Author: A.T.

Not to say politicians aren’t entitled to their opinions, but should they state them so forcefully?

Who can forget Ross Perot’s flat-out assertion that NAFTA, if passed, would lead to a “giant sucking sound” as our jobless rate soared? Over and over again he said this. And with such disdain for anyone not bright enough to see it!

The thing about Ross: It’s just all so obvious to him. A giant sucking sound.

Of course, NAFTA and GATT have been in place for some time now and the jobless rate, at 4.6%, is near its lowest rate in decades. And still Perot calls everyone who disagrees with him (on any issue) a moron.

And here’s another, even more important example:

As Newsweek‘s Jonathan Alter pointed out a couple of weeks ago, there was not a single Republican vote for the Clinton economic plan in 1993. Not one. (It was a plan that, among other things, raised taxes on the highest-income Americans to help balance the budget and get interest rates down.)

The Republican chorus: It would wreck the economy. “It will kill jobs and lead to a recession,” Alter quotes Newt Gingrich as having said. Phil Gramm said there was “no possibility” we would see any economic growth if taxes on the best-off were raised. “This plan will not work,” said Republican budget-expert John Kasich.

Every single Republican voted no … and five years later we’ve added 16 million jobs, balanced the budget, seen interest rates fall, and watched the stock market double.

There are millions of good Republicans … even including some in Congress. But I’m scared when the leadership has gotten so polarized, when the battle has taken on such … fervor.

Religion is, of course, a wonderful thing. But, especially when it gets mixed up in governance, it can go too far. Queen Isabella boasted, 500 years ago, “I have caused great calamities. I have depopulated provinces and kingdoms. But I did it for the love of Christ and his Holy Mother.” Ouch.

Not for a moment to suggest that any Republican leaders actually approve of snipers murdering doctors or bombing clinics, or thugs beating, burning and crucifying homosexuals. But the influence of the Christian right on the Republican party has, in my view, become disproportional. If only every moderate Republican would run to the polls November 3 and vote overwhelmingly Democratic, this one time, to send the Republican leadership an unmistakable message: America must not become a theocracy controlled by wealthy televangelists. (They should have their say, of course, but not control of the party unless their views are shared by a majority of the party – which polls suggest they are not.)

Then we could go back to electing good Republicans, of whom there are many, right along with good Democrats.

Yesterday I know I promised you The Cheese of the Month Club. Well, I had scanner problems, and the cheese is just going to have to wait awhile. Stick with me a week or two, and we will get it all resolved.

In the meantime, this quote from a September Worldwatch paper by Lester R. Brown, Gary Gardner and Brian Halweil. In reporting that the world population has grown from 2.5 billion in 1950 to nearly 6 billion today, they note the mathematically obvious yet startling: “… there has been more growth in population since 1950 than during the 4 million years since our early ancestors first stood upright.” The first 2.5 billion people took 4 million years; the next 3.5 billion took 49 years.

The report talks of “Water tables falling on every continent … collapsing fisheries …. We are triggering the greatest extinction of plant and animal species since the dinosaurs disappeared.”

There are slow-motion problems that are tough to get excited about. And the growth is not happening in the rich industrialized countries, for the most part. (Indeed, Italy and Russia are examples of countries on a path, at least for now, to sharply shrinking populations.) It is the other four-fifths of the world’s population that continues to grow at a rapid rate. But in the long run, since the oceans and the atmosphere don’t respect political boundaries, it’s everybody’s problem.

Something to think about next time we’re pondering whether to increase or cut back on funding for international family planning, or programs to help avoid unwanted pregnancies or children having children. It is an interesting irony that many health insurers will cover Viagra but not birth control pills.

I know many of you know this or have done it, but in case you want the flood of unsolicited mail and/or dinnertime phone calls to slacken, just send notes to the following. In a few months, it should taper off somewhat. Just make a note to renew your request in October 2003 – it sticks for 5 years.

Mail Preference Service
DMA
Box 9008
Farmingdale, NY 11735-9008

Phone Preference Service
DMA
Box 9014
Farmingdale, NY 11735-9014

Of course, do this and you may very well miss your chance to join the Cheese of the Month Club.

Tomorrow: Well, sure! The Cheese of the Month Club

There are those who think Dell Computer — an outstanding company by any measure, some of whose outstanding products I have been pleased to own — is an overvalued stock.

I’m not saying either way. (OK, I’m saying. I think it probably is. I think somehow, someday, little outfits like Compaq, IBM, Toshiba, NEC, SONY, Gateway and maybe even Intel or who knows who else may find a way to compete and, at the least, narrow Dell’s profit margins and slow its growth. I have, however, been wrong before.)

What I know for sure is that it’s fun — pointless, perhaps, but fun — to play with DELL’s market cap … to marvel at it … to find new ways of expressing the giant value Wall Street puts on it. All the more so when you consider that Michael Dell is (a) reputedly a very nice guy and (b) one of those astonishing modern-day American success stories who started the company in his dorm room.

It is for this reason that I have summoned all the subjects of my kingdom to construct on my own nascent Web site a giant “scale.” Its sole purpose (at least for now): to weigh the market cap of DELL, based on today’s prices, against a handful of not-entirely-unknown stocks you may have heard of as well. Click here to see it, and to see what it takes to tip the balance.

LET’S BUY MARS

From Duncan Smith: “With regard to your ‘Let’s Buy Mars’ article today, I think some guy named Dennis Hope already owns all the land in the solar system (other than the Earth), and is selling it off bit by bit. Check out www.lunarembassy.com. They are selling property on the Moon, Mars, and Venus, at bargain prices. Who knows how this will stand up in court once people actually start settling on the Moon and Mars, but it’s a brilliant business scheme nonetheless.”

CORRECTION: IT WAS $24

From Brian Annis: “You write [with respect to the Louisiana Purchase and the purchase of Alaska, so why not Mars?], ‘Only the $23 purchase of Manhattan Island has not been ridiculed among early North American land acquisitions.’ Actually, it wasn’t just $23. The Dutch paid TWICE for Manhattan Island, and HAVE been ridiculed for doing so. They originally ‘bought’ the property from the Canarsee tribe, then had to pay for it again to buy it from the real owners, the Manhattan tribe.”

And — what was I thinking? — it was not $23, according to popular lore and the value of beads and trinkets; it was $24.

3Com Puts

From Jeffrey Schwarz: “Well, I guess it’s a good thing I didn’t buy those puts. Since I asked you that question [should he buy puts on 3Com, hoping the stock would fall?], 3Com continued to go up due to more silly rumours and improved earnings. (Whew!) Improved earnings should keep it higher, or it might make a good put-buying opportunity now. Either way, options seem to present an unfavorable risk/reward ratio for me. Sure, you have a chance to make a bunch of money — but from what I gather, you lose most of the time and money.”

Yep.

Not long ago I told the heart-warming story of an ordinary couple who never earned more than $70,000 between them (before tax) yet who, by living beneath their means and investing the difference, had managed to retire, aged 62 and 60, with $3 million in savings.

“OK, they are retiring with $3 million,” writes Kathi Derevan, “NOW will they give themselves permission to ENJOY some of the fruits of their labor??? Is there such a thing as saving TOO MUCH money for the future?”

To be honest, I’ve never met anyone who rued having saved too much, though such people must exist. But sure: memories are as important as dreams. The more money you spend today, I suppose the more you’re building memories (“Remember that fantastic new BMW we had, back when we could afford one?”) at the expense of dreams (“Someday, we’ll just kick back, financially secure, and really enjoy the last 30 years of our lives.”).

Ah, the memories. “Wasn’t it wonderful never weatherstripping or insulating to lower the electric bill? Those were truly blissful days.”

OK, maybe I’ve stacked the deck with those examples. I’m sure Kathi is not suggesting people waste money by failing to weatherstrip.

But how about this one, as a compromise example. Does it strike a good balance? “Remember that trek through France? We only really splurged on hotels two nights, but the best night of all was actually the one camping out along the river and killing a couple of bottles of wine under the full moon with that big loaf of bread.”

OK, I’m not sure you can still do that. I was 16 at the time. There may be “no camping signs” throughout Europe now, and it may actually have been a river in Poland, not France. I don’t remember. My point is: It’s a balance. And if you do it with a sense of humor and a sense of gamesmanship, you can live beneath your means, saving for the future, and still enjoy it. Indeed, one thing savers enjoy most — without being miserly — is their sense of security and control. Driving a car you own outright may be more enjoyable than driving a fancier one on which you have to struggle to make the payments. (Every time my car is stolen — four times now — Charles, who has a different philosophy about money, cheers. Yes!, he thinks. Andy will finally get a new one! But then the police find it, I stitch up the top, and thank my stars it wasn’t an expensive new car they had stolen.) This is not the first time I’ve proposed a bumper sticker that would read: “Sure. But it’s PAID FOR.”

Easier to joke about this, I know, when you’re lucky enough to be considered not poor for driving a wreck, merely eccentric. If I couldn’t afford a BMW, I might not be so comfortable in my Frankenstein convertible.

My father said something wise that Kathi reminds me of: Life is not a business. So, sure, people should enjoy the fruits of their labor. But the sense I had — just an intuition, really, from the tone of the message that gave rise to this exchange — was that Mr. & Mrs. Retiree, aged 62 and 60, had enjoyed their pre-retirement lives. But frugally.

From Elliott: “I noticed that State Farm is being sued for forcing their customers to use generic parts when they bring their car in to be serviced. Do you have any thoughts on this matter? I noticed that Nader, et al., are backing the Insurance Companies on this one.”

And rightly so. Ralph may be a Big Fat Idiot when it comes to personal-injury auto insurance, as I’ve argued at length elsewhere, but he’s very much on target if this is indeed his position on replacement parts. Generics are usually a better buy when it comes to many consumer items — it’s just wiser shopping. So if State Farm — a mutual company with no rich shareholders who profit from screwing consumers — thinks it’s in the interest of its customer/owners to hold down costs by specifying generics, it probably is. (All the parts, as I understand it, have to meet quality tests.) Otherwise, you give GM, etc., a monopoly — only GM can sell genuine GM parts — and monopolies are not consumer friendly.

If there’s a demand for a policy that would cover “only parts from the original manufacturer,” insurers should offer it (some already may), and consumers who want to pay the extra cost should be free to choose it.

Ah, the rush. I get so excited writing about auto insurance. Tomorrow, back to less exciting topics.

From cheery old Lubenovic: "What kind of financial strategies/tactics would you recommend for a worldwide recession or … depression?"

This would be so easy if you knew for sure a recession/depression were coming. It’s a possibility, of course, but by no means something you can "count on."

If you could, you would sell all your stocks and real estate and buy puts. (Puts leverage your pessimism much more than selling stocks short directly — and have the virtue of limiting your loss to 100% rather than leave it open-ended if you are wrong.) And/or you would put a good chunk of your money into U.S. Treasury securities. And you might put a few bucks into silver dimes, just to have some walking around money if the value of paper currency were ever called into question.

And then, when things seemed worst and most hopeless … when stocks were being given away at prices that would look good unless the world ended altogether … you would trade most of your profits in those puts and Treasuries and buy like a bandit. Because I can say with the confidence of a man who knows you will not be around to rebuke me if I am wrong: the world will not end.

But here’s the catch with a disaster strategy: We may already be a good deal of the way into that disaster. Just ask that sliver of the globe that lives East of Prague all the way on out to the Pacific and Hawaii. So it may be that the world is poised to reinflate and grow, that interest rates will rise, puts expire worthless, and Treasury bonds (at least those of the long-term variety) sink like a stone.

My guess is that the true path lies someplace in between those two scenarios. We will not have a worldwide depression, but the easy years are behind us for a while. A quarter-point drop in the fed funds rate — swell surprise though it was — may not be enough to turn the world economy around.

Hence it makes sense, I think, to spread your money — if you’re fortunate enough to have enough to spread — over the "four prongs" I have written about from time to time: some cash/liquid money first (money-market funds, T-bills, whatever); an inflation hedge in case the world reflates (your home, stocks over the long run, though inflation would kill most stocks at first); a deflation hedge (long-term Treasuries); and a "prosperity hedge" in case we really have already hit bottom (stocks). How you best weight these prongs depends on your own circumstances (80-year-old widows and 29-year-old eye surgeons are not the same) and your own view of what might happen (or at least your own view of how unhappy you would be if certain things happened, so you can try to stay within your tolerance for pain).

What will happen?

All I know for sure is that no one knows. If things get bad enough, prudence could even come back into fashion. That, no doubt, will be the bottom.

“As a fixed-income trader,” writes Sarah, “I’ve always understood your $10 bottle of wine vs. $108 case example” [wherein one can technically earn a 177% tax-free return on one’s money], “and I certainly put those principles to work in my own shopping (thank you www.NetGrocer.com ) but NOT ON WINE.

“If I buy 12 cans of Starkist Tuna fish when it’s on super sale, I cheapen up my per can cost substantially. Same with the 12 pack of toilet paper. But if I buy a case of wine, we drink twice as much! (Basically we have wine with tuna, wine with pizza, wine with everything.) Some items simply cannot be effectively stocked!

“Conversely, my fiance said over dinner last week: ‘Your garden has saved us a fortune.’ I immediately knew what he meant. It wasn’t that my tomatoes and peppers were any less expensive — after fertilizer, soil, etc., I broke even or spent a little more. But staring at all that fresh produce made us find reasons to eat in rather than racing for the nearest take-out menu (ah, Manhattan) or going out. Life, and saving, works in odd ways.”

A.T.: Ah, Manhattan, and ah the million-dollar-plus apartments that have terraces for a garden. Or Billy Joel’s old apartment that a crazed real estate agent once showed me in the daft hope I might actually abandon my $41,000 long-ago digs for this unusual one-bedroom-with-a-greenhouse on Central Park South that was a steal at little more than $1 million but came with a $50,000-a-year maintenance fee.

But however they grow this stuff, Sarah makes a charming point.

Which brings me to the recent cover story in the Boston Globe Sunday magazine profiling Edgar Dworsky. Every worthwhile movement needs its extremists, and the more crazed penny-pinchers among you might enjoy reading about him, as I did, and how he beat the Wiz (this one left me with mixed feelings), by clicking HERE.