The economy

November 25, 2008

There is no doubt, things are scary out in the world today. The entire first world is in trouble with issues that hearken back to 1929. Are we there yet? No. Will we get there? I don’t think so but then neither did the people who experienced the Great Depression.

One thing is certain, those that have lived simply will be better prepared than those who have lived the great American tradition of spending, buying, and accumulating goods if we do experience another economic meltdown of the proportions of a depression. Why? Those who live simply don’t have as much debt because they didn’t buy as many things. They typically have smaller homes with a reasonable mortgage or no mortgage at all. They may grow their own food and therefore are prepared to provide if the economic meltdown mimics the late 1920 bank runs where money simply evaporated out of accounts.

It isn’t too late. One of the best ways to prepare for economic crisis is to choose simplicity over abundance. If you don’t know how, look for my Wednesday posts where I publish each step to guide you into the simple life.

Even if they manage to pull the economy out of this nose dive, we can all benefit by simplifying our lives and will be better prepared for any economic crisis that comes our way. 

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November 2, 2008

Last week I caught up with several friends from high school, people I haven’t seen in almost twenty years! It is surreal to chat with someone whom, in your head, is still seventeen but, in reality, is a practicing attorney, an elected official, or a triage nurse at a children’s hospital. 

One friend in particular inspired me to think about my own life and the choices I make.  This friend left a fast-paced, probably well paying, law firm in a large city to move back to our home town to spend more time with family, or just have more time.  I admire the guts that move took.  It is obvious an attorney will earn far more working in a large urban firm than being partner in a firm in a town of two thousand.  It is easy to let that financial knowledge and quest to have more be the sole decider of your fate.

Let’s forget the fact that I am now old enough to have spent my formative years with people who are now either prosecuting or defending capital murder cases – and think about what my friend gained.  While he is currently working on a significant case that involves a great deal of time, he still has control over what cases he takes, how many cases he takes and where he takes them. 

Many of us that continue in the urban grind do so because of our children and their education. It is no question that many suburban or upper class urban schools have far better resources, more money and incredible parent involvement than small town schools, giving our children an “edge” in higher education.  But I wonder at the cost. My child is lucky, his mom works from home and while his dad has a demanding job, he works with a family friendly firm.  Many kids at our son’s school aren’t so lucky.  They go to outside care before school, after school and see their parents for a few hours a day so their parents can work in their, granted high paying, demanding jobs so they can send their kids to the “best” schools.

I think back to my own education.  It was lacking, to be sure.  My husband and I were not as prepared for university as some of our higher ed classmates.  But still, we both went on to be professionals.  While some of our classmates continue to toil in small jobs, many went on to become doctors, lawyers, dentists, nurses, teachers, writers, lobbyists and other professionals.  So it couldn’t have been that bad.

I think my friend may have found the modern day equivalent to Thoreau’s Walden.  I don’t know if I would do it, but he has my full admiration.  And has made me take a moment to pause and wonder…what if.

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This should be obvious but I am going to mention it anyway – it fits green living, minimalist lifestyles and frugality.

One way to reduce resource waste is to visit your public library rather than purchasing books or videos.  Since the library is free, it is also a big money saver.  Most public libraries now have Internet search and reservation options in which you can search for and reserve a title.  Once the title has been secured, you will be notified of its reservation and location, as well as how long they will hold it in your name.   The Internet search and reserve function saves a great deal of time and resources in fewer trips to the library.

If your library does not have a title you are interested in you can usually search and reserve through the inter-library loan program.  Most libraries participate in this option in which you can borrow titles literally from libraries all over the United States.  Odds are if your local library doesn’t have a specific title, a library somewhere else does.  

Libraries don’t just stock books.   They subscribe to newspapers from across the globe, monthly magazines, and resource materials.  If you wish to learn a foreign language they often have language tapes or cds.  For the sight or reading challenged, they often stock books on tape/cd as well as large print additions.  Videos and music cds, including classics, new releases and how-to videos, are another big commodity.  Finally, they often host community programs including story times, book clubs, author lectures, and writing workshops.  Thanks to governmental grants, all libraries have high-speed Internet stations available to the general public.

All of these resources are available to you free because of your already contributed tax dollars.

Borrow – Don’t Buy

October 13, 2008

Green resource: 

An excellent website that links people who have stuff with people who need stuff.

If you have something that you aren’t using regularly rent it to your neighbors who may need that particular item.  If you need something like a saw or a canoe or truck even…do a search on loanables to see if someone has one in your area that you can rent.

I am making an early new years resolution…stop procrastinating and post more, damn it! 

As for the dollar short….well, aren’t we all these days?  Can you believe what is happening in the financial world?   The fun and games of a few rich men, at the top of the heap are George W. and his band of criminal cohorts in congress, have thrown the entire world into chaos. Nice.  What a legacy.   An unending war that eats billions of dollars a day that we have to borrow from China so the rich don’t have to pay their fair share of taxes and a financial crisis to rival the early days of the Great Depression. 

But I suppose it is just, the rich have their mansions and million dollar parachute clauses while us poor bastards that do the majority of the living and working and dying in this country get to sort out the mess.  (okay, I did steal part of that line from It’s a Wonderful Life but it is a great line).  Meanwhile there are millions of us that cannot get basic health care, cannot afford to send our kids to college any longer and will lose our homes if we get cancer even if we are insured.  We let that happen and that disappoints me on so great a level. 

My day job is public policy.   I have been watching this train careening on the tracks headed for the cliff for a very long time.  When my husband came home the other day overjoyed to have been reassured by a colleague that we are in a ten year economic cycle and that we are simply feeling the pain, I unleashed all of the anger that I have been building watching this disaster in the making. 

It saddened me….even my husband, a well educated man proved…when we are desperate….we will believe anything.

That 10 year economic theory may feel nice but it is hardly the truth.  That theory gives us leave to believe that we had no control, that this is something that is just happening to us.  To believe it means that we, as a government, as a nation, as citizen consumers, had nothing to do with the mess that has landed on our plates.   The truth is this country turned it eyes to irrelevant topics bandied about by the neocons from the far right of the republican party and let them raid the treasury – and we gave them the keys.    We were too caught up in our self-righteous ideals on how other people should be living their lives i.e. abortion and gay marriage that we completely abdicated our responsibility to police our government.  For that, we should be ashamed.

Once the thieves were elected they set about to bankrupt the nation – and make no mistake, this was their plan from the very beginning.  This mess is no accident.   First they began what Reagan started with his trickle down economic theory, which means if the rich have all the money, it will spur investment and eventually trickle down to the rest and economic prosperity will reign  (for those that are unaware this is Reaganomics- which had been proven a bust by the last enormous deficit and bank scandals – i.e. the Savings and Loan crisis of the late 80’s).  A  nice theory but doesn’t actually work in reality.  Reaganomics belies the fact that under Clinton/Gore, when taxes were higher there was economic prosperity and massive investment in the technology fields (that did eventually create a bubble that had to bust but did not do so as to affect every single American to such a massive degree).  It also fails to recognize that other developed countries in the world have higher taxes than the US has ever experienced yet still have investment by both their own national corporations and US corporations operating abroad. – In other words Dorothy – if you want to get back to Kansas, listen to the booming voice but do NOT look behind the curtain for surely you will find everything is not as you were led to believe.

How did they do this?  Here is the simplified outline.  Start with deep tax cuts for top 1% of the nation.  With that in place, there wasn’t enough money to run the current government programs. In essence the goal was to “starve the beast”.  The idea was to ensure the government couldn’t function so people would lose faith in the government programs and demand they be revoked and therefore would have less to pay for and so the rich keep more of their money.  The FEMA Katrina disaster was the culmination of that effort – that program was set up to fail by appointing people with no disaster management experience to run it and stripping its budget to the bones.  They were successful, FEMA failed most spectacularly. 

Finally, with the money back in the hands of the rich and the government limping after having been thrown under the bus, they set about the last phase of the plan – relax government regulations and allow private enterprise to police themselves – because, as Katrina proved, clearly the government was too incompetent to function in that role.   They literally repealed the majority of banking regulations put in place as a direct result of the Great Depression.  Without rules, the banking industry went wild as they did before the Great Depression that resulted in rules in the first place.  They issued loans to people who would have never, under the old regulations, been able to get loans.  They preyed upon the vulnerable (the poor and less educated) and tied them to the company store through crippling mortgages while televising commercials espousing the great American Dream of home-ownership. 

People who were brought in under low mortgage interest rates with ARM loans found that once the house of cards started falling, they couldn’t afford the higher shifting mortgage payments as interest rates started creeping up and that began the unprecedented level of foreclosures across the country.   Then the banks, having leveraged these loans, found themselves holding a bunch of houses and no income.  They didn’t have enough capital coming in to cover what they borrowed against the projected income of these loans and so they too started falling – and failing. 

Now the question is, should the government have bailed them out?  Well, if they didn’t it could very well end up in the second great depression.  But they did and yet, the sky continues falling.  It may have been too late.  We may not see the end of this for a very, very long time.

What is the moral of this story?  Corporations need rules and the entity (government) whose job it is to provide those rules abdicated its responsibility and left us to the wolves – with our consent seeing as we elected them in the first place.  But make no mistake, this did not happen because  government itself is too inherently bad or corrupt to function, it happened because a few people MADE the government unable to function through deliberate undermining of programs and appointing people with no experience.  When staffed appropriately with experts rather than cronies and funded adequately it can function just fine. 

Taxes are important to keep the country running.  No corporation could expect to run on limited means, and so no government entity can do it either.  I am not saying this from a self righteous position of someone that falls into a low tax bracket. My husband and I are firmly in the top 8% of the nation with regards to income.  This means we pay a fairly healthy tax bill with every paycheck and sometimes at the end of the fiscal year.   But we do so with the knowledge that when our country faces a natural disaster, there is a program that will assist. When someone cannot afford to eat, we will feed them.  When someone cannot afford to educate their children, we will take that duty upon ourselves.  When we have to go to war (and I specify have to not want to as in the case of Iraq) we can send our soldiers knowing they have proper equipment so they can safetly return home again. 

Private companies are entities without morals (not meaning they are bad, but they are things and things cannot have morals).  A corporation’s job is to look at the bottom line of their company – and that definitely has its place.   However, without someone looking at the bigger picture (the government) to look out for the continued interest of the country as a whole, the puzzle is not complete and chaos reigns. 

But the President and his crooks, I mean cronies, aren’t the only ones that deserve ire for our financial predicament.  There is plenty of blame to go around from greedy financial institutions to every single person that lived beyond their means, consuming as if there is a never ending supply of money.  Our irresponsibility has put the entire world into jeopardy, from the pollution we spew to keep up our never ending need for oil to the products we buy and dispose of without thinking about where the resources and cheap labor were obtained.  Sure we were sold a bill of goods by our government that created an economy nearly entirely based on retail consumption requiring more and more consuming to keep up the the demands of the economy.   We also saw millions of pictures every day that equated goods with happiness, prettiness and the perfect life….but you know…like our mothers used to say, if everyone is jumping off a bridge, would you do it too?  In other words, don’t we bare some responsibility for failing to think for ourselves?  Don’t we have an obligation to do what is right rather than what we are “told” is right?

Clearly, living lightly is something we, collectively as a society, have needed to do for a very long time and it looks like we will all get the chance.  Overall, we can look on the bright side, okay perhaps the less dark side, and see that we, who have become a consumer nation, will have to stop consuming.  We will have to go back to our roots, perhaps plant gardens and reuse those once disposable yogurt containers and butter tubs.  Already today I saw an unprecedented attendance at our neighborhood garage sale.  I am seeing more and more bikes on the roads and have joined the ranks for short trips around my neighborhood.  I stopped in at Goodwill on a tip that I can find great jeans at cheap prices…and this from an upper income neighbor.  You know what?  I wasn’t in there alone.  The place was buzzing with middle class ladies browsing the used clothing, kitchen items and second or third hand books.

Winston Churchill once said “You can count on America to do the right thing…after it has exhausted every other possibility.”   I think we are there.