Sunday, December 28, 2014

A Very Merry "Screw You" from Obamacare

For those of us who need to deal with Obamacare directly through the exchange, finding health insurance becomes more bizarre and frustrating each day.

After completing our 2015 application for coverage and managing to find a "reasonable" plan that will cost us only about $10,000 per year (before Obamacare, an identical plan in South Dakota would have cost us $3,000 per year), we just received a notice that we cannot receive coverage in South Dakota because we don't own or rent a home in the state and pay utility bills. Apparently, you need to provide proof of both mortgage or lease payments and the payment of utility bills to be eligible for healthcare coverage through the Obamacare exchange in South Dakota. Considering we had South Dakota coverage in 2014, I can only assume this is a new development.

So under Obamacare, you can't be denied coverage for a pre-existing condition, or even if you are not a U.S. citizen, but you can be denied coverage if you do not own property or pay rent to a slumlord and pay utility bills.

Even after explaining to the Dakotacare representatives that we live in an RV and provide for our own utilities by living off-grid, they either could not or would not understand our situation and address this ridiculous policy. The fact that we are legal residents of South Dakota, with valid drivers' licenses, pay annual property taxes to South Dakota on our truck and RV, are registered to vote in the state, receive all of our mail in South Dakota, and have South Dakota residency in the eyes of the most powerful federal agency in Washington...the IRS, was not a convincing enough argument. The help desk at didn't have any answers for us to solve this. Like most of my dealings with this group, they were clueless and helpless, trying to refer us to the South Dakota insurance commission to seek some help.

At least we have a partial solution. We will skip buying health insurance for 2015 and save that $10,000. If they try to penalize us with a fee for not buying insurance, we have ample documentation that we applied through the federal exchange, were approved, and were prepared to buy insurance when we were denied by the Obamacare-approved insurer on the exchange. I don't believe we can be penalized for not buying something that we tried to buy but were then denied by the provider. But who knows, things get weirder and weirder in this country every day.

Next year we will switch our residency to Idaho, where we do at least own raw-land property and pay traditional property taxes. I doubt the Idaho healthcare exchange will require proof of utility bill payment since it seems that about 30% of the state already lives off grid!  

I've been trying to give this legislation the benefit of the doubt for the last year and a half, but the steaming pile of excrement that is Obamacare just seems to get worse and worse every day. From revelations that a major designer of the program devised a way to sneak elements of it by the "stupid" American public (Jonathan Gruber), to "we have to pass it first before we can know what's in it" (Nancy Pelosi), to let's keep delaying the employer mandate and the impacts on Medicare until after our next elections because the impacts on the voters are just going to suck, and on and on and on, this is a piece of legislation that is destined to die a long, slow, painful, multi-trillion dollar death.  There's really only one thing to say:



Saturday, December 20, 2014

Bright Lights, Big Sell-Outs

We take great pride in such things as never needing to plug into the grid
(the last time was nine months ago), seeing how long we can go without needing to hook up and go dump our tanks (so far our record is six weeks), and seeing how cold the weather can get outside before we need to turn on the heat inside (so far, 9 degrees outside along with 41 degrees inside).

So now we find ourselves plugged in at the Circus Circus RV park right on the Strip in Las Vegas. For the next 13 days we'll have unlimited electricity, endless hot showers, be eating at some very fine restaurants (including the best pizza East of NYC), and endure the diverse crowds that flock to this "impressive" metropolis over the holidays. I suppose we should feel guilty about all of this indulgence, but it's for a good cause. We'll be spending the holidays with relatives from Pennsylvania.

A free doggie spa station is a nice benefit as well.

 Ah yes, Christmas and New Year's in Las Vegas.

By January 2nd we should be camped all alone out in the middle of the desert once again!

Meanwhile, at our place up in Idaho it may not be a very white Christmas this year. It seems to be warmer in Northern Idaho than it has been in Nevada. The elk herds are having a good time cutting trails across the valley floor as they move between our place up on the bench and the water ditch down below.
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Wednesday, December 10, 2014

We're Number One!!!: A New $18 Trillion World Record

By the time Reagan was in the second year of his presidency, the US national debt hit $1 trillion dollars. That is the first time I remember discussions about the national debt. It was an astounding figure at the time and Reagan was pilloried by the press for his tax cutting, ramped up spending, and trickle down policies. David Stockman covers this time period in his excellent book "The Great Deformation" about the financial history of the US from the formation of the Federal Reserve to the present.
So it took about 205 years for the US to accumulate its first $1 trillion in debt. In less than 5 years the next $1 trillion would be accumulated. Again, Reagan took it on the chin for his administration's policies that contributed to this debt build.
When the Bush Administration took the country from $4.5 trillion in debt to $9 trillion in debt, he was called "unpatriotic" by Senator Barack Obama, who then proceeded to vote against an increase in the US debt limit. That's the Barack Obama I voted for in 2008. Someone who appeared to have the juice to take on these issues. I don't who the guy was/is who moved into the White House in January 2009. He's not the guy who campaigned so well in 2008. He hasn't had my vote or trust since. When Vice President Dick Cheney famously said "deficits don't matter," that may be the only position he ever took that Democrats could wholeheartedly endorse.
Ironically, on Black Friday, the US government took a major step forward to insolvency by passing the $18 trillion debt level. Under the last six years of the current administration, we have managed to accumulate the same amount of debt as the nation accumulated in total over its first 232 years of existence. Yet not a single network bothered to cover this milestone. I first wrote about this in October 2013 when gasoline was officially poured on the debt fire.

Who knows, maybe the US national debt really doesn't matter. That's one myth about our debt, here are some others:
"It's the Net Worth that matters, not the Gross Debt"
Analysts often pay attention to a country’s “net debt” instead of its gross debt. If you have a million bucks in debt, and a million bucks in cash, then your ‘net debt’ is zero. It washes out. It's manageable. This same approach is also applied to GDP. Again, a million dollars of debt is cancelled out by a million dollars of assets (GDP).
The problem is that the US government doesn’t have any cash. The Treasury Department opened its business day on Black Friday morning with just $71.9 billion in cash, or just 0.39% of its total debt level. Apple has more cash on hand than that. In addition, even after altering the way GDP is calculated so that they could go back to 1945 and artificially increase the nation's GDP figures, the US GDP is about $17 trillion. We are now $1 trillion in the hole versus a revised GDP calculation that artificially inflates the number by more than $1 trillion. So we're actually $2 trillion in the red.
“We can make some adjustments to get our debt under control.”
Both Democrats and Republicans have painted themselves into a corner and proven this is a lie. Politicians have been saying for decades that they’re going to cut spending and get the debt under control.
The reality is that the last time the US debt actually decreased from one fiscal year to the next was back in 1957 during the Eisenhower administration. During the Obama administration, the US government has been spending roughly 90% of its entire tax revenue (including payroll and gas taxes) just to pay for mandatory entitlement programs and interest on the debt.
This leaves almost nothing for practically everything else we think of as government. To keep our boat afloat, both parties need to embrace identical fiscal and monetary policies.
“The debt doesn’t matter because we owe it to ourselves.”
This is probably the biggest lie of all. Two of the Social Security trust funds alone (OASI and DI) own $2.72 trillion of US debt.
The federal government owes this money to current and future beneficiaries of those trust funds, i.e. every single US citizen alive and all the new ones entering each year.
I fail to see the silver lining here. How is it somehow ‘better’ if the government defaults on its citizens as opposed to, say, banks? To stay in power, both parties have to find any way possible to avoid pissing off the US citizens who see these entitlements as their birthright.
“The US can always ‘selectively default’ on the debt”
Another lie. People think that the US government can pick and choose who it pays.
We could make a big stink about China, for example, and then choose to default on the $2 trillion in debt that’s owed to the Chinese. Nice try, but this would rock global financial markets and destroy whatever tiny shred of credibility the US still has.
Others have suggested that the government could selectively default on the Federal Reserve (which owns $2.46 trillion of US debt, and that much more as mortgage and sub prime private sector debt). Again, possible, but given that the Fed (the issuer of the US dollar) would become immediately insolvent, the resulting currency crisis would be completely disastrous.
“We can tax our way out of this mess”
No, we can’t. Looking at the numbers, since the end of World War II, regardless of economic growth or tax policy, US government tax revenue has consistently been roughly 17% of GDP. 
We can raise tax rates, but it doesn’t move the needle in terms of revenue as a percentage of GDP. Even if we take every last penny earned (or stolen) by the 1%.
You’d think with this obvious data that, rather than try to increase tax rates (ineffective), they’d do everything they can to help grow GDP. But no, we have to regulate every aspect of people’s existence: How you are allowed to educate your children. What you can/cannot put in your body. How much interest you are entitled to receive on your savings. The water that falls out of the sky onto your property, and on and on and on.
All of this costs time, money, and efficiency. So do never-ending wars and policing a global empire.
This isn’t about any single person or President. The problem is with the system itself. History shows that every leading superpower from the past almost invariably fell to the same fate. Great powers often feel that their wealth and success entitles them to spend recklessly and wage endless, arrogant wars. The Romans. The Ottoman Empire. The British. And now the US. The lesson here is very clear. Debt weakens a nation and the society upon which it is built.
Generations that will not even be born for decades will inherit these debts by complete accident of birth.
And the people in charge of the system have backed themselves into a corner where there is no way out other than to default– either on their creditors (creating a global financial crisis), the central bank (creating a currency crisis), or on the citizens themselves (creating an epic social crisis). Being a Republican or Democrat doesn't matter at these debt levels. To maintain power, both parties have to implement the same policies that keep the charade going. So we will see more and more stories and "political" debates about social issues (race, immigration, marriage equality, abortion, gender wars, drugs, death penalties, torture, etc.) to serve as a distraction from the financial story that will have the biggest impact on our lives now and for generations to come.

Bottom line: Although through benign neglect of the issue we are being told not to think about our debt issues, this is not a consequence-free environment. Maybe this will change through media scrutiny of a Republican administration or become a campaign issue during the next Presidential race. Republican administrations seem to be held to account more aggressively by the media. While we can't fix the debt problem with our votes, we can certainly each reduce our own personal exposures to what happens next.

Wednesday, December 3, 2014

The Best Christmas Movies of All Time

I wanted to write about the US national debt crossing the $18 trillion thresh hold. This happened last Friday, and the media thought we would all be more interested in watching the morons climb over each other at local big box stores in between clips of rioting in Ferguson. So as a result, not a peep about this most recent milestone to US insolvency. I remember all the hand-wringing and pulling out of hair when the Bush Administration ran it up to $9 trillion. Those were the good ol' days.  Oh well, maybe for the next post.

For now, it's time to put up a list of the greatest Christmas movies of all time. When we had a "normal" house in Napa Valley, we used to host an annual Christmas movie viewing weekend. People would come and go over the the two day period and we would serve up many rare vintages of wine, specialty red and green cocktails, and the tasty treats to go with them (jambalaya, lamb stew, exotic cheeses, seafood dishes, etc.) while we watched about 20 or so movies. After we went fulltime in our RV and sold almost all of our stuff, some of the few things we kept were all those movies, and we watch them once every year. So if you're looking for some Christmas cheer this year, check out some of these gems.

The Classics (rated G)

The Grinch that Stole Christmas
Offering one of the best sing-along opportunities and the cutest animal – Max, the Grinch’s little dog who is forced to have antlers tied to his ears and pull the sleigh.  Plus, I’m a sucker for Boris Karloff narrations.

Classic Quote:  “He puzzled and puzzled till his puzzler was sore. Then the Grinch thought of something he hadn't before! Maybe Christmas, he thought, doesn't come from a store. Maybe Christmas... perhaps... means a little bit more!”

White Christmas
Let’s dissect the parts:  Oscar-winning costumes by Edith Head.  Bing Crosby with the marquee name and the pipes.  Danny Kaye with the, well, everything.  Rosemary Clooney as the singing starlet.  And then there is Vera Ellen to wrap things up with a bow on top.  Watch this movie one time through, watching only her.  She’s super-hot in G-rated movie.  The plot is corny, but it brings back memories of a simpler, more pleasant America
Classic Quote:  “When what's left of you gets around to what's left to be gotten, what's left to be gotten won't be worth getting, whatever it is you've got left.”

Miracle on 34th Street
Is there a Santa or is the man that works in Macy’s every year just a great actor?  Find out as we go to court to solve this mystery once and for all.  It’s not just Kris Kringle who’s on trial; it’s everything he stands for - kindness, joy, love, and all the other intangibles. Plus, a precocious little Natalie Wood.
Classic Quote:
Kris Kringle – “You know what imagination is?”
Susan Walker – “Oh, sure.  That’s when you see things, but they’re not really there.”
Kris Kringle – “Well, that can be caused by other things too.”

The New Wave (rated PG)

A Christmas Story
We loved this movie before it was cool to love it!  Grown up reflects on his childhood growing up in post-WWII Indiana.  See boy and friends do stupid kid things.  See parents pass on their neurosis to their children so that subsequent generations may benefit. 
Classic Quote:  “The line waiting to see Santa Claus stretched all the way back to Terre Haute.  And I was at the end of it.”

A cute story about a baby who accidentally crawled into Santa’s bag on Christmas Eve and was whisked away to the North Pole...There he was raised by Elves and thought of himself as an Elf.  But soon his size became a problem so his Elf “parents” decided it was time he returned to his world...That’s when the problems began and the lessons in the movie are learned.  Ferrell did a good job without going completely over the top as he usually does in his other movies.  What’s normally overlooked by reviewers of this movie is the outstanding comic turn by Bob Newhart.  If you can suspend belief for a while and just roll with it, you’ll enjoy this one.
Classic Quote:  “It's just like Santa's workshop!  Except it smells like mushrooms... and everyone looks like they wanna hurt me...”

Fred Claus
Not too well thought of by the critics, but what the hell do they know!  This movie has it all…the best soundtrack of any Christmas-themed movie ever made (sorry White Christmas), a cast that includes three Oscar winners and five that have received Oscar nominations, Ludacris cast as a DJ elf, and a story that will at various moments make you laugh, cry, disgusted, and feel warm inside.
Classic Quote:   “You’re all fired…in the morning you’ll all be on a bus back to Elfistan!”

The Dark Side (rated PG-13 and R)

No one has ever retold the classic story of Ebenezer Scrooge as well as Bill Murray and Bob Goldthwait.  This movie is laced with campy humor and edginess while preserving that age-old message of “appreciate life and what you have.” 
Classic Quote:  Too many for one page, but I’ll go with…. “I never liked a girl well enough to give her 12 sharp knives.”

A Midnight Clear
Probably the best war movie with the best script and cast that you have never heard of or seen.  That it’s set during Christmas in the middle of the Argonne Forest on the eve of the Battle of the Bulge makes it even more poignant.
Classic Quote:  “I'm not exactly sure what country we're in. Could be Belgium, Luxembourg, France, or even Germany. I don't know what day it is. I have no watch, so I don't know what time it is. I'm not even sure of my name. The next thing you know, they'll be making me a general.”

Bad Santa
I saved this movie for last since it’s so bad it’s good, especially for anyone who has a warped, sophomoric sense of humor or just likes a bit of perversity in their Christmas movies (yes, yes, and yes).  Billy Bob Thornton plays a Santa Claus in a big department store who, with his partner, a dwarf, or a small person, as is the politically correct term to use these days, are only there as Santa and Elf to rob the store as their ultimate goal.  The fact that he has a change of heart when he becomes involved with one of the kids shows that there is good in most people after all.  As the quote below from Billy Bob demonstrates, his language, ill-humor and other “behaviors” are not for the faint of heart… so consider yourself forewarned. We've decided we can only be really good friends with people who "get" this movie.
Classic Quote:  “I've been to prison once.  I've been married - twice.  I was once drafted by Lyndon Johnson and had to live in shit-ass Mexico for 2 1/2 years for no reason.  I've had my eye socket punched in, a kidney taken out and I got a bone-chip in my ankle that's never gonna heal.  I've seen some pretty shitty situations in my life, but nothing has ever sucked more ass than this!”

I know this list leaves out a lot of good movies. We have more than 20 to choose from, but keeping the list somewhat short was the goal. Comments whining about how "It's a Wonderful Life", "The Santa Claus", or "Home Alone" weren't on the list will be met with ridicule. They are good, but not top 10.

Instead of "happy holidays", you all get a "Merry Christmas!"

A Christmasy herd of 100+ elk in the valley below our Idaho property (phone photo from a friend up there keeping an eye on things for us)
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Wednesday, November 26, 2014

A Truly Lost Generation(s)

"and all that could not sink or swim was just left there to float"
Ship of Fools
Grateful Dead

Here are a couple of mind blowing (ie., sickening) charts that make you wonder at how a generation of Americans could have frittered their lives away, spending money they didn’t have on things they didn’t need, utilizing easy to acquire debt, and saving virtually nothing for their futures or a rainy day. Have we become a Ship of Fools where too many people are sinking, too few are floating, and fewer still are swimming?
We were all young once. Old age and retirement rarely enter people's minds when they are young. Most people aren’t sure what they want to do for the rest of their lives when they are in their early twenties. Slaving away at your entry level low paying job, chasing the opposite sex, getting drunk, and having fun on the weekends is the standard for most young people. But you eventually have to grow up. Because one day you find ten years have got behind you. No one tells you when to grow up. And based on the charts below, tens of millions missed a once in 50 years opportunity.

Susan and I graduated from college in 1986 and started our entry level jobs. My engineering job paid $30,000 and her CPA firm job paid $25,000. We never had to live at home and were able to afford our own apartments. In my case, paying cash for a modest used car and paying off some student loan debt was easily accomplished. We were still able to go out on the town in Philadelphia with friends and still still save money in

IRAs and 401(k)s. When we got married at the age of 28, we had saved enough to pay for our own wedding and honeymoon. We both were taught the value of investing by our parents and had mutual fund accounts at Vanguard long before we met. We knew retirement by age 50 was an achievable goal. Anyone who entered the job market from the mid 1970s through the mid 1980’s, which would be the late Baby Boomers and early Generation Xers, had job opportunities and the benefit of starting their investing with low stock market valuations.

P/E ratios of the market were single digits in the late 70s and early 80s, versus 20+ today. Dividend yields on stocks averaged 5% for the S&P 500, versus 1.9% today. The Dow bottomed out at 759 in 1980, while the S&P 500 bottomed at 98. A 20 year secular bull market was about to get under way. Baby Boomers and Generation Xers had the opportunity of a lifetime. Even after six years of the bull, when we graduated from college the Dow stood at 1,786 and the S&P 500 stood at 521. We had just begun to ramp up our investing when the 1987 crash wiped out 20% in one day. I remember my divisional GM in hysteria that day as he proclaimed it was the end of the economy as we know it. He didn't have as much time as we had. It meant very little to us. We didn’t have much to lose, and we had time on our side, so we just kept investing.

The 20 year bull market took the Dow from 759 to11,722 by January 2000. The S&P 500 rose from 98 to 1,552 by March 2000. You also averaged about a 3% dividend yield per year over the entire 20 years. Your average annual return, including reinvested dividends, exceeded 17%. Anyone who even saved a minimal amount of money on a monthly basis, would have built a substantial nest egg for retirement. If you had invested in 10 Year Treasuries, your annual return would have exceeded 11% over the 20 years. Even an ultra-conservative investor who only put their money into 5 year CDs would have averaged better than 7% per year over the 20 years.

Even with the two stock market collapses since 2000, your average annual return in the stock market since 1980 still exceeds 11%. That’s 34 years with an average annual total return of better than 11%. Every person who had a job ovr this time frame should have accumulated a decent level of retirement savings. That is why the chart below is so shocking. Over 15% of all people 60 and older and 23% of people 45 to 59 years old ZERO retirement savings. This means 25 million Boomers and Xers are stuck living off a Social Security pittance or on a pension system that is primed to collapse under its own weight. It seems they let 30 years of one of the greatest investing periods in history get behind them. They floated through a period unlikely to be repeated in our lifetime and are now waiting to sink.
I’m not shocked that over 50% of 18 to 29 year olds have no retirement savings. With the terrible job market, declining real wages, massive levels of student loan debt, two stock market crashes and one real estate crash in the space of eight years, and 4% annual returns since 2000, young people today have neither the means nor trust in the system to save for retirement. Their elders had no such excuse. Just a minimal amount per paycheck saved over the last 30 years would have compounded to well over $100,000, even at modest salary levels. It is disgraceful that 25 million people over the age of 45 have saved nothing for their retirement. Far more disgraceful is the median household retirement balance of $3,000 for all working age households. There are 122 million households in this country and 61 million of them have $3,000 or less in retirement savings.

The far worse data points are the $12,000 median retirement balance of aged 55 to 64 households and the $10,100 median retirement balance of aged 45 to 54 households. These people are on the edge of retirement and have less than one year’s expenses saved. There is no legitimate excuse for this pitiful display of planning. These people had decades to save, strong financial market returns, and, if they worked for even a small to medium size organization, matching contributions to their retirement accounts. They didn’t need a huge salary. They didn’t need to save 20% of their salary. They didn’t have to be an investing genius. A savings allocation of just 3% to 5% would have grown into a decent sized nest egg after a few decades of compounding.

We know from the data in the chart, it didn’t happen. The concept of delayed gratification is unknown to the millions of nearly broke Boomers and Xers, shuffling towards an old age of poverty, misery and regret. A 64 year old has a life expectancy of about 20 years. They’ll have to budget “very” frugally to make that $12,000 last. The question is how did it happen. I don’t buy the load of crap that you can’t judge people as groups. I judge people by their actions, not their words. I know you can’t lump every Boomer and Xer into one box. Individuals in every generation have bucked the trend, lived within their means, saved for the future, and accumulated significant nest eggs for their retirement. But the aggregate numbers don’t lie. The majority of those over the age of 45 have squandered their chance at a relatively comfortable retirement. These are the people who most vociferously insist the government do something about their self created plight. It’s their right to free healthcare, free food, subsidized housing, free utilities, higher minimum wages, and a comfortable government subsidized retirement. They are wrong. They had a right to life, liberty and the pursuit of happiness. It was up to them to educate themselves, get a job, work hard, and accumulate savings.

The generations of "live for today, don’t worry about tomorrow" Americans over the age of 45 have no one to blame but themselves. They bought those 4,500 square foot McMansions with negative amortization, 0% down mortgages. They had to keep up with the Jones-es by putting in granite counter-tops, stainless steel appliances, home theaters, Olympic sized swimming pools, and enormous decks. They have HDTVs in every room in their house and must have every premium cable channel, along with the NFL package. They upgrade their phones every time Apple rolls out a new and improved version of iCrap. They pay landscapers to manicure their properties. They lease new BMWs every three years. They have taken exotic vacations on an annual basis. They haven’t packed a lunch for themselves since they were 16 years old. Eating out for lunch and dinner has been a staple of their existence for decades. That morning Starbucks coffee is a given. A new wardrobe of name brand stylish clothes for every season is a requirement because your neighbors and co-workers are constantly judging you. Nothing proves you’re a success like a Rolex watch, Canali suit, Versace boots, or Gucci handbag. If these things had been purchased with cash after savings, then good on them. Unfortunately, the have it now generations got it then and have virtually nothing now because they acquired all of these things with debt.

Real cumulative household income is up 10% since 1980. Consumer debt outstanding has risen from $350 billion in 1980 to $3.267 trillion today. That is a 933% increase. We’ve had decades of faux prosperity aided and abetted by Wall Street shysters, corrupt politicians, mega-corporation mass merchandisers, and Madison Avenue maggots trained in the methods of Edward Bernays to convince willfully ignorant consumers to consume. And consume we did. Saving, not so much. You can blame the oligarchs, bankers, retailers, and politicians for the fact you didn’t save, but it rings hollow. No matter how much propaganda is spewed by the ruling class, we are still individuals with free will. The older generations had choices. Saving money requires only one thing – spending less than you make. Most Boomers and Xers chose to spend more than they made and financed the difference. When the average credit card balance is five times greater than the median retirement account balance, you’ve got a problem. The facts about our consumer empire of debt are unequivocal as can be seen in these statistics: 
  • Average credit card debt: $15,593 
  • Average mortgage debt: $153,184 
  • Average student loan debt: $32,511 
  • $11.62 trillion in total debt 
  • $880.3 billion in credit card debt 
  • $8.05 trillion in mortgages 
  • $1.12 trillion in student loans 
Anyone who entered the workforce around the year 2000 has good reason to not trust the system or their elders. Every asset class is now extremely overvalued due to the criminal machinations of the Federal Reserve. There are far less good paying jobs. Real wages keep declining. They were convinced by their elders to load up on student loan debt, leaving them as debt serfs. The Wall Street/Federal Reserve scheme to boost home prices and repair their insolvent balance sheets has successfully kept young people from ever being able to afford a home. So you have young people unable to save, invest or spend. You have middle aged and older Americans with little or no savings, mountains of debt, low paying service jobs, and an inability to spend. The only people left with resources are the .1% who have captured the system, peddle the debt, and reap the rewards of consumption versus saving. They may be able to engineer a market rally to further enrich themselves, but they can not propel the real economy of 318 million people. Our consumer society is dying – asphyxiated by debt – shorter of breath and one day closer to death.

I’d love to offer some sage advice on how to fix this problem, but it’s too late. Too many people missed the investment boom of our lifetime. By not doing anything extraordinary, Susan and I were able to retire by age 47. No one is going to come to the rescue of people who never saved for their future. The Federal government has already made $200 trillion of entitlement promises it can’t keep. State governments have made tens of trillions in pension promises they can’t keep. They can’t tax young people who don’t have jobs. Older generations who think the government is going to rescue them from their foolish shortsighted choices are badly mistaken. Their benefits are likely to be reduced because the unsustainable just can not be sustained. The 45 to 64 year old cohort who chose not to save can paddle and kick to try to learn how to swim, but it’s too late for this Ship of Fools. They are sinking. Absent a stick save in the form of a rich relative, they are most likely destined for lives of quiet desperation. There is nothing more to say.

Wednesday, November 12, 2014

Obamacare: The other shoe is dropping

In early February of this year we posted about our experience with Obamacare.
Affordable Care Act: The Verdict is in

As two people too young for government healthcare and with no employer healthcare coverage, we are in the group that Obamacare proponents always reference when talking about how good the program has been for the uninsured. We also had to use to obtain our insurance. So we are about as committed to Obamacare as any user could possibly be.

We described the bottom line back in February as follows:
"The good news is that my wife and I are now able to buy a healthcare plan with a $500 deductible. The bad news is that the annual premium is $10,200. before the ACA, we could have purchased a plan with identical coverage and a $3,000 deductible for an annual premium of $2,400. So we're paying an additional $7,800 per year to buy our deductible down by $2,500. Not a great deal."

In that February posting and in this August 2013 post (The Real Healthcare Scam), I covered how both Republicans and Democrats refuse to address the real cause of exploding healthcare costs: the refusal to address the monopolistic and anti-competitive pricing practices of the entire healthcare industry. Everyday, hospitals, pharmaceutical companies, doctors, and insurance companies operate their businesses in ways that would put the managers of any other industry in the US into jail for failure to comply with the nations anti-trust laws. Healthcare consumers in this country bear the burden for this lack of government oversight.

Effectively, all Obamacare has accomplished is make available insurance policies on structured exchanges at higher costs than before. I maintain that until these higher costs hit the employer provided plans, and most importantly, the medicare community, that there won't be much demand for change. Well now the other shoe has dropped and the new plans for 2015 are being rolled out. For us, we're seeing deductibles go from $500 to $10,000 for the same coverage. If we're willing to pay 50% of the costs (up from 0% this year) for all services (doctor visits, lab work, hospital visits, prescriptions, etc.) then we can drop our deductible to $250. That's great as long as we never use the $10,200 annual premium insurance.

So it looks like plans are keeping the premiums the same for 2015, but are drastically passing on the costs of using the insurance on to the policy holders. Alternatively, we could pay about 50% more in premiums ($15,000 annually) and keep our 2014 coverage levels.

Again, when this cost shift starts to happen in the employer plan and medicare markets it's hopefully game over. Maybe then the citizens of this country will start to wake up and demand that our politicians quit bowing to the largest lobby in the country and finally address the real cause of spiraling healthcare costs. I'm not holding my breath though.

In the meantime, we'll continue paying $10,200 per year for coverage that we will try our best to never use. That's when the real costs to us would kick in. Paying 50% of the cost for a criminally priced $40,000 hospital visit would be a real budget buster!

Wednesday, October 29, 2014

Housing Market Chart Porn

Presented with little comment. After all, what is there to say about the "housing recovery" over the past six years when the volume of applications for home purchases is the lowest since August 1995? Add to this the fact that the all-cash buyers (AKA hedge funds) have dried up. 
Keep believing that lower rates will support home prices. Keep believing the Fed's QE infinity is working. Alternatively, we could all face the facts that this is not your mother's housing market anymore. 
Charts courtesy of Bloomberg.

The long term: Six years of recovery?

The long term:

This is called a broken transmission channel. Every artificial spike in the homebuilder stocks is a chance to add to short positions.

Friday, October 17, 2014

Tails from the Back Seat: National Parks are for the Birds (and Cats and Other Lesser Species)

National Parks??  We don't need no stinking National Parks!!
--Adapted from Mel Brooks' "Blazing Saddles" 

A world without wilderness is a cage
--David Brower, Founder of Sierra Club

Our names are Karly and Jake
Adventures we like to take
Rivers, mountains, and beaches
All best without leashes :-) 
But National Parks we cannot partake!!

For reasons we don't understand
Trails on which we are banned
Why the horse rules
Including the mules
Aren't we the best friend of man??

And so we share our recent adventures in the Flathead National Forest outside Glacier National Park

Boondocking in leash-free paradise

I can already taste the sweet smells of the glacial outdoors...let's get goin'!

This is my kind of weather...and hiking!
Wait for me!!!

Let's take a break and enjoy the view
(North Fork of the Flathead River, designated a National Wild & Scenic River)
                                                                                                            --Karly & Jake

Okay, Susan, we'll keep you company now
                                            --Karly & Jake

Fine, we'll pose for a photo too
                              --Karly & Jake

Whoa, that's quite a drop!
Karly, what do you think?

Where there's a will, there's a way!
Thanks for showing the way
Come on in, John, we dare you!
                                 --Jake & Karly
Hey Jake, the view is spectacular, but I have a stick...come and get it!!
So many smells, so little time.....
                                                                  --Karly & Jake

So many fun things to chase too, especially this poser!
                                                                 --Karly & Jake

(Deep Creek, Flathead National Forest)
Nothing like a "room" with a view...
...a stick is nice too
Did someone say Happy Hour???  Don't I look happy???

Oh yeah.....
I loooooove happy hour!

And yes, you can take my photo again, Susan....

So ends another wonderful dog day afternoon

Oh yeah!!!!!!!!

Wednesday, October 15, 2014

From a thousand shades of green to a thousand shades of brown

It's good to pull the band-aid off fast. In less than a day we went from the verdant greens of Northern Idaho to the brownish tan sage lands of Eastern Oregon and Nevada. For the next six months or so the brown/tan will dominate our landscapes.

Sure there are some other colors in these areas. Arizona has its fair share of red rocks and blooming deserts, but the canvas on which these landscapes is painted is always some variation of brown.

Even in the desert, find a little water and you'll find some green.

The Pillars of Rome are definitely off the beaten track. No tourist amenities for 100 miles. That's OK, we had them all to ourselves.


 This was one of the few lakes/reservoirs in Eastern OR and Northern NV we've seen that still had a little water in it. Even so, it's about 95% dried up. It's a nice free boondocking spot that used to be right on the shore of the lake. Now the lake is a mile away. The drought in the West is still serious.