My dad taught me to save.
One of his lessons when I was very young was that he would point out a guy that drove a new Mercedes that he knew was in financial trouble and then he pointed out a fisherman that he knew was a saver and drove a beat up old pick up truck.
The point he made was that it didn’t mean anything if you made $125K per year but spent $130K per year. The guy that made $50K but saved $15K was ahead.
That’s why I feel like all of this stimulus and crazy low interest rates is so counter-intuitive to everything my dad taught me.
The incentive to save is gone because banks can’t offer you a decent rate of return because the government just keeps printing money.
They have tried to do away with the business cycle of boom and bust by rewarding companies that make shitty business decisions by bailing them out instead of letting them fail and letting the responsible company that kept a strong balance sheet to buy them at auction prices, and they do the same thing for people that are irresponsible with home purchases.
They place the blame on the lenders. At what point is someone that is signing a mortgage responsible?
I feel like both parties have completely sold out our future and the answer is always to print more money to bail us out.
The reason that people are supposed to invest in stocks is because you expect growth and to be able to participate in profits in the form of dividends but these companies hardly even pretend to pay out decent dividends because investors (myself included) have allowed the upper management of these public companies to pay themselves exorbitant salaries and pass on hardly anything at all back to the small investor.
Can you believe that people were upset that they couldn’t invest in the GM stock offering?
Who the fuck in their right mind wants to invest in a shitty company that makes shitty cars who has already proved that it can’t manage itself and can’t compete worldwide because of the ridiculous amount of money it has to pay it’s union workers and pensions? and yet people are tripping over themselves to throw money at this company????
So all the talking heads on tv say that they want the American consumer to spend-spend- spend, and I’m scratching my head saying why wouldn’t they want people to save- save-save, and possibly be able to take care of themselves when they get older and retire at a reasonable age?
How the hell is anyone supposed to ever retire if they are teaching every generation that it is Un-American to save money?
WHEN DID LOGIC GET TURNED ON IT’S HEAD??????
Am I a crazy person? Is there something I’m missing???
was dad wrong???
God help us all.
end rant
Good Morning Gloucester 
It will be a very long time before GM trades in the mid-50’s (the break even point). Layer on top of that a fiercely competitive auto market that will barely break the 12 million mark anytime soon, a management team that has proven nothing, and unemployment that will remain at these levels for the foreseeable future. More attractive returns and opportunities exist elsewhere. It’s all hype and you’d be a fool to go anywhere near this.
Shorts? Maybe sooner rather than later.
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The movie “Inside Job” at the Mall is a good place to understand what happened.
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Joey, your dad was a smart man. You’ve touched a bit of topics here and I’ll try to keep this post short to avoid my rant 🙂
First of all, the people that are saying spend, spend, spend most likely benefit from tax money. They don’t get as much taxes if you save, save, save especially with such a low interest rate.
As far as investing, I believe in investing in local companies instead of the huge companies. Sure locals probably don’t have stock but you can buy from them. Buying local (I hope) keeps your money local and (hopefully) continues that local cycle. Big companies probably send money overseas. Look at Facebook. They spend the least amount of taxes because of overseas accounts. A report that came out a month or two ago said they paid around 3% taxes… 3% TAXES!!! What’s your tax rate?
(Oh goodness, this is becoming a rant. I feel the blood flowin’ now.)
Lastly, as far as driving expensive cars check out this video http://www.daveramsey.com/articles/article/articleID/drive-free/category/lifeandmoney_automobiles/ It describes how to drive expensive cars for free. There are a few flaws (watch the video before reading on) like assuming a 12% rate of return. Where can I get that rate? I’ve started saving to hopefully follow the same concept but with such a small interest rate I’ll be happy with paying cash for a new car and starting over.
Anyway, keep on ranting Joey. I think a lot of people (especially in this community) believe the same thing.
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I don’t think you’re wrong. It is insane that commercialism has become our culture and our economy only thrives when we make tons of useless crap and convince people that it is American to buy beyond their means and manufacture artificial demand. It is considered downright un-American to be frugal and sensible in your choices culturally. Your dad was right and TVs should all be thrown out the window!
I do think, however that the current administration is providing a reactionary response to prevent complete collapse and another Great Depression. Intervention in the banks and the auto industry was necessary for the simple fact that so many, many small businesses that provided services to these monolith companies would have tanked too, even though they may be hard-working with concrete balance sheets. The previous administration provided bailouts without reform – while the current administration has made sure that top leadership was replaced. Also, the money we invested in the auto industry is being returned to tax payers in the form of return on investment – it wasn’t just a gift. No one thinks it was ideal, but a Great Depression so my dad says, was much much worse.
We need restructuring to not allow these large companies to be so pivotal to our economy (trust-busting, monopoly-busting) and some of the financial reforms are trying to accomplish some of this control with oversight. (The previous administration considered this un-American). I’m all for big-time monopoly bust-ing and law enforcement on price fixing and false advertising. No one should be able to put a photo of a traditional farm on factory farmed, ammonia-bleached goop. I have no idea where traditional ethics and morals went, but everyone it seems has gone mad and sold their soul to allow this in exchange for money or cheap plastic crap. More than that though, we need an economy that doesn’t rely on manufactured demand for stuff. I’ve no idea what this would look like, but I’m pretty sure everyone has enough plastic crap and our garbage issue (for our children to deal with) is enormous.
We need to create more service-oriented infrastructure with repair, recycling, and fixing stuff instead of having it cheaper to throw things away. That would provide a lot of skilled labor opportunities. Investment in green or alternative energy sources would help stimulate the economy while increasing our national security by not putting all our eggs in one basket. We also need to create our own stuff instead of allowing cheap imports. Everything we cleaned out of our grandparents house said Made in the USA on it and now it’s difficult to find. Health insurance is an enormous issue. Almost everyone in my family is self-employed and health insurance is one of the biggest preventers of entrepreneurship in the country. Health insurance costs more than our taxes, we get next to nothing for it, and most of the money goes into the pockets of CEOs, marketing departments, lobbyists, and whole departments of lawyers whose sole purpose is to fight legitimate claims until you die. Health insurance is killing the country, not social security. Social Security is in danger by the same amount that our national security budget RAISES each year. So don’t believe the hype that we need to replace it – it’s one of the most frugal, well-run social net programs this country has.
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This sums it up to me.
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Don’t get me started Joey…..I agree with you and your very wise Dad!
I cringe at the thought of ending the Bush tax cuts, for the time being, how can we afford to pay these huge new taxes? Why should we be the ones to continue to bail out their mess?
Let Washington clean themselves up first – If I saw departments making any cuts, instead of giving raises, and really making an effort, I’d be happy to do my share.
With that thought – Happy Thanksgiving to all – we still do have a lot to be thankful for.
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Yeah Joey, I also agree with you. Say no more Elaine Marie…LOL… Because you know I could, but I’ll be good. Only because the 4 letter words would probably start flowing & then I’d piss someone off. Me being the rebel I am…LOL…
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