Afghanistan: Graveyard of Foreign Armies

I don't like to weigh in about war because I do not like war and the rationale for war. I thought the entry into Iraq was a bad idea and the obvious contrivances foisted upon us in the run up to the war had me shouting at the television. Then George Bush threw down the gauntlet, we were either with him or against him and Rummy (Donald Rumsfeld) enthralled us with his surefire shock and awe strategy and the next minute we were watching the biggest fireworks show ever, the bombing of Baghdad.

The whole thing was supposed to be easy, the mighty pyrotechnical weaponry of the greatest and most expensive army in the world would take out Saddam Hussein and his weapons of mass destruction and deliver unto the Iraqis a freely democratic state that would also serve as an American foothold in the region. Six and half years later, we are still there. Are we?

There has not been much press on the Iraq War lately because the Iraq War, all that it is, ended up being a very expensive trillion dollar distraction, siphoning off troops and resources from the war in Afghanistan, where we were fighting the good fight against Al Qaeda and Osama Bin Laden, the architect of the September 11, 2001 terror attacks, and their state sanctioned sponsor the Taliban. Now, Afghanistan is front and center again, for eight years later, we are still there as well.

Both the Iraq and Afghan wars are of the same ilk. We invaded sovereign nations, destabilized their dictatorial regimes, tried to impose a system of democracy that resulted in weak, ineffectual and corrupt governments and where we have whipped up brutal insurgencies. Now, if we pull out, both of these fledgling states, Iraq and Afghanistan, can easily be overrun by power-hungry anti-American factions that will reverse all of our efforts, undermine our foothold in the region and imperil the lives of the inhabitants, not to mention becoming full out breeding grounds for terrorist cells.

The only existing military logic is to hold the line against insurgency by sending in more troops and training the national armies to manage the fight themselves allowing us to withdraw. We have been training the Afghans and the Iraqis for eight years and six years respectively and their armies are still not ready to take the reins. We send our soldiers into battle after six weeks of basic training but it seems virtually impossible to bring those national armies up to speed.

We are supposed to draw down troops in Iraq next year and right now, I don't know if that is still the plan. Whatever the case General McChrystal has now asked his Commander-in-Chief for 44,000 more troops in Afghanistan. Sending more troops will be a tacit acceptance of prolonged war. We must note here that Afghanistan has been known as the "graveyard of foreign armies" for several hundred years. Historically, foreign armies, including the British and the Russians, have jeopardized their empires trying to defeat the Afghans in lengthy contests, without success.

We cannot continue to fund both of these wars as we have already gone into considerable debt funding them and if we continue, in light of the current deficits and amid our current economic collapse, we run the risk of utter financial ruin. The President has a hard choice but in the end, I think, he should not send more troops. He should let the military manage with what they have while finding a solution for America to withdraw as expeditiously as possible before we all go down in flames.

Long Island Consumer Confidence Confounds

As reported in the Long Island Business News, The Sienna Research Institute is claiming that Consumer Confidence on Long Island rose by 9 percent in the third quarter over the previous period. This seems to conflict with recent reports that Long Island's economy is still in the toilet, that there are no signs of the recovery that is supposedly taking place in the greater economy. This I believe. But consumer confidence increasing?

The core group of respondents must either be from the financial sector or the public sector. But seriously, I am still having trouble believing how an economy driven by consumer spending can recover when so many of those consumers are unemployed. It is simple math. The population of the United States is 300,000,000 comprising about 100,000,000 households. Over 7,000,000 jobs have been lost since the recession officially began 22 months ago. 7,000,000 jobs lost affects the finances of almost as many households, allowing for those that have, sadly, lost more than one job.

We must also count the millions of households who are affected by underemployment or have fallen below the radar. So, all told that is at least 10% of households not spending like they used to. The economy has been driven by 70% consumer spending over the last 10 years. A 10% reduction in consumer spending is a huge hit, accounting for trillions of dollars of our economic engine. There are also the millions of households who are in fear of losing their jobs and they are not spending like they used to, either.

In fact, the best numbers that have come out so far are those of consumer debt reduction. People are not spending, they are paying down debt and conserving. Wages continue to be stagnant and companies continue to cut jobs, albeit at a slower pace, in order to present better quarterly numbers but that is by no means a true gauge of health. I will certainly feel better and look better when I stop eating for a while but if I stop eating for too long, I may not survive.

Given all of these developments, it is hard to see where the consumer is finding any confidence especially in high cost Long Island where, unfortunately, those costs are closing in for many. I have completely lost my confidence. I don't even want to go to the store at all. But, since I am not the biggest consumer to begin with, I am always behind in necessities and so I remain. I know we are all looking for light at the end of the tunnel and we definitely need it soon. Even I am running out of patience.

Hello Retailers, Stop Rushing Us

Since many retailers moved up their back-to-school specials to July, I keep thinking the children are going back to school any day now. Yesterday, I finally stepped out to get going on the school shopping because I felt like I was running out of time. There have been flyers in the paper for weeks now advertising special discounts and so far I had failed to take advantage. Today, I checked the calendar and our school district does not open for another 4 weeks thanks to a late Labor Day holiday. So here I am thinking I have to rush for nothing.

These days, in an attempt to chase sales, retailers are pushing the calendar out of whack putting us all under pressure to shop months ahead of our usual timing. Many are experimenting with beginning Christmas sales in August. Halloween stuff is out in many stores already. Now we are supposed to shop for back-to-school, Halloween and Christmas at the same time. Hello retailers, we can only focus on one shopping season at a time. Throwing all the stuff out there months and months ahead of time believing that we will shop earlier for everything is just confusing all of us, well me. What was wrong with thinking about Christmas/holiday shopping after Halloween?

Well, as the dismal July retail sales reports are revealing, consumers are still in economic shock and they are not buying, no matter how many enticing discounts have been flung at them and I don't think that will change anytime soon. So, instead of rushing us in to buy everything that we would have bought through the end of the year by next week, retailers ought to adjust to the cold hard reality that the consumer is out of dough. Unfortunately, it is too late to change the fact that we are in for a very, very long Christmas/holiday shopping season this year. Egads!

Credit Card Madness: Can We Play a Game?

By not drinking the Kool-Aid you didn't enjoy the party. Everybody else enjoyed the party; they have better cars than you, they took bigger vacations than you and now your credit is being whacked for something you didn't do."

This is a quote from my husband today as we sit here contemplating the state of the union as we do most evenings while catching up on our Tivoed "real" news: Nightline and Frontline, Meet the Press and BBC News, 60 Minutes and CBS News Sunday Morning. Not to mention our "fake" news The Daily Show and The Colbert Report. It takes us a while to slog through it all because we are always pausing and commenting throughout. "Pause that" is an often used phrase.

We have been reacting strongly to the current credit card situation because we funded our small business with credit cards at cheap rates and now we are being forced to pay back "old" borrowed money that is 2 and 3 years old at a steeper rate. In addition our credit lines are being cut as well. I'm not too concerned about preserving the credit lines because we never used these cards for any other purpose than for the business. Now that the business is defunct, we are simply just paying them down as quickly as possible.

Anyhow, I was railing about the fact that Bank of America had simultaneously cut one of our credit lines very close to the current balance and doubled the interest rate, creating a situation where we were over the limit once they added on the finance charges. In fine print, in the middle of the statement, along with all of the other benign announcements, was a penalty agreement stating that we would be charged over the limit fees unless we brought the balance down, below the new credit limit, within 20 days of the statement date; a date, mind you, that was over a week prior to the usual due date. Furthermore, we must keep the balance under the limit going forward or else we would have to pay the fees. In order to remedy the problem you must be aware that you need to include enough funds to cover the next addition of finance charges or else find yourself back over the limit again and subject to those penalty fees. Did I ask them to drop my credit line by $18,000. No. Did I ask them to double my interest? No. Yet, by their action, they deliberately attempt to trip me up so that they can collect fees as well. Ain't that some shit? This is just madness.

Bank of America is one of those banks rushing to pay back its TARP funds because it is suddenly flush. I would be flush too if I got to borrow from the Federal Reserve at practically 0% and then turn around and jack up the interest rate on existing credit card balances to 15% and over in most cases. Anyone could make lots of money if they had this kind of deal. To make matters worse, they are not lending much at all which was the sole purpose of the bailouts, was it not? We have had a credit-fueled economy for the last decade, credit card companies cannot just turn off the spigot without unleashing another set of dire consequences for the economy.

GM Bankruptcy: Par for the Course

So GM is dead-ish and the market did not raise an eyebrow. One of the largest manufacturing companies in the United States is being shepherded through a structured bankruptcy on the taxpayer's dime to the tune of $50,000,000,000, not including the $19,000,000,000 it has already received, and the market rallied several hundred points apparently overjoyed over other unrelated positive, though flimsy, economic data. Apparently investors felt that the GM thing was expected and already priced in so no big deal. Par for the course.

In the course of less than a year, another industry giant has been transferred to the taxpayer dole, let us not forget AIG, Fannie Mae, Freddie Mac and the dizzying array of financial firms that are now majority owned or significantly owned by the American Government. Smacks of that "S" word, doesn't it. Yech! Actually, I don't see any problem with socialism, we are trying to save America in this global economy, aren't we? Though it does look bad that the government of the country that is/was the economic powerhouse of the world is bailing out the firms that underwrote its superiority. Furthermore, this government is as bankrupt as they come. If the American government was a company, it would have sought chapter 11 a long time a go.

Why is the financial sanctity of this country so reputable when it has not been able to balance its books in nearly a decade? Now this government sits on the brink of skyrocketing legacy costs and it cannot negotiate any settlement. Sounds a lot like GM. The perceived strength of the US government lays upon its solid revenue source - the American taxpayer - but it cannot sell the prospect of higher taxes or reduction in services to the representative body of this bunch; it is considered political suicide. It has the largest military in the world and so cocoons its weakening financial condition with weapons. We are democratic, we are free, we are safe, we are broke.

But, we are saving GM and the rest of the funky bunch but the amount given to GM and Chrysler, which I still cannot understand why Chrysler is being sold to a foreign automaker but whatever, is still a drop in the bucket compared to what has been given to AIG and the financials. Now Wall Street is happy and the market is rallying while they criticize the President for spending too much money. How can anyone even mention free market in the same breath?

The government can save GM but at some point we will need to save the government. We will all have to pay a lot more taxes. Is there any other way?

A World of Hurt

Hundreds of auto dealerships are set to close in the next few months. They have been laid off by their parent auto corporation, Chrysler. GM is set to follow suit soon with a couple thousand dealership layoffs of its own. The auto industry is dying under the weight of its own importance; they made American cars which for most of the 20th century were all the rage. They guaranteed all of their workers, past and present, a lifetime entitlement to the spoils of American domination, everybody's piece was golden.

Well, times as we know them have changed drastically as to be almost unrecognizable. Stalwart industries are dropping like flies and the rest are hanging by a thread as the ranks of the unemployed just keep swelling. When will this all end? Nobody knows. For every person who is laid off starts a domino effect; its own ripple that continues to pluck people off the rolls as it travels down the line. Any person laid off is a person who stops or reduces consumption, is a person who has to layoff a caregiver, a gardener or a domestic helper, is a person who requires discounts, tax breaks, or some form of financial aid in order to survive, is a person who forces industry to not make that one car, that TV or any other consumer goods to sell to him/her, is a person who may foreclose on their house, and is most definitely a person who throws a wrench into the economic machinery.

Over 500,000 people a month are still being laid off. The resulting halt in economic activity due to each of those layoffs is staggering and that is before we even take into account all of the collateral damage. I wish President Obama could save us all but he can't; it seems the government has run out of steam when it comes to bailouts. Whatever we want to call it, the government blew its wad by saving the monetary system by propping up all of the banks. Institutional investors had to be made whole so that they would continue to purchase government debt; treasury bonds and the like.

All it is doing in the northeast lately is raining. Perhaps the heavens are crying for us all, this economic crisis is truly like no other. We are resorting to every man for himself tactics instead of putting our heads together. We can and must find better solutions.

Who is Afraid of the National Debt?

The big stink today is that the projected budget deficits for fiscal 2009 and fiscal 2010 were revised upward by the White House. To put this figure in perspective, the budget for fiscal 2009 is $3,100,000,000,000 with a projected deficit of $1,840,000,000,000 revised upward from $1,750,000,000,000. The 2010 proposed budget is $3,600,000,000,000 with a projected deficit of $1,250,000,000,000 revised upward from $1,190,000,000,000. We are looking at adding over $3,000,000,000,000 to the national debt over the next 2 years all in the name of saving the country from economic collapse.

Of course these numbers are way too incomprehensible for most Americans for many of them have lost track of how many zeros are in a billion or a trillion dollars. We barely speak in millions anymore and the value of a billion dollars, of being 1000 million, does not seem to rankle many minds. In the last decade the shift from speaking in millions to speaking in billions happened almost without alarm as if the move from millions of dollars to billions of dollars was a small incremental, a mere matter of changing from an "m" to a "b".

Now, in the short span of a couple of years, we have graduated to speaking in trillions, too overwhelmed to comprehend the new valuations, afraid but mired in our own mathematical and financial ignorance. Imagine an individual or a family making $50,000 a year and spending $125,000 - overspending by $75,000 in just one year. That is how our government is spending right now and that is how it has been spending over the last decade and that is how it will continue to spend over the next. Every year, we are promised a reduction in government spending and every year it overspends. Until it can get to the point of spending less than what it brings in, the national debt will just continue to skyrocket. Bill Clinton famously balanced the budget at the end of the 90s and delivered a surplus to the incoming President Bush nevertheless, he still increased the national debt.

Of course, the only way to solve this problem is to cut spending or raise taxes. But, no one wants to see their taxes raised and no one can agree on what to cut from the budget. At the end of the day, every group has a vested interest in keeping the status quo; government employees do not want to see their jobs cut, the citizenry does not want to see any of its programs or services cut and most of all, elected officials won't dare offend either group in order to get re-elected.

While we are patently afraid of saddling the next generation with potentially insurmountable debt, we are unwilling to take any real action to prevent it. Instead we resort to the same pipe dream solution that has been in place for decades; that with the right economic and fiscal policy, we can grow ourselves out of our financial mess. We fail to accept the reality that the only thing that has grown is our collective debt; that of government and individual alike.

Housing Market on Long Island Still Depressed

Today I heard some disturbing news about the state of the housing market on Long Island. There is now a 31 month supply of homes on the market; over 35,000 homes for sale. In the last 6 months a little over 1000 homes were sold. Now that prices are declining, there are more interested buyers, but declining values will put more of those new home buyers of the last 2 or 3 years underwater where the amount owed on their mortgage is greater than the market price of the home. It may also put many of those who tapped their home equity based on peak market values underwater as well.

While there may be glimmers of hope in some pockets of this turbulent economy, the reality is that homeowners in Long Island and downstate New York are in trouble. Sadly, due to the high cost of living in this region, those homeowners who are laid off, underemployed, or whose wages have been reduced for any reason barely stand a chance of survival for very long unless they have ample savings. Many of those home buyers of the last 2 or 3 years were financially stretched when they purchased the home in the first place. But, they feared missing out on the opportunity to own a home when prices started to skyrocket putting any chance of home ownership out of reach for much of the middle class. Now, that home is a financial burden in itself.

Unfortunately, the financial safety nets that cheap money provided such as the ability to tap home equity if one needed extra funds or the ability to pick up another credit card on the fly, if times got a little tight, are gone. What will the homeowner turn to when he or she needs to make ends meet? We are facing a lot more foreclosures on the Island and a lot more desperate homeowners in New York.

Meanwhile, Albany is behaving as usual, jacking up the budget by $10,000,000,000 over last year, making underhanded funding deals with the MTA, granting all unions basically a stay of financial execution and a myriad of other deplorable financial conduct in a state that ranks in the top 3 for the highest taxes and cost of living nationwide and where taxes associated with Wall Street account for 20% of the state budget and we know how well they are doing. Long Island suffers from the same pigheadedness that New Yorkers do, too big, too important, too powerful to fail.

What to do? Though Long Island is an aging suburb, it has the benefit of a desirable location and has plenty of options that it refuses to accept. Long Island could minimize its downward spiral simply by implementing a few of the recommendations proffered by the Island's best economic minds, Chief Economist Pearl Kamer, Martin Cantor, Director, Long Island Economic and Social Policy Institute at Dowling College and Irwin Kellner, Distinguished Scholar of Economics, and the Rauch Foundation's excellent economic overview, Long Island Index. Taken together they have researched, reviewed and recommended viable solutions that will help Long Island regain its financial footing.

Bold action is always recommended, even desired, but rarely ever implemented. So it may very well be that we will watch, defiantly, as Long Island and even New York State continue their downward spirals while everyone else is finding their way out.

Unemployment

Tomorrow, I have a meeting with the department of labor (NYDOL). It seems that I will qualify for some unemployment benefits after all. Whoohoo! When you have a big fat zero coming in, anything is better than nothing and of course I am extremely grateful for it. Except...

Well, I was listening to the radio the other day. Actually, I listen to the radio every day in my car. I only listen to public radio stations in the car, nothing else, so it is either classical music or NPR programming, my trusted news source. Ask my kids. Sometimes they are not amused but I do see them tuning in against their will so there is hope that they will actually respond to music and information that challenges their minds. Anyhow, since I am old enough to know practically every song on most popular radio stations, I own the records - yeah vinyl - I do not need radio stations to over-play and kill the music that I love. Also, I find the children want to listen to dreadful pop radio notorious for playing the same 5 songs all day that I wake up in the morning with these songs in my head (umbrella ella ella ella...). Not to mention that I have heard many of these "new" songs before because most are re-dos of old songs I grew up with. The children are always shocked that I know the tune and/or the words. Sadly, I have to tell them that there is very little music that they listen to that is original.

Anyway, since I live in Suffolk County, Connecticut is geographically closer than New York City so I pick up their public radio station as well. During one of their news stories they discussed unemployment benefits in CT and it turns out that the maximum unemployment benefit in CT is $519 versus $405 in NY. In addition, they get $15 per dependent child. Well you know what I was thinking. What the heck, if I knew that, we should have moved to Connecticut. Well? It is something to ponder isn't it? You know I worked out the numbers quickly, that is a whopping $576 per month more than in NY providing you get the maximum benefit and have two children. That is quite a bit of extra moulah. Perhaps this info should be added to the relocation checklist alongside the other quality of life markers such as school district stats, property tax rates and community amenities. Of course, we ruled out moving to CT for the same reason we ruled out NJ, we are New Yorkers, good, bad and indifferent.

All kidding aside, I am looking forward to my meeting in NY. I am happy to jump through any hoop right about now for a few extra bucks, every little bit counts.

Gingerly Hoping for the Best

This weekend brought warm comfort from dear friends as we commiserated together and reset our outlook. I have never been surrounded by so many professionals simultaneously out of work or underemployed in my whole working existence. We are all hoping for the best. It is hard to fathom the breadth of this economic collapse. It is even harder to establish a comfort zone when all you have to look forward to is a quagmire of dwindling finances.

Before last week's devastating news, I had a plan for our income tax refunds. Our Federal refund was, without question, immediately directed to savings to help bolster our emergency funds. Most of the State refund was actually earmarked for closing out two smaller credit card balances with the remaining used to purchase some much needed supplies for the house but, of course, all of those purchases go back to the hold pile; that money has been re-directed to the survival pile. I try not to count my chickens and in fact my list which was remarkably mundane - things like a shower door, no problem we'll stick with the curtain and a door between the kitchen and un-heated sunroom where thermal curtains will remain, indefinitely - had the caveat "if chickens hatch." They, unfortunately did not.

I feel like I can't even dare to dream lest those "green shoots" be mowed down before they even have a chance to thrive. But, I do not want to be trapped in a downward spiral of negativity either. So, I gingerly hope for the best.

The Deed is Done

It is true, my husband was laid off today but we are OK for now. Yesterday I was mad, today I am still mad but I am not sad. I'll be sad 6 months from now if things don't turn around though.

I've stepped up my job search with renewed vigor and remain optimistic for now but the job situation on Long Island is dire. There are lot more offerings in NY City and I would have a much better chance finding something in my field there. But, with no family and few friends out here it is difficult to realistically think that we both could commute given that we have two young children. Nevertheless, if the situation dictates that it has to be so then of course we would find a way. Until then, it will be nice having a little more help around the house.

Final Nail

I said this before and now I'm feeling it again. No matter how much one prepares psychologically and rationally for a layoff, the actuality of it happening gives you one gut-sucking punch. Late this evening, my husband received an email calling him in for what we believe is his final blow tomorrow. No amount of karma or prayer saved us from this one. No one wants to be in a situation where both wage earners are laid off. Economic lightening should not strike the same household twice so it seems. After all, we have paid a lot of dues and are still paying.

My mom says "the lord is good" because we appear to be positioned for survival. So thank you lord for giving us the foresight to aggressively pay down our business debt, large though it still may be; the will to save the requisite 6-9 months emergency fund; and the fortitude to not shop nor truly enjoy our wealth during the boom times when we supposedly had it. Thank you for forcing us to live below our means so that we are positioned to survive this crisis. Thank you for giving me, then taking away my dream job because the short period of time helped us to make a dent in the debt. Thank you for letting my husband lose his job so that we can drain whatever savings we have and continue to struggle for countless years more. After all, we don't work on Wall street so we really shouldn't expect our earnings to return to peak levels even though theirs will thanks to us lowly taxpayers.

On behalf of the 5,000,000 people who have lost their jobs during this recession, who have been ripped off by the Madoffs of the world, whose savings are slim and whose retirements are all but a wish unless you get a union pension, whose houses are underwater and whose future is bleak, we thank you for teaching us how to make lemonade out of lemons. I'm sure ready to have a nice tall glass of our current predicament right about now.

Agony

Friday the axe fell again at my husband's company. Since the company is national and many work from home on occasion, including my husband that day, layoff notices were done by phone call. All day Friday, we jumped every time his office line rang, is it us? is it we? has our time come? Each time, it was a colleague trying to continue some vestige of work which was all but impossible given the circumstances.

All day we waited for his fate and in the late afternoon, an email arrived stating that more details were forthcoming from the CEO. So, we waited, again. It was bad enough that the email did not arrive until 7pm but it carried no relief just further torment. After squirming all day, he was treated to an email stating, in essence, that the status of the employees in his division would be determined "next week." Yes, they were treated to the reality of an open-ended death knell, another week of bile churning speculation.

Today he described the feeling from the bench today as one of sheer panic as other bits and pieces of information surfaced to put an even bleaker spin on the whole macabre situation. As we all know, a definitive answer is much, much better than not knowing one's fate. Right now, no one knows what to do or how to act. The one thing they do know is that their group, as they know it, will not be intact come Friday.

Who will be the ones to go? The logic supports any number of outcomes, all of which are plausible. Whatever the outcome, we know we will survive. No one is immune during this economic downturn but it is totally agonizing when the process is dragged out one painful nail at a time.

Credit Card Companies Officially Sanctioned Loan Sharks

I am so blooming mad, I am thoroughly disgusted. After nearly 2 harrowing years of aggressively paying down business debt, unfortunately funded by credit cards, on time and always well above the minimum due, we had reached the stage when the light at the end of the tunnel was in reach. But now, all hopes have been dashed as one by one our creditors have reduced our limits and doubled our interest rate for doing the right thing. Are we being punished because we were only paying down and not charging any more? Are we being punished for actually trying to eradicate our credit card debt? Or are we being punished for simply having credit card debt in the first place?

I understand that many people are defaulting on their debt but I show no signs of doing so, the amount of my payments have been consistent for the last 2 years. I have not made a late payment this decade and I've never abused my balance. Yet, I am a liability as far the credit card companies are concerned. Well, since most of them are banks, they have a captive audience that they can raise rates on at any time and are doing so by necessity since the rest of their loan businesses are tanking. It is an odd feeling to have borrowed at a low rate but now be paying it back at an obscenely high rate when you didn't do anything wrong.

I think it is time to revisit the Fair, Isaac credit score (FICO) monopoly. Anytime a credit line is reduced, it increases our debt utilization or debt ratio, the total amount charged in relation to the credit available. This accounts for 30% of your FICO score. If you have a $2,500 balance on a card with a $10,000 limit, you have a debt ratio of 25% but if the credit card company reduces your limit to $5000 then your debt ratio is now a whopping 50%. Debt ratios of 30% reduce credit scores significantly. This sucks. Yet, most of us have little recourse.

We can disagree with a rate change by agreeing to close the account thereby reverting back to the old rate for the remainder of the repayment. I would gladly take this road but, as we have learned by now, closing down credit cards affects our debt ratios. Then again, how much worse can our debt ratios get since closing cards at this juncture may not make any more difference to our scores since the reduction in credit lines has increased many of our ratios above 50%. Yet, this score affects our cost of credit and is now used as a reference factor of employment. A good score means you are a reputable person? That is definitely debatable. Nevertheless, credit scores across the country are being smashed due to the housing and employment crisis. Maybe there is not much to worry about after all. Let the score fall and to hell with it? Maybe.

At the end of the day, no one can really shut all of their credit cards because we still need a credit card for so many transactions that I have a hard time imagining how people get by without them for everything from reservations to large purchases; even if you don't want to use one, it is tough to get around not using one. If consumers now have to pay double the interest for all the purchases they made last year or before, then they really won't have any extra money to spend. Also, their costs to borrow will be too high to take advantage of the low interest rates that are supposedly abounding. Is anyone really qualifying for them? Investors can cheer the banks for making a profit but at what expense.

End of Quarter Woes

Well, it is that time again; the rise of the layoff axe as companies struggle to report results for the 1st Quarter 2009. So far none of the numbers have been good; they only appear good in theory. Either they are not as bad as analysts expected or they are downright forgery, as is the case with the banks. How hard would it be for you to show a profit if the government handed you tens of billions of dollars and the suspension of mark-to-market accounting rules allowed you to overvalue the "toxic" assets on your books? I'd show a profit and I'd take a bonus too.

The real truth underlying all of this reporting is, of course, the need to lay off more workers in order to improve the outlook for the 2nd quarter. Since wages are the highest expense of any business, businesses have no choice but to continue to reduce the minions for some relief on the books. The layoff numbers are not as daunting as they were initially but the cuts continue in every industry across the board. A simple search of the web reveals so many layoff tracking scorecards for technology, banking, retail, law firms, etc. it is sad to comprehend. Even the once mighty unions are starting to lose the fight to protect their workers from upheaval.

Now the rumor mill is hot and heavy at my husband's company this week. We are counting down 2 days til another d-day on Friday. It looks like the cuts will be deeper accompanied by a major re-organization. We are keeping our fingers crossed yet again. Remember we survived the first set at the beginning of the year. We join the ranks of those living quarter to quarter wondering how long our jobs will survive. It is a nerve-wracking way of living and coupled with all the economic news, it is hard to keep a good face. Yet, we will cheer if we make it past this week and hopefully breathe a sigh of relief that we don't have to face this all again until June.

Sign O' the Times

The economic crisis is taking its toll. The New York Times is diligently trying to save itself as it continues to suffer steep decline in advertising revenues. Unfortunately, declining readership is a sign of the times. Ironically, this news comes a day after it was announced that the New York Times won 5 Pulitzer prizes for Journalism.

The New York Times, the standard bearer of "intelligent" news is still winning awards but it just may die anyway. It has already sold and/or leased most of its midtown Manhattan headquarters and has implemented a 5% reduction in employee paychecks for the remainder of 2009. Incidentally, the New York Times Company also owns the Boston Globe and it is attempting to get those employees to agree to $20,000,000 in concessions or shut down the paper. The Globe lost $50,000,000 last year and is on track to lose $85,000,000 this year.

So, it doesn't help that subscribers like me are considering giving up their beloved subscriptions to this and other publications. Lately, it just seems that every Monday I gather up reams of unread newspaper and toss directly into the recycling, hoping that the next week I will get a chance to read more. However, more weekends than not, after a brief perusal, both my husband and I run out of time to truly sit and read. Besides, with the 24 hour news cycle, we have seen most of the headlines by the time the newspaper arrives.

In fact, I know I read more New York Times on the web than the actual paper that shows up every weekend at my house. So, by all accounts I should give up my subscription except I feel terribly about adding to the demise of this great paper. What a quandary. The upside is that we pay more for the paper to be delivered Saturday and Sunday (which they force you to do) than it costs to buy the Sunday paper on the newsstand. So, we can buy it as we need it without spending money every week to have it and not read it.

But, if we subscribers keep giving it up, then where will the great paper be when we are ready to read it. Us lapsing subscribers are the biggest part of their problem; hence the rapid decline in readership for print media across the board. We are passively allowing our die-hard subscriptions to lapse primarily for the same reasons.

Some newspapers are actually considering charging for their web content so people like me stop reading all the articles for free online in lieu of a subscription. But, like most people, I am unwilling to pay for a web subscription to anything. I suppose I can always find "good" news for free so I could just carry on but I don't want to help kill the New York Times by cancelling my subscription. Then what will we be left with, sensationalist rubbish from the competition? I rue the day but it really may be time for me to say sayonara to the Times.

I thought accounting shenanigans were unsustainable

There is nothing like tax season to put things into perspective. I'm even madder than ever. So far, five financial institutions have shown 1st quarter 2009 profits due to hundreds of billions in bailout funds, government guaranteess for their bad assets, government guarantees for their bad loans, suspended mark to market rules allowing them to value the assets at a phantom price and a gullible electorate. I thought accounting shenanigans were unsustainable; I am very very wrong indeed.

The most egregious reporting came today when Bank of America claimed to have earned over $4,000,000,000 in 1st quarter profits, more profit than they made in the entire year of 2008, as if they did not recently receive over $25,000,000,000 in TARP funds and antoher $120,000,000,000 in loan guarantees. This is the biggest accounting b.s. heard around the world. How in the most bold face of lies can a bank show profits while being held afloat by the taxpayers. We are running with the mandate that some institutions are "too big to fail," and the bankers have moved beyond silently laughing at the gullible taxpayers to rubbing our faces in their government sanctioned ponzi-scheme-like balance sheets in broad daylight at our expense. What a life!

Thankfully, investors met Bank of America's outlandish claims with an even more resounding skepticism than I had anticipated so at least some people are paying attention. Instead we have fools throwing tea parties and protesting about taxation without representation as if George Bush didn't already spend their money while encouraging them to drink the fancy tea he made them believe they could afford. And now poor Obama in order to survive has surrended fully to the financial industry.

The general consensus that America's future depends on saving the financial sector was a battle cry of and by the entitled. Banks have an insatiable appetite for gains, ill-gotten or otherwise and they will take every penny the government has if it let's them.

The Bailing Out of the Reckless Has Gone Global

The euphoria on Wall Street with its recent rallies and the reactions to the G-20 summit, which essentially calls for nations to commit more money towards economic stimulus efforts worldwide including $1,000,000,000 for the IMF to help to prop up developing countries, once again puts the celebration squarely on bailouts as the only way to combat the collateral damage of the near-collapse of world financial markets; the bailing out of the reckless has gone global.

In the meantime, the only people who do not seem to be benefiting from any of this financial benevolence are those who "did the right thing." Those who were responsible for their financial actions are getting a rude blow; while their irresponsible compatriots are defaulting on their mortgages, credit card payments and other loans, the dutiful credit borrowers who paid on time, never missed a payment and did not carry large balances are having their credit lines slashed in droves at a time when the credit cushion safety net is most needed. Wasn't this the reason why you paid on time and kept your balances low, so that you could have the credit line available for a financial emergency?

Instead of reward, banks are reducing the credit lines of the diligent folk in order to reduce the amount of reserves required to cover the balances of those who default on their payments. While Wall Street may think their world is getting better now that they are infused with taxpayer cash to meet their debt obligations, the taxpayers are wondering how they are going to meet their debt obligations.

You know the consumer credit crisis is coming; it has already been forecast since the beginning of last year and finally the news is beginning to trickle out. A couple weeks ago it was reported that credit card defaults had reached a 20 year high. It is surer than sure that this whole consumer credit market is seriously about to blow. Nearly 2,000,000 people have lost their jobs this year alone. Compare this to 2008 where the total job loss for the year was 2,600,000. The current clip puts the US on track to lose at least 5,000,000 jobs this year. That is a heck of a lot of people who will stop paying on their cards or will be charging up what's left of their credit lines to survive now that they are jobless; soon they will run out of credit and stop paying on that too. Bankruptcy filings have risen 55% on Long Island this year.

Lenders are tightening their standards, raising interest rates and reducing or canceling consumer credit lines as fast as they can. Unfortunately, credit has fueled our consumer-based economy; consumer spending is responsible for nearly 70% of the US Gross Domestic Product (GDP). 2008 GDP was approximately $14,000,000,000,000. To put it in perspective, the government and the Federal Reserve have lent, promised or guaranteed approximately $12,000,000,000,000 to stem the financial meltdown. The consumer borrow and spend mentality that has fueled this decade's growth will have to be replaced with something else in order to maintain the current GDP. What will that be?

All of this bailout and "not being held accountable for one's actions" does make it very tempting to quit paying those credit card bills and suffer the consequences along with the rest of the folk. Those with business debts and other debts may just abandon paying because they see no reward in doing so. After all, should any of us really be concerned with the negative marks on our credit reports. If your score is below 720, what do you have to lose? No one is going to give you any new credit anyway. I think sometimes of abandoning paying back the credit cards that were used to start our unsuccessful business venture. I have been laid off from the job that I specifically went out and procured to pay this business debt. We are struggling to pay them since I still have not received any unemployment compensation.

However, I am chicken. I want to be able to refinance my mortgage should interest rates continue to fall. I want to be able to get a job in the future without being disqualified because of a bad credit score. My car was originally leased as a business vehicle and the lease is up in a year; I will need good credit to get a replacement vehicle. The relief for the prudent is non-existent, only the assurance that without all of this economic and financial intervention for the greedy and irresponsible, we would all fail. So much for keeping up with the Joneses.

Always Look on the Bright Side of Real Estate

On this April 1, optimism was abounding on all fronts for there is a feeling that the bottom is near for the economy. In typical fashion, Americans want things to turn around now; they don't like to suffer and are tired of the doom and gloom. The stock market surged again following up on its gains of last week on the belief that this should be the bottom yet investors found hope in data that was too arcane for most of us. The economic data to be published later this week and the upcoming 1^st quarter numbers will be a better indicator of the real deal.

For those of us, looking for data that we could feel joyous about, Newsday published an article today that made lemonade out of a sour real estate market. (See Buyers may find LI homes affordable now by Jonathan Starkey) No matter the economic conditions, there is always a bright side to the real estate market and right now it is brighter for buyers. The article quoted a real estate professional spouting the numbers,

“In February, the median closing price for a home in Nassau County was $400,000. That's down from $458,800 the same month last year and $502,500 at the peak in August 2007. In Suffolk County, the median closing price for a home was $309,500 in February, down from $359,500 in February 2008 and $420,000 from its peak in June 2007.”

The data cited should be welcome news for buyers but for sellers, the reality of the new pricing still has not hit home, so to speak. This is bad news for those who bought during those high periods because the odds are they are now underwater in their mortgage. This is also bad news for those who have home equity loan products that together with their mortgage lands them underwater. This is really bad news for those who want to refinance their mortgage just to find out that they are now officially underwater. This is really, really bad news for those who want to trade-up; the desirable next step for those who bought “starter” homes during the last 5 years or so. Many of them would probably have to sell for less than they paid if they are lucky to find a buyer. But, most of all, this is really, really, really bad news for the rest of us who are watching our home equity evaporate along with the rest of our savings and investments.

Anyhow, much of the article is geared toward the first-time home buyer – plenty of incentives exist to help them purchase a home, if they so desired, in the form of tax credits and the like. However, moving out to the island requires a much greater income than most people realize. Unless you are a first-time buyer, you need a 20% down-payment plus the ridiculously expensive NY state closing costs so at the Nassau average of $400,000, a buyer needs $80,000 down plus closing costs which can easily exceed $5,000, not to mention moving and move-in expenses. If you are a first-time home buyer and are lucky to get one of those FHA 3.5% down payment deals and you get assistance with the closing costs, you will still need at least $20,000 to cover the down payment and all of the other expenses. Since we have not been encouraged to save over the last decade, and any investments we had have tanked, where is that money coming from?

Technically, if we understand that banks have reverted back to the general rule of thumb of income to home price, a home price of $400,000 requires at least $125,000 in household income. A mortgage of $300,000 at today’s 5-6% rate is still a $1700 - $1800 payment plus at least $1,000 for taxes and insurance per month and that’s with no PMI (private mortgage insurance). Yep, nearly $3,000 a month for that average home. How many first-time home buyers can afford that?

Houses for sale in my community have been sitting, some for over a year now, and more homes are added to the pile weekly as the older folk realize they have to sell and leave. Since many of these communities are ageing, the sad fact is that there are very few young folk who can afford to take over. Back in the nineties, there was a similar housing decline on Long Island and it recovered nicely. However, the entire economy was not declining drastically across all sectors along with that decline nor did people have the high debt levels that they have today or were losing their jobs or having their salaries frozen or reduced to the magnitude that we are now experiencing. Most of all, there was a steady supply of Wall-Streeters and similar professionals who migrated out but now, even they have been decimated. Maybe there are some "dinks" (double income no kids) out there who continue to dream of raising kids in the suburbs one day and are still waiting to pounce on the housing market. Too bad there may not be enough of them this time around.

NY Budget Bucks Fiscal Responsibility

Oh No! I have to reverse all of my glowing recommendations for Governor Paterson. I really thought that he was going to get things done and he has failed all of us New Yorkers. NY's 2009-2010 budget at $132,000,000,000 is $11,000,000,000 more than the current budget. How could this be possible in the face of the economic calamity that has befallen our state? How could Paterson abandon all of his impassioned pleas for fiscal discipline? What happened to making the hard choices now to ensure the future fiscal viability of the state?

Until last year, I did not know that Wall Street revenues contributed approximately $20,000,000,000 or 1/5th of the state budget. It is definitely certain that this level of contribution will not be attained again for quite some time. The new budget proposal includes approximately $6,000,000,000 in federal aid and another $7,000,000,000 in new fees and taxes. I am simply shocked that no provisions have been made to account for the upcoming shortfalls that are all but certain in the coming years. When our West Coast cousin, California, is on the verge of collapse and the Federal Government borrowing heavily to prop up the entire financial system, any rational human would expect some serious budget cuts. We cannot depend on the Federal Government to continue to provide aid at current levels.

Besides, with an approval rating of 26%, what did Paterson hope to gain by risking the ire of the wealthiest New Yorkers? Now don't get me wrong, those earning over $300,000 probably can afford to pay a few more taxes but when the budget does not contain any real effort to cut expenses, it does not seem fair. Fairness is always key in the tax equation. But then again, the wealthy folk and the rest of us don't count, do we? It seems that public employees and unions are the key to an election in New York State and without those unions, your star is all but faded.

Paterson's star has been faded for so long, how about going down a hero? It does not seem that there can be enough pandering for him to reverse his political fortune and be elected governor for an official term. Now, I don't think like most people but I would wager that a good budget would have been applauded by the rank and file; we would weather the cuts because we have to. Instead we will have to pay more to register our cars, renew our licenses, pay more for health insurance and property taxes, pay more for transportation and everything else.

My goodness, how much do the regular people of New York have to suffer and why do we have to pay so much while doing so? Will New York continue to be worth the hype? I guess it will so long as you have money, work for a union, or are simply flat out poor, you can stay. As long as the budget process remains broken, the legislature remains mired in political shenanigans and the power brokers reek what they sow, the rest of us in the middle class and the young people who don't see a viable economic future may truly have to leave; that does not bode well for the future viability of the state. And Long Island, Fuhgetaboutit!