McCain Historic Choice for Vice President: Gov. Sarah Palin of Alaska

Well there is no doubt that McCain’s Vice Presidential pick has stolen some of the lingering thunder of the Democratic Convention because he has certainly shocked America by choosing a virtual unknown for the ticket; the merits of which continue to be vigorously debated. Sarah Palin, the Republican Governor of Alaska, brings an interesting angle to McCain’s campaign but I’m not sure what her candidacy can do for America.

Governor Palin is an evangelical Christian, a life time member of the NRA and a card-carrying member of the religious right. She is against abortion and believes it should be banned for anything other than saving the life of the mother. She is against stem cell research, is against state health benefits for same-sex partners and believes creationism should be a part of the school curriculum.

There are many Americans who believe in these matters completely but there are many more that do not. I am not sure that this is the philosophy of change that America needs. McCain may be a maverick and she may be one too but these are not the type of policies that a country rising to meet the challenges of the 21^st century can completely embrace.

Democratic Convention: Barack Obama Hits It Out of The Park!

Barack Obama's speech was so magnificent that Fox News was fawning, no matter how hard they tried they could not keep up the anti-Democratic climate that they have been cultivating all week. Bill Kristol, editor of The Weekly Standard, frequent Fox News contributor and standard bearer of the Republican Party line, who has denounced and trounced every speech so far was clear in his evaluation; it was a great speech! For those of you who know and understand the perspective of Fox News; no greater compliment can be found.

If you missed it, YouTube It, Download It, Re-Stream It, Buy the video tape! Even if you are a staunch Republican, you have to see, read or hear this speech so you know what you are up against. There is not much more that I can say other than I can't wait for the Republican Convention next week. This is a real race folks and there is no doubt about it. I for one am not missing one minute of it.

Democratic Convention: Obama-Biden is the Ticket

With a lead up by President Bill Clinton and Sen. John Kerry, Sen. Joe Biden of Delaware accepted the nomination as the Democratic Vice Presidential Candidate and launched into a speech that without a doubt made it clear why he was chosen and what this ticket would offer to the American people. And, although Sen. Barack Obama, the Democratic Presidential nominee had not been present at the convention thus far, he presented himself at the end of Biden’s speech to seal visually and completely the Democratic ticket for President.

Once again the speeches were on point and delivered exactly what was expected of them. Though the press may want to continue to trump up a Clinton-Obama discord between the delegates, it was pretty clear that the Democrats had reached common ground.

Whether we want to accept it or not, this election is different. The policies of the past 8 years have left the country bereft. Reaganomics worked in the 80s when we needed to spur industry and growth, back when America still outranked the world economically and created wealth within its borders. This decade it has had a negative effect because in this decade it is about competing in the world economy. The wealth no longer trickles down only to Americans; it is spread across the world. As we can see, many countries in the world have improved their economic standing greatly.

Which candidate will help America to reclaim its helm and once again set an example of innovation and prosperity? We cannot continue to borrow from China to purchase oil from the Middle East; whether we consider them Allies or not should not be of consequence. We are the Superpower; we should still be rich enough to buy what we want when we want it on the world stage. We should not be borrowing for our basic needs. This is in fact what many middle class folks are doing; should America, the greatest country on earth be doing that too?

Democratic Convention: Hillary Rocks and Brian Schweitzer Comes in 2nd

People of America, why aren’t you watching the Democratic Convention? Hillary Clinton’s speech was excellent and Governor Schweitzer, a person that I had not heard very much about was a dynamo delivering a rousing speech that engaged the arena and got people out of their seats. Other notable speeches were made by former Governor Mark Warner of Virginia and Senator Bob Casey Jr of Pennsylvania. Just about 21 million out of an estimated 112 million U.S. households tuned into the convention coverage at 10pm Eastern Time. How can we call ourselves a Democracy when we don’t even take the time to engage in the political process of our country? I hope that more Americans will tune in for the final days of the Democratic Convention and tune in next week when the Republicans have their turn.

What is the point of traipsing our military out in the world to fight in the name of democracy when we barely exercise the right ourselves. We can sit around and complain all we want or we can take the time to find out about our presidential candidates, learn about the Democratic and Republican party platforms and learn about some of the elected officials within each party. We cannot make assumptions and pass up our opportunity to learn more about the political process because we already have preconceived notions about each political party.

After watching the conventions, you may conclude that neither party satisfies your agenda or that you were mistaken about what each party represented. Maybe you will find out that it is OK to cross party lines when you realize that they are out of touch with your values. Maybe you find that your faith in your party is renewed or maybe you will conclude that there was a reason why you chose not to watch the whole convention circus to begin with. Whatever you decide, at least your decision is informed. A Democracy requires participation of and by its citizens and citizens cannot participate responsibly without being informed. If we are not going to bother to learn about and participate in our government during the election process then we are conceding our rights to the people that do. And perhaps we may not like what they sign us up for.

Are You Watching the Democratic Convention?

This week I am watching the Democratic National Convention and next week I will be watching the Republican National Convention. We dutifully watched the Olympics and now it is time to watch the “Political Olympics.” While we have been steeped in the lofty ideals of spreading democracy around the world, we have not practiced it to the extent that we should. We decry the authoritarian and totalitarian governments across the seas and carry Democracy as a badge of honor, independence, sacrifice, commitment and totality of the right of individuals to have a say in their government yet we let Media predilections inform our choice. We must seize the opportunity as responsible citizens to engage in our political process and to witness the essence of each political party through their conventions; the official nomination ceremonies for their presidential candidates. Only then can we learn enough of each party platform to make an informed decision when we enter the voting booths in November.

This is an election for the future of America and anyone in doubt of that is sorely mistaken. We all need to pay attention to what each party has to offer and to decide for ourselves through our freedom to vote who is best equipped to lead our country. We need to set aside race, gender, age and political affiliation to arrive at the best solution. This is a time that requires the best person to win without the usual biases that bog down the political process.

Tonight, if you were watching, Michelle Obama's speech at the Democratic Convention was dynamic; the most incredible speech given by a pre-first lady in my cognizance of politics which for me begins with the Presidency of Jimmy Carter. Though the CNN Anchors complained of the lack of energy during prime-time, I was moved by the speeches and/or appearances of Representative Jessie Jackson, Jr, Caroline Kennedy, Ted Kennedy, Jimmy & Rosalynn Carter, Former Republican Representative Jim Leach, and Missouri Senator Claire McCaskill leading into Michelle Obama’s keynote speech. I was disappointed that the Fox News Anchors felt compelled to incorporate a negative thread into the proceedings simply because it is not a pro-Republican event. Finally, I was surprised that CNN, MSNBC and FOX all chose to put their talking heads above the proceedings; the very proceedings that would help to give the American people insight into the quality of the Democratic candidacy. Thankfully, PBS saved the day by broadcasting the lesser known speakers and slide shows that in my estimation were no less important despite the major networks choice not to broadcast.

Michelle Obama's speech was electrifying in that we have never heard a pre-first lady speak with such alacrity, clarity and brilliance. This is a woman who lived the American dream; whose working class parents dreamed of a better life for their children and whose children became successful people who at the pinnacle of their careers chose to give back to the community just like Bill and Hillary Clinton, Joe Biden, JFK, RFK and everyone else out there and the fact that they are black people does not make them different or any less American; not by a long shot. We have to understand that we are all Americans with the same dreams and we make choices for or against education (academic or vocational) that define how successful we become. I await the Republican Convention with the same anticipation because this election depends on our ability to transcend our biases and pick leadership that will reverse the negative trend in government that has come to define our existence. We can be lulled into submission by our usual selves or we can seize the chance to educate ourselves and rise above the tendency toward shallow convictions. Be informed citizens! At the very least you owe that to your country.

Waiting for the Official Race

For the last 2 years the nation has been a swirl with the presidential primaries. The run for the White House dominates national news sometimes to the exclusion of everything else. This weekend is the democratic convention and next weekend is the republican convention; the official race is soon to begin. In just over 2 months we will be voting for a new president.

America is facing difficult economic times and is still knee deep in a difficult war. Our foreign relations have been strained and our government is not only deeply in debt but completely at the mercy of special interests. Each candidate claims they have the better plan to solve these problems and the victor will surely be tested over the next 4 years.

In my view, neither candidate has put forth a workable plan. I am looking to these 2 conventions to give me better information. No matter your political affiliation, we all need to be watching, America's future is at stake.

Federal Debt: How Much is Too Much?

I have been especially worried about this economic downturn because of the amount of debt associated with it. Not just for individuals but on the part of the federal government and its entities. The treasury and the federal reserve are borrowing and spending like wildfire to prop up the economy. The federal government has tacked on more debt in the past 8 years than it had acquired in its entire previous existence. The 2009 budget deficit is already close to $500 billion ($500,000,000,000) and the national debt is over 10 trillion ($10,000,000,000,000).

The government has the highest level of debt it has ever had. The American people have the highest level of debt they have ever had. Yet we don’t seem to be too worried. While we all worry about the state of the economy, many look to the government for help and the government is helping. Maybe we Americans simply do not understand how much the government is borrowing for all of the bailouts. Many Americans are suffering now because they didn't recognize their debt limit until it was too late. New York state is currently trimming its budget in order to combat its rising deficit before it becomes unmanageable. When will the federal government realize that it has borrowed too much? What amount will that be?

Miracle of Miracles: NY State Legislature Agrees to Budget Cuts

Today, state lawmakers agreed to cut $427 million ($427,000,000) of the additional $650 million ($650,000,000) in budget cuts proposed by Governor Paterson. In addition they have proposed up to $1.5 billion ($1,500,000,000) in cuts from next years budget. This is great news because I thought the naysayers were going win. I had all but given up on any government body ever finding their way back to fiscal responsibility. I am happy to give credit where credit is due.

I am impressed that the Governor and the Legislature were able to stand up and do what it is right for New York State. This is very important. The outlook for the economy is still uncertain. We have no data as to how we will thrive in the global economy. Planning for this uncertainty will give New York the edge when things turn around. Caution will allow New York to succeed. Willingness to do so will cement that success. Kudos to Governor Paterson for fighting the good fight!

Public School Uniforms

My public school district instituted a uniform policy for K-5 grade last year. However, per state guidelines, the district has to give parents the ability to opt out of the policy to be achieved by hand delivering the required form to their child’s school principal. Since most of the children in K-5 have not yet developed an affinity for fashion or material approval the uniform policy was instituted with little complaint. There was approximately 85% participation and I was very happy; uniforms are a cost-effective and efficient method of clothing your grade-schooler.

This year the policy was revised to include middle school students, 6-8^th grade. Now we have a problem. As the parent of a middle school child, I was well aware of the peer pressure to purchase certain clothing and adhere to a fashion code. Middle school encompasses the age group 11-14 when children reach puberty and become more aware of their bodies, peer group and social surroundings. Girls especially are particularly severe in their criticism as to who fits in and who does not fit into the perceived popular culture. Unfortunately, parents at the urging of their child found themselves caving to the relentless pressure of conformity and purchased the “right” fashions to insulate their child from being ostracized at school.

I thought the uniform requirement would finally allow my child to get down to the business of academics without the relentless undertow of the fashion police. Excited by the prospect of a new banner of solidarity against the marketing and materialism and consumerism, I bought my 7^thgrader a uniform. With the school year rapidly approaching, my child and I conducted our own straw polls were both surprised to find that many of the middle school parents were opting out of the uniform requirement. I was saddened because in these economic times, I thought parents would flock to the choice as a respite from having to shop for overpriced designer clothing and from the seemingly endless materialistic exasperations uttered daily by their child. Unfortunately, I was wrong.

Manic Stock Market Does Not Inspire Confidence

Hello Monday! The stock market went down 180 points today but this is no longer unusual; 2008 is the year of break-neck rallies and steep declines and lately we do not even know what each day will bring. First crude prices skyrocketed because of worldwide demand that was apparently out of our control; India and China and the rest of the world were consuming so much more oil that it was out of our hands. Even the President went over to the Saudis begging for more production. Now the price of crude has dropped $35 per barrel since mid-July because inflation, America’s reduced consumption and a stronger dollar are helping to bringing the price down. What suddenly happened to world demand?

The Financials are hemorrhaging billions in cash to the point where we are numb to it. After borrowing countless billions from the Fed, they are still posting massive losses. Financials have tapped the Fed for at least $300B that we know of. Fannie Mae and Freddie Mac are on the brink of insolvency. No one seems to care that the government is borrowing money to finish out 2008, to pay for the war and all of these bailouts and that the 2009 federal deficit is already $1/2 trillion ($500,000,000,000) in the hole not to mention the federal debt of $10.6 trillion ($10,600,000,000,000). When will the taxpayer wake up and say enough is enough?

Consumer spending is 70% of GDP. Unfortunately, the consumer is out of funds right now and in debt up to their eyeballs. The consumer has been spending borrowed money for the last 7 years and now they have run out of sources to borrow since the credit markets have dried up. Real income has not budged this decade. Where will the consumer get the money to keep spending?

Right now, all of the behavior in the market is speculative; none of it makes any sense. Bad news is good news. Good news is bad news. How can the market reflect true economic reality when government bailouts, losses that fall short of wall street expectations and massive layoffs are considered good news these days?

What is the average person who does not understand the nitty gritty of the financial markets but is an investor through a 401k or retirement account supposed to think with the market yo-yoing back and forth, especially over the past 4 months. Regular folk are depending on the market for their retirement and this type of manic market behavior does not inspire confidence. When are we going to get back to the business of investing?

Brain Drain

Long Island is suffering from a brain drain, and I'm not talking about the thousands of young people 24-39 who are forced to leave each year because of the high cost of living here or that employers are concerned about the future of the Long Island economy without this vital pool of talent. I am talking about my brain when I read the news.

Maybe it is just me but I can't seem to get enough information in any one Long Island publication to satisfy my brain. Yes there is island-wide coverage provided by Newsday and News 12 but their news gathering is dominated by shallow sensationalist stories that do not adequately feed an inquiring mind. Maybe, I am asking too much. Maybe Long Islanders do not really require much depth in their news coverage and I am just barking up the wrong tree.

Maybe it is just a case of Long Island being so localized, so carved up into so many pieces; villages, towns, school districts, taxing districts and special districts that it is impossible to do a broad coverage of news. Don't get me wrong, each of these tiny pieces has its own local publications. Today I read the Long Island Business News, The Long Island Press, the Long Island Advance, The Smithtown News, The Long-Islander, The East Hampton Star and a host of other little dailies looking for information. Because of the sheer volume of teeny tiny weeklies, I have to limit myself to Suffolk county publications because I reside here. For those of us in Suffolk, Nassau county is a whole other planet. Enough said.

Maybe I am just complaining because of the sheer amount of publications I have to troll through just to get all the news and information that I crave. I wish there was an easier way.

Long Island Economy Under Pressure

The numbers are creeping up around us:

The unemployment rate on Long Island hit 5% in July

Lenders repossessed 150 Long Island homes in July and there is a 55% increase in foreclosure notices nationwide

Though gasoline prices have come down, they are still averaging close to $4 a gallon on Long Island

Consumer prices rose at the fastest pace in 17 years.

We are losing our jobs, we are losing our homes and everything costs a lot more than it did last year. Our debt load is high and our sources of funds are low. These are tough times for the middle class and there are a lot of us on Long Island. The general consensus is that things are going to get worse before they get better.

What are we going to do about it?

Jellyfish Invade Robert Moses Beach

Today the water temperature at Robert Moses was perfect; the jellyfish thought so too and showed up in droves. Over the course of this summer, I have visited the ocean beaches from Robert Moses to Montauk, and the appearance of jellyfish has gone from occasional sightings to serious density. Today at Robert Moses, we were barely able to get into the water.

Now I’ve seen and heard about jellyfish in the Peconic Bay and in the Long Island Sound over the years. There was much ado about their earlier arrival and denser presence in bay waters this summer. Global warming was the cause they all chimed but then I see that global warming was blamed 10 years ago too.

I personally had not seen any jellyfish in the ocean until this year so up until now I was under the impression that they were strictly bay phenomena. Of course, I was wrong. It turns out that jellyfish have waxed and waned in the ocean over the years and this just happens to be one of those plentiful years. So, we have to be careful but it is not the end of the world.

Thank Goodness for the Olympics

The dog days of summer are just that; dog days. The economy is in the toilet and no amount of massaged news can reverse reality. We are getting a little bit of a reprieve at the gas pump with gasoline prices now averaging $3.89 a gallon, down about 40 cents a gallon since July. Unfortunately, for middle class Long Islanders, this is not enough savings to stave off the indebtedness we are all facing and the fact that the home heating oil season is soon to be upon us. Thankfully for the past few days and another week or so to go, we have had the distraction of the Olympics and these games have been far from ordinary.

The sheer magnitude of the opening ceremonies captured our imaginations so completely that we were immediately swept up in the glory of the games. There is no way to deny that the Chinese are a force to be reckoned with; a new rival. We were completely upstaged in these opening ceremonies, for most of us felt that America (or any other country for that matter) could not have, would not have, produced anything so breath-taking and amazing, yet we are enjoying the games. It is a dichotomy that speaks volumes. There is a tacit understanding as we cheer for America that this is our last chance at glory; we have to win the most medals or more medals than the Chinese at least. We are now directly competing against the Chinese with our athletes as they are with us, mano a mano, except we compete with our last vestige of status, our advantage, a (perceived) dominance in sports. I’m certainly enjoying every minute of it. May the best country win!

Weekend of Sorrow: Farewell to Isaac Hayes and Bernie Mac

This weekend, America lost two formidable entertainers. A huge amount of loss in such a short period of time. One moved us through song, the other through comedy. Each of them had a difficult ascent to the top but thankfully their brilliance kept propelling them forward. Isaac Hayes and Bernie Mac are legends in their own right and we were fortunate to be completely and thoroughly entertained by them.

It is always a shame when those who we admire are taken before their time, Hayes was 65 yrs old and Mac was only 50. Maybe the man upstairs couldn't wait any longer to have them in his permanent collection. Nevertheless, they left a final farewell for all of us. Both Hayes and Mac will be in the upcoming movie Soul Men to be released in November 2008; a parting gift of sorts, I will be looking forward to it.

Property Tax Cap: Solution or Disaster?

It is nice to see that the NY State Senate Is meeting to tackle the property tax cap issue in response to the Commission on Tax Relief’ recommendations. The Commission, instituted by former Governor Spitzer and headed by Nassau County Executive Tom Suozzi, recommended a school property tax cap of 4% annually; a proposal supported by Governor Paterson. This means that school budget increases must result in a property tax increase of no more than 4% each year. We have long known that New York spends significantly more per pupil than any other state in the nation and some regions in New York, like Westchester and Long Island have the highest property taxes in the nation so something has to be done.

A property tax cap seems like it would be welcome news but it has ignited a furor. School districts, the teacher’s union and other pro-union, pro-education forces have dug in their heels claiming that many school districts will suffer and they will. In order to meet budget requirements, districts will be forced to cut more and more programs to make ends meet. This budget cap will lead quickly to the demise of music, art, athletic and after-school programs. There are few, if any, districts that have been able to maintain the same level of programs without an increase greater than 4%. This is troubling.

Nevertheless, what can we do, the property taxes on Long Island are crushing middle class families and senior citizens. The high taxes coupled with the high cost of home ownership is forcing families to leave and preventing young families from settling here. There are other solutions, like revamping the school districts all-together or sharing administrative services. These are reforms that I personally favor but so far they have no champion. I also think that some elected official has to find a way reduce the stranglehold of the teacher’s and school administrator's unions even if it means political suicide. After all, school teachers and administrators cannot be entitled to tax-payer funded benefits that the tax-payer themselves do not receive in their private sector jobs. It is only fair. Nevertheless, we will see what the legislature comes up with; it won’t be pretty either way.

Undocumented Workers Leave For Greener Pastures

You know things are bad in the Long Island economy when the undocumented immigrant workers start to leave. Anecdotal evidence from the front lines of community resources that provide services for immigrants suggests that many are leaving for greener pastures. Those of us who regularly pass hiring sites may realize that the throng of willing and able workers is all but dissipated.

For the past few years, County Executive Steve Levy has led a charge to crackdown on undocumented immigrants. Suffolk County recently passed a law that requires county contractors to use e-verify, a free internet based service run by the Dept of Homeland security, to certify employment eligibility of their workers. All of the bellyaching about immigrants taking jobs, burdening the school systems, emergency rooms and the like that pitted Hispanic community groups against one another and the county has met a greater decider – the economy.

The sole motivation for any undocumented worker to defy U. S. Law Enforcement and take a back-breaking journey to America is work. If they cannot find work in a community, they will move on to where the jobs are. Perhaps their presence or lack thereof can be viewed as yet another barometer of the economic reality in any community. When times are good, we will see them and complain, and when times are not, they disappear, depriving us of the access to cheap labor that we have all come to depend on. It is a double-edged sword.

Gas Prices Rise Quickly But Come Down Slowly

The following is from an article in today’s paper. See Newsday 8/6/08 Gas prices not falling as fast as crude.

“From a peak of $147 a barrel last month, crude oil has fallen by 19 percent -- but not gasoline.

The local average gas price has fallen by less than 5 percent from its high of $4.346 a gallon on July 8 -- and 6 percent nationally.

So, why do gas prices go up like a rocket as crude oil is rising, but parachute slowly downward when its basic raw material is plummeting.”

Why is that? The article went on to quote various experts from the petroleum industry, all of them had nothing but excuses when trying to explain away the inequity. From the previous run-ups in gasoline prices, we have certainly learned that once the prices reach a certain psychological threshold like when it passed the $3 mark, there is no reduction in prices no matter how much the price in crude retreats. Now that they have us psychologically past the $4 mark, this is where we will stay, for now. Prices may retreat a little but not enough to realize any real savings. Besides, gasoline was already costing too much money when it was priced at $3, let alone $4. Lately I have seen prices at $3.99 a gallon which psychologically seems like a bargain so they have us where they want us.

Exxon-Mobil recently posted its highest quarterly profit ever, $11.8 billion ($11,800,000,000*) dollars. They made this much money in 3 MONTHS, that is $98 million ($98,000,000*) a day. Who are the Americans who are still buying this overpriced gasoline? Has anyone ever seen the Exxon or Mobil stations have the cheapest price on the block? Yet somehow, they continue to rake it in. See post 6/4/08 Fight Back! Buy the Cheapest Gasoline You Can Find. We have no one to blame but ourselves for continuing to patronize these over-priced stations.

It is true that Americans have drastically reduced gasoline consumption in response to the high gasoline prices and that this lower demand has led to the retreat in price per barrel of crude oil. Sadly, this did nothing to prevent Exxon-Mobil from increasing their profits. Oh well.

*I will be writing out numbers with the requisite zeros going forward because the shorthand of million, billion, and trillion does nothing to make people realize just how huge those numbers are. We need to realize just how huge those numbers are.

Stock Market Has 2nd Biggest Rally in 4 months: Day Traders Ecstatic

It was nice to learn today that the Dow had its biggest one day rally since April 1 rising 331 points. This is good news I said and quickly chided myself for not being a day trader. So much money to be made, so little knowledge of the process. Why don’t I know these things? I could be out there making money. These last 4 months of triple digit run ups and run downs would not be complete without another milestone to add fumes to the fire. The Dow is now 11,615 points, this is fantastic! At this rate, the Dow will reach the highs that it had back in 2000. For all the pomp and circumstance, we are where we were 8 years ago. In fact, if we subtract fees, losses and taxes paid, we haven’t made any money since then. But, that’s alright; we shouldn’t ruin the spirit of these breakneck days.

Today was a great day because the Federal Reserve, concerned about inflation and a weakening economy, kept the key interest rate the same, making it still beneficial to borrow cheap money, if you can get your hands on it. Those of us with HELOCs should be elated; we get to keep our rock bottom rates! The banks, Wall Street financial firms, Fannie Mae and Freddie Mac get to keep their federally funded deals too. They all have access to the fed discount window, borrowing unlimited funds at 2%. How is it that we can’t get any of those deals? I’m going to have to look into this. Also, to make matters better, oil fell a few more dollars and now is only twice as much a barrel as it was last August.

It really is hard to enjoy these dog days of summer with all of this drama on Wall Street. With the government propping up the financial institutions, the housing market, and the credit markets, it is good to see Wall Street taking this all to heart and rallying in the face of fiscal calamity. America will be saved after all and I hope to be right there with them. The economic realities that cautioned the fed to keep interest rates the same and caused the price of oil to drop means that things are going to be OK. The market is rallying on fumes despite the economic realities so don’t try to understand it or apply any logic. Go with the flow, get your money in and get more money out on a daily basis. It’s like Vegas, we just have to learn a different set of rules. Now that things are really looking up, I plan to stop worrying about all of this not making sense and run with the bulls. Now, if only someone can teach me how

Are You Maxing Out Your HELOC?

My June 27, 2008 Bracing for the Big One entry regarding the lowering of credit limits for credit cards failed to mention that home equity lines of credit (HELOCs) are also under the knife. In response to the threat of credit line deductions, many Americans are doing the next best thing; taking out whatever balance is left on the HELOC and putting it into savings accounts. Fearing the real possibility that their credit lines won’t be there when they need it, some folks have realized that they do not have to sit idly by and watch the banks snatch back their credit lines, why not take the money now, just in case, as a way of propping up their emergency funds. By doing so, they are opting for higher principal and interest payments now in an effort to secure those funds and a little peace of mind.

During the housing boom, many took out HELOCs to fund home improvements and personal finance experts recommended using the HELOC as a source of emergency funds in lieu of actually saving the necessary 3-6 months living expenses. Saving 3-6 months expenses outright is a difficult task for most middle class Americans living paycheck to paycheck and HELOCs were a cheap available source of money. As the economy sours, many are worried about their jobs and their well-being and many have little or no savings.

The reduction in interest rates and the fact that interest payments are tax-deductible make HELOCs a very attractive loan source right now. However, most HELOCs have variable rates tied to the prime rate so if the Federal Reserve starts to raise rates to combat inflation then those payments will rise significantly. Taking another loan now to ward off the possibility of financial disaster may be the last resort that some people have but they must remember that defaulting on a HELOC can cost you your home.

Fiscal Responsibility is the Dullest Topic

No one cares about fiscal responsibility. Why do I waste my time? I should be happy thinking about food, television, celebrity, entertainment and sports. No one thinks about the government bailouts or what they are going to cost in the future. Everyone simply wants their handout, as quickly as possible. Greed is good and much of this financial recklessness is being rewarded. Everyone who made a bad judgment in the mortgage debacle is being bailed out, the lenders, the borrowers and everyone in between. The bailout mentality has taken hold of the government, much to the delight of Wall Street and I’m pretty sure that there will be more to come now that the trough has been opened.

The value of fiscal responsibility with which my generation was raised is no longer part of the vernacular. Save now to buy it later has been replaced with get it now and pay it later. Everyone is entitled to have whatever they want, whenever they want, with as little down as possible. There are few savers out there, they are in the minority, and in fact the national savings rate is practically zero. We have become so addicted to debt that we are immune to the billions and trillions of debt being reported. Yet, if you ask most people how many zeros are in a billion (9) or a trillion dollars (12) they probably don’t know. People spend to buy things on sale when they don’t even have the money. The logic is that it was a bargain. The question of whether it was a necessary expense is dismissed without a second thought. The fact that it was charged and that any and all savings will be negated by interest payments doesn’t seem to register.

The fact that the average interest rate is approximately 12% for your basic consumer credit card and the average family has close to $9000 doesn’t seem to bother most people. No one sits down to do the math because most people hate math anyway. If they did, they would see that if they never charged another thing until this debt was paid off, it would take 5 years with a payment of $200 a month to pay it off. Debt never really seems like that much until you actually try to pay it down. But most people don’t think that far ahead when they are in the store whipping out the card to purchase some soon to be forgotten item and why should they? The government is sending the debt is ok message loud and clear to the tune of $10 trillion dollars and counting. All those who made it this far should be applauded, fiscal responsibility is the dullest topic, if only I could stop talking about it.