Well, you’ll be happy to know that the guys behind FICO are watching you:
USA Today: Study: Underwater Homeowners Are Credit Savvy
I’m not sure why a study was needed to figure any of this out, because it seems fairly obvious that “strategic defaulters” aren’t your typical Joe and Jane Sixpack. The very word “strategic” sort of implies that, yes?
Ah well. Fair Isaac just wants to cover all the angles, I guess.
I know this story has been everywhere the last day or so, but I just cannot let it go by without a few words:
KABC-TV: Calif. Mom to Sue McDonalds Over Happy Meal Toys
Yes, a California mom has filed a lawsuit against McDonalds, hoping to require the fast-food megachain to either (1) churn out healthy meals for kids, or else (2) yank toys out of their Happy Meals. Why? Because she’s tired of being “pestered” by her kids (a six-year-old and a two-year-old) to go to Mickie D’s.
In a press release, we get to hear Ms. Parham describe her parental angst:
Getting into your kids’ heads without your permission? You mean like EVERY OTHER COMPANY that markets to kids in any way / shape / form? Ms. Parham, I’d suggest you sue Mattel, Disney, Scholastic Publishing, and American Girl, while you’re at it. As well as General Mills, Kraft Foods, Procter & Gamble, and Kelloggs. (Actually, whomever boxes up those god-forsaken Corn Pops really should be sued. Those things are disgusting.)
More from Ms. Parham:
Glad to see you’re paying attention, Mom. Now maybe you’d like to take the next step, and TRY TO BE AN ACTUAL PARENT to your kids. They’re two and six, for goodness’ sake. Who runs the show at your house, anyway? It damn sure isn’t you.
As the parent of an eight-year-old girl, I would like to state clearly, here and now, that I am truly amazed at the masterful job which McDonalds has done in getting kids to want their food. In the world of advertising, the Happy Meal campaign has to go down as one of the Greatest Ever.
Do they sell crappy food? Yes.
Do they blatantly target kids? Yes.
Have they absolutely mastered these tactics? Holy hell, yes.
And yet somehow, SOME WAY, my wife and I have managed to say no to our daughter’s frequent requests for McDonalds food. Does our kid whine? Yup. Does she moan? Yup. Does it matter? Not so much.
Am I going to sue McDonalds for bringing out the “I wants” in my kid? Um, no, because Lisa and I are The Parents. Unlike Ms. Parham, apparently, we aim to be In Control. We prefer to raise our child to understand the difference between good choices and poor choices — and also that Mom and Dad not only make the rules, but can also remove every single belonging from your room while you’re at school, lock it all up in storage, and allow you to earn it back, if we so choose. (Which, at one point this year, we did.)
Of course Ms. Parham has an agenda working, and I seriously doubt that the “It’s for the kids!” angle covers her motivations entirely.
But watching people like her try to litigate their way through life (and teach her children to do the same) causes great pain in me. Ms. Parham’s primary responsibility should be to be a good parent to her children; nowhere in there does the word “easy” come into play. Dealing with whiny kids ain’t easy.
And, as Ms. Parham so clearly shows us, dealing with whiny parents is often far worse.
… if you have to camp out on the sidewalk for nine consecutive days to get it.
WTSP.com: “Black Friday” First Family Story #1
13 News: “Black Friday” First Family Story #2
Hmmm. So let me get this straight:
If you’re homeless, and you set up a tent in front of Best Buy nine days before Black Friday, you get slapped with a complaint of trespassing, and thrown in jail.
But if you’re a Shopper On a Mission, and you set up a tent in front of Best Buy nine days before Black Friday, you get free iPads, an award, and TV coverage.
Yeah. In a country as off-course (“We have to spend more to keep from going broke”) as this one, that sounds about right.
You know, I’m all about getting bargains and deals, too, but the stories above just make me want to scream. I’ve never once participated in Black Friday consumerism, and have no plans to do so, if I can help it. And I damn sure wouldn’t use it as an excuse to “spend more time with family” as the folks above try to do.
Nine days ahead of time? Seriously?
Everyone needs goals, I guess.
JLP at All Financial Matters put out a few thoughts yesterday regarding the Fiscal Commission’s proposals for reducing the country’s deficit and debt, regaining a sound financial footing, eliminating the road-tar-like aftertaste of Diet Dr. Pepper, ensuring that Bolivian forest fairies are allowed to vote on Dancing With the Stars, and … yeah. Whatever.
My opinion? I’ll believe spending cuts — and I’m talking meaningful cuts — when I see them.
Regarding the proposal, JLP pointed out a snippet from its introduction which I too would like to comment on:
It’s pathetic that a mere three paragraphs in, I’m forced to stop reading and call the proposal’s authors what they are, which is bald-faced liars. Americans as a whole haven’t been about “sacrificing for the future” since movies were still being made in black and white. Certainly there’s been no “sacrificing for the future” in my lifetime.
No, all we do is play generational kick-the-can. We in the U.S. use our “full faith and credit,” coupled with our dollar’s advantage of being the world’s reserve currency, and we leverage these puppies to the max at every opportunity. Rare has been the expenditure deemed truly out-of-bounds by our elected officials. I contend that most of us below the age of, say, seventy, wouldn’t know true sacrifice if someone poured it in our Cocoa Puffs.
Are these guys serious? “Sacrifice to give our children and grandchildren a better life?”
Bullshit. I can pretty much blow off the rest of that 50-page proposal right there.
Just off the top of my head, here are a folder-full of changes I’d love to see Washington undertake. Which, of course, they won’t. But it’s fun to think of the chaos that’d ensue.
There you go. I figure signing off on those items would pretty well fill up the first two hours of my Supreme Dictator office-ship. Yes, I might bring the economy to a screeching halt before any of us have had our morning coffee. Yes, I would find myself in the crosshairs of a great many lobbying groups and monied interests. And yes, I would almost certainly have people brandishing rusty farm implements in the streets.
But hey — at least when I talked about “sacrifice,” I wasn’t blowing smoke up your patootie.
That is all.
Last month, I posted about the fact that roughly one in every eight Americans will participate in food stamp programs in the coming year.
Now the Wall Street Journal presents us with an article, and accompanying chart, regarding each state’s participation in the program:
WSJ: In U.S., Some 14% Rely on Food Stamps
Turns out that my state, Oklahoma, shows up at #15 in the ranking of states with the highest percentage of population on food stamps. I can’t say I’m surprised that 16.5 percent of Oklahomans utilize food stamps, as the Sooner State has never been noted for any sort of widespread affluence. (We do likes us some crappy Easter baskets, though, uh huh.)
I try to read John P. Hussman’s (of Hussman Funds) articles at least once or twice a month. His article of this past week, entitled “The Recklessness of Quantitative Easing,” gives me a chunk which I’d award Quote of the Month. Heck, Quote of the Year, maybe.
The entire article is absolutely worth a read — if you’d like an economic point of view that runs counter to what we’re so often force-fed by CNBC and most financial outlets.
I don’t pretend to understand all the workings of macroeconomics, though I’ve made efforts in recent years to educate myself on larger-scale economics issues that would’ve bored me senseless when I was younger — and far more intrigued by Beavis and Butthead than by short-term interest rates and credit spreads.
When I read the following Reuters article the other day, I found myself agreeing with the author far more than I’ve done with most mainstream financial writing lately:
Reuters: Fed is Banking on Phony Wealth Effect
I suppose it would be nice to believe, as so many money gurus do, that our Federal Reserve officials and economists at large have so much knowledge and historical data these days that it’s virtually impossible for our economy (or the world’s economy, for that matter) to undergo any sort of “great depression” as was experienced in the 1930s. There are, as I’ve heard Dave Ramsey say on more than one occasion, “too many safety valves in place.”
Ummm … yeah.
I don’t buy that theory for a second. Rather, I tend to believe that usually, that kind of pride and arrogance (“The Titanic is unsinkable!”) goes before the fall. Nature, and other forces larger than us, have a way of eventually cracking whatever multi-reinforced structures we previously believed were failproof.
Sometimes it’s ocean liners. Sometimes it’s Centralized Economic Recovery Planning™.
Equilibrium, in short, will always have its day.
From the article:
A round of speeches from key Fed officials has given the clear view that, faced with deteriorating conditions and trapped by the lower bound of zero in its monetary policy, the Fed is preparing to once again buy up large amounts of Treasuries, perhaps even more than the government is issuing on an ongoing basis, in an attempt to drive down market interest rates and stimulate the economy.
Will that do any good, given that people generally do not want to borrow and the banking system is impaired?
“Balance sheet policy can still lower longer-term borrowing costs for many households and businesses, and it adds to household wealth by keeping asset prices higher than they otherwise would be,” Sack said in a speech in Newport Beach, California on Monday.
And right there is where we step into folly: Keeping interest rates artificially low means asset prices will stay higher than they otherwise would be. And apparently, for our Fed captains, this brings additional household “wealth.” Which of course exists only to be borrowed against, and spent.
So, there you have it: Pump up asset prices and hope that people spend some of the ephemeral gains. The idea that people will spend more if their houses and other assets rise in value is called the wealth effect, but this policy creates only pretend wealth.
In fact, many people in the U.S. now face diminished retirements and generally straitened circumstances precisely because they mistook the rising prices of their house and Internet stocks for wealth and spent or borrowed against it. Is the U.S. actually so desperate for economic activity that this is the best it can do? Apparently so.
Yes. I think some would call it “empire in decline,” actually. When the answer to every question is “more borrowing” and “more debt,” you really have to step back and admire all the delusion around you. This can’t end well.
I’m pretty certain that equilibrium will have its day. I don’t imagine that it will be pretty, either.
The only question is how long we can put it off.
Here’s a shocker: U.S. food-stamp participation (now called the Supplemental Nutrition Assistance Program, or SNAP) is still rising.
Per Bloomberg, roughly one in eight Americans will participate in the program during the upcoming fiscal year.
Now this is some encouraging news … if you enjoy financial distress.
If we’re to believe CareerBuilder’s survey of 4,500 U.S. workers — and I don’t really have a great reason not to — then roughly 77 percent of us describe ourselves as living paycheck to paycheck:
CareerBuilder: Nearly 8 in 10 Living Paycheck to Paycheck
From the article:
Ouch. Earlier this year, I mentioned that more and more $100k workers were living paycheck to paycheck, too.
For those of you who like charts, here’s one with a bit more data from the CareerBuilder survey:
Pretty great, ain’t it, that more people were willing to dip into savings and retirement accounts than were willing to cancel their cable TV and other subscriptions. What the hell are people thinking?
And since I’ve already got Excel open, I might as well update this running chart while I’m at it:
If you’re interested in comparisons, I covered last year’s CareerBuilder survey here.
You want stimulus? Well, how ’bout the chance to go almost 15 months without a house payment?
Thanks to cottony-soft (and FedGov encouraged) accounting standards, banks are loathe to foreclose on underwater properties. As a bank, realizing five- and six-digit losses is no fun. It tends to leave ouchies on your balance sheet, and more importantly, has a negative effect on management bonuses.
Cause, meet effect:
Four hundred days with no house payment? A fellow could save up quite a stash in his piggy bank, going that long without sending a check to the mortgage company.
In any case, that tantalizing little snippet comes from an article at AmericanBanker.com.
And speaking of homeowner savings, just imagine all the dutiful home care and maintenance being performed by all these “living free for now” borrowers — borrowers who know that one day the bank will be coming to throw their La-Z-Boy on the lawn and Master Lock all the doors. The question isn’t if, but when.
Oh, I’m sure that leaky roof will get fixed. Any day now.
Yes, indeed. Delaying foreclosures (most econ-types refer to it as “extend and pretend”) with schemes like relaxed accounting standards and FedGov-initiated can-kickings (HAMP much?) should work out just fine.
Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).
My financial life began turning around when I took responsibility for it. — Dave Ramsey
Yes, I'm nuts: I'm usually reading anywhere from 4 to 6 books at a given time, plus watching DVD sets as I can.
Here's what I'm digging into now: