Tuesday, June 9, 2009

Post No. 122a: Re-Posting of Post No. 90: Making Use of the Current Financial Mess


We frequently re-visit earlier posts to determine their continuing applicability. In February of this year, we generated a piece entitled "Making Use of the Current Financial Mess."

Since we continue to be in an economic "______ession" of some type, we thought that we would re-visit our earlier thoughts, and see if any of your thoughts have changed in the interim.


© 2009, the Institute for Applied Common Sense

Mark Twain observed that if a cat sits on a hot stove, she will never do it again. Unfortunately, she'll probably never sit on a cold stove either.

Everyone has their favorite villain for the current economic collapse. The Logistician sent me a list of 10 ways in which he felt consumers were responsible.

I told him that I did not buy into his premise, but in thinking about it further, I realized that if we only point the finger at the fat cats, we will have learned little. We all bear some responsibility.

We are behaving much like Mr. Twain’s cat. Despite our efforts to revive our financial system, we have little to show for it… yet. We definitely can’t sit at the starting line waiting for the next guy to say, “Go.”

We simply need to use some Common Sense, on which the left and right should be able to agree.

According to the Scientific Method, bad ideas and experiments that don’t work are as valuable as those that do, provided we learn from the experience, and use that knowledge productively.

So, with 2/3rds of our economic well-being based on our own behavior, we would like to suggest a few topics for discussion, the results of which may assist us in finding our way out of this financial wilderness.

1. If a deal sounds too good to be true, it probably is.

You don’t need a Ph.D. in economics to realize that markets don’t always go up. The observation that a few people are making great sacks of money, and violating the rules of Common Sense, does not relieve us of the obligation of doing our own home work.

If you can’t make the numbers work within your current income, don’t bet on massive increases in the value of your investment to bail you out.

You have a better chance in Vegas than in a financial commodity you do not understand. (And the truth be told, few of us really understand them.)

2. Don’t bet your home on things you don’t need.

Contrary to the Logistician’s mantra, there is nothing wrong with wanting a better, more luxurious life, but not at twenty percent interest. Here there are demons…like bankruptcy…and acid rain falling on your childrens' heads.

Save the money 1st; then buy the Lexus. It’s only Common Sense.

3. Ignore herd instinct.

When everybody agrees on the direction of a market, guess what…?

4. Be careful when building and buying things which are more than you need.

Advertising not withstanding, buying an Escalade won’t make you an NBA star. There is a reason why the Toyota Camry and the Honda Accord are the 2 best selling cars in the country.

5. Particularly avoid using credit or going into debt to build or buy things which are more than you need.

We went into debt, both individually and collectively, based on the assumption that the party would never stop.

Pick up any book on history…it always does. And, you don’t want to be the guy playing musical chairs when….

6. Remember that gluttony and greed are 2 of the 7 deadly sins.

Really want to make a 20% return on your income? Pay off your credit cards.

7. Carefully weigh the impact of retirement on an individual and societal level.

The Logistician and I differ on this point. The Logistician feels we got lazy and retired too early. My take is that we took the money and ignored our inherent desire for a more worthwhile job… and after 30 years we couldn’t wait to get out.

With our most experienced workers, although still productive, leaving the workforce early, all of this experience went to waste… and it is experience we can ill afford to waste.

8. Avoid being seduced by the short-term Sirens.

There was a time when we bought things to last. Next time you are in the park, look at the number of people taking pictures with manual focus SLR cameras.

This desire to last drove a subsequent demand for quality… producing a pride of workmanship that represents the essence of “Quality of Life.”

9. Don’t leave the education of your kids to the entertainment industry.

Not wanting to engage them, we abdicated our responsibility to the likes of Nintendo, Disney, and MTV, as long as they didn’t interfere with our pursuit of the “good life.”

If you don’t want children, don’t have them. You can not experience the sense of wonder children project, as they learn about the world via remote control.

You have to be there… and evolution suggests that this is one of the few primal pleasures we have inherited undiminished.

10. Lend a helping hand.


If you know someone in need of a job, through no fault of his own, ask around. Do what you can to help him get re-employed.

Want to raise the “quality of your life,” watch the face of a man or woman you have helped put back to work. Government can’t do that.

You see, we do most of the spending. No income, no spending. No jobs, no income.

Is there anything on this list which defies Common Sense?

After all, we should be smarter than Mr. Twain’s cat.

© 2009, by the Laughingman for the Institute for Applied Common Sense

12 comments:

  1. My opinions have not changed since that post (a very good one, by the way) and I am afraid that some of what I feared would happen as a result of hastily taken policies has begun to occur.

    But there was something you said to me:

    If you have all of your clothes in the washing machine when the earthquake hits, and you run outdoors naked, you will be judged a streaker, obviously trying to seek some perverted attention.


    It came to me, while rereading that comment, that you would only be considered a streaker if there was no earthquake and you ran out because someone said one was "imminent."

    It seems to me that the programs and legislation put in place to forestall this "earthquake" have not done a thing except possibly shift some power and control into the hands of others. The economy has not improved, unemployment has gone up, GM and Chrysler have both gone into bankruptcy, and few "shovel ready" projects have begun in areas of high unemployment (where they are needed).

    Are we better off? And now the push is on to "fix" healthcare in another Big Hurry. What is the rush?

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  2. Excellant post, thank you. What a pleasure to read. I go to blogs for different things, recipes, pets, etc. This blog is full of good information.

    Anne

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  3. Thanks again, as always, for your loyal participation Douglas. Is it your position that the activities taken by the current Administration over the past, let's say 6 months, should have stopped and reversed the momentum or force building up over the past 30 or so years?

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  4. Thank you chicamom85 for taking the time to visit us. We appreciate it.

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  5. An excellent post and straight-forward common sense! If a person only followed two or three of the items, we would all benefit greatly. As with any good idea, the value comes in doing. I hope these reminders encourage all of us to start doing what we can where we are, as the old hymn goes: "Brighten the corner where you are!"
    Thanks for bringing this post back!

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  6. Thanks much Dan. We just feel that directing blame toward others, and not recognizing our personal responsibility as consumers, would be addressing only part of the problem.

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  7. I believe that if one can blame the previous administration for the problems one "inherited" when the previous administration took us out of a recession it had inherited, overcame a huge hit to the economy caused by an unprecedented attack on our soil and gave us a bustling economy for 7 years then one should have some answers that produce some evidence of reversal of said problems.

    Fact: the problems have roots in legislation passed by this president's own party back in the 70s and again in the early year's of the 90s.
    Fact: We have weathered "bubbles" before. (remember the Dot Com bust?)
    Fact: we have lost car manufacturers in the past (as I pointed out)
    Fact: The stimulus bill has not produced the jobs promised.

    Can you define a "saved job"?

    So, I guess my answer would have to be "yes, I believe so."

    I would be very wary of the numerous "czars" that have been installed (they are not approved or vetted by Congress and have enormous power), about the intent to governmentize* as much of what was once private enterprise in as short a time as possible, and the increasing debt and deficits.

    * I made that word up to describe something that seems like an unofficial form of nationalization.

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  8. too many cooks spoil the broth and this is what happened to our economy lol

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  9. People I spend several hours every day reading everything I can find on what the Obama Administration is doing to our nation. The picture is not a pretty one. We had better wake up before it is too late to stop the complete take over of our liberties. As Douglas states there are a lot of "czars" being created and being given a great deal of power and no one is vetting or controlling these people but the President. Many of these people who are being appointed by the President have ties to radical groups, have indulged in activities just shy of criminal and/or have ties with known criminals.

    I don't know what else to do but to keep on reporting on my blog what I have discovered and hope that someone out there is listening and preparing for what lies ahead be it surrender or another revolution against a dictator. I truly can not see Americans giving up their freedoms, but then again we have been asking the federal government to take over more and more of what should be our own responsibilities. So perhaps we are spoiled children who become angry over petty things like someone driving too slow on the highway, but can't be bothered being concerned about some one moving very quickly to nationalize our financial institutions thus controlling the entire economy which is of course based on the free flow of currency, make the United States a Debtor Nation by supporting failing industries and expanmding the welfare state and so burden successful industries with taxes for this debt that they close up shop and move to other countries who are more cognizant of the importance of free enterprise. Of course this driving the industrialist and entrepreneurs (also known as greedy capitalists!) out of the United States will simply make the people more dependent upon the government and therefore less willing to question the government, so I suppose the Obama Administration is employing the correct strategy for destruction of a nation and sublimation of the population.

    And the answer is NO! The Bail Out, the Stimulus Bill and the unprecidented Annual Budget all passed by the Democrats in Congress have done nothing to help the economy and everything to hurt us. If we had done nothing a few financial institutions might have had to sell themselves off to more stable banks, the American auto industry would finally at long last died and been buried, a few investors who played around with derivatives (what the government calls toxic mortgages) would have lost their shirts and some people who should not have been given mortgages who could not afford them would lose their homes thus sticking the banks who made the loans with homes they just might have to sell without making a huge profit. BUT the ecomony would have already been well on it's way to recovery.

    Now the financial institutions who took the Bail Out money are trying to give it back thus proving they didn't need it in the first place but were trying to get the tax payer to pick up the tab for their bad business practices until Congress attached too many strings (against the Administration's advice so the theiving Treasury Secretary is still trying to stick it to the tax payer by selling the banks their stock back for 20 cents on the dollar; that is the deflated dollar at that!)

    Banks and industries are holding on to their cash assets instead of offering credit or expanding their businesses because they are afraid of what is ahead. This is driving the rising rate of unemployment. Unemployment that will only get worse as businesses move out of the country. GM is bankrupt in the United States but opening new plants overseas at this very moment!

    What more can I say? I'm just a silly old broad who sees ghost and goblins around every corner, so don't mind me. BB

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  10. Today, Sunday, at 1:00 pm EDST, C-Span2 Book TV will air a book discussion program featuring Edmund Andrews, and his book, "Busted: Life Inside the Great Mortgage Breakdown."

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  11. Today, Sunday, at 1:00 pm EDST, C-Span2 Book TV will air a book discussion program featuring Edmund Andrews, and his book, "Busted: Life Inside the Great Mortgage Breakdown."

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  12. too many cooks spoil the broth and this is what happened to our economy lol

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