Free Republic

In between the happiness of Christmas and the promise of the New Year, permit me to introduce a sour note, a hint of a scold. If you're like, well, almost everybody, you're not saving enough. 15% of each paycheck into the 401(k) is the bare minimum you can get away with, not some aspirational level you can maybe hope to hit someday when you don't have all these problems. I mean, obviously if one out of two workers in your household just lost their job, or has been stricken with some horrid cancer requiring all sorts of ancillary expenses, then...

"You see, the only way a society can really increase it's future consumption is to save. and by definition saving is under-consumption, it is a lack of consumption, it represents self sacrifice. But when you save and reduce your consumption today, you have money that you can invest, compound interest, and returns, ultimately you can enjoy enhanced future consumption. In America, we have indulged ourselves in the present at the expense of the future." - Peter D. Schiff 2006

OK, just go to the link. It's mostly based on Paul Krugman's data (yeah, I know), so its suspect, but the jist of it is that if the government runs a surplus, it's on the back of the private sector, who will have a negative savings and investment rate as a result. Is this true, and, if so, is it possible to have a surplus and shrinking national debt with a growing economy that saves money? Hoping someone who understands this better than me can explain it.

I gave up cable TV a few days ago. I watched perhaps five or six channels, at most, and it just wasn't worth the money. Now, I have no TV at all since my set is pre-digital and I don't have an antenna. What now? Do I have to get a special antenna? I would like to have at least broadcast TV if only for sports.

At one time, having a dedicated land-line phone in your house was a requirement. Like heat or air conditioning, every house had it. With the advent of cell phones I have found it impossible to justify the cost of keeping a land-line phone—I just don't use it that much anymore. When you include taxes, the minimum cost of having a land-line phone in the house (in my state) is $45 a month ($540 ayear). I only used the land-line phone for 5-10 calls a month, which worked out to be over $5 per call. I thought about getting a land-line...

Establish smart spending habits. Live like you're poor. How do you do that? Drive your cars into the ground, don't eat out very much, avoid expensive and potentially unhealthy processed foods, buy food in bulk, buy just enough clothes to fit your needs, and use public transportation. ... Use credit cards only as a convenience to avoid carrying cash; limit your credit card spending so that you can easily pay off the balance each month. Make every dollar count with your spending, so you can free up money to invest in the future. Get healthy. One of the best things...

NEW YORK (AP) -- More than 8 million consumers stopped using credit cards over the past year. The decline stems from a combination of consumer choices and bank actions. An analysis by credit reporting agency TransUnion found that use of general purpose credit cards bearing MasterCard or Visa logos, or issued by Discover or American Express, fell more than 11 percent in the third quarter, compared with the July to September period last year.

Here’s a piece from the Economist’s Buttonwood blog on the West’s savings problem: people simple simply do not save enough. That’s true enough. With striking exceptions in certain countries, they don’t. There are plenty of reasons for this, but the author passes too lightly over the disincentive role played by taxation, simply noting:   The tax system varies from country to country, but it is quite common for interest payments to be tax deductible while interest receipts are not. Indeed, it is hardly surprising that many people view their houses as their nest eggs, since in addition to interest deductibility (in...

In George Orwell’s brilliant novel Nineteen Eighty-Four, one of the characters, Syme, in discussing the nature of Newspeak, says “It’s a beautiful thing, the destruction of words.” Newspeak was a systematic attempt by the dictators of Oceania, a totalitarian society eerily similar to North Korea, to control thought by eliminating words that gave rise to ideas they disapproved. What Syme and Orwell are talking about is that the destruction of words is the destruction of ideas. There is a parallel to this in contemporary economic thought. Mainstream economists, Keynesians, Neo-Keynesians, and Neoclassicists, would have you believe that what common sense...

What do banking crises have to do with consumption? Jul 4th, 2010 by Michael Pettis Just three days after returning to Beijing from New York, I had to leave again, this time to a series of conferences in Torino, Italy, so it is hard to do much writing for my blog, especially since I won’t spend my free time in the hotel when there is so damned much food out here that urgently needs sampling. Still, I did want to write a hurried note about a topic of conversation that came up a lot while I was in the US...

Rarely has the dismal science of economics inflamed such passions. While the "cuts versus growth" debate has been building steadily for more than a year on both sides of the Atlantic, over the past week it has exploded into open international hostilities. A compromised form of words will already have been agreed for the communiqué to follow this weekend's meeting of G8 and G20 leaders; the sherpas who do the preparatory donkey work for these stage-managed events will have ensured it. But behind the anodyne platitudes of any statement, the tensions have reached fever pitch. Gone is the co-operative consensus...

Do you remember candidate Barack Obama offering his hope-and-change platitudes in front of the fake Greek columns during the Democratic convention? Or, earlier, pontificating at the Victory Monument in Berlin? Why didn’t an old cigar-chomping Democratic pro take him aside and warn him about offending Nemesis? She is the dreaded goddess who brings divine retribution in ironic fashion to overweening arrogance. Or maybe a friend could have whispered to Senator Obama to tone it down when he was merciless in damning the Bush administration for its supposedly slow response to Hurricane Katrina. Obama railed that Bush showed “unconscionable ineptitude.” Obama...

Japan nearing debt crisis, says ex-BOJ Taya May 17, 2010 TOKYO, May 17 — Japan is likely to face a sovereign debt crisis in three to four years as its current account balance is expected to fall into deficit, former Bank of Japan board member Teizo Taya said today. “Three to four years from now I expect a sovereign debt crisis to hit Japan and long-term interest rates to surge,” Taya said in an interview with Reuters. He said the government would probably only start reforming the tattered public finances after such a crisis emerges, driving up government financing costs....

More than 200 million free energy-saving light bulbs have been sent to households over the last two years by energy suppliers. The mass mail-out was caused by gas and electricity suppliers trying to hit Government targets to reduce carbon emissions. However, Which?, the consumer watchdog has calculated that each household has ended paying £45 each through higher energy bills to fund the scheme, even though many consumers objected to being sent the bulbs. Many complained about having to go to the Post Office to collect what they thought was a parcel, only to find it was a bulb that did...

Alan Greenspan traces housing bubble to collapse of the Soviet Union Fall of USSR pushed hundreds of millions of workers into global market, fueling savings glut that drove down rates, former Fed chairman says Kristina Cooke New York — Reuters Published on Thursday, Mar. 18, 2010 1:30PM EDT Last updated on Thursday, Mar. 18, 2010 6:53PM EDT Former Federal Reserve Chairman Alan Greenspan, whose legacy has been tarnished by the global financial crisis, on Thursday laid out a scholarly defense of why Fed policy did not fuel the housing bubble. Mr. Greenspan did offer somewhat of a mea culpa, though,...

Is it too late to save your retirement? For many, the answer is surely yes. News out this week shows that 29% of those who have already retired have saved nothing at all to support themselves, while only a third have saved at least $50,000. To put this in context: A retirement account of $50,000 will provide a 65-year-old man with an annuity of just $4,000 a year. Yet according to the latest annual retirement survey from the Employee Benefit Research Institute, a nonprofit think tank in Washington, two-thirds of those in retirement don't even have that much set aside....

Former U.S. Army Master Sergeant John Hatley is now serving a forty year sentence in Leavenworth prison. He was convicted by a 2009 Court Martial of murdering four Iraqi insurgent arrestees in Baghdad following a 2007 ambush and firefight, and dumping the bodies into a Baghdad canal. Two other Sergeants with the Alpha Company 1-18 1st Infantry were also convicted and sent to prison. Hatley’s wife, Kim Hatley, is leading a crusade to win clemency for her husband. I recently spoke with her by telephone. A veteran of six years as an Intel-analyst and Crypto-analyst with the U.S. Army 18th...

SAVING FAITH What Does It Include? "For by grace are ye saved through faith; and that not of yourselves: it is the gift of God: Not of works, lest any man should boast. For we are his workmanship, created in Christ Jesus unto good works, which God hath before ordained that we should walk in them." (Ephesians 2:8-10) "This only would I learn of you, Received ye the Spirit by the works of the law, or by the hearing of faith?" (Galatians 3:2) Individuals can not be saved until they realize, being convinced and convicted by God's Holy Spirit, that...

Las Vegas Mayor Oscar Goodman on Wednesday said President Barack Obama was a “real slow learner” for once again insulting Sin City as a place of reckless spending, the Las Vegas Sun reported. “He has a real psychological hang-up about the entertainment capital of the world,” Goodman said during a press conference called in response to Obama’s latest Vegas gaffe. “I want to assure you, when he comes, I’ll do everything I can to give him the boot back to Washington to visit his failures back there,” Goodman told reporters. Goodman, who switched party affiliation from Democrat to Independent last...

This was the year of the return to financial sobriety — if you judge such things by the nation’s personal savings rate. That rate — which was 4.4 percent in October, according to the Commerce Department’s Bureau of Economic Analysis — subtracts what we collectively spend from what we make and then expresses the result in percentage terms. In 2009, it has ranged from a low of 3.4 percent in February to a high of 6.4 percent in May, which was the highest figure since 1993. In the decade and a half since that last high, gains in the stock...