Friday, January 25, 2008

Saving is bad - you heard it here first

Good day, friends. Thanks for checking back after all this time.

So, we are all going to be from $300 to $1,200 richer come June. The government, to stimulate the economy, is sending everyone a check for $600 for most single taxpayers (and even some who pay no taxes) and $1,200 for those who file jointly. There is also $300 for each kid (l assume the kid has to live with you). I know people who have a dozen kids or more, but I don't think they will be able to collect for those who are over 21 and have left home.

Since this is going to be done by Congress and the administration, however, anything is possible.

The idea is, as the worst president who ever lived said this week, to put more money back in the hands of the people. The deal is that they will spend the money and stimulate the economy, since consumer spending comprises more than 60 percent of the economy.

That's the rub.

We have been upbraided since Moses was in the third grade by all and sundry experts for not saving enough. Americans don't save enough...we have the lowest savings rate in the civilized world. We save less than the Japanese, we don't save for our retirement, yada yada yada. We also have too much debt. We use our credit cards and home-equity loans and consumer loans and auto loans and vacation loans entirely too much, piling up so much debt that we are bad, bad, bad.

That's what I have heard for decades upon decades. Shame on us for being spendthrifts.

Just wait, friends, until this economic stimulus plan is passed and the spin machinery starts. Things will change in an Orwellian way. Good is bad. Bad is good. Let me explain.

Shakespeare said the past is prologue. History repeats itself. Our economic geniuses never heard of this concept. Their idea is that we will get this $1,200 and go out and buy that flat screen television or home theater or take the family to Disney World or a wonderful romantic trip to Quebec City for black fly season.

What happened the last time this give-them-a-check strategy was tried less than a decade ago? More people used it to pay down debt and to increase savings than to spend. What makes the powers that be think this time will be any different? It's easy to see that the plan won't increase spending and stimulate the economy this time either.

So, friends, according to the government spin machine I foresee warming up this spring, you will be told the following: You want to use your government money to pay off debt? You are a traitor to your nation. You want to save it for that rainy day? Shame on you. You want to save some of it to pay the taxes you are going to owe on it (nobody told you about that part of it, did they)? You are not a good American!

You heard it here first.

Page 2

The California Supreme Court really blew it his week.

The justices in the fire and mudslide state upheld a ruling that allowed a company to fire a guy whose drug test showed marijuana.

It wasn't a surprise. The follow had suffered a back injury that left him with debilitating back spasms that are only relieved by medical marijuana use. The use of marijuana for medical purposes was approved by the voters in a proposition. The guy had a prescription for the pot and a doctors' declaration that he was only relieved by using grass.

He was fired anyway. So he sued, saying his use of pot was legal. The courts backed his employer.

So, what the court was saying was that if he had elected to use other prescription drugs that could leave him woozy or half asleep while not helping him, he could keep his job, but because he used pot, not to get high but to keep his back from causing him awful pain, he should lose his job.

It makes no sense, but then again, it's California.

Page 3

The more I think about the sub prime mortgage mess, the angrier I get. It was like the Iraq war -- there was no need for it to happen and its outcome was so predictable.

What kind of sense does the following make: A person comes to a mortgage broker asking for a loan. The house seems to be in good shape, the buyer is anxious to become part of the American dream -- home ownership.

So, the mortgage broker asks the buyer how much money he or she makes. The buyer answers that it's none of the broker's business. The broker says fine. How much does the buyer have in the bank. Again, none of your business. Fine, says the broker, we can approve the loan, but it'll cost you, the buyer, a little more money you may or may not have to borrow the money you may or may not be able to afford to repay.

The brokers, by the way, laid off most of their bet on investors, many from other countries, and walked away. So, they still have their commissions while buyers are losing their houses and investors are losing their money. That's what makes me really angry.

Page 4

It seems the Water Pollution Control Authority is joining the foreclosure posse, suing to sell dozens of properties to get their fees that are owed.

I have two comments. First, is this the same WPCA that allowed Hamden to skate on its share of the operating cost for years and years?

Second, I really don't blame the WPCA for seeking to get the money that is owed to it, but I do blame them for their apparent lack of common sense. Why go after church, for crying out loud, a church that itself is struggling to survive? And why foreclose on homes in the midst of a foreclosure crisis that has thousands of people in danger of losing their homes? Why be the bad guys when you don't have to.

And where is the mayor is all this. The New Haven Independent asked Mayor John DeStefano Jr. about this. The WPCA is a quasi-public agency. The mayor is silent.

So what else is new?

Have a great weekend and for those in the Tribe, a great Shabbos.

Until next time...


Reuven said...

There's a new "War On Savings" web site:

Keep up the fight!

Good Times said...

The thing is, we've not saved anything for so long and have amassed such an obscene amount of debt that doing what we should is no longer possible. The entire economy of the nation is now built on a cycle of debt and spend and it's reaching across the ocean into the economies of other nations like a cancer. We'll borrow from China until they can;t afford it anymore then we'll borrow from the Saudis until they can't afford it anymore and eventually the globe will be destitute.

To maintain the sham of an economy this nation has going requires the citizenry to perpetually spend money it doesn't have.

The best thing about this "rebate" is not that if I didn't have to suffer this taxation at all I would have an extra 10K/year in my pocket but that the government doesn't have the 300-1200 to give us all back. It is borrowing itself further into debt to give us back our money that by all rights doesn't actually exist in the first place.

My "rebate" is going straight into ammunition. The day that people are killing each other in the streets with their bare hands for a package of Top Ramen is not far off.

Only a government can return taken money that doesn't exist. No system can withstand that level of "book cooking."