Archive for the 'Budget' Category

Immigration and your job

Everyone always talks about whether the current immigration is good or bad for society. If you are wealthy, it seems to come out great. If you are poor and uneducated, once again, you are screwed.

When immigrants come to town they bring cheaper labor (as a whole- I know some are very educated). This reduces the cost to produce labor intensive goods, like fruits and vegetables. The first farmer that started using immigrants had the benefit of cheaper labor, and made more money. Within short order the other farmers adopt the same techniques, and, in efforts to sell more goods, reduce their prices. Competition allows the lowest cost highest quality goods to move through the chain. Eventually these reach us. The good news is products are much cheaper in stores. Who benefits from this effect? Those who buy the most. While you can only eat so many fruits and vegetables, other labor intensive services can be consumed extensively. Everyone benefits from the low cost labor, but the more wealthy benefit more because they can buy more.

Economically, lower classes bear a large portion of the difficulties. Generally, there is small mobility in a job slot you are already in. If you are the weed whacker operator doing the landscaping at Intel, you could get moved up to driving the riding lawn mower, but good luck on CEO. Engineers can become project managers, but you won’t find a lot of janitors becoming engineers. You don’t have to take massive steps from day laborer to drywall installer to owner of a drywall company. The costs involved are relatively small, the training necessary to start is very small (although improvement can be done constantly).

When cheap labor comes into town, the supply glut depresses wages in jobs requiring the least skills first. As the wages drop, more and more people decide they won’t work for those wages and look for a better paying job. A secondary supply glut (generally smaller then the 1st) hits the jobs that are slightly more difficult, lowering the wages their also. This continues up until the moat is to difficult to cross due to education, capital requirements, or networking requirements. As a result, the earning power of the lower economic classes are hit hardest by the effects of immigration.

The net effect is that, as a trend, those who benefit the least from lower cost goods are the ones who suffer the most from wage depreciation.

If we want to insulate ourselves from the negative effects of immigration, we must get a moat between us and and competitors. Twenty years ago, the moat of education was sufficient. Now an influx of Indians trained in math and science has started to bridge that moat. We are importing doctors from other countries as well. Specialization has helped some create a sphere in which they do not have massive competition. We need to work on other economic moats if we wish to protect our earning power. Accumulated capital, used wisely, can provide a massive business advantage.

My father, a PE, did landscaping for a change of pace about 13 years ago, mainly sprinkler systems. As illegal immigrants showed up, they started to depress the profit margin in the business. My father jumped to more specialized projects that required greater capital investment and drew more heavily on his engineering knowledge. He is still doing very well, and he recommends that before we get into a business, make sure that illegal immigrants can’t be competing with us 1 week after they cross the border.
I am now thinking about how to widen the economic moat around myself.  I need more skills (bo staff skills, mustache growing skills), more capital (no negative savings rate for me, thank you very much), and more business connections (soon I will have 2).  There are a ton of dollar bills out there looking for a good home, and I want to provide that.

Peace out, hombres.

I’m Broke and Its All Your Fault!

I saw an article in Yahoo news that displayed all the brilliance of America’s media. As I read through the article, I was surprised at the lack of thought, and the use of different phrases to make it look like the borrowers are just people who had bad luck. The borrowers chose to take a great risk when they used “exotic” (reads “you probably can’t afford it”) loans. If they ever read a paper or watched news, they knew that rates were at the bottom, and could not feasibly go lower. Those who sell themselves into slavery and use the proceeds to live high for a day shouldn’t be surprised when the buyer comes. Apparently this writer thinks they should, and states how they are undeserving participants in a massive tragedy over which they had no control.

“I have three borrowers who desperately need to refinance and they aren’t going to be able to do it. They are going to lose their homes,” said Patrick Schwerdtfeger, a Walnut Creek mortgage broker for Windsor Capital.

I will interpret. I have three people who can’t afford their homes and nobody will loan them any money. They need to refinance to a lower rate. They got in at a low teaser rate because they wanted more house than they could afford or because they decided they wanted to spend their money on something else. Now those stinking bankers aren’t going to give loans to people who have a fantastic chance of going bankrupt in the near future. They’ll have to move into a neighborhood they can afford.

The intelligence continues.

Borrowers with blemished credit records and inadequate paperwork to verify their incomes are having the most trouble getting mortgages.

Here is another piece of sage reasoning. The media is all over banks because they made loans that people couldn’t afford to borrowers in the sub prime market. Now, apparently this writer thinks we should do it again. Banks don’t want to lend money to people who haven’t paid their bills on time in the past and those who are not likely to have the resources to pay them in the future (trouble verifying income). Given how many people lied on their loans in the first place, it is hard not to agree with the banks. I have a lot of respect for self employed people, part of it because they are able to work without a regular paycheck. Banks don’t want to assume that risk for free (and that is assuming people are having trouble verifying their income because of paperwork issues instead of the standard lying cheat reason).

The media is sure that the only way out of this mess is for the government to save us. Apparently, the government also has plans to save tourists in Vegas from appalling losses.

Other media stories point toward the trouble that the wealthy have buying a home. If you’re really wealthy, shouldn’t you be able to afford it? People with a $5,000,000 home (and corresponding mortgage) are in the rat race just as much as those with a $100,000 house. The media is claiming that people have learned that people know what they have done wrong, and are all penitent. On the other hand, people are trying to continue to live mortgaged to the hilt.

I read a idiotic article from a “financial adviser” which said you should always have as large a loan as possible out on your house. That is a great idea in the ideal world, where the stock market returns 11.8% a year, no one ever gets laid off or laid up, and real estate appreciates every year. In this world, it is looking like our grandparents aren’t as stupid as we thought they were. Reducing your exposure can help you keep your house during difficult times, and sleep well during all of them. The spring in my step and peace of mind I will get from knowing my house is paid off are worth the few percent a year.

Casino Patrons to be Reimbursed for Losses

Reports are coming from Las Vegas of a massive government effort to help investors that have been betrayed by casinos. These investors have put massive amounts of money into investments, some their entire livelihood, only to end up broke. One investor says, “I was just doing what everyone else was. I knowed that I had to make money at this, cause my cousin, Willy, was here last week and he made 500 smackaroos. Now I’m broke, upside down on my mortgage, and my kids don’t have anything to eat. I just want what’s fair and decent.”

The betrayal by the casinos occurred on a grand scale. At one end of a casino, the lights flashed above the slot machine “Win Car Here”, but poor Harold Hickson walked home. “It just ain’t right,” he says. “It says I should win a car, but I put in my entire savings, and even pawned my mobile home, and I ain’t won crap. I don’t know what Betty Sue will do when she hears. We made this investment in good faith. I heard a bunch of people were here last week and made a bundle.”

Another patron, Graham Wellington said, “It is clear that the practices here have been unethical. As I walked in, the lady who gave me chips said, good luck, I hope you hit it big. The personnel in the industry spread this idea that investing at a blackjack table is a sure way to get a significant payout. There were no warnings that these investments could turn sour. This euphoria caught many up in it, and I cannot afford the losses I have incurred. As a working citizen, I have a right to have someone help me with the losses I face due to this deception.”

The deception is all over. Claims of million dollar payouts were spread far and wide. These losses aren’t flukes, but a scheme by those no good dealers to get fat off of their pay. Rick Henson, a college student majoring in economics, reports, “I was always good at investing back at college, and got my friends good and wasted before I cleaned them out. It’s gotta be a fraud, because I toasted my student loans in one day of investing in poker here. I saw a billboard that says people hit it big in Vegas, false advertising if I’ve ever seen it. This disaster is too big for individuals. The government needs to intervene and help the market out of this crisis.”

A spokesman from the heartless bastards at The Von Mises Institute said, “Their unwise speculations did not result in the outcome they expected. The risk management was skewed by years of being taken care of by the government, resulting in expectations of large payouts with little aversion to downside risk. If the government mitigates these consequences, it will perpetuate this poor judgment, and these types of incidents will occur with greater frequency.”

Someone from the back yelled, “What he’s saying is they gambled and lost their shirts because they were greedy. If we bail them out they won’t learn their lesson, and we will have to keep bailing people out.”

The Center for Compassionate Government rebutted these outrageous insults.  “These are people who trusted the advice of these casinos, and were provided an environment where they could simply get more chips. There was nothing that told them about the impending losses.  Serious sanctions must be taken against these corporate bosses. One investor told us that they thought they could simply get back all of their money after they were done gambling, assuming that the casino was just holding the money for safety purposes.  He never signed anything that said he would not get his money back.  He was duped.  The thought of losses had never entered his head.”

“Now he and his family don’t have the money to pay next month’s rent.  We need to help them.  After all, it’s for the children.  We are proposing that people be allowed to be reimbursed in a way that will be fair to all parties. We don’t think anyone should be locked out of the American Dream.  Now we recognize that the casino owners don’t have the means to deliver what they promised, but I am sure that no true American wants little Bobby to go hungry.  The government has the means to support this, and we demand they help the poorest,  who were tricked into precarious financial situations.”

The president of Evil Conservative Industries, Gren Bock, said, “What the heck did they expect? They were gambling at a freakin’ casino. It’s sad that the kids are in such trouble, but come on. Everyone knows that in speculations you have ebbs and flows. There is no free lunch. My father was a baker, and he worked his rear off for every cent he got. These guys think it will fall into their laps just because their friends got lucky, well, they are in for a surprise.”

It is clear that despite the heartlessness of the rich evil conservatives, something must be done to help those that invested in at these well known establishments in good faith. Americans are obligated to help those who have been tricked and swindled. Presidential candidates promise that relief is coming. We couldn’t suppport them more strongly. Everyone has a right to the American dream!

Plattitudes that you hear that are dead wrong.

I was at church today and I heard someone say ” If you aren’t out of your comfort zone, you aren’t progressing”.

That sounded good to me at first glance, but the more I thought about it the more it became retarded. The things that I need to do more than anything else to progress at this point are well within my comfort zone.

I need to help my wife with dishes a little more. Helping your wife with stuff can get well into your comfort zone. (yeah)
I should spend more time reading to my children and less time watching brain suckers (tv, computer, video games).

I should spend more time meditating and planning my day instead of getting up literally 10 minutes before I have to leave and showering, shaving and dressing in a panic. You can’t tell me that that would not make me more comfortable and help in my progress. I need to read more good books and less fluff (right after I read the last Harry Potter book).

You see the point. People are waiting for these big experiences that will shape their lives. Speaking in front of people is out of most peoples comfort zones, and I think a big part of that is they don’t have anything useful to say.

I teach and I have all these students claiming test taking anxiety. After talking with them for a few minutes I realize that the problem in 95% of the cases is they don’t have a clue what they are talking about. They failed because they should have, and the test accurately assessed their knowledge. It’s ok, Jesus still loves you, you just don’t know jack about chemistry.

The speaker today was painfully boring. I zoned out and looked at my watch and recognized that he had gone over the time alotted. HEY BUDDY!! IF YOU WERE WORTH LISTENING TO FOR 40 MINUTES THEY WOULD HAVE GIVEN YOU THAT MUCH TIME TO SPEAK!! I know I should be humbly listing but this guy was painfully boring and thought he was Demosthenes. Prepare for the talk and don’t wing it. Do your little progression in your special little comfort zone and your sermon won’t induce blogs.

If you budget in your comfort zone, when a salesman comes by it is easy to say no. We had your customary alarm system salesman come by yesterday (just 9 bucks a week) and I told him it wasn’t in our budget. ” Well what about your protection?” ” I have a gun.” “What about your wife?” “She’s as good of a shot as I am.”

The last example I will give is this blog. This is my second entry and you can bet that I don’t think that I am Mark Twain. I am writing for free to a non trapped audience (thank you for reading) to develop some skill so if I want to write later, I can put out a better product after some practice. Have a good one.