David Bruce Has Done His Taxes March 31, 2005March 1, 2017 Meanwhile, the Saudi Royal family continues to make an extra $250 million or so A DAY from today’s higher oil prices. That’s extra, beyond what they were making before the price of oil shot up from $25 or $30. (Just thought I should remind you what a grand time this has been for Bandar Bush, as he’s known – the Saudi Prince who’s virtually a brother to our President – and for the oil crowd generally.) And now . . . DON’T LET OEDIPUS ANYWHERE NEAR MY FEEDING TUBE Richard Vroman: ‘In California there is a place to specify who may not in any circumstance have input into health care and end-of-life decisions. This could be very useful for those who anticipate that there might be a fight. If such clauses are available in other states, they could prevent a lot of problems.’ DAVID BRUCE HAS DONE HIS TAXES David Bruce: ‘Last year, it became apparent that some of your readers don’t realize that people making incomes in the $30,000-range pay income taxes. In 2004, I made $34,269.51. I paid $2,571 in federal income tax and $386 in Self-Employment Tax. I paid $726 in state income taxes. I paid $565.46 in local income taxes. I take the standard deduction, and I am in the State Teachers Retirement Program in Ohio. Frankly, I don’t mind paying my fair share of taxes. To me, taxes are the price that we pay for civilization. Of course, I would like the money spent responsibility, and I believe that it is spent more responsibly when we have Democratic leadership.’ APPLE ALERT James Jensen: ‘The bags of ‘Gala’ Michigan apples you bought could really come from Michigan in March. Nitrogen-rich refrigerated warehouses allow last year’s harvest to stay fresh for months.’ ☞ Next you’ll be telling me dinosaur bone marrow can be preserved for 70 million years. YOUR WEIGHT BEFORE AND AFTER EATING THAT APPLE Judy: ‘You SAY you’ll never speak of this again, but you KNOW you’re going to get some physicist telling you why a man weighs more or less when he does or doesn’t….etc….and it will go on and on until you start eating avocadoes.’ ☞ You cut me to the core. John Ebert: ‘I agree the guy and the apple weigh the same before and immediately after eating. But the digestive process is a bunch of chemical reactions, with food molecules combining with oxygen molecules and so on. Some products of those reactions add to the body and some are waste products. In turn, the waste products are either stored for later excretion or exhaled in breathing. So after ingestion but before excretion we have a “closed system” – except for respiration. Any change in weight would depend on the difference between the weight of air inhaled and the weight of air exhaled. Since a CO2 molecule exhaled weighs more than an O2 molecule inhaled, we’d expect there to be a gradual weight loss – unless there are more O2 molecules inhaled than CO2 molecules exhaled. (More precisely, unless the ratio of O2 molecules inhaled to CO2 molecules exhaled exceeds about 1.375).’ ☞ Didn’t Einstein say that weight loss was 2% respiration and 98% perspiration? I thought I weighed gradually less because I was evaporating. OK, not another word about this.
Basic Fairness March 30, 2005March 1, 2017 This is a letter to the editor sent yesterday by a highly successful and magnificently gracious South Carolina business woman I know. It’s worth a read even if you’ve never been to South Carolina. March 17, the S.C. Senate voted 36-4 to silence me and over 250,000 other South Carolinians. The vote cancelled the already stingy 75 minutes of hearings which had been allowed for gay and lesbian people to offer testimony against a South Carolina constitutional marriage amendment. This constitutional amendment will prohibit not only our right to legally marry, but also to form civil unions, domestic partnerships, and any form of legal protections for our families. The issue is one of basic fairness. We simply seek what all other South Carolinians already have: the rights and responsibilities which protect our families. Important things are at stake such as hospital visitation, insurance, social security, veteran benefits, and tax protection on estate bequests. Despite the myth, at any given time, 75% of all lesbians, and 50% of gay men, are in committed relationships (Friedman, 1995). According to the 2,000 Census, South Carolina has the third largest population of gay and coupled African Americans in the United States. We are indeed here amongst you, working, paying taxes, rearing children, holding jobs that you value. As regards the S.C. Senate, I hope it didn’t go unnoticed that the successful effort to deny our right to speak was initiated by Senator John Hawkins. Senator Hawkins was arrested for rape in 1989. According to the State newspaper, “Lt. Mark Barry of the Spartanburg County Sheriff’s Department, who worked the Hawkins incident and has worked hundreds of rape cases said, ‘It was one of the strongest rape cases I’ve ever seen. There was no doubt force was used. This was not a consensual act.'” The case was dropped when the woman failed to appear in court. The bill itself was sponsored by Representative John Graham Altman, who is on his third marriage, has purportedly had some awkwardness with unpaid taxes and multiple DUI’s according to the City Paper. I bring these things up to highlight that moral superiority doesn’t become those who live in huge glass houses. Or, does it? Both men have been re-elected. Both men have lead the anti-gay activity on righteous grounds. Is it about diverting voters away from their own iniquities? Is it arrogance? What? Gay and lesbian people ask to live our lives at least with the same freedom as those arrested for rape, with three marriages, tax liens and DUI’s; but, with more dignity. There are two converging messages in the Bible and in the Constitution. Can you find them? Both verify that in our country – and in our majority religions – all people are created equal in all ways and there are no exceptions. None. No citizen’s belief system is subjugated to another’s. None. America’s birthright is equality. When I support our troops in Iraq, that is what I support. And that, is what I would be willing to die for. These days, it sometimes seems harder to live for it. LK Wadmalaw Island, S.C. And this is an excerpt from Michael Kinsley in the Los Angeles Times Sunday: Based on the two big domestic stories of last week – Terri Schiavo’s feeding tube and Social Security personoramification (or whatever they want us to call it instead of privatization) – the Republican philosophy seems to be that people need more control over their own retirements, but less control over their own deaths. Based on recent polls, most people feel the exact opposite. They prefer the modest but certain Social Security check they get every month over the opportunity to spend their twilight years nursing their portfolios and worrying every time Alan Greenspan’s successors open their mouths. On the other hand, they want to set for themselves the rules about their own final departures. Specifically, people are terrified of being kept joylessly alive – active minds trapped in a shut-down body or lost minds mocking the dignity of a lifetime – just to prove somebody’s political point. And this is what Google looks like if you’re Elmer Fudd.
Do Home Prices Need a Living Will? And What ARE Smelling Salts? March 29, 2005March 1, 2017 THE BUBBLE Thanks to Toby Gottfried for this highly readable link. Snippets (but read the whole thing if you’re amused by – let alone speculating on the continuation of – the real estate bubble): ‘In 1999, 20% of the second home buyers surveyed by the association said they were doing it for investment purposes. By 2002, it was 37%; by last year, 64%.’ ‘A variety of middlemen have sprung up to relieve real estate novices of the burden of doing anything besides forking over a wad of cash.’ ‘His own [California home’s appreciation] makes the Colorado duplex he agreed to buy look inexpensive. Balbas, 60, has never been to Colorado and said he had no plans to go anytime soon.’ SOCIAL SECURITY – HIDING THE GOOD NEWS? This post suggests the Social Security ‘crisis’ may be even less of a crisis than we thought: Brad DeLong has peered into the archives of the Social Security Trustees Report to look at the question of the missing productivity data and comes to a very interesting conclusion. The methodological rule that “forces” the Trustees to ignore the previous four years’ worth of productivity data was first implemented . . . in 2004. If they had used the methodology that was in place as recently as 2003, they would have projected long-term productivity growth of 1.9 percent per year rather than 1.6 percent. Interestingly, 1.9 percent happens to be precisely the figure used in the low-cost estimate; the low-cost estimate, also interestingly, has been more accurate historically than the intermediate projection, which forms the basis for our misleading public debate on the subject. The media masochists may not like to hear it, but if we get the policy right in terms of continued productivity growth, immigration reform, fighting age discrimination, and improving preventative medicine we may well eliminate the Social Security “crisis” without making any “painful choices” at all. –Matthew Yglesias (You probably saw that when the five Social Security trustees issued their report, only the three who agree with President Bush were invited to participate.) This doesn’t mean we shouldn’t tweak around the edges, as I’ve suggested. But those tweaks are the least of what the country needs to do to get back on track. SMELLING SALTS Pieter Bach: ‘Smelling salts, or ‘sal volatile,’ were either a compound of scented hartshorn, a natural type of ammonia, and carried in small bottles about the size of a Chinese snuff bottle, or were, for the extremely delicate of sensibility, ‘aromatic vinegar,’ made of any sort of vinegar which was brewed with various natural scents such as flower petals or herbs. Think of popping the top on a bottle of Parsons’ Sudsy and taking a whiff, or pulling the cork on a jug of Antonetti’s Best Red Wine vinegar and breathing deeeeep. Kind of perks you up, doesn’t it? Ladies carried these small vials as a matter of course during the fashion periods when tight corsets were the rule, because the tightness of the lacing (‘Tighter, Mammy, tighter!’) made it difficult to take a full breath – that’s also why Victorian ladies had such tiny appetites in public but managed to get so plump anyway (hint, they took the real meals in private, with their ‘stays’ loosened). Those who smell the coffee and wake up are those who have automatic coffeemakers OR wonderfully considerate Significant Others.’ FINALLY . . . The Schiavo tragedy may not have been sent by God to aid Tom DeLay in his political difficulties, as he suggested, but at least it has led a lot of people to designate health care proxies (see the next two items for caveats). Reading this from Andrew Sullivan – the conservative Catholic columnist pal – one can only wonder why, after so much media scrutiny and public discussion, these facts are not more widely known. Prime among them: A CAT scan shows that her brain has since shrunk massively. Her electroencephalogram reading was and is completely flat – she has no brain waves. She is not brain-dead. But she has no ability to think, feel, or communicate. There’s much more, all of it sad. I urge those who believe an injustice has been done to read the whole thing. Including this piece: Last weekend, they got the federal Congress back in emergency Sunday session and got a law designed to delay the process of death pending new federal court challenges. President Bush rushed back to D.C. to sign the bill in the middle of the night. You want proof that the religious right runs the Republican Party? What more do you need? And now, two caveats . . . > Living Wills . . . Or Won’t They? Gary Konecky: ‘Thank you for the repeated mentions of Living Wills. There is one point that has not been mentioned. My mother died in an internationally respected cardiac hospital, St. Frances in Roslyn, New York. My mother’s doctor knew about her living will. A copy of the living will was part of the hospital chart. The hospital and its doctors violated each and every provision of her living will. I was to learn subsequently, that it is the policy of Roman Catholic hospitals to disregard living wills. In matters of health care, Roman Catholic teachings take precedence over accepted medical procedure and the patient’s wishes.’ ☞ Anyone know how widely true this might be? > Correction – Medical Power Of Attorney David Groshoff: ‘Eric Batson (MD, PhD) wrote Friday: Furthermore (and this is VERY useful for those in non-marriage relationships of ANY sort), the person with the power of attorney has COMPLETE access to the patient’s medical records and is obviously entitled to visit the patient (how can you make decisions for the patient without seeing him or her?). A random member of the patient’s family cannot just tell the hospital to exclude you. ‘While this may be true where Dr. Batson lives, some of this simply isn’t the case in some states, and it’s very important that people be aware of that. ‘First, the person with the power of attorney may not, in fact, have complete (or any) access to the patient’s medical records, unless the Health Care proxy specifically provides for access under HIPAA. ‘Second, as a member of the bar in a state, Ohio, that recently passed the most damning so-called ‘marriage’ constitutional amendment in the country (that impacts all unmarried heterosexual people as well), I can tell you that a health care proxy in no way makes the person named in the health care proxy ‘obviously entitled to visit the patient.’ The advance directive only evidences an intent of the person who is unable to make his/her own health care decisions, and it typically does not state priority of visitation, despite how obvious it may be to Dr. Batson and others who logically ask, ‘how can you make decisions for the patient without seeing him or her?’ Believe me, many attorneys who cater to the gay community have seen this story play out badly many times over. ‘Many courts in my state (as shown in the link above) will in all likelihood bend over backwards to give ‘traditional’ family members preference over those of us who are viewed as strangers in the eyes of our state’s founding document, regardless of whether an advance directive exists, regardless of what’s contained in that advance directive, and regardless of how long we’ve been with our loved one, particularly when *public* hospitals must overtly discriminate against unmarried persons based on the mandates of the state’s constitution. ‘All that said, I agree wholeheartedly with Dr. Batson that having both a living will and a durable power of attorney for health care (as well as perhaps a springing general power of attorney and other documents) in place is indispensable. In fact, executing several of the same advance directives over a period of time, say once every six months (and holding onto the old ones) *and* specifically providing for the same person to have priority of visitation in each one, helps to build up further evidence of the person’s intent. ‘It’s a complicated and important issue. People spend days agonizing over what sofa or car to buy (or what stock or mutual fund to buy/sell), but they often refuse to spend even half of that time dealing with this. Hopefully, the sad situation in Florida will be a wakeup call to everyone to ensure that their wishes, whatever they may be, are expressed as best as they can.’
The View from Morgan Stanley And Carrots, Prisons -- the Works March 28, 2005March 1, 2017 HYPOCRISY I guess you’ve heard by now that Tom DeLay did not object to pulling the plug on his own father after an accident left him severely brain damaged – even though he had left no written instructions. And it’s by now old news that George Bush signed the Texas law that routinely pulls the plug on patients in Terri Schiavo’s condition even if their families unanimously object (unless they can pay). (You probably also saw that the House Ethics subcommittee has been revamped to avert any further investigations of Tom DeLay – only a Republican can trigger such investigations, and the ones who might have have been replaced with DeLay loyalists. ABC’s Nightline covered this Thursday.) How can the Republican leadership focus so much attention on Terri Schiavo yet be so indifferent to the suffering of so many sensate human beings? How can they make tax cuts for the wealthy their top priority and then claim to follow the Bible? Last thought: If I and most others are wrong and Terri IS aware of what’s going on around her, imagine the hell it must be. Desperately bored, desperate for someone to scratch her itch or turn on the TV (or turn it off) . . . desperate for people either to find a way for her to communicate, ala Helen Keller, or to end the hell she is in. On the TV show ’24’ a few weeks ago they kept the Secretary of Defense’s son in sensory deprivation for just a few hours – a few hours! – and it was the worst torture. Imagine 15 years of it! All because she never put her wishes on paper. More likely, of course, she is aware of nothing, has none of the thoughts or memories that were Terri, and in that sense, tragically, left the world 15 years ago. By all accounts, she was a wonderful woman. Whatever side of this one is on, it is impossible not to feel awful for all involved. PRISON Ever wonder why New York’s draconian ‘Rockefeller drug laws’ never get changed, even though they wreck lives and cost New York taxpayers a fortune? Here may be one clue, from an op-ed by Andrew Cuomo. He says that sending all those non-violent offenders upstate and throwing away the key . . . . . . works out nicely for New York’s Republican Party. Why? Because the population figures that determine Senate and Assembly districts include prison inmates. It’s simply not in the Republicans’ political interests to support measures that would let those locked up under the old drug laws go free. According to data from the Prison Policy Initiative, nearly 44,000 prisoners — mainly from downstate and mainly minorities — are incarcerated in small, upstate communities and are counted as “residents” of the communities in which they are imprisoned. Their presence in a prison adds to a legislator’s constituents — even though, as prisoners, they can’t vote. This is politically powerful for the Republican Party. There are four upstate Senate districts that qualify as districts only because they include a large prison population — and all four are represented by Republicans. The Democrats would have to take just four more seats for the Republicans to lose their majority. The leading defenders of the Rockefeller-era drug laws are upstate Republican Sens. Dale Volker and Michael Nozzolio, heads of the committees on codes and crime, respectively. The prisons in their two districts account for more than 17 percent of all the prisoners in the state. It may not be fair to say Volker and Nozzolio actually “represent” the inmates who make their districts viable. Sen. Volker told another newspaper that the cows in his district would be more likely to vote for him than the prisoners. State population statistics show that, without the inmates, Volker’s district is one of the four that would have to be redrawn. THE VIEW FROM MORGAN STANLEY Morgan Stanley’s Stephen Roach opines, in part: The US Federal Reserve is behind the curve and scrambling to catch up. Inflation risks seem to be mounting at precisely the moment when America’s current-account deficit is out of control. Higher real interest rates are the only answer for these twin macro problems. For an unbalanced world that has become a levered play on low real interest rates, the long-awaited test could finally be at hand. Note the term ‘real’ interest rates. If rates are 3% when inflation is also 3%, the real rate is zero. Roach highlights the Fed’s challenge: Yes, it has been raising rates. But inflation has also been rising. So in actuality, it has only been raising real rates very slightly (and, he says, will need to do more). One could argue (he argues) that the Fed ‘needs to be shooting for a nominal funds target of around 5.75% – or more than double the current reading.’ And that the Fed might need to get there sooner rather than later. If so, it likely halts real estate appreciation or causes a correction. And imagine what that does to the engine that’s been fueling so much consumer spending: borrowing ever more against ‘ever more valuable homes.’ (Except they are the same homes they always were, so their greater value is disputable, while the added debt is not.) Roach is not certain the Fed will bite the bullet. If not, and rates don’t rise fairly swiftly, he believes the dollar will fall fairly sharply instead (wait till you see the price of oil then!). It didn’t have to be this way [Roach writes]. The big mistake, in my view, came when the Fed condoned the equity bubble in the late 1990s. It has been playing post-bubble defense ever since, fostering an unusually low real interest rate climate that has led to one bubble after another. And that has given rise to the real monster – the asset-dependent American consumer and a co-dependent global economy that can’t live without excess US consumption. The real test was always the exit strategy. ☞ The other big mistake was undoing the sensible balance Clinton/Gore had reached in the tax burden – down from the crazy 90% top bracket under Eisenhower and nearly as crazy 70% all the way from Kennedy, Johnson, Nixon, Ford, and Carter to Reagan . . . but slashed to 28% when Reagan left office, which went too far and led to huge deficits. Clinton put it back up to 39.6%, which was just about right: the rich kept getting richer faster, after-tax, than everyone else (as is our due), but the nation’s finances came into better balance and there was room to raise the Earned Income Tax Credit and put 100,000 cops on the street and extend health care coverage to more kids and modernize the military Bush would go on to use in Afghanistan and Iraq. CARROT ALERT Kim Ness: ‘Be careful with the carrots. I love ’em, and the baby ones make them so easy to eat. But last year I found that I had become ORANGE (not tan, not nicely bronzed, but orange). Since August I haven’t eaten a carrot, except for random slices or shreds from a packaged salad – and I’m still orange. Apparently the stuff that makes carrots (and me) orange is stored in fat, and so it is harder to get rid of than stuff that is water-based.’ ☞ Not to make light of your problem, but there is a red-state-blue-state joke in here someplace. I am going to lay off the beets. Michael Fang: ‘My aunt was so obsessed with her children getting the nutrition in carrots that she made and fed them carrot dumplings. The next day my nephew was orange.’
Neigh, A Living Will Is Not Enough March 25, 2005March 1, 2017 PEOPLE RESPOND TO INCENTIVES The oldest houses in Amsterdam are generally narrow because, centuries ago, homeowners were taxed according to their width. It was cheaper to build a long, narrow house than a square one with more street frontage. ‘The narrowest house on the Begijnhof,’ reports a traveler named Andrea, ‘was only five feet wide!’ (And speaking of feet, when the Soviets judged shoe factories by the number of shoes they produced, they tended to produce just one size – it was more efficient. And when, in 1988, Massachusetts upped the threshold of medical expenses one had to incur under its ‘no-fault’ auto-insurance law from $500 to $2,000, the average number of chiropractic visits after an accident jumped from 13 to 30.) Men may be pigs, but people are pigeons: we respond to incentives. BUBBLE Georgia Wong: ‘Just got word from a former neighbor that my dark, airless, viewless condo that I sold in 2003 for $327K is now worth $510K. Oy! If I’d stayed another year or so before selling!!! Arggghhhhhhhhhh.’ ☞ I know the feeling! Like selling AMZN at 200 only to see it at 400 weeks later! Let’s just hope the real estate market has a softer landing – as I expect it will. NEIGH I have become a horse. Strong like bull, yes, but a horse. I say this because I find myself eating mainly apples and carrots. The carrots became a snack of choice when they started whittling them down to baby size and packing them in Ziploc bags. And the apples zoomed up my ingestion chart when I recently discovered bags of ‘Gala’ Michigan apples. I have no clue where they are really from in March (Mexico?) but they are crunchy, cold and juicy and turn out, astonishingly, to be an even better snack than cookies. So I started reflecting on my life and realized, with equine-imity, that all I need is a feed bag. Well, except that I eat a huge amount of salmon, which has my ‘good’ cholesterol at levels not seen since the days of Methuselah, and horses don’t eat salmon. Never mind. AND SPEAKING OF APPLES Does a man holding an apple weigh MORE or LESS than he will after eating the apple? The answer will not likely change the world as Isaac Newton’s apple insight did – I do not expect to be knighted for this. But once I started pondering it (as I ate an apple while weighing myself), I decided that the answer to the question is that he weighs MORE before he eats the apple. Clearly, you could argue that he weighs less. Indeed, that is how a normal person would probably view things: you weigh less before you eat a big meal (or even a small apple) than afterward. But it is the imprecise nature of the question (‘do you mean ‘does the man-and-apple’ weigh less or just the man, not counting the apple he is holding?‘) that leads me to think that, absent the ability to receive clarification, one is called upon to take the question at its most literal: a man holding an apple. Like a man fully clothed weighs more than a man naked – even though the man does not weigh more. Now, you say, ‘but you fool, it makes no difference whether the apple is in his hand or in his stomach – the man and apple weigh the same whether the apple is inside or out.’ But that’s not strictly true. To begin with, most men do not eat an entire apple. They toss aside the core or at least the stem, thus slightly diminishing its weight. But even a man who eats the entire thing will weigh less after eating it than he did, holding it, shortly before, because each of us loses weight continuously (until we refuel). You always awake weighing less than you did when you went to bed. Perspiration – even when not noticeable, let alone profuse – takes its toll. I promise not to write about this again. LIVING WILLS Mike Mattes: ‘Please tell your readers to get living wills to avoid all this mess and have their wishes followed. They can go to agingwithdignity.org for info and the forms.’ Joel Margolis: ‘Here’s how to reduce the number of Schiavo-type cases in the future: it should be a requirement of enrollment in Medicare that the individual submit a letter from his physician stating that he has a living will and health care proxy on file. Admittedly Ms. Schiavo wasn’t eligible for Medicare but this would reduce the number of such cases among the elderly.’ Michael Rutkaus: ‘Popular conception is that a Living Will is enough, but that is mainly when death is imminent. A Medical Power of Attorney is also needed so you can assign medical decisions to someone else if you are incapacitated but not about to die.’ Eric Batson (MD, PhD): ‘A living will has problems. If you, the patient, are not conscious and able to defend your living will, a conscious and argumentative relative, who might hire a lawyer, will often get lots more attention from the hospital’s “risk management” staff. Lots of organs are not donated because a relative who is alive and talking tells a hospital NOT to harvest organs that the soon-to-be deceased (and no longer communicative) patient clearly offered for use. ‘A better document is a health care power of attorney. It gives the bearer the legal right to make all the health care decisions on your behalf. That person, as a communicative adult, can be just as vocal about threatening legal action and this gets the requisite respect from hospital administrators. This person is also empowered to make these decisions even if the situation is one not considered when the document was drawn up. Furthermore (and this is VERY useful for those in non-marriage relationships of ANY sort), the person with the power of attorney has COMPLETE access to the patient’s medical records and is obviously entitled to visit the patient (how can you make decisions for the patient without seeing him or her?). A random member of the patient’s family cannot just tell the hospital to exclude you. ‘OK, I am not an attorney, nor do I play one on TV, but I *am* a doctor and have spoken with prominent hospital administrators and organ transplant officials about this issue. I know *my* CD-ROM with ‘hundreds of legal documents for home and office needs’ includes a template for health care power of attorney. Make sure everyone in the family has swapped one with someone else. It can prevent these dilemmas from going into protracted litigation.’ ☞ Click here for one of those CD-ROMs. Alan: ‘As a native Floridian, I have to wonder whether, if this issue had came to light in any other state than one ran by a Bush, the federal government would have jumped to attention as it has? I know from personal experience the pain and heartbreak of having to decide to pull the plug. We lost my 17-year-old sister in a car accident many years ago, and luckily the government did not intervene when we had to make the hardest decision of our life. With all the Republican leadership’s devotion to the sanctity of marriage between a man and woman, why would they even choose to get involved in this intimate issue between the wishes of a wife and her obviously devoted husband?’
The $64,000 Question Do we wake up and smell the coffee? Or, having smelled it, wake up? March 24, 2005March 1, 2017 THE $64,000 QUESTION John Lemon: ‘As a result of your concerns (as well as those of Mogambo) about the national debt and the future of our economy, are you beginning to rethink your longstanding advice to young and middle-aged people to regularly invest in equity index funds?’ ☞ Yes and no. With an emphasis on no. The yes part is easy: there’s lots to be concerned about. America’s financial position is growing increasingly precarious. We are borrowing most of the world’s savings rather than saving on our own – and for what? To finance oil imports that we burn into thin air; to finance tax cuts for our wealthiest citizens. Well, you read all that yesterday and the day before. The ‘no’ part comes in several pieces: These concerns could be ill-founded. Things could go better than expected. That would be good for the periodic investor in index funds. I’ve long recommended that these regular monthly or quarterly or annual investments be not just in domestic funds, but perhaps a third or more in international funds. That could help the periodic investor. Over the long run – and it can be very long – the market tends to price its wares in such a way that it rewards investors for taking their risks. Not always, and certainly not with every stock (or risky bond); but over time, and over asset classes, the least uncertain – e.g., the 90-day Treasury bill – offers the lowest return. Risks wisely taken, and by those with the staying power to wait, and the resources to diversify and spread that risk, tend to reward their risk takers. (This is one reason the rich get richer; they can afford the risk.) By investing periodically and steadily, you get the benefit of dollar-cost averaging . . . buying more shares when they’re cheap, fewer when they’re dear (because $1,000 will buy only twenty shares of a stock at $50 but fifty shares when it falls to 20), so in the long-run, the odds are stacked in your favor. (Say the stock – or, in the case of index funds, ‘the market’ – see-saws equally above and below $50 for a long, long time. And ends up at $50. It was $50 in 2005 and it’s $50 in 2030. You’ve gotten nowhere! But actually, on top of any dividends along the way, you would have done well. Just how well depends on the frequency and amplitude of the fluctuations around that $50 price. But the concept is clear: you bought a lot more shares below $50 than above $50, so taken together you have a nice profit.) Historically, ‘you gotta be in it to win it.’ Market gains tend to come in spurts, unpredictably. If you try to ‘time’ the market, you could very well miss much of the growth. There’s much to be said for not breaking the habit/discipline/routine you’ve developed. If you have found a way to shunt 10% of your pay (say) regularly and (by now) painlessly (because by now you barely notice it, having come to accept the notion that you live as if you earned 90% of what you actually do) . . . why break a good habit? But might it be wise to up from 33% to 50% your allocation to international index funds? It might. And is the problem more complicated as you get older? It is. If you’re nearing the time that you’ll be taking money out of your fund rather than putting more in, you would want to rethink the proportion on your total pie you’ve committed to equities. So maybe what it really comes down to, as I try to weasel out of your very good (nay, $64,000) question, is how you define “middle-aged.” WHERE TO DONATE THAT OLD COMPUTER? Click here. They can often match what you have with the needs of a local group that will pick it up from you. PRIVATE ACCOUNTS There are just so many reasons not to borrow trillions of dollars from the Chinese and Japanese to fund President Bush’s proposed Social Security partial privatization. A brief excerpt from one more: The Post’s Jonathan Weisman quotes both Jeremy Siegel, a stock market enthusiast, and Kevin Hassett of the conservative American Enterprise Institute in support of Shiller’s views. All three agree that balanced investment portfolios are unlikely to earn 3% a year over the next few decades. . . . Bottom line: any kind of prudent investment is likely to leave a lot of people worse off than they are under current Social Security law. As with any financial scheme, you should be mighty cautious about signing on the dotted line when you’re dealing with a fast talking huckster who’s seems a little too eager to sell his goods without giving you time to read the fine print. WAKE UP AND SMELL THE COFFEE Longtime readers of this page will know we have long-since answered which came first, the chicken or the egg. (Hint: the egg.) But what about this? Do we wake up and smell the coffee? Or – smelling the coffee – do we wake up? I lean toward the latter. After all, think of smelling salts. I have never seen or to my knowledge smelled smelling salts and don’t know exactly what they are. But they appear frequently in literature, for reviving fainted ladies. Swoon; sniff; revive. Everyone seemed to carry a vial, just in case. So isn’t it really, ‘Smell the coffee and wake up!’ ?
From Mogambo to the Comptroller General March 23, 2005March 1, 2017 But first . . . Could the Terri Schiavo tragedy be to the current era what Joe Welch’s question to Joe McCarthy – ‘Have you no shame, Senator?’ – was to an era whose fever broke a half century ago? The President of the United States, who rarely if ever interrupts a vacation, flies back for a dramatic middle-of-the-night bill signing he could just have well done in Crawford? Because he so deeply cares about overturning the decisions of more than 15 judges after more than 34 hearings and appeals including two to the Supreme Court? Even though he signed a Texas law that lets a hospital remove a feeding tube even over the objections of the family? From Digby’s Blogspot: By now most people who read liberal blogs are aware that George W. Bush signed a law in Texas that expressly gave hospitals the right to remove life support if the patient could not pay and there was no hope of revival, regardless of the patient’s family’s wishes. It is called the Texas Futile Care Law. Under this law, a baby was removed from life support against his mother’s wishes in Texas just this week. A 68 year old man was given a temporary reprieve by the Texas courts just yesterday. Those of us who read liberal blogs are also aware that Republicans have voted en masse to pull the plug (no pun intended) on Medicaid funding that pays for the kind of care that someone like Terry Schiavo and many others who are not so severely brain damaged need all across this country. . . . Those of us who read liberal blogs are aware that the bankruptcy bill will make it even more difficult for families who suffer a catastrophic illness like Terry Schiavo’s because they will not be able to declare chapter 7 bankruptcy and get a fresh start when the gargantuan medical bills become overwhelming. And those of us who read liberal blogs also know that this grandstanding by the congress is a purely political move designed to appease the religious right and that the legal maneuverings being employed would be anathema to any true small government conservative. Have they no shame? OUR MILLION-DOLLAR-A-MINUTE DEFICIT If you thought the Mogambo link was a little too wacky yesterday, how about this from the Comptroller General of the United States? (Where he speaks of our $750,000-a-minute deficit, note that he is understating it by nearly half. The true deficit, when you include the cost of the war and the $200 billion we’re borrowing from the Social Security trust fund, is more like $1.3 million a minute. But even with his numbers it is sobering.) BUYING ON MARGIN And speaking of massive deficits and the $10 trillion National Debt that the Republican leadership will bequeath our kids when President Bush leaves office . . . . . . one of the basic tenets of prudent investing is not to buy ‘on margin’ – borrowing to invest. As others have pointed out, the President’s proposed partial Social Security privatization would have us – collectively – borrow trillions more from the Chinese and Japanese, among others, to invest in the U.S. stock market. Have they really thought this through? SO? Ron Carford: ‘You linked to the Mogambo article regarding the eventual collapse of the economy. My question is this: How do you suggest one should protect one’s assets? Assuming stocks will eventually collapse, is it safe to keep cash in a brokerage house like Fidelity? Or in a bank? Or in your mattress? In gold?’ ☞ Big topic. But even if this bad stuff happens – it certainly may not – I think the banks and brokers will likely be fine (and your account is federally insured against their insolvency). On top of that, diversifying should help. TIPS should hold their value. Investments in foreign stocks and in resource-rich companies could be a significant part of the mix.
Click for Mogambo March 22, 2005March 1, 2017 PLAYING THE REAL ESTATE BUBBLE (IF THERE IS ONE) Doug Simpkinson: ‘My wife and I played the real estate bubble by selling our house in the Silicon Valley and buying one slightly farther away (but bigger, in 3 acres of forest) for $100,000 less. This way we still own our (nicer) house, but we’ve extracted six figures from the bubble. Sort of like selling half of your TiVo stock after it shoots up, but imagine the remaining half of your TiVo stock has a mountain view. Or some other horribly strained metaphor.’ REASONS NOT TO FEEL STUPID KEEPING SOME OF YOUR MONEY SAFE Click here. Very entertaining and frightening at the same time. Note that our accumulated National Debt since 1776 will have reached $10 trillion or so by the time President Bush leaves office – up from under one trillion when Ronald Reagan took office. Of the $10 trillion, $8 trillion or so will have been racked up under just three presidents: Ronald Reagan, George Bush, and George Bush. (Of course, with inflation, it’s natural that 21st Century deficits would dwarf 19th Century deficits. What really matters is the size of the Debt in proportion to the size of the economy – and which way that ratio is headed. The debt was about 30% of GDP when Reagan took office, will be about 75% when Bush leaves – and is headed in the wrong direction.) Meanwhile, the ratios of consumer debt are higher also. Our homes ‘appreciate’ (even though they grow no bigger) and we borrow and spend that newfound ‘wealth.’ It may all work out fine. It generally does. But not always. [So? So? So, as expensive as they are, I’m not selling my TIPS or my oil stocks or my PCL, all of which might be good hedges against inflation.] And now, just in case you’ve not already read them . . . TWO VOICES ON THE TRAGIC SCHIAVO MATTER The first was Congressman John Conyers on the floor of the House Sunday: By passing this bill, in this form, we will be intruding in the most sensitive possible family decision at the most ill-opportune time. It will be hard for this member [of Congress] to envision a case or circumstance that Congress will not be willing to involve itself in under this precedent. By passing legislation which takes sides in an ongoing legal dispute, we will be casting aside the principle of separation of powers. We will be abandoning our role as a serious legislative branch, and take on the role not only of Judge, but of Doctor, Priest, Parent and Spouse. By passing legislation which wrests jurisdiction away from a state judge and sends it to a single preselected federal court, we will abandon any pretense of federalism. The concept of a Jeffersonian Democracy as envisioned by the founders, and the states as “laboratories of democracy” as articulated by Justice Brandeis will lie in tatters. By passing this legislation, in the complete absence of hearings or a committee markup, and with no opportunity for amendments, in complete violation of what we used to call “regular order,” we will send a signal that the usual rules of conduct and procedure no longer apply when they are inconvenient to the Majority Party. By passing this legislation, and taking this sensitive decision away from a spouse and giving it to a federal court, we will make it abundantly clear that all the talk last year about marriage being a “sacred trust between a man and a woman” was just that – talk. My friends on the other side of the aisle will declare that this legislation is about principle, and morals and values. But if this legislation was only about principle, why would the Majority party be distributing talking points in the other body declaring that “this is a great political issue” and that by passing this bill, “the pro-life base will be excited.”? If the president really cared about the issue of the removal of feeding tubes, why would he have signed a bill in Texas that allows hospitals to save money by removing feeding tubes over a family’s objection? If we really cared about saving lives, why would the Congress sit idly by while 40 million Americans have no health insurance, or while the president tries to cut billions of dollars from Medicaid – a virtual lifeline for millions of our citizens? When all is said and done, this bill is about taking sides in a legal dispute. Last year, the Majority passed two bills stripping the federal courts of their power to review cases involving the Defense of Marriage Act and the Pledge of Allegiance because they feared they would read the Constitution too broadly. Last month, the Majority passed a class action bill that took jurisdiction away from state courts because they feared they would treat corporate wrongdoers too harshly. Today we are sending a case from the state courts to the federal courts even though it is the most extensively litigated “right to die” case in our nation’s history. There is only one principle at stake here – manipulating the court system to achieve pre-determined substantive outcomes. By passing this law, it should be obvious to all that we are no longer a nation of laws, but have been reduced to a nation of men. By passing this law, we will be telling our friends abroad that even though we expect them to live by the rule of law, Congress can ignore it when it doesn’t suit our needs. By passing this law we diminish our nation as a democracy and ourselves as legislators. The second is my pal and classmate Jesse Kornbluth, in his blog . . . The Passion of Terri Schiavo March 21, 2005 | 6:00 p.m. The first thing you do when you are waging war against law and reason is to ratchet up the language. . . . [C]onsider the words of Randall Terry, former leader of Operation Rescue – and now the spokesman for Terri Schiavo’s parents: Yes, hate is good … if a Christian voted for Clinton, he sinned against God. It’s that simple. Our goal is a Christian nation. We have a biblical duty, we are called by God to conquer this country… There it is, right out in the open. The kind of country they want is everything our Founding Fathers labored to avoid. A Few Facts You May Not Know March 21, 2005 | 6:00 p.m. 1) The bill passed by Congress and signed by the President applies ONLY to Terri Schiavo. 2) The President’s decision to cut short his vacation and rush back to Washington made no medical difference to Terri Schiavo: White House officials acknowledged that the final bill could have been flown to Mr. Bush in Texas, a round trip of six or seven hours that probably would have made no difference in whether Ms. Schiavo lives. Doctors say she can survive for up to two weeks without the liquid meals that have sustained her for 15 years. Where George Bush Really Stands March 21, 2005 | 6:00 p.m. Just last week, the Houston Chronicle reports, Texas pulled the plug on an indigent African-American baby who seemed considerably more “alive” than Terri Schiavo. Who signed that bill? Then-Governor George Bush. Read on: The 17-pound, nearly 6-month-old boy wiggled with eyes open, his mother said, and smacked his lips. Then at 2 p.m. Tuesday, a medical staffer at Texas Children’s Hospital gently removed the breathing tube that had kept Sun Hudson alive since his birth Sept. 25. Cradled by his mother, he took a few breaths, and died. How does this Texas law work? Hospitals can stop life-sustaining care – no matter what the patient’s family wants. It just takes a doctor’s recommendation and approval by a hospital’s ethics committee. The family then has 10 days to find a facility that will take the patient. For a poor patient with little or no insurance, this is, in essence, a death sentence.
How to Play the Real Estate Bubble In 20 Words Or Less March 21, 2005March 1, 2017 But first . . . LEST THE CONGRESS HAVE TO FLY BACK TO OVERRULE YOUR WISHES Mike Mattes: ‘Please tell your readers to get living wills to avoid all this mess and have their wishes followed. They can go to agingwithdignity.org for info and the forms.’ Steve Strunk: ‘I find it extremely distasteful that the state government of Florida and especially the US Congress should think that they have any cause for action in this case. Given that the courts have already decided in this matter, it would seem that any law passed to over-rule the court’s decision could never stand the separation of powers clauses of the Constitution. I am starting to feel ashamed that I have been a Republican my whole life. Prior to the last election I had never voted for a Democrat. The party that I had always counted on to keep government small and out of these situations has suddenly become the opposite of what I had thought it meant to be Republican. The party is now a big government party imposing its will on the people and trampling state’s rights. This party now knows what is best for everyone and is not afraid to act on this belief.’ R*E*S*P*E*C*T Rosina Rubin: ‘It took me 13 years to get my husband to register as a Democrat, and he is a good barometer of moderate Republican thinking. George Bush doesn’t embody the Republican Party values in which he long believed; but when he hears Democrats talk scathingly about ‘the Republicans,’ he feels unwanted by the Democratic Party. This language may appeal to the faithful, but if we’re going to win big, we need to reach beyond the faithful. So I’ve been telling everyone who will listen that when we talk about ‘the Republicans’ we need to be specific (i.e. say ‘George Bush’ or ‘Tom Delay’ or ‘the Senate Leadership’ or ‘our opponents on the other side of the issue,’ whatever it is that we mean), but let’s try really hard to not to push the swing voters away by accidentally making them feel that we’re talking about them.’ ☞ Exactly right. There are millions of Republicans who agree with the Republican leadership that we should be pushing for a global ban on stem cell research (as we are) . . . borrowing the costs of the war from our children (as we do) . . . drilling in the Alaska National Wildlife Refuge (as soon as possible) . . . tilting the playing field ever more heavily in favor of the rich (as Jesus would have?) . . . retaining the right of FBI terrorist suspects to buy firearms (as the NRA applauds us for doing) . . . tearing down the separation of church and state (lest judges be allowed to decide matters like the Schiavo case). And even these people’s views should be respected. But the Republicans I know – and I know a lot of them, including a surprising number of gay ones (albeit no lesbians) – generally lament these positions. They long for the days of the Eisenhowers and Rockefellers and Javitses, and wish that the Bill Welds and Rudy Giulianis could actually play leadership roles in their party. (Bill Weld couldn’t even be confirmed ambassador to Mexico, let alone considered a presidential contender.) In my view, these folks are basically in the sensible center (maybe one click to the right), as the Democratic leadership also is (maybe one click to the left). We need to let them know we’re very close on a lot of issues; and that they should feel warmly welcome in our tent, at least until they get their party back. And now . . . PPD Lajon Webb: ‘I’m an Independent Associate with Pre-Paid Legal Services. Our company was formed nearly 32 years ago to provide affordable access to the justice system for middle-income working people like you and me. Pre-Paid is to attorney fees what major medical is to hospital and doctor bills. In other words, many of the legal services you need most are prepaid through your membership. We place you, your family and your business under an umbrella of legal protection provided by a nationwide network of quality law firms. Here is my website for further information about our company.’ Doug Mohn: ‘PPD is pre-paid legal insurance of questionable value sold through a MLM organization. Andrew Tobias, Consumer Advocate, would tell people to run from this product. Andrew Tobias, stock tipster, is probably going to regret this one. Be sure to tell everyone to sell after the short covering run-up finishes, because long term this company is a dead end just like all pyramids.’ POP Joe Cherner: ‘It’s obvious to me that the U.S. housing bubble is about to burst. Since I don’t own any U.S. housing, what could I do to bet I am right?’ ☞ Buy puts on . . . everything. Except that, of course, you could be wrong, or too early, and lose your entire bet.
Visit the Monkeysphere March 18, 2005March 1, 2017 GIVE THEM THE WORLD In a world of Google and Mapquest and that site that gives you a bird’s-eye view of the globe, this is retro at best. But this Barnes & Noble atlas would make an extraordinary gift for the high school student in your family. Or the college kid, except it’s too heavy to take back and forth to college each year (and even if it weren’t, you wouldn’t want to see it go). There is so much in it, from our planet’s place in the Milky Way and phenomenal double-page satellite photos of the continents at night, to a photo of the world’s tallest waterfall, to . . . well, the whole world. WHY SUPPORT DEMOCRATS? Alex: ‘Three Democrats — Senators Daniel Inouye and Daniel Akaka of Hawaii and Mary Landrieu of Louisiana — joined 48 Republicans in supporting drilling by voting no. Please explain to me again why I should give money to the Democratic Party?’ ☞ Because 48 Republicans voted the wrong way versus just 3 Democrats? And because with Gore or Kerry or whoever comes next, this would never have been proposed in the first place? 1 AMERICAN = 573 SUMATRANS Gennady: ‘Goes like this: there is a fixed exchange rate between the dollar, pound and ruble: a pound of rubles costs 1 dollar.’ Anna: ‘Re your point yesterday that we see ‘close neighbors as more important than distant neighbors,’ I highly recommend The Monkeysphere. The language is a bit, uh, informal, but the insights and examples are unforgettable. Also relevant, from Jaron Lanier: ‘You have to draw a Circle of Empathy around yourself and others in order to be moral. If you include too much in the circle, you become incompetent, while if you include too little you become cruel. This is the ‘Normal form’ of the eternal liberal/conservative dichotomy.” ☞ The Monkeysphere is fun. But the language is a bit, uh, informal. ST. AMEX DAY Sharp-eyed readers will have noticed the green highlights in yesterday’s column, perhaps ascribing them to St. Patrick’s Day. No, it was my exceptionally subtle way of suggesting shares of American Express. You know, the ‘green card’ folks. (Well, originally.) Retailers aren’t crazy about Amex because it takes a bigger slice out of each transaction than Visa or MasterCard. But in the wake of a seemingly decades-long litigation, banks can now offer their customers the Amex card. I think I even saw something from MBNA about switching Visa or MasterCard holders to Amex – presumably to get some of that premium Amex charges retailers. Not to mention what could be decades of newly prosperous Eastern European and Asian travelers, winers, and diners, who just might like the cachet – if our President doesn’t permanently turn the whole world away from anything with the word ‘American’ in it – of carrying the American Express card. Another item I’ve picked up this week are the January 2007 25 LEAPS of Prepaid Legal Services (stock symbol, PPD; LEAPS symbol, VPXAE) at $11.80. With the stock at $35, you are paying a $1.80 premium for nearly two years’ control of the stock (being able to buy a $35 stock for $25 has an intrinsic value of $10, so paying $11.80 is paying a $1.80 premium). I know very little about the company – and it is controversial to say the least – but one of you who seems to have done his research likes it. (The company is doing well, he says, selling some kind of program to help cover people in the event of identity theft. He expects good results that he believes are not yet reflected in the stock price.) I would stress, as always, that the sensible thing for most people is to invest steadily in two or three no-load, low expense mutual funds of the type I recommend at the back of my book. And to invest in the market only money they will truly not need to touch for many years. Certainly PPD LEAPS entail significant risk. Click here to see why. But say you’re rich and can afford to risk $11,800 for the right to buy 1,000 shares of PPD at $25 anytime between now and January 2007 (by which time any profit on the sale of the LEAPS would have gone ‘long-term’ and be lightly taxed). And say, further, that the stock rises 50%, to $52.50. Your $11,800 becomes $27,500 ($52.50 less the $25 strike price times 1000 shares), so you have more than doubled your money. More interesting than the return on a savings account – but with the very real risk that you could lose the entire $11,800 (less the value of the tax loss in lowering your income tax). Have a great weekend. Hop up onto a satellite and take a look back at Earth. Or visit the Monkeysphere.