

Food Banks and Douchbaggery

I'm seeing quite a few posts on blogs I follow about food banks lately. As our economy tanks, more and more people need resources from food banks. Many are seeing lines form early in the morning, and run out of food.

When I lost my job in 2010, my ex-wife started getting food from a food bank since my unemployment check didn't come close to matching my salary. She overheard some people in line talking about how they'd hit every food bank in the area, then turn around and sell the food.

While I'm sure this isn't a representative sample of the entire food bank "industry", I'm certain those in the area of Jersey where I lived at the time are not the only ones visited by people who take a free product meant for needy people and then sell it.

A proverb I often use is "Never underestimate the capacity of people to be douchebags." If the economy does in fact tank, we'll probably see a lot more of this kind of thing.

Student Loans Are the New STDs

I've contracted this too. There truly is no cure and no hope, especially since our ever-loving government exempted them from bankruptcy. Repeat after me: our government loves us and wants us to be happy. Everything it does is for our own good, not for the good of the politicians on the lobbyists' teats.

The Entry Level Home May Be A Thing of the Past

As I slowly start and stop in traffic through northern Virginia, I often wonder if the economy's biggest problem is a lack of McMansions. Everywhere I turn, I see "New Luxury Homes- from the $450's". I've wondered why we don't see smaller, less expensive homes anymore.

I've come to the conclusion I wouldn't want a McMansion even if I could afford the payments. All I really need is a workable kitchen, 3-4 bedrooms, and an office or library (search for my commentary on the idiotic "man cave"). I don't see a need for a living room, media room, game room, etc. Plus, do you know how much work it takes to keep a house that sized cleaned and maintained? If I'm ever wealthy enough, I'd rather have a real mansion with a staff to clean it and cut the grass.

Realtor.com has an article about the demise of the single family home. Apparently, land costs too much and most homebuyers wait until longer in life to buy a home.

I guess when I'm ready to buy another house, I'm going used.

Personally, I think Virginia needs more roads. Not more McMansion owners to clog the ones we already have.

The Car Loan Bubble- Will These People Never Stop?

I came across something interesting today. Since bankers didn't learn their lesson with the housing bubble, now there's a car loan bubble. That's right. Like subprime housing loans, they sold a bunch of cars to people with poor credit and securitized them, then sold them off to investors. And when these people stop paying on their cars due to a slowing economy, that bubble will pop too.

How much do you want to bet that another government bailout will be the solution? Because the solution to corruption and stupidity is more corruption and stupidity.

Buying A House May Not Be The Best Thing For You

Like most other members of Gen X and Gen Y, I grew up hearing about how buying a house is the best investment you can make. It's not. At least, not in all cases. There are times when a house can become an anchor around your neck, holding you back from being able to make better choices in your life.

Writer "Anton McDowell" at Return of Kings (I placed his name in quotes because many of their writers use aliases) put up a post about 7 Reasons Why Buying A House Is A Terrible Idea. I concur with him.

No, I am not saying that buying a house is a global binary choice, where every single person on Earth either buys a house or nobody buys a house. That's stupid. Like the other choices you make in your life, you have to decide based on pros and cons and research what option works best for you. Not for your dad, not for your coworker, for YOU.

In my case, several years of bad choices during the housing boom left me with an upside down house I couldn't get rid of for seven years. Then in the divorce last year, the only option I had was to put it up for short sale. The house closed a few weeks ago, finally. And in addition to crushing amounts of debt from the divorce, now my once stellar credit is shot.

Being stuck in an upside down house limited my choices severely. When I lost my job in 2010 and the job market was poor in my area, I was able to get a decent job in Virginia. But I could not move my family because of the upside down house (no, I wasn't going to rent it). I don't think three years as a geographical bachelor was what ended my marriage, but it sure didn't help. But because the house was so badly upside down, I had no choice. And I had to pay to live in two places.

For all the positives of a house, there are some serious negatives. Your municipality laws are bad enough; throw in an HOA and you have to live under even more rules. Some of them are comically stupid. When I owned a condo in 2000-2001, the HOA had a really stupid policy about trucks. As in, they couldn't park there at any time or for any reason. If you were having work done, you had to get approval from the HOA for the contractor to park a truck or van. I was once threatened with a $25 fine because my ex-wife (girlfriend at the time) had her pickup parked there for less than 5 minutes. That's right; if a friend owns a pickup truck, they can't stop by for coffee. Or to drop a DVD off.

Trash was always fun when I owned a house. You have to separate your recyclables from regular trash. Oh, and you're only allowed 5 trash cans or bags or combination thereof. You can sometimes bribe the garbage men. They'll take almost anything for a $20. 

Some municipalities issue you a trash can, and you can only throw away at each trash pickup what will fit inside it. A neighboring township in New Jersey took all the issued trash cans and replaced them with trash cans that had pink ribbons. You apparently didn't have a choice but to use the trash can with a pink ribbon, whether you support the cause or not (and I don't). I support my own causes. I shouldn't be forced to support anything just because some municipal bureaucrat thinks everybody should.

In New Jersey, nobody had done a tax assessment in years. So they decided it was time. At that point, my property taxes were calculated on some past value of about $80,000, and even then my property taxes were $5500 a year. I had just refinanced the house for $180,000 thanks to my bad decisions during the housing boom when I was naive enough to listen to the opinions other people pulled out of their asses. I was terrified of what was going to happen to my property taxes. Oh, and the appraisers the government hired; you had to let them in your house. You know, so they could appraise it. You had no choice in the matter.

Somehow, none of this got finished before I sold. Whew! What would really suck is, after the bubble burst, housing values in that area tanked. My short sale price was far less than I bought the house for in 2001. They got a good deal on it. So imagine having your housing value for property taxes recalculated during a boom, only to find the values of houses in your area drop like rocks in the bust. How many more decades do you think it will be until they reassess property values for property taxes again?

Before I go on too long, stop basing your life on the opinions other people pull out of their asses. Buying a house is NOT always the best option. Sometimes it is. Sometimes it isn't. It all depends on what YOU want out of life. If you're going to settle in one area and be there for a long time, it could be a great idea. If you like to be mobile, renting might be a better fit for you.

I'm tired of hearing people say "If you rent, you're just throwing money away." No, you're not. It's an economic transaction between yourself and a landlord. And there are scenarios in life where this is better for you. Water heater bust? Put in a work order. If you own a house, a water heater can run you hundreds of dollars. Toilet clogged? Work order.

My ex and I had to absorb some family members due to economic reasons (theirs, not ours- long story, and it put a LOT of strain on us financially and otherwise). One of them was really good at clogging toilets to the point where a plumber had to be called out. The plumber they liked to call would usually charge $300.  This usually happened when I was at work, so I'd get home to find out a check was written for $300 to unclog a toilet. They really loved that plumbing company; at least as long it my account paid for it. This is a scenario where renting an apartment is preferable. "Hello, maintenance? Shitter's full."

Sure, there are drawbacks to renting, especially in apartments, such as noisy, uncouth upstairs neighbors who can't even roll over in bed without making a noise and who spit and throw cigarette butts of the balcony. Some of which land on your car. And if they have children and are shitty parents, there's lots of running, jumping off furniture, crying, and screaming. And meltdowns on both the part of the children and the shitty parents.

But there are occasional times when it's a better deal for you.

Captain Capitalism (Aaron Cleary) put up a quick post on how Danny from 504 is planning to contribute to starving the parasite class.

We're probably reaching or soon will be at a tipping point where there will be fewer people contributing to the taxes that fund the programs that allow other people to not have to work to pay taxes.

Aaron works the math:

But I did some very quick math.  Since the socialists and government has driven him to go Galt, what would he have contributed to society had he not been deterred?

Well, he would presumably work another 30 years until he was 70.  Pro-rate it at $50,000 per year and a 40% tax rate, that's $600,000 that will NOT be going to welfare bums, whiners, complainers and other general parasites on society.

Now imagine if you will the 75 million male workers in America just saying, "to hell with it, I'm done.  It's minimalism for me."

If they did that it would cost the government/parasitic classes $45 trillion.

What is going to happen when this tipping point is reached? It won't be pretty.

Infowars Caught Being Reactionary and Incorrect

I know, the headline is as obvious as one about me caught with a glass of cold beer.

I saw something on Facebook the other day about Chase stopping international wire transfers. I've been occupied with some other things, and I don't have any Chase accounts or money (much less money to wire overseas), so I ignored it. I saw it both in Alex Jones' and one of his writer's feeds.

John T Reed, a journalist and expert in these matters, looked into it. He found that Infowars was wrong.

The issue had to do with levels of accounts. Chase went from a "one size fits all" account to small business and large business. The small business accounts don't have the ability to wire money overseas, but have smaller minimum balances. The larger business accounts have a higher minimum balance and the ability to wire money overseas.

I used to listen to Alex Jones. I stopped about a year ago. Mostly it had to do with time. His 3-4 hour podcast was a huge commitment. Plus, he had a buttload of commercials that had to be skipped. Also, as a radio show, it seemed like he wasted so much time just restating himself after every single commercial break. I don't have anything against Alex Jones other than his reliability. There are some amusing YouTube videos about failed Alex Jones predictions. In July 2010, I was listening to him on a drive from New Jersey to Virginia for a job interview. That day, he was predicting an imminent war between Israel and either Syria or Iran within two weeks. We're still waiting.

Working To Death

I've asked a few times before: "When did the American Dream become debt slavery?"

Recently, I heard of an investment intern who literally worked himself to death. And that kind of even should leave most of us asking "Is it worth it?"

Return of Kings blogger "Western Cancer" (why can't people just use their own names? Anonymity is bullshit!) explores this briefly, and relates experiences from people he knew in college with dreams of power and money. He summarizes:

Whenever I pried I never got a straight answer as to why these people were willing to give up the wealth of their youth for the riches of the future. The girl never wanted to be a lawyer because she respected the law. The guy never wanted to be a doctor because he loved humanity and wanted to help all he could. They just wanted status and a salary.

That sounds about right.

Medicine and law are two fields that require an enormous commitment during your youth if you want the money and the power. I've never figured out what the benefit is to working 120 hours a week as an associate, or a medical intern forced to go days without sleep while working shifts. The only adequate explanation I've come across for this is "Well, the old guys had to go through it. We can't just let the young people coast, can we?"

Right, so does working 120 hours a week make you a better lawyer or going days without sleep make you a better doctor? If so, I'd love to hear how.  Whenever I go long periods without sleep, it usually makes me worse at what I do. Whenever I work excessive hours, it likewise makes me worse at what I do.

When I was younger, it might have been easier to sell me on the "work long hours and you too can have lots of money and power". As I approach 40, I don't get the point anymore. Work is what I do so I can do the things I want to do. It's not what I do so at some point in the future, maybe I'll be able to enjoy something.

I get that sometimes you have to make short term sacrifices for a long term payoff, but young people, if your chosen career is going to require you to make a ton of sacrifices for no other reason than "everybody else had to!", you should probably rethink it. Don't get too far in life before you find yourself asking "What's the point?"

The only way to change that kind of game is to not play it. Don't go into medicine. Don't go into law. Don't go into investment banking. As the old f*cks start dying off, then come back and say "I'll do it, but I'm going home at the end of a reasonable workday. I won't just shuffle papers for 10 years in the hopes of a payoff later. I won't go days without sleep as an intern. You figure it out if you want me in your career field."

Seriously, what is the point to that kind of money and power? I would much rather spend my time at backyard parties like one I went to last night than at some kind of high society cocktail party.

Foodstamp Surfer Dude

I've noticed a lot of people are up in arms over a Fox News story about some California surfer who doesn't work, buys lobster on his food stamp card, and hangs out and screws hot chicks (Hat Tip to South Park).

I haven't watched the video yet. And as a productive taxpayer who is forced to support two households thanks to easy no-fault divorce laws, I'm not as mad as most of you are.

Why does everyone always act so surprised when they see "stories" like this? The thing on my mind is, how did you NOT see this coming, and of course, where do I sign up?

This is the whole point to "Going Galt". This guy is simply gaming on a system that is set up to encourage parasitism. Who can blame him? This is pretty much part of what Aaron Clarey urges you to do in "Enjoy the Decline". Why should I slave away in a cubicle to support a parasite like this? Why not be one? If the system is going to punish me for productivity, then screw it. I might as well stop playing. This system depends on people like me working hard, advancing in our careers, and paying lots of taxes as we advance into the ever increasing stratosphere of the progressive income tax pyramid.

For what? The pool of people like me is rapidly decreasing.

Sooner or later, the bill will come due for the system that encourages people like the Foodstamp Surfer. And by then, people like me will have found a way to join him. Without a productive class, sooner or later, the government will not be able to borrow from China or print more money to cover the parasite class. Then things will collapse.

And I'm not mad at Foodstamp Surfer. I see his game. He was smart. I'm mad at the system, and the non-math doing bleeding hearts who created and perpetuate it. I'm mad at the politicians who keep expanding it because free votes. I'm mad at the voters who have voted in a system where the majority has the most to gain at other's expense, instead of suffrage where the voters should be the ones who have the most to lose at other's expense.

Enjoy the decline!

Thoughts on Atlas Shrugged

I don't think I'm going to do this as a book review. I'd say the book is well enough known that I don't have to describe the plot in detail.



Lately, the kind of blogs and YouTube channels I follow often speak of "Going Galt", which I knew came from Atlas Shrugged. Recently, I was walking down a street with a few companions. We passed a car with a bumper sticker advertising a popular Presidential/Vice Presidential candidate from the last couple selection cycles. One companion said those stickers cause him to want to smash windows out of the car. (He obviously does not; that would be vandalism.) I commented that those stickers cause me to want to "Go Galt", and remove my productive capacity and tax paying from the economy, and leave those people to the world they think they value. I guess I understood the point to Atlas Shrugged before I read it, except once I "Go Galt", I don't have a reentry plan.

I started getting into Atlas Shrugged this year (a few weeks after the incident in the previous paragraph). I'd heard of Ayn Rand more than a decade ago, and read many quotes and summaries of her works. Earlier this year. I was trolling Netflix, and found "The Prophecy of Atlas Shrugged". It was an interesting documentary, so I watched the first part of the movie and bought the book.

This summer, I saw part II of the movie and finally started reading the book.

The writing isn't bad. For the most part, as a libertarian, I don't have a problem with most of her philosophy. Obviously, thinking people aren't likely to agree on every point, and so Rand and I don't, but I enjoy quite a bit of her view of the world.

The sex scenes in her book, at first, made me wonder if Ayn Rand ever actually had sex herself, or if she had normal people sex. The dialog when Hank Reardon and Dagny Taggart first scored was my first clue. All that talk about sex being animalistic.

I know Rand was an atheist. I know from a Christian standpoint, some people have kind of a pious dislike for the concept of sex, at least externally. Nobody knows what they think on the inside, or what they're hiding, because it seems the people who project the strictest image almost always end up hiding the biggest perversions. I'm not sure how the atheist "piety" against sex fits in, but when sex comes up in the book, it often seemed to be considered animalistic in the minds of the characters.

As I reached the end of the book, I think the animalistic part of sex she writes of may have been a stab at the dualistic nature man is forced to take by the world's thinking. (This, I believe, fits both Rand's atheistic worldview and my Christian worldview). By the time John Galt bangs Dagny in the railroad tunnel, it's never mentioned. Part of Hank Reardon's break was recognizing that the only power his wife and her world had on him was him submitting to their values. Once he stopped caring what they thought of him, he was free.

I'm trying to decide how to describe the characters. They're not entirely flat or two dimensional, but I will say they all seem to converge on a few points. Any time somebody delivers a monologue or speech, it's the same voice. It doesn't matter if the monologue is delivered by Reardon, d'Anconia, the pirate Ragnar, or John Galt, it is the same voice. The speeches by the parasites and looters suffer from the same uniformity. But this is probably what happens when a philosopher uses fiction to communicate a message.

Everybody also seems to converge into the same stoicness when confronted. d'Anconia always stoically defers to Reardon, as does Ragnar, no matter how much abuse is heaped upon him. I'd love to think a man so dedicated to delivering me from a "Plato's Cave" would be so dedicated to my attempts to defend the cave.

The book wasn't too dated, except for newspapers, trains, and long distance phone lines. Other than that, it's not so much set in time. The movies seem to have worked around this seamlessly; where people have BlackBerries and instead of newspapers, they're watching Faux News. The second movie has text at the beginning explaining that economic reasons caused a resurgence of rail travel. This probably should have been in the first movie, which left some people wondering how rail travel was important enough in our time to justify this movie.

Also, the privately owned companies aren't quite as common now. There wouldn't be a "Reardon Steel"; it would probably be a subsidiary or AT&T or Monsanto or something. I'm not sure how the "Equalization of Opportunity" act would work now. The book depended on all businesses being privately owned, but still having stockholders and boards.

Rand gives voice to my "Cargo Cult Riches" theory even though she doesn't call it that. The characters surrounding the disposition of the 20th Century Motor Company claim "I had everything Starnes did, and I should have been able to succeed!" Yeah, everything but knowing what to do with it, and knowing how to run a successful business.

Rand raises an interesting point on page 737, where the philosophy professor, Hugh Akston, asks "What is wrong with a philosopher running a diner?" Indeed. Also, earlier in the book, the doctor from the "State Science Institute" seems to believe that the great scientific minds should be sequestered away in his government, non-profit center. He implies it's wrong for great minds to work on commercial products.

I think this mentality that if a man is truly great at something, he should only work in a certain field is bullshit. What is wrong with a philosopher running a diner? I don't see anything. Imagine being able to go in for a cup of coffee and a discussion with a great mind, without having to go to college. What is wrong with an engineer or scientist working on a results based commercial product that will ultimately drive the economy? We seem to have turned professors into some kind of priesthood, where you must go to the temple in order to obtain their knowledge. This is wrong.

Besides, this whole "hyper specialization" thing is wrong. In some cases, sure a man may need to hyper focus on a narrow topic, but not all. What's wrong with having a broad base of knowledge? I don't believe in a single-discipline approach to life. I'm committed to learning outside of my field. I've studied theology, philosophy, economics, history, weather. I prefer a multi-disciplinary approach to live and work.

I didn't make a note in the book or highlight the passage, but I saw some Orwell pop up in the form of "freedom is slavery". I have no idea if it was a hat tip to Orwell. I don't even know if Ayn Rand read his book.

The looter (liberal) mindset seemed accurate enough. They keep passing regulations and taking control over the economy, while it falls apart farther with each new act. Then when they ask Dagny or John Galt what to do, and they reply "What about cutting regulation?" they reply "Oh, no, we couldn't do that! There's an emergency going on! But you have to tell us how to fix it. You can tell us how to fix it!" Idiots.

This is the kind of mentality I see all the time. "Schools are failing because there isn't enough money". "OK, here's more money. Wait, schools are still failing." "Yeah, schools are failing because there isn't enough money". At what point do you start to ask whether money is the deciding factor? The economy is in a slide because Keynesian models say there isn't enough government spending. Yet we have record levels of government spending and debt. But those who follow the Keynesian models seem to think we need more. Sure, 16 Trillion isn't enough. Would the economy work with 20 trillion in debt? (No, but they'd argue for it anyway, even though it won't work).

The book ended kind of vague. Eddie Willers was trying to start a dead train. I guess he died with it. Then the book switches back to Galt's Gulch where the main characters are planning their comeback. I figured more than halfway through the book that Eddie Willers probably deserved a spot in Galt's Gulch, but it was Ayn Rand's book and I guess she disagreed.

The biggest problem with "Going Galt" or running away is, you'll be followed. I assume by the time Galt & crew decided to come back and bring their minds and production capacity with them, the world had collapsed far enough they would get no resistance. But how long would it be before the "looters" start back up? "You have so much. You're greedy. You should sacrifice your profits because other people need things. You should give them jobs they can't do. You have plenty of jobs."

Then the cycle repeats. I have a lot of conservative and libertarian friends who talk about leaving and forming their own society. I keep reminding them that if they pull off a productive, free society, liberals will start infiltrating and bringing their values with them, and we'll be right back to square one. So while the return of Atlas might get a few generations, surely the cycle will repeat eventually. Rand didn't address that as far as I know. I'm planning to read some of her other books, so maybe she covers it somewhere else.

My own idea for "Going Galt" is far less complicated. My idea is to divorce myself from a nationality. I'll get passports from a few different nations, and spread my assets around so no one country can ruin me. Most people think expatriation is packing up their 2400 square foot house in America and relocating it somewhere else, and picking up where they leave off. I don't see it that way. Expatriation to me means having any and no nationality. I'm a citizen of me. We'll see if I ever get it pulled off or not.



As a side note, while drafting this blog post, I came across some excerpts from Ayn Rand's column in People in the early 80's before her death. She makes an interesting comment during some reference to a speed prescription, which supposedly led to her challenging Liza Minneli to a jaguar roaring contest and writing a 25,000 word extra chapter to Atlas Shrugged by biting through toilet paper:

 Because Ronald Reagan has deposed Jimmy Carter, and I predict that by 2013 my influence will be profound, and a new generation of leaders will hallow my name, and devotion to self-interest and capitalism and the free market will not be the exception but the rule, and these leaders will naturally share my disapproval of religion, my support of abortion rights, and my love of Godiva chocolates. I have to stop writing now, because I have chewed through my typewriter.

It stood out to me because this is 2013, and her book is undergoing a resurgence about this time. It has never actually been out of print. I obviously don't agree with all her opinions, but consider her an insightful philosopher nonetheless.

She's mostly a talented writer. Can you imagine how dry Atlas Shrugged would be if it were non-fiction?

You can buy it here.

Will Chicago Be The Next Detroit?

Interesting article here, showing some of the trends Chicago is undergoing in its own decline.

I am rapidly becoming convinced that pensions were one of the stupidest ideas employers ever had. Sure, they're great for you and me, free money to not come to work. But the money has to come from somewhere, and that somewhere is managed by politicians and cronies who are on record at being poor at managing money.

This part stood out to me:

In addition to the pension, law enforcement, and emergency response concerns that remind us of a certain bankrupt city across the lake, the report notes that three of Chicago’s four largest private employers (JP Morgan, Accenture LLP, and Northern Trust) are in finance. It seems like blue cities have a codependent relationship with the one percenters progressives claim to hate.

Blue areas dependent on the 1%?

But then again, who else can pay off the politicians to let them operate without excessive taxes and regulation? Who else can buy influence?

I'm not counting on having a retirement when I reach that point in 25-30 years. And people in places like Chicago better start accepting they never should have trusted politician promises in the first place.

I think I picked the wrong summer to read Atlas Shrugged.

Fukenfurloren

Remember when Volkswagen would advertise with those nonsensical German sounding words like "farfegnugen"? That's what "fukenfurloren" is: a nonsensical German sounding word. If it were a real word, it would translate to "F**king Furlough".

Hundreds of thousands of government workers are being "furloughed" right now. It's a bullshit political ploy by the power elites running the government to look like they're being tough on budget cuts. In reality, it will do nothing but inconvenience (or harm) people caught in the crossfire between a bunch of unaccountable elites who are not undergoing any inconvenience for this.

Government workers are being furloughed for 20% of the time last week and the next ten, for a total of eleven. Each agency or service can allocate these however they want. I'm being furloughed one day each week. Others are taking two days at a time, since it's 20% of a two week pay period.

My furlough day is Friday, which I'm happy about. Many government workers aren't allowed to have a cool day. They lose 20% of their pay and productive time, and get stuck with Thursday.

A problem many government workers are running into is, the 20% of their pay that is being taken away is the 20% they live on. That's the case for me. I automated my finances, so each paycheck, 1/26th of all my obligations for the year is automatically put in another account, which my bills are paid out of. Then I give my ex-wife her cut. Until the house sells, I still have to pay utilities and insurance. My paycheck still supports two households.

I'm not trying to whine about it. I'm doing the only thing I can: buy everything I will need for the next three months while I still have money. The divorce maxed out my credit card and wiped out my savings, so there's not a lot to work with. But I think with the exception of some perishables like cheese, I could remain in my "basement command post" for the next three months and survive. I'll get sick of rice, Ramen, mac & cheese, Hormel, Sun Chips, etc. But I could survive.

Talk about the perfect storm: a divorce AND a 20% reduction in pay. I won't even be able to see my children again until October, because mathematically, I can't afford the gas and tolls to drive to New Jersey to see them. In the immortal words of Beavis: "This sucks!"

Another part of my furlough survival plan is to get free food. Yesterday there was some kind of tech expo at work. I showed up, talked to vendors, and got some swag. There was also a provided lunch, so I ate that, and left the food in my desk for another meal.

My furlough eating out plan will consist of going to Costco for lunch on weekends. You can get a pretty good meal from the free samples. I've done that a few times, although I spit the laundry detergent out. That stuff was nasty!

The "One Size Fits All" American Dream

For those of us in "America", we've spent our lives hearing about the so called "American Dream". It's coated up in pretty words like "freedom" and "liberty", but then starts to devolve into things like "own a house" or "have a college degree".

Then things like marriage, family, expensive vacations, large TVs, and expensive cable packages got added to it. Also, public schools, and an expansive, intrusive, and expensive social safety net.

And having to send our children to college.

When did our "American Dream" get wrapped up in debt slavery?

Now the "American Dream" includes having our private parts molested at the airport in the name of "safety" and "terrorism". And not being able to travel with toothpaste and water bottles.I'm not entirely sure about the toothpaste thing, since I refuse to fly under the current system. But I heard a foreign woman had a water bottle confiscated. She was confused as hell because other countries let you bring water on the plane.

Aaron Clarey points out how the "American Dream" seems to be designed for a certain class of citizen who is a good cubicle wage slave:

Remember kids, home ownership and the American dream isn't for you.  It's only for older people and good little corporate cogs who did what they were told.

Whatever it used to be, it is no longer. Don't take your personal future plans from advertisers, media personalities, and parrots. Chart your own course. 

Mortgage Rates Are Rising- It's Going To Be Harder To Buy A House

According to The Economic Collapse Blog, mortgage rates are about to start rising. They have been kept artificially low for a long time thanks to the Federal Reserve, which is about out of tricks.

Low interest rates allowed a lot of people to buy houses, and to buy even more expensive houses. McMansion, anybody? One benefit to rising interest rates is, they will likely push housing prices down after a while. It's real easy to finance a $350,000 house at 3%, but at 9%? Forget it.

We've been hearing for so long now that owning a house is the "American Dream". I'm starting to wonder if we're not just parroting some marketing bullshit thought up by Realtors and mortgage companies. There are certain benefits to owning a house, although don't forget that even though you own it, you can still lose your property over tax and zoning issues. It's not entirely "yours".

The blog post I linked said rising interest rates are causing more people to turn to ARMs (Adjustable Rate Mortgages). I would warn you not to do that, but most of you won't listen so just knock yourselves out and cry about it when it backfires. I won't be listening.

My house is up for short sale as a byproduct of a bad housing market and a divorce. I'm not in a hurry to own another one. In my case, owning a house became an anchor around my neck dragging me down and not allowing me to make a few moves I wanted to. It forced me to live 180 miles away from my family for 3 years because I had to move away to find a stable job that could support us.

Don't base your own life plan on the bullshit other people are parroting. Do what is right for YOU at the time it is right. Don't get jealous because everybody else owns a house. There are some times in life during which renting is probably better for your. It's not throwing money down the drain any more than eating out is. It's an economic transaction, pure and simple. One size does not fit all.

Cargo Cult Riches

Over the last few weeks, we've seen gold drop. We've seen Bitcoin ramp up then drop a little bit.

I have an idea of one of the forces behind things like this, besides deliberate manipulation.

Most "investors" seem to be working from a cargo cult mentality. They don't understand what they're doing or why they're doing it. They only have one or two data points from which to figure "I better do this!"

They see people "getting rich" in stocks and think "OK, I just need to get into stocks, and I'll be rich too!" Or they see people "getting rich" in real estate, and think "OK, I just need to get into real estate, and I can be rich too!"

But they don't know what the people "getting rich" in stocks or real estate (or yet another investment) are doing or why they're doing it. All they see is people "getting rich".

Gold is about the same. People listen to Glenn Beck and other gold pitchmen and freak out and buy gold. I used to listen to Alex Jones. He pitched for gold almost hourly. Wouldn't shut up about it. Now he's in some  MLM pyramid scheme selling overpriced vitamin powder.

Let's look at stocks. People buy stocks to "get rich", but don't understand why stocks might make them rich. As I said above, the same applies in real estate. People have a flipper mentality. They think "I buy the stock (house) low, and I sell it high! Preferably within 15 minutes." They don't understand that the reason people in stocks and real estate "get rich" is not because they buy the "right" stock or house and flip it right away. People in both "get rich" through long term holding. You aren't supposed to buy a stock you're going to sell in the next 15 minutes. You're supposed to consider stocks based on what kind of dividends they'll pay you.

For this part, I'm talking out my ass because I don't really own any stock so we're going with my limited understanding of the theory. My employer sponsored retirement is in "funds". Lets say you buy a single share of stock for $15. Your $15 in your bank account has been transferred in value to the single share of stock, so your net worth remains the same. You can sell the stock for $15 and walk away even. But this share of stock pays $.15 in dividend. Over the course of a year, if the stock holds steady, your net worth is still $15 in the stock, but over the course of the year, you'll have earned $1.80 in dividends. So next year, you buy another $15 share of stock int he same company, and now you're earning $3.60 in dividends. By the way, this dividend income is only taxed at 15% because Warren Buffet.

Obviously, a serious investor will buy enough shares of stock to at least get a cup of coffee at Starbucks (after taxes). Let's say you could pull off enough stock investment to ensure approximately $60,000 per year in dividend income. Your income taxes on this are 15%. In some areas of the country, you could live on this alone. That means no commute; no job; none of that BS.

The same principle goes for a house. Say you purchase a house for $100,000. You put 20% down like a SMART investor. At 5% interest, $80,000 financed over 30 years will come to about $550 per month. Tack on taxes and let's say we're at $900 per month, which is probably unrealistic outside a shithole like New Jersey (where I own an upside down house that can't sell that charges me $5500 per year in property taxes on a four bedroom cape cod on .18 acres).

You rent the place for $1000 per month. That's $12,000 per year.

Now lets say you "flip" the house rather than rent it. You put $20,000 worth of work into it and "flip" it for $130,000. I doubt that's possible, but this is theoretical. Which option gives you more? A one time theoretical $10,000, or $12,000 per year in rental income?

Most investors don't think that far, which is why I call them "cargo cult investors". They scream bullshit like "I just have to find the RIGHT stock." "I just have to find a house and flip it!" "I have to buy gold 'cause Glenn Beck says so!"

Yet they don't understand why. And when prices go south, they flip the hell out and sell off. They are incredibly prone to market manipulation. On one hand "I have to buy gold! You need gold too! If the economy collapses, gold will save us!" On the other hand "Oh, crap! Gold is dropping. Sell! Sell! Sell!"

That's what happened in 2008. The stock market dropped, so people dumped their retirement plans. And lost a buttload of money. Those who stayed in saw their plans come back up. A friend showed me the Excel graph he keeps of his retirement account. There was a drop in 2008, followed by a SHARP increase in 2009-2010. Not only did he maintain the monthly retirement contribution; he upped it. So while the price of shares were down, he was buying more for the same amount. Then when they came back, his value soared.

Today's lesson is, don't be a cargo cult investor. If you don't know what you're doing, ask somebody. Preferably somebody outside of your family and social circle. Don't take advice from people who can't demonstrate success in the area in which they're offering advice in. Just smile nicely while you say under your breath "You're full of shit. You've never done this. You just read it in a mass-market paperback bestseller aimed at idiots like you who will eat this up and never act on it. I'm not going to listen". 

Casino Spending Is Crashing

There's an interesting post on The Economic Collapse Blog about "11 Economic Crashes That Are Happening Right Now".

Some of them are standard things you'd read about. It mentions the Bitcoin and gold crashes (not sure if those are really crashes or just the effects of over-eager cargo cult investors, or deliberate market manipulation). It mentions oil being down. One thing I thought was interesting is Casino Spending:

#7 Casino Spending

Casino spending is declining again. Many people (including myself) would consider this to be a good thing, but casino spending is also one of the most reliable indicators about the overall health of the economy. Remember, casino spending crashed during the last financial crisis as well. That is why it is so alarming that casino spending is now back to levels that we have not seen since the last recession.

 

That's interesting. Considering that many states live off the proceeds of casinos, I'm sure we'll be hearing about tighter budgets and the need to increase fees and taxes. I heard something Friday that Maryland is going to start taxing landowners for the rain that falls on their property. What other idiotic schemes will governments come up with while avoiding the reality that they are unsustainable?

25 Things You Should Be Doing- The Economic Collapse Blog

There's a great post on The Economic Collapse Blog about things you should be doing to prepare for, what else, the economic collapse. I've been studying this for a few years, and I believe it is going to come. I don't know when. Four, five years? This year? Maybe.

In the meantime, if you do prepare, you're called a "Prepper", because that's what passes for intellectual discourse in 21st century America. We can boil down and dismiss an entire philosophy with a single, silly word. "I'm not going to pay attention to you because you're a prepper".

I even know people who are "prepping", who keep railing about "those nutjob preppers". There's some kind of cognitive dissonance between their actions and the actions of everybody else doing the same thing. "These nutjobs are burying guns in their yard!" "Dude, you buried a gun in your yard." "Yeah, that's different! I'm not a nutjob!"

Of all the tips, if you do choose to prep, you should be following this one:

#25 Keep Your Prepping To Yourself
Do not go around and tell everyone in the area where you live about your prepping. If you do, then you may find yourself overwhelmed with "visitors" when everything falls apart.
And please do not go on television and brag about your prepping to a national audience.
Prepping is something that you want to keep to yourself, unless you want hordes of desperate people banging on your door in the future.

Inevitably, some poor starving idiot who scoffed at you is going to show up at your door begging. He'll probably tell other people "Hey, that guy prepped! Lets go to him!"

In which case, you would be in the right to say "Screw you. I saw it coming, and I did the work to preserve myself and my family while you watched Real Housewives and scoffed at people like me, calling us nutjobs. Find your own food."

Although by that point, you should probably be up in the mountains or something, away from the hordes of people who listened to entertainers passing themselves off as news casters.

I heard something the other day (not sure where) that goes:

In prosperity, your friends find you.
In adversity, you find your friends.