Left, right; left, right, march.... Dave and Ellie wrote: I feel for you guys. This has been a rough decade for America, and about 50 million of its citizens. Zackman wrote: That's one of the reasons I believe we have to stop relying on politicians to solve our problems for us. Politicians are supremely ambitious- for power, prestige and, sometimes, money. Once they get it, they can't bear to let it go. Just look at Senator Arlen Specter, and the "spectacle" he made of himself, changing parties, so desperate was he to hold onto all that- and he, at 80! Good god, man, give it a rest! "Left, right, left, right"- this is how we march, and not how we should govern. The sooner Americans stop with the labels and start addressing the problems, and finding solutions, the better, and I think it's more easily done if we don't make a religion out of our political beliefs. _____________________
Debtor nation/debtor citizens How did we ever get to this point? Our students now owe $750,000,000,000.00 in student loan debt- much of it federally insured loans not dischargeable in bankruptcy, subject to collection through garnishment of wages, and resulting in denial of government benefits for non-payment. Student loan debt can ruin your life, and our kids have been encouraged to take it on.... When I went to university there was a belief that the society benefited from educating its citizens, and higher education was heavily subsidized, making it unnecessary to take on debt to get a university degree. My tuition, when I first began my studies, was just $50/semester, a token amount, even then. ____________________
V, you're showing your age! Isn't it funny how government jumped right in to tackle the thorny problem of the high cost of health insurance, but nowhere do you hear even the most remote rumblings about the high cost of education. Do you think that the massive support the teachers' unions and the university professors' unions give to various politicians may have anything to do with this lack of indignation? Here's what I see from clients regarding the cost of a university degree...St. Lawrence U. $50,000 per year, Penn State (out of state tuition) $37,000, Cornell U. $60,000 per year. I'm sorry but those numbers are insane. To put between a quarter of a million and half a million into the cost of a degree when most of these colleges are sitting on billions in endowments is just plain stupid. Add to it the fact that the average university professor works less than 20 hours per week and none of it makes sense. Is it any wonder we're in trouble?
The tuition figure I gave was for in-state tuition, University of Texas, 1965!, just to pin it down, twinini. Tuition is now an average of $4,500 per semester for residents of Texas, having increased by 90 fold over that period- 13 times more than inflation would have accounted for. Highly paid university professors at that same school were earning about $32,000/year, at that time. Just keeping up with inflation would have brought such a professor to $221,440/year, now. I believe much of the change (the 13X part that is not accounted for by inflation, generally) to be due to the societally mandated shift of the cost of government services away from the taxpayers- and onto the recipients of those services- and, in the case of education, also creating a booming business in student loans, many of them virtually risk free to the lenders, being guaranteed by the government, as they are. You can see this phenomenon everywhere; for example, in higher "user" fees paid by those who visit National Parks, fees charged those who wish to access the justice system, etc., but nowhere is it more evident than in education. Our kids are still getting educated, but being sent off into their adult life with, in many cases, unbearable levels of personal debt. ______________________ It is widely known that Americans pay the lowest taxes of any developed nation, just how low is not so well known. Recently, USA Today ran an article that asserted the average working American was paying just under nine percent of his total income in total taxes, including income, sales tax, excise taxes, etc. This is not a very big investment in ones country....
Gold hits record Gold prices hit an all time high, yesterday, reflecting continued interest in holding something that can be a hedge should the wheels come off, sometime in the future, in spite of governments' efforts around the world to stabilize the economic situation; BUT, there continues to be mixed news, much of it positive, such as China's report, yesterday, that their exports were up 50% in May, from May a year ago. In addition, striking workers in China at multinational manufacturing plants have forced wage increases of 100%, in recent days. While this will be reflected in higher prices for Chinese manufactured goods, and contribute to inflation in other parts of the world, it's good news for the Chinese domestic economy, which has lagged, owing to low wages, generally. Improving wages there will increase domestic consumption and, in the end, help to further develop their economy, with domestic consumption having been the lagging component. [Wages in the U.S. have been stagnant for the last 25 years, when adjusted for inflation, and domestic consumption has proceeded by increasing the levels of credit available to consumers and, in the last decade, through large tax cuts, but giving broad wage increases to working people- instead of massive salaries and bonuses to management as has been the practice in the U.S., in recent years- would have the same positive effect on domestic consumption as it would in China, especially if directed towards the lowest wage earners.] If wage increases can be accomplished in China without a serious disruption to the social fabric which could occur if there were wide spread strikes, there is a chance the world economy can continue the very uneven progress towards stabilization that's now underway: if serious social instability in China should occur now, it would be very bad news, indeed, for the world economy, and all bets would be off. ____________________
Repository of value If there is anything that annoys me about the decisions I've made in recent years, it's my failure to seriously consider the roll that gold could play in an increasingly unstable world. In the five years since 2005, gold has tripled in value, and yesterday traded at a new record high. We all know what's happened to other assets during those five years, and it's been a roller coaster for most. Buying in June 2005, you'd never had to experience the pain of watching your purchase slip below what you'd paid for it: in fact, you'd have remained comfortably above that, and enjoyed watching its value climb. Even at today's prices, it remains in demand: I read, recently, that orders for the U.S. gold coin have doubled, in recent months, as many consider what may happen to their savings should hyperinflation arrive at our doorsteps. Land, houses, etc., do not represent the same investment because, although they too, retain value, they do not "spend" when times are hard- and there are no buyers, at any price....
Maybe you know something I don't V, but having friends with pawn shops and such I am somewhat familiar with the sale of gold.... gold may be X dollars per ounce, but unless you have a legal tender gold piece with a guaranteed market value redeemable someplace, selling gold as a private citizen will almost never get you the market value... the only way to quickly sell gold around here, and I expect in most areas, is to sell it as "scrap" to refineries that resell it to jewelry makers and mints. That means taking about a %15-20 loss on the market price per ounce of 24k gold. I agree the climb in gold has been incredible, and I still keep saying it can't go any higher only to see it make a liar out of me.. but I'd still take land over gold any day, its harder to have stolen, easier to pass on, and more versatile... you also have to worry about the day some wacko figures out how to make gold from peanut butter.. thereby making your horded savings worthless..
Gold Fever My thought, Life, is that what I've read made sense; that is, to have 20% of your net worth in gold coin. It would be something you keep, in a bank safety deposit box, hoping it would go up in value- but mainly to have it in hand, as a substitute for money, should all money go south. In times like that, others would also want to have your gold coins, and they would trade fairly with you for them, it seems to me. If anything, the gold coins would be even more "in demand", eliminating the problem you spoke of which occurs now- when someone wants to exchange them- of their being somewhat "undervalued" when compared with the market price of gold. For gold to have gone up in price 3X, over the last five years, there has had to be tremendous demand for it, especially given the fact that more is being produced, from gold mines around the world, everyday. Without knowing for sure, I suspect this may be due, in part, to the growing prosperity of India, and China, where there exists a long, historical tradition of hoarding gold against hard times. With their 2.5 billion population, that's a lot of potential gold hoarders out there! As for passing it down, I suppose my children would be happy with the appearance- and reality of the value- of beautifully minted, gold coins they, too, could keep "just in case".
Recession It's starting to look increasingly likely that the U.S. has begun sliding back into recession. In recent days, the data that's been returned has, for the most part, been worse than expected. Today's report that home sales (contracts pending) had plunged 30% month-to-month, in spite of mortgage interest rates that are at 50 year lows (under 5%), and yesterday's consumer confidence figure coming in at just 52, when the previous month it was at 62, point in the same direction. New car sales figures from the majors in the U.S. also posted a 12-13% drop, and new claims for unemployment for those recently layed off again increased. U.S. efforts to stimulate its economy have not been very effective, with most of the money going to shore up banks and other institutions saddled with bad debt, and had merely stabilized an economy that was in a downward trajectory: now that the stimulus has been exhausted, and with Congress rejecting attempts to provide new stimulus, or even sustain those that were in place, the slide will probably resume. Cutting off unemployment benefits- as the Congress seems bent on doing- will just contribute to the slide, by immediately removing benefits from 1,300,000 unemployed Americans who were putting that money back into the economy, everyday. It is said there is another 2,000,000 who will lose their benefits before the end of July, if nothing is done. It's been years since we've had unemployed citizens marching and rioting in the streets, demanding jobs, but we could see that yet. The unemployed now total 15,000,000 in the U.S., and food stamps and unemployment benefits have kept them off the streets, to this point. __________________ At the G-20 meeting, recently, other countries' leaders chided the U.S. for running big deficits. Many of them have introduced a number of austerity measures, increasing the hardships their people are experiencing, but feeling it's necessary to stabilize markets, especially the bond markets. Canada, having never deregulated its banks and investment banks, thereby preventing them from taking on risky investments, is said not have suffered much at all from the global downturn. (It would be interesting to hear from any readers who are from Canada who could comment on this. Brewster, are you out there?) If the scenario I suggested at the beginning of this post comes to pass, it may suggest they were right, in some way, if the stimulus that was applied in the U.S. merely delayed, but did not prevent, a further decline. __________________
