They listen when you complain.

Today I read some political news that truly cheered me. No, really. It turns out that public outcry — ordinary citizens calling and writing their elected Congressmen — turned back an egregious attempt by certain Republicans in the House of Representatives to substantially loosen ethics rules:

Rep. J.D. Hayworth (R-Ariz.) said during a break in the meeting that the “indictment rule” was restored in part because of complaints that members had heard back home. “Constituents reacted,” he said. “We’re blessed with a leadership that listens.”

[snip]

Rep. Christopher Shays (R-Conn.) called the planned ethics changes “a grave mistake.”

“Those of us who were here in 1994 remember we gained our Republican majority in part because we argued that as public servants, we have a responsibility to the American people to maintain the highest standards of conduct,” Shays said.

Brendan Daly, a spokesman for House Minority Leader Nancy Pelosi (D-Calif.), said: “Even for Republicans, this proposed change was unconscionable. The issue simply became too hot for them to handle, so they had to drop it.”

There are other ethics rules changes still under consideration, so if you think Congressmen being held to ethical standards is good — and keep in mind how many of them ran on a platform that stressed “values” — be ready to write some email.

But before you hit send, there are two other issues where your elected officials need to know your opinion. The media says the two big issues for this Congress are Social Security and judicial nominees.

As important as judicial nominees are, it is also important to look at the fellow President Bush has nominated for the other side of the bench, Attorney General Nominee Alberto Gonzales. As you form your opinion about this man, you must remember that he is the fellow who helped write the rules on interrogation techniques that are in use at Abu Gharib and Guantanamo. You also need to know that the White House is trying to gloss over that fact. They wouldn’t hide it if they were proud. Regardless of what you think of the people being held in those facilities, the fact remains that anything we do to them becomes fair for enemies of our nation to do should they capture American soldiers as Prisoners of War. If you need a reason why torture is bad, there you are.

The other thing that your elected officials need your opinion on is Social Security. There is still some hope among moderate Democrats that a truly bipartisan solution to “reform” can be made. I think such appeasement strategies are doomed to failure. Private Retirement Accounts are not going to work. If the goal is to increase the amount of retirement funds Joe and Jane Average has in the stock market, then increase the amount they can contribute to their IRA, but don’t pretend diverted Social Security money won’t be eaten by fees and unpredictable returns. A terrific summary is available from a guy I generally don’t like, Mark Cuban. A choice bit:

[W]hen companies were given the chance to make investments to meet their obligations to their pensioners, they were unable to do so. They had the option of taking on more risk, or playing it safe. They took on the risk and lost…. [W]hen it was all said and done, when corporations took on the job of investing for the financial security their retirees, they were unable to do so. They are now turning to the government funding of The Pensions Benefit Guaranty Corp with the expectation of being bailed out. If the experts that run our pension system had the expectation of financial protection by the government if they failed, do we really think that all of us wont have the same expectation?

The other thing to remember about what we are told is an impending Social Security Crisis is that the nice folks at the Social Security Administration have been aware of the Baby Boomers for quite some time. So they have taken the surplus they have now and put it in nice, safe United States Savings Bonds. This leads economists such as Paul Krugman to say:

The short version is that the bonds in the Social Security trust fund are obligations of the federal government’s general fund, the budget outside Social Security. They have the same status as U.S. bonds owned by Japanese pension funds and the government of China. The general fund is legally obliged to pay the interest and principal on those bonds, and Social Security is legally obliged to pay full benefits as long as there is money in the trust fund.

There are only two things that could endanger Social Security’s ability to pay benefits before the trust fund runs out. One would be a fiscal crisis that led the U.S. to default on all its debts. The other would be legislation specifically repudiating the general fund’s debts to retirees.

That is, we can’t have a Social Security crisis without a general fiscal crisis – unless Congress declares that debts to foreign bondholders must be honored, but that promises to older Americans, who have spent most of their working lives paying extra payroll taxes to build up the trust fund, don’t count.

It is time to make your voice heard. Write your Senator and Representative. After that, if you’d like something literally fluffy to think about, here is a map of library cats around the world.

Happy New Year

May 2005 find you happy and healthy, and may there be Peace on Earth.

One thing a lot of people do at this time of year is review their financial situation. As you know, this is not a joyous thing for many people. Way, way back, I wrote a little piece on Investing. Not only do I have a lot more readers now, but it bears repeating anyway.

Investing (n.) spending money with the reasonable expectation of receiving more money in return at a later date.

Please notice, there has to be money spent, and it has to be reasonable to get more money back. Thus, neither lotto tickets nor insurance are investments. If someone comes to your house to talk to you about investments and starts talking about life insurance, throw them out; you have to die to collect.

The other thing to remember about investments is that you are falling behind if your return is less than the interest you are paying on your debts. It’s one thing to say real estate is an investment with 6.34% average annual return since 1968 and 10% in 2004 when the interest rate on a standard 20 year mortgage is 5 7/8%. If, however, interest rates continue to slowly rise — as economists expect — this may no longer be obvious. I do not include the mortgage deduction when figuring this because a deduction is not money you receive, but rather a discount on the taxes for money you have already spent.

Using similar logic, you should really look closely at the brokerage statement if you have returns of 9.3% (assuming you matched the S&P 500) and are paying more than that on your credit card balances. This is a big, common problem, and if you can get rid of some debt, that is better than having underperforming “investments.”

In closing, I bring you the 25 Dumbest Quote of 2004, a thoroughly bipartisan list including President Bush, John Kerry, and even pop star Jessica Simpson. Or, this account of the Christmas Tsunami and the scientists who didn’t know who to call from the New York Times. I must say, it reads better than the script to last spring’s awful made-for-tv movie, “10.5.” Finally, the BBC tells us about something that might actually be evidence of climate change near the arctic circle, if not global warming.

Tis the Season to Get a Gym Membership

Christmas is over, the clearance sales are picked over, the Christmas cookies are getting stale, the roast beast is mostly gone, and the time has come to consider the New Year fast approaching.

Once more, retail-land is getting rid of those winter clothes, because goodness knows we all want to buy shorts for January. And of course, if you want to look good in those shorts, you may want to pay attention to how much of this week’s Target circular is dedicated to workout gear.

You’ve heard the figures before, and they aren’t getting better: about 2/3 of Americans are overweight or obese. The best thing we can say is yeah, but at least Americans are smoking less.

I have written my thoughts concerning weight loss before, but some things bear repeating, revising, or additions. Disclaimer: I lost a bunch of weight some years back and kept it off; so did certain other members of my family; right now I know people who are in the process of losing what I consider to be a lot of weight, and I would like congratulate them for their progress in a very difficult task.

First, BMI is not a crock. It is not the only thing a person should consider when looking at his or her weight, but it does mean something. Unless you are a professional athlete –in which case, defer to your trainer’s judgment — it is worth getting your BMI to 25 or lower. Frankly, the overwhelming majority of people who talk about the inaccuracy of BMI are overweight or obese.

You don’t have to buy her book, but one thing Susan Powter was right about is that you do have to move and you do have to eat. Losing weight is not as simple as skipping meals or bouts of self-destructive exercise. In fact, skipping breakfast or lunch is counterproductive, as your body thinks it is smarter than you and will hoard calories until the self-induced “famine” is over. Breakfast really is important, and should ideally be something nutritious.

Next, added sugar is still the deadly enemy of weight loss. I am not talking about the natural sugars you will find in fruits and vegetables, I am talking about sugar, corn syrup, dextrose, fructose, glucose, and sugar by any other name. New research keeps saying so, much to the displeasure of the Corn Refiners Association. As I have said before, Dean Ornish never said you could lose weight by switching from Snickers bars to (fat free) Twizzlers.

Calories still matter. You can’t eat huge quantities of even healthy food and expect to lose weight. A thousand calories worth of fresh fruit is still a thousand calories. You have to pay attention to serving sizes, and sometimes what a package calls a serving is unrealistically small. For that matter your body still needs protein. If you fail to eat enough protein, your body will take what it needs out of your muscles, making you less fit. This is particularly true if you do not exercise.

You don’t need prepared foods. This one is tough, but eating a pear is better for you than eating a canned pear (which has added sugar) or pear juice (which has less fiber). You don’t need someone to add sugar, preservatives, colors, and/or unpronounceable chemicals to your food. This counts double for at least 90% of reduced fat, reduced carbohydrate, or other “diet” foods.

Anybody who is trying to lose weight should not consume “sports nutrition” products. If a half hour on the stationary bike is burning 130 calories, and a 20 oz bottle of Gatorade is 140 calories, well, you see my point.

Don’t forget to drink water. If you have to put something in your mouth, let it be water. You might not need 8 cups of water every day, but it’s better for you than a lot of things.

Don’t forget to move your body. I am not saying that you need to buy large pieces of exercise equipment, or sign up at the YMCA. I am saying that physical activity is good, even if it’s a brisk walk around the mall — without a latte! It has to be something you can (and can stand to) do 3 to 6 days a week, every week. If you are claiming lack of time, maybe you can find or think of an exercise regimen that can be done during your favorite TV show. Don’t worry if it isn’t “fun.” It isn’t about “fun;” it’s about how you look in the mirror.

Finally, your body is the result of your lifestyle. This means several things. First, you will have to make changes to lose weight. Second, you will have to maintain certain of those changes if you intend to keep weight off. Funny thing, if you go back to what made you fat in the first place, you will get fat again.

You can do this. In fact, you are the only person who can get you to do it.

Good Marketing, Bad Marketing

This week I received marketing materials from two competitors. Realtors, in fact.

One was a plastic bag, left by my front door while I was away. As paranoid as people are about terrorism, he should consider it a victory that I brought this bag inside at all as opposed to calling the local bomb squad. It contained a “complimentary luminary kit” (that’s a candle and a paper bag), a phone list for local ski lodges, and contact information. I do not know this realtor. I have never heard of him, and will likely never hear from him again. He has spent quite a bit of time and money putting these little bags out around the neighborhood. There is nothing in this bag that will remain in my home next week — except maybe the candle.

In short, I will not be calling this man, and I certainly won’t be generating a commission for him.

The other item was mailed to me by the realtor who helped me purchase the very house I sit in. It is a desk calendar. It is neutral in decor, nice and heavy, and has a little pocket in the front cover with 2 of his business cards. Not only is this item likely to sit on my desk all year — incidentally keeping his contact information handy — I am likely to give one of the business cards away to someone who needs a realtor. This might have cost more than a paper bag and a candle, but I think it’s better marketing.

Odds are very good that even if I don’t buy or sell a house in 2005, I will generate future revenue for this realtor.

It is almost impossible to run a successful business without some kind of marketing. When considering your marketing options, be sure to pay attention to the return on your investment.

Christmas is Ruined and It’s All Your Fault!

…At least that’s what the retailers are thinking. This Forbes article outlines the ways in which you, the consumer, have disappointed retailers. Keep this up and Santa will be giving you… oh I don’t know, something practical.

Everybody knows a turkey and some mistletoe help to make the season bright, and that the Christmas shopping season is the time of year when retailers make most of their profits. But this year, consumers — the people who used to be called customers — are shopping judiciously. Specifically, they are concerned about debt.

At long last, consumer debt worries are coming home to roost. Half of all Americans are concerned about their debt levels. That includes one in five who worry about their debts “all the time.” About one in ten isn’t even sure how much money they owe. A lot of that debt is on credit cards. It’s pretty serious; if this sounds like you, read the rest of the article:

Americans are declaring bankruptcy at record rates, with one in every 100 families affected by a bankruptcy…. Americans are now carrying $683 billion in revolving credit card debt. That’s not the amount we charge every month; it’s the outstanding unpaid balances on which people pay interest. And, according to a report by Cambridge Consumer Credit Index, 47% of the people who paid less than the full amount on their credit card bills in a recent month, made only the minimum payment due. In fact, only 13% of Americans with an outstanding balance could afford to pay more than half the balance.

Many people are having trouble paying the rent, let alone having a lavish holiday with lots of gifts under the tree.

Finally, I bring you these Christmas tidings: a majority of Americans believe the literal Biblical Christmas story; but the figure that frightens me is that 15% of Americans believe that Christ will return in their lifetimes. Think about that. More than one in eight Americans believe The World Will End before they die. When that is what you believe, what point is there in worrying about the environment, or Social Security, or much of anything else beyond today’s needs?

Never mind that everyone that has ever said they knew when the world would end has so far been proven wrong. Knock on wood.

Owning up to Reality

We’ve been hearing a lot about the Ownership Society. What the heck is the Ownership Society? According to the Cato Institute:

An ownership society values responsibility, liberty, and property. Individuals are empowered by freeing them from dependence on government handouts and making them owners instead, in control of their own lives and destinies. In the ownership society, patients control their own health care, parents control their own children’s education, and workers control their retirement savings.

Don’t you get warm fuzzies just reading that, the radical notion that people should be responsible for themselves and their own families, and nobody has the right to interfere? There is, of course, another way to state that paragraph: eat what you kill.

The Bush Administration has been using this idea of the Ownership Society as a big umbrella to cover everything from school choice (vouchers and charter schools) to Social Security “reform” (private retirement accounts) to tort reform (protecting corporations from you).

The bottom line is that “eat what you kill” is great when you are a big predator, not so great if you are not. To succeed in an Ownership Society, you must have money with which to Own. If you don’t have the money to sink into very illiquid Health Savings Accounts and Private Savings Accounts and A House, the opportunities offered seem rather hollow. Most people don’t have the money or the skills to succeed in an Ownership Society. Indeed, most Americans are in debt, and not just mortgage debt.

Which brings us to the lynchpin of the Ownership Society, the idea that home ownership is good and desirable for absolutely everyone. Some people are finally starting to question the universal wisdom of that idea; not saying that owning real estate is bad, but rather that it is not for everyone, and that not everyone will benefit from owning a home. A plethora of new lending products and low down-payment options means that people who really can’t afford to do so are buying houses. And the fact that Fannie Mae and Freddie Mac are willing to buy the mortgage, regardless of quality, exacerbates the problem. For that matter, the idea that home ownership is universally good assumes that people can afford to own quality homes in decent neighborhoods; homes that can be maintained, are safe, and will appreciate in value. This is not necessarily so. And I haven’t even touched on the fact that home ownership puts a geographical damper on employment and educational opportunities.

The Ownership Society is a great idea for the Owners at the top. For the rest of us, it’s the Debtor-ship Society.

Trade Ya

First, by way of follow up, two friendly reminders: the TSA’s Trusted Traveler System is still not a get out of the security line free card; and Social Security is not a savings plan of any sort and thus anybody who talks about the “returns” on Social Security either does not understand the system or is trying to manipulate you.

The day’s headline economic news may be the Fed raising short term interest rates, but the Fed is not acting in a vacuum. Part of the Big Picture for the United States economy is the record trade deficit. Not only does this mean that we are importing more stuff than we are exporting, month after month, in spite of a low and dropping dollar, it means that more money is leaving the country than entering it each month. As if that were not bad enough, the trade deficit is one of the factors used to calculate Gross Domestic Product, so don’t be shocked if GDP estimates get lowered.

The Bush Administration says this is mostly because of high oil prices, which OPEC keeps high because the dollar is weak and oil trades in dollars. Another huge factor is our trade deficit with China, which is going to get worse after the first of the year, when textile quotas are eliminated. Many of the 700,000 American textile workers may lose their jobs, but we will all be able to buy cheap anti-microbial underwear.

The part of the trade deficit that nobody is talking about is that the United States no longer has a trade surplus in agricultural goods. It is difficult to overstate the importance of this fact. Over and above the fact that there is no longer a food export surplus to offset other imports, over and above the impact on the family farmers and ranchers for whom we are told “death tax” repeal was critical, over and above the dizzying drop from a $13 Billion annual surplus in 2001 to no surplus now.

In addition to being dependent on foreign nations for oil, we will soon depend on foreign nations for food.

Now does Tommy Thompson’s warning on food safety make more sense?

Oh the Job Market Outside is Frightful

It turns out that jobless claims are on the rise, and now sit at the worst levels since September. Keep in mind that when the Department of Labor says that, seasonally adjusted, 8000 more people made a first time claim for unemployment insurance, they really mean an increase of 147,256. That link only contains the most recent information, and thus will be gone next week! Remember, these numbers do not include temps, part-timers, and contractors because they are not eligible to receive unemployment benefits. The point remains that there was a larger increase in the state of Wisconsin alone (+10880) than the official seasonally adjusted headline number. If you prefer to think of it this way, the increase in people claimed unemployment for the first time last week exceeded the number of jobs created in all of November.*

Where else on earth does 8 equal 147?

In other bad news for the American economy, productivity growth is down and over 100,000 layoffs were announced in both October and November. Remember, that’s only announced layoffs at companies big enough to bother with press releases about such things. John Challenger, the guy whose job is to be an expert on layoffs and their effect on everything else says “The biggest worry for the economy is that the large number of lower-middle class and middle-class Americans struggling to make it paycheck to paycheck will be short of discretionary income during the holiday shopping season.” Plain and simple, many people will not have money for Christmas presents.

Meanwhile, we have a President who thinks that making sure 4th graders can read will help their parents get jobs.

Finally, I leave you with the most balanced item on currency problems that I have seen to date.

* This is a net jobs created figure, so lay-offs are already taken into account.

I reed, rite, & count reel gud.

If you are a supervisor, manager, or any other businessperson who hires and directs others, you may already know what follows. If not, I am about to scare you.

American students, by age 15, have fallen behind their peers in many countries. In fact, only 10% are considered to fall in the top two most proficient groups, despite the fact that 72% say they get good grades in math. We aren’t talking about esoteric problems involving mathematical minutia, either; the test the students were given “assesses the abilities of 15-year-old students from 41 countries to apply what they have learned in school to real-life problems.” Problems much like those adults face on the job and in their lives. A calculator won’t help with these problems unless you know what to calculate.

One expert excuses the poor performance of American teenagers by pointing out that our classes focus on “analytical and theoretical” issues, saying “You could have American kids knowing more math, it’s just that they may test lower than other countries because their learning is not geared toward practical application.” Call me old fashioned, but practical application of math is what most adults will do when they balance their checkbook. I think little of “analysis” that does not result in accurate “application.” This explanation is akin to saying we shouldn’t be expected to read newspapers, but we studied Shakespeare in High School!

Apparently, there is no great secret for how to prepare students to do well on this type of test. Throwing money at schools was not the answer, instead the critical factors were “a good relationship between students and teachers, pupils eager to learn, an environment in which mathematics classes do not provoke anxiety, and constructive rules to enforce discipline.”

Let me say that again: it is well known how to teach math to students, yet American students are not learning.

In general, effective teaching methods are no great secret, just sometimes ignored, derided as the stuffy, boring old way things used to be done. It is as true for reading or any other subject as it is for math.

And, no surprise, we have a crisis of language skills in the United States too. We are a nation that can’t tell the difference between s and ‘s, that can’t put together a coherent memo, that can’t read instruction manuals. Even some college educated professionals have problems when it comes to written English. The addition of e-mail to the workplace has made this all the more obvious to employers.

Some people are under the delusion that public education does not effect them. They think that because their kids are grown up, or they have no kids, that schools are none of their business. The truth of the matter is that unless you live in a cave, every day you interact with and depend upon people who were educated in public schools. Your doctor, lawyer, hairdresser, landscaper, the cashier at the grocery store, the FedEx delivery guy, all very likely went to public schools. You even depend on public schools to teach enough reading that the guy in the next car understands “No Left Turn” and doesn’t crash into you.

The history and usage of the word “dude” is probably more interesting than the rules of grammar, punctuation, and mathematics. All things considered, I’d rather have an employee who understands how to solve everyday problems using math to one who understands the proper use of the term “Dude.”

Okay, that’s enough.

I confess, when it was very first suggested that airport screeners should be employees of the Federal Government, I thought that was a good idea. I mistakenly believed that this meant they would have to meet the same standards as many other Federal employees, including that they pass a civil service exam and have their background checked. I was wrong. TSA screeners don’t even strictly speaking have to have a GED.

So, here we are 3 years into the Age of Terror-Threats. Today, we have a new nominee for Secretary of Homeland Security, an emotionally charged title which is supposed to make us think of Mom, Baseball and Apple Pie (and maybe ’57 Chevys), but unfortunately makes me think of European Nationalism. I hope Mr. Kerik is wearing protective gear, because he is about to walk into a big mess.

I am speaking of a problem so big that even editorial cartoons are piling on. I speak of invasive searches at the airport. Here is one account, another account wherein it is made clear that the TSA is not permitted to clarify the situation, and a rebuttal from someone who obviously does not understand the problem. To be selected for such a search, one does not need to set off any alarms, merely have an unusual shape. There is some evidence that the TSA doesn’t even follow their own rules when conducting such searches. Such incidents may well be severely under-reported due to a fear of being placed on a Do Not Fly list.

Just because people are not submitting formal complaints to the TSA does not mean they aren’t complaining.

But it gets worse than this. There is plenty of evidence that many screeners are abusing their authority, abusing the fact that nobody gets on a commercial airliner unless they say so. Here is an account of alleged strip searches at one airport and a story of a man who has experimented with the TSA’s rules regarding shoe removal, entitled “Screenings at airports confound men, too.”

Now think about this. We are worried about miniscule quantities of explosives being hidden in women’s bras, but we are only inspecting 10-20% of the tons of cargo that go in the very same airplane. If you wrap a Christmas present in your carry-on or checked luggage, it may have to be unwrapped even though it will be on the plane with you; if you mail it, the same package may go on the same airplane without you, and receive no inspection whatsoever.

I would advise you to write your Congressional representatives, but it has been made clear that Congress will only be considering issues that please “a majority of the majority.”

When can we stop pretending this has anything to do with keeping us safe and everything to do with keeping us in line?