Archive for May, 2009

I’ve been contemplating dropping my satellite service and hooking up a computer to my TV and watch shows on Hulu and iTunes for entertainment.    I began investigating this seriously then discovered several flaws in my diabolical plan.

First, when I tried to use Hulu I received a friendly message that I needed to upgrade my flash player.  Hmm….so I might be subjected to frequent requests to “upgrade” my player every few months eh?

Second, iTunes shows aren’t exactly free but I’d be willing to pay for the content but it seems iTunes is heavily laden with DRM and I’m not sure the viability of  “broadcasting” shows to numerous TVs in my household.

Third, I’m wondering how obsolete all my equipment will get with time.   To illustrate the point, one of my pet projects I’ve been working on during my time off was to convert all the video I’ve recorded over the years (in various formats analog, digital 8, dv, etc) onto my computer.    My original plan a couple of years ago was to edit and put all the video on DVDs but then BluRay came out promising to be the be-all end-all of video format.

Of course, now I’m hearing about 300 gb and 1 tb optical disks that may be coming out in the near future so why bother burning anything to BluRay?  I’m sure in a year or two we’ll have PurpleRay then GreenRay and then something else so I finally opted just to convert the video onto hard drives and watch the video directly from the computer to the LCD screen.   It actually works great because I don’t have to worry about 4:3 or 16:9 formats or whether to burn something onto DVD-R or DVD+R or DVD+RW or BluRay etc.

Unfortunately, there is always a catch and I’m worried that the video format I’m converting video to won’t be easily readable in the future.   There are a ton of video formats: mpeg-2, mpeg4, mov, avi, wmv, etc.  Which ones will last and which ones will not?   Initially, putting the video on my mac was easy but now I’m running into many problems which I won’t get into here.

With regards to Hulu, I’m wondering what hoops we’ll have to jump through to watch TV.  Upgrade flash players every few months?  Upgrade browsers? Buy new hardware?  Increase internet speed?  Sign a service agreement every 3 months? Just thinking about it is already getting me frustrated so I’m not sure I’ll ever take the plunge.

Hulu may be “free” if you don’t factor in the “aggravation” cost and I can only compare it to the iTunes experience.  At first iTunes was easy and friendly but now iTunes is a bloated program with Genius, DJ, Music, Movies, TV shows, Apps, and CONSTANT service agreement legalese that you have to agree to every few months!  Oh yeah,  iTunes needs to be upgraded every few months too.

Hulu may seem free but you don’t get something for nothin’ and just wait until Hulu execs try to figure out how to squeeze money out of it; that’s when the aggravation will begin to take hold!

There is now talk of adding a VAT (Value Added Tax) or something similar to help increase tax revenue for the government but before we go down this road I’d like for someone to explain why we spend at least $40 billion dollars for prisons in this country. Think that number is too high? If I’m not mistaken we have about one million people in prison and the average cost to house a prisoner (food, clothing, healthcare, etc) is about $40,000 per year.

Before we begin adding a whole new layer of taxation how about we look at controlling the out-of-control waste in this country.   I don’t understand what the rationalization is for $40k per year per prisoner.   We do want to keep murderers and rapists locked up forever but I can’t believe that we have one million murders and rapists.

I firmly believe part of the problem here is education.  I’ll wager  that MOST of the people in prison have little or no education and if that is the case then I’d rather have one million productive workers than one million celled chumps.     So why isn’t there a focus on education?   No doubt there are always arguments about giving people “free” education but it’s clear that the alternative to “free” education at a cost of about $3k – $10k per year per student is much better than 40k per year per prisoner.

Many people are noticing a recent surge in crime and there’s no doubt that unemployed people have turned to crime but I also suspect that parents have cut back on day care or after school programs (e.g. YMCA) which have now unleashed hordes of restless kids onto the city and suburban streets.   With nothing better to do, kids will vandalize and commit petty crimes and this boundless energy is better served in a classroom or some after school program.

As I drove home today from my kids school I saw three teenage boys looking and acting rather suspiciously.  As I drove by they hid something behind their back attempting to be rather nonchalant but I decided I better check out what they were up to so I drove around the block again and saw those same kids hiding something rather suspiciously.   I think it might have been a crowbar or some type of wedge object to pry open a house but after they saw me looking directly at them twice they decided they better move off somewhere else.  I probably stopped a crime but those punks will probably just move on to another house.

I hope someone out there can explain prisons and the prison industrial complex.

“Would you work at McDonald’s flipping burgers?” I asked.

“Not in a million years!” he retorted.

“But what about your family?” I quizzically asked as I turned up my eyebrows.

“We’ll cross that bridge when we get to it!” he said as his face went flush and he took his right arm and rubbed the back of his neck deeply.

That was the discussion I had a few days ago with a buddy who has now been laid off twice in the last 8 months. He lost his job of 15 years back in October of 08 then picked up another job in January 09 but got laid off again after a few months of work.

So we were having lunch and our discussion turned to the dialog listed above. Essentially we were asking ourselves if we would cross the job threshold, meaning would we pursue a job in the labor workforce working at or slightly above minimum wage to make things meet.

My buddy absolutely refuses to even consider an hourly labor job while I wouldn’t mind it if it came to that and I’ve seen many a millionaire fall from their good graces down to your local Wal-mart greeter (e.g. Madoff investors) but my buddy still refuses to accept that he may need to do it.

My friend also made some interesting observations.  He has some neighbors that just purchased new vehicles like Mercedes and Lexus and they’re doing fine and we got into a discussion about John Edward’s famous “two Americas” and he agreed.  It seems if you are employed as an executive for a company then there isn’t much to worry about as the wealthy are doing just fine but if you’re not part of that “elite” group then you might have an entirely different story.

I still have a bit of money left before I even begin to fully consider getting an hourly job but if things keep deteriorating will it be too late at that point in time to try to find an hourly job?

It’s an interesting situation that we may all need to carefully consider soon enough.

We went for a drive to a nearby city this Memorial holiday to visit a relative and we were surprised at the low volume of traffic into/out of the city before and after our trip.   The gas stations weren’t busy, the traffic wasn’t backed up as it normally is during a busy holiday weekend.

I got the sense while driving that perhaps things are getting worse from an economic stand point.  It wasn’t a matter of traffic being light but restaurants, marinas, and shops were all fairly light and empty.   The only place that had quite a few people were the movie theaters.   We went to one theater to watch The Night At The Museum 2 but were turned away when the theater put up signs reading “ALL SHOWS SOLD OUT” so we headed to another theater and barely found seats for all of us.   During the last depression, “escapism” was THE thing to forget the misery of daily existence and perhaps we are at the cusp of a resurgence of that activity.

It will be interesting to see what economic data comes out in a few weeks to reflect May but things didn’t appeared very dreary this holiday weekend.

A few people have commented that they are seeing ads on my blog but I don’t run ads so I’m curious how/why this is happening.   A reader e-mailed me the following screen shot from his computer.


Clearly there is some strange ad which appears to be some sort of flash overlay.  I’m wondering if my site has been hacked.  Any ideas?

I periodically get emails from readers asking me if I’m still investing and the truth remains:  Until government meddling stops and we have a complete AND stable “rulebook” not subject to whims and changes from Administration officials, I am sitting on cash and the investments I have now.   I am not investing any more money in any way shape or form (no 401k contributions, no IRA, no cash increases to any brokerage accounts).

Unfortunately, Bloomberg is reporting that the administration plans on stripping the SEC of some powers and handing them over to the Fed.   While I don’t care about the policy changes they will ultimately have an impact on the stock market and investors perception of an ever changing rulebook.

Imagine if you and I sat down to a poker game and during the course of the game, I decided that deuces would be wild and a few moments later, I stated that you could only cash out your green chips and not any color for the next hour.   After that, imagine if I said any disputes that arise during game play would be settled by my Uncle Bob in Seattle.   Imagine that I change the dispute resolution from Uncle Bob to Aunt Donna in Phoenix a few moments after that and then imagine that I changed deuces wild to One eyed jacks wild.   Would you continue to sit at the table and play in this scenario?  Does this make any sense to you?

Well neither does this:

The Obama administration may call for stripping the Securities and Exchange Commission of some of its powers under a regulatory reorganization that could be unveiled as soon as next week, people familiar with the matter said.

The proposal, still being drafted, is likely to give the Federal Reserve more authority to supervise financial firms deemed too big to fail. The Fed may inherit some SEC functions, with others going to other agencies, the people said. On the table: giving oversight of mutual funds to a bank regulator or a new agency to police consumer-finance products, two people said.

Wall Street has always been a casino but it feels like the regulatory agencies are the roulette wheel (instead of investments) and where ever the marble lands determines which agency gets to make decisions and rules until the next game play.

Who knows what the next few weeks will bring…..certainly not my cash into the stock market.

A friend who goes camping every year during the summer was kind enough to inform me that all camping sites within a 300 mile radius of where I live are booked solid for the summer.   I was pretty amazed since I had been planning on taking the kids camping during the summer during my extended unemployment but those plans now seem to be a wash.

Evidently many people are deciding to simply stay near home and drive to camp sites this summer as a potential summer vacation and I find that fascinating.   I have a subscription to TravelZoo’s best deals of the week and each week the deals keep getting better and better.   Recently I’ve received Cancun trips (all inclusive) for as low as $199 for 3 to 4 days/nights.    Costa Rica seems like a bargain at $299 for 5 nights per person.

I’m not sure what we’ll be doing this summer but with deals like that perhaps camping isn’t a great idea.   I’d hate to be at those camping sites with hundreds of other people “disturbing” the peace so perhaps Costa Rica and Cancun will be empty this summer!

BTW, sorry for my short disappearance but I’ve been having problems with my hosting provider but that seems to have been fixed now.

In January 2007, I wrote this post questioning and criticizing some conventional pf blogger advice and the long term consequences of their actions.   Flash forward to today May 2009 and we’re beginning to see that what I suggested would happen is happening exactly as I said it would.

To quote from my own article:

What really bugs me about PF Blogger “advice” that starts off with “Don’t buy a new car” is that the writer really hasn’t bothered to stop and think things through thoroughly.  In essence, many bloggers don’t think about the long term consequences of their suggestions.

What are the long term consequences of that advice?  Let’s walk through it.

1. Everyone stops buying new cars on the advice of pfbloggers because this will supposedly make them rich.

2. GM, FORD, Toyota, etc stop making new cars because no one is buying them.

3. The Auto Manufacturers file for bankruptcy and lay off all workers.

4. With no new cars, dealerships nationwide close down and lay off workers.

5. Federal, State & City governments that relied on tax revenues from these industries lose tax revenue.

6. Federal, State & City governments furlough workers.

See the pattern?

So where are we today?   States have lost billions in tax revenue from lost auto sales, hundreds (if not thousands) of dealerships have closed and thousands have lost their jobs.   We haven’t even seen the full effect though as I predict GM will file for bankruptcy some time during the summer.   After that things will get way worse as the cascade of domino bankruptcies wrecks havoc on the economy and increases job losses.

It can be argued that if consumers hadn’t over extended themselves we wouldn’t be in this mess and there is no argument from me on that but we also wouldn’t have had the economic growth (e.g. stock market) that we did during the past 7 years.    So what is the appropriate solution?  It depends.

I firmly believe that each person out there has a passion.  Some people love sports and some people love shoes and if going to a stadium to watch your favorite team or if going to the mall to buy a new pair of shoes every week makes you happy then you should do it.   Likewise, people who love to own a new car every three years should go and buy one.   The key, like everything else, is balance.  I don’t believe that people can be passionate about owning:  a new home, a new car, new clothes, new shoes, new ipods, etc.

I see too many people just following the herd and not pursuing their passion.  I personally love travel and I’ve traveled all over the world but I don’t buy a new car every three years nor do I buy new suits every month.    I’m passionate about gardening so I invest money in gardening tools, pots, seeds, fertilizer, and such but I don’t buy new shoes every week.

The true cause of the housing mess was that people who weren’t passionate about owning a home bought one because everyone else was doing it.   Some saw individuals that were passionate about real estate making money that others thought they could get in on the game, all the time not having any passion about owning a home or passion about being a real estate guru.

It was the exact same thing during the dot com era.  People who were not passionate about technology left their jobs to go work for tech companies in the hopes of winning the IPO lottery to get rich quick.    I currently see many people beginning to (re)learn this lesson.   My advice is to stick to your passion even if it doesn’t make you rich.  It is better to be happy than rich.

I found this interesting article on Consumerist discussing how credit card companies are now building psychological profiles of their customers.    So why is this doomed to fail just like FICO?  Because people will immediately begin to game the system and I’m sure there are at least a few hundred people (if not more) who have already gone out and purchased birdseed and snow roof rakes on their credit card to be deemed “good” consumers.

No doubt, you’ve seen all those “credit/FICO repair” services advertised all over the place and the common method used to game the system was to add a poor credit user as an authorized user of someone with good credit and presto better FICO score.

Well now the new game in town is the purchases made by end user so it will only be a matter of time before some enterprising individual starts selling lists of “things you should buy to keep your credit card” or “top 10 psychological indicators used by credit card companies.”    Heck, why not even offer a service to automatically “purchase” these things for you on your credit card and then they’re shipped to your address.   Call it the, “credit card care package” and have these items delivered every couple of months to your home.

At the end of the day, the ONLY people this will have a negative effect on are the clueless uneducated consumers who don’t know how to game the system.    Now if you’ll excuse me, I’m off to the store to buy some premium bird seed for my bird feeder.  😉

The price of food continues to drop and I recently went to the grocery store and picked up two boxes of 18 eggs for $2 and I’ve never seen such a deal on eggs before, at least not in recent memory.   I have also noticed the price of other staples down significantly such as rice and beans.

Bacon/Ham, Lobster, shrimp and certain fish categories also to continue to drop in price but one thing that perplexes me are beef prices.   I keep seeing certain cuts of meat as high as $8/lb and others constantly on sale at $0.99/lb so I can’t figure that out.

According to this post over as Global Economic Analysis, wholesale prices have dropped the most in 50 years and I am certainly seeing that in grocery items.   The generic price of bread continues to drop although I’ve see no change in price from the name brand price I usually buy but I’ve stopped buying the name brand and use the store brand now.   I can’t justify a 100% price difference from generic to name brand when there’s only a marginal taste difference.   I can swallow the difference!