Federal Government · investing · Personal Finance

That Kind of Hertz

In an eleventh hour weekend move, the car rental company Hertz filed for bankruptcy, sending its shares for a lovely ride:

“Give you a lift?”

I’m curious what stands to follow, especially as many states continue their draconian frighten in place orders despite the economic bleeding. The travel industry and airlines might raise particular concern, but even some restaurants could hit the chopping block due to their brick and mortar ways. And that’s all excluding oil, which has a lot of livelihoods attached to it throughout various parts of the U.S.

If nothing else, this crisis should inform politicians of how fragile the financial web remains in our country. Sending over thirty million to the welfare rolls in order to save them from the invisible enemy strikes the mind as nanny state idiocracy, which we surely don’t have in America. After all, this is the greatest country on earth.

Right?

investing · Personal Finance · Self-Improvement

Are Beggars Beating The System?

When I was younger, I recall watching the Sherlock Holmes series starring Jeremy Brett. While not always equal to the Basil Rathbone version, it delivered thrills aplenty, bringing to life countless tales by Sir Arthur Conan Doyle. A particularly poignant example is “The Man With The Twisted Lip,” which focuses on a wealthy but debt-troubled man who mysteriously vanishes, only to be discovered playacting as a beggar to help service his liabilities. It’s possible that the tale was written with assumptions of upper-class snobbery towards the poor, but that should not jettison the social value, particularly in today’s early retirement and money-scrounging culture.

I thought back to the show over the last two weeks, as I handed out cash to several panhandlers between my work shifts. Of course they might well be down on their luck, but what if they aren’t? What if homeless beggars are more like our friend in the show, a clever masquerader seeking to avoid the wages of tax?

From what data is available, a panhandler might draw $100-$300 dollars a day in an American city,  This doesn’t sound especially great, but remember that the funds are tax-free. To put it into perspective, when I worked retail some years ago, an eight-hour shift gave me $80.00 in gross income. After taxes, paying for boomer retirement, and Berniecare, I was sitting closer to sixty-five bucks. From any standpoint, that’s a yuuuge difference.

We should further understand that homeless people have access to soup kitchens and shelters, two helping hands that absorb other daily expenses. Should the person be masquerading of course, they might live with a family member or pay minimalist rent off the books to avoid added scrutiny. Meanwhile, Clarence Goodman has to cough it up for housing, food, gas, and Trojans, all to ensure semi-regular affection from his wow, man.

Now you might say, “Sure, but they don’t get all those great benefits!” As it turns out, that depends. Disabled folks can claim SSDI up to a certain level, and the general homeless population is eligible for Medicaid, with some regional variances. To be sure though, they miss out on subsidizing the retirement of the elderly, which does rather sting.

There are some downsides, to be clear. Any pretender to the homeless throne would have to deal with rough weather, lack of consistent sanitation, low money haul days, and the usual social stigma. In addition, whenever they chose to “clock out” of the streets, their behavior would have to carefully avoid attracting suspicion from the empowered and governmental.

Still, it’s a thought.

Federal Government · investing · Personal Finance

Can Free Market Healthcare Work?

One of the silliest debates in the last ten years has been that surrounding healthcare. Progressives screech about the need for broader Medicare coverage, and conservatives extol the virtues of “free market reforms” to bring down medical costs. In both cases, they miss the mark by fixating on the delivery of insurance rather than an elimination of health issues in the first place.

For the purposes of this post, let us consider conservative arguments. They will typically join libertarians in advocating a rollback on insurance regulation and hospital restrictions, along with less government intervention in the economy. Many will note that in 2013, government spending was already 48 percent of the total for healthcare, and yet costs do not seem to be coming down. They might even point to the historical example of Nelson Rockefeller, who tried to expand government coverage of people under Medicaid, but had to abandon the program after it became too expensive.

These are all valid concerns, yet we run up against several problems. To begin with, as long as hospitals find it difficult to deny care to those who cannot pay, fellow travelers will end up footing the bill. Private insurance already acts like a placeholder of sorts for the government in these situations, but they simply amp up premiums on others to support the weaker links. Further complicating matters on the insurance side is the McCarran-Ferguson Act of 1945, which granted sweetheart exemptions to the insurance industry from federal antitrust laws, making it harder to prevent price gouging.

At least for the purer conservatives and libertarians, antitrust restrictions are a troubling question, appearing to some as a needless restriction on liberty. Others term them “anticompetitive,” and claim such legislation was only implemented to benefit industry actors who were losing market share. The front is thus not unified, although the House did vote overwhelmingly to approve a repeal of McGarran-Ferguson in 2010, only to see it die in the Senate.

The bigger issue being left out of the free market argument is the effect which lifestyle has on personal health. It’s easy enough to note that people must take responsibility for their own diet and exercise regimen, but this view fails to acknowledge contributing health factors sourced in other areas. If we fail to properly regulate food production, for example, we might well have hog waste getting into the water supply, if not the ham itself. The consequences have been algal blooms and massive fish casualties, yet who knows how many humans might already be affected.

Permitting high levels of added sugar in cereals or snacks is another problem. Sure, people are responsible for their own actions, but children will be capricious over what they want. In some cases, those kids might have been raised consuming junk, and not know any different. The mere availability of unhealthy foods might also result in them being consumed because of convenience, particularly if there is no existing market for healthier alternative in close proximity.

Sensible regulation is an obvious solution, with the EU providing baselines, but conservatives and libertarians will often come out against any further government control – while also demanding free market healthcare. Clearly this poses a problem. If people are eating garbage products because “it’s good for the economy,” then they will likely drive up costs after developing conditions like heart disease, diabetes, and cancer. Unless care is entirely individualized, with people “only paying for what they need,” and those unable to pay getting denied service, even private sector insurance will end up subsidizing them through risk pools and higher premiums. In other words, everyone gets charged more.

Thus we are left with a conundrum. Either we must overhaul food production and environmental protections to prevent disease in the first place, or make everyone pay out of pocket for their needs alone. As long as insurance plays a leading role however, the latter idea remains a wistful thought.


investing · Personal Finance

How The Stock Market Works

As some of you surely know, Elon Musk’s lovely contributions to humanity have taken yet another fanciful turn. After a few hard lemonades, he spat this out on the tweet deck:

I’m sure there’s more to the story than meets the eye, though it presents a fascinating look at how markets react in the current age. We have already seen how the Religious Investor approach chucks all principles and guidelines out the window in favor sheer fanboyism, but it’s getting worse. Literally nothing matters except the increasingly-fatter balloon of millennial viral popularity.

 Tesla fans will quickly castigate any skeptics on stock price by appealing to the “technology of the future,” but a mere microemail from their leader is now enough to cut about $15 billion from the market cap. Is the company now fairly valued, still too big, or dirt cheap? No guess exists worth taking.

In fairness to Teslaites, the rest of the stock market is not acting much different, so they can hardly be brought up on charges of cucking against humanity. We just have to sit and wait, or maybe buy bitcoin and hope it goes to $150,000. I mean, come on.

All that’s left to say is this: quality weed matters, Elon.  

investing · Personal Finance · Self-Improvement

The Problem With Self-Help

Ever since the 2008 financial crisis, there has been an explosion of new self-help guides on the internet dot com. Old legends like Tony Robbins keep cranking it out, while young orangutans jostle for their piece of the pie. Almost every online following seems to devolve into the genre with varying degrees of intensity and commitment.

That’s all good, but an unfortunate theme appears to pervade most of the books: complete disconnect from reality. I happened upon this realization after reading through The Compound Effect  by Darren Hardy. It’s a short and compelling read that rehashes the timeless principles you typically hear, such as:

  • That $4.00 coffee at Starbucks every day adds up to $51,833.79 after 20 years.
  • If you make only $40,000, bring a bag lunch and cancel your magazine subscriptions, plus change your cable provider. This will save you a lot of money which could be invested for a higher return.   
  • If Stacey puts $250 in her Roth IRA each month starting at age 23, she’ll have $1 million by age 67, in this case ASSUMING she gets an 8 percent return, compounded MONTHLY.
  • If Chad does the same but delays his start by a a few years, he’ll have only $300,000 at the same age.
  • Surround yourself with positive people and energy.
  • You’re 100 percent responsible for your actions/decisions/choices.

The last hyphen point is especially interesting. Hardy does attempt to push the gospel of self-improvement, laying into the folks who blame other elements for their misfortune, such as family or the government. He hoists the individualist banner valiantly, yet towards the end of the book there is a brief disclaimer which can be summarized as follows: You’re 100 percent responsible for whatever you do, but those choices are INFLUENCED by powerful external forces.

At precisely this moment, the “Stop complaining and focus on yourself” mantra is dealt a fateful blow. Obviously one can apply all those principles, but there is nothing preventing a Black Swan from tossing it all back to square one again. These gurus seem to forget that prior to the 2008 collapse, companies like Lehman Brothers and Bear Stearns were well-respected, with both residing in various investment and retirement portfolios. Concurrently, there was no shortage of self-help spin doctors encouraging people to “Save every penny so you can invest” for the future. No doubt others adhered to those philosophies, but nothing stopped the macro-level malevolence of corporate and governmental interests.  We can look at the oil collapse of 2014 (and even 2020), along with the Coronavirus financial spanking to see a steady dynamic afoot. The train rattles on.

I suppose the takeaway should be that for all the benefits of helping yourself and “being an individual,” there are always factors at play well beyond your control, and those unwelcome guests can easily crash the self-reliance party.

Anyone bring the Natty Light?

investing · Personal Finance

Why You Should Work For The Government

Some years ago I was party to a conversation about various career fields. One participant noted they hoped to get hired by the federal government, which another dismissed as “under-achieving.” This did not seem to faze the first chap, who just shrugged and gave off a satisfied smile.

Looking at some recent stats, we can see why. As private sector industries such as hospitality and leisure bleed jobs like the hemorrhoid circus, government is one of the few examples with a net positive rating, and the highest performer among the winners.

Even as the economy goes bad, the government continues to operate, paying out salaries to workers who might be deemed “non-essential” and laid off if they were in the private sector. This gives state employees a tremendous economic advantage over those who are losing their jobs (or getting less hours). They will not face the disruption native to other industries, and therefore can more easily buy into the discounted stock market or real estate.

Beyond this, government workers aren’t treated all that badly. The current federal model of FERS, which has been replicated by many state and local governments, provides a far more stable benefits package than the vaunted private sector. Participants get access to a Thrift Savings Plan (basically a 401k) with up to 4 percent matching, and a pension that comes to around 33 percent of their highest three-year salary, along with Social Security. Healthcare plans are decent as well.

The skeptics among you might point to the recent government shutdown as an example of disadvantages, but government workers ultimately received back pay, while most of the workers affected by coronavirus will not.

So if you have a child someday, recommending a career in the civil service isn’t necessarily a bad idea.

Culturalism · investing · Personal Finance

The Federal PRESERVE of Wall Street

Some people ask me how I’m able to stay sane as an investor during times like these. The answer is quite simple: just pay attention to the federal government.

As most already know, the Congress approved a $2 trillion monstrosity by voice vote yesterday, with the only visible opposition coming in the form of representatives AOC and Thomas Massie. Beyond its inclusion of various stimulus programs, the legislation creates a fat bailout fund for larger companies, and allows the Federal Reserve to leverage up to $4 trillion in support of the economy (Read: Wall Street ).

In the words of Powell the Owl:

“Effectively one dollar of loss absorption of backstop from Treasury is enough to support $10 worth of loans. When it comes to this lending we’re not going to run out of ammunition.”

Some Democrats openly demanded oversight for $500 billion in assistance that corporations will have partial access to through the bill, and succeeded in establishing an inspector general to monitor disbursement of the money. In response, Republicans began to weep miserably.

Just kidding. In reality, El Orangelo was several steps ahead of them, placing his ink on the bill accompanied by a fancy signing statement, which effectively allows him to ignore parts he doesn’t like. According to the man himself:

“I do not understand, and my Administration will not treat, this provision as permitting the [inspector general] to issue reports to the Congress without the presidential supervision required.”

In relation to congressional oversight requirements for specific funds he added:

“These provisions are impermissible forms of congressional aggrandizement with respect to the execution of the laws.”

In other words, the money is already compromised. If that wasn’t enough, the legislation also shrouds Federal Reserve meetings in deeper secrecy, establishing an effective wall against FOIA requests.

So Wall Street will be fine, although your currency is another question. But don’t worry, you can forget all that and just rage against Thomas Massie.