Sushi Money

So now we read that many consumers are spending their tax rebates to cope with the soaring cost of living?   No kidding!  It should be no surprise to anyone that inflation is taking an enormous chunk out of the typical family’s monthly budget.

In some areas we are cutting back and spending less money.  But the real problem for consumers is that we’re spending more money and getting less for it than ever before! 

I haven’t run the numbers, but I know we’re paying a lot more for basic needs this year, and it really has changed our driving and consumption behavior.  

Joseph LaVorgna, chief U.S. economist at Deutsche Bank, thinks at least half the rebate money may go toward energy costs alone.

“It’s not going to give you the bang for the buck as originally envisioned,” he said. “The odds of it having a longer-lasting impact on the economy are less. … People were not planning to use so much of it on energy and food.”

Diane Swonk, chief economist for Mesirow Financial in Chicago, also estimates that consumers will spend more than half of the rebates — but much of it on the higher cost of living, citing evidence of a “very stressed consumer.”

Although the government formally says inflation is under control, you don’t have to walk very far to find people who are paying for huge increases in food, transportation, and services.   We are seeing “fuel surcharge” on receipts and big ticket items more frequently.  And when we head to the airport next week to visit relatives for 10 days, we may have to pay for our checked baggage. 

There’s supposed to be multiple investigations taking place in the commodities markets.  It’s never that simple, but maybe the government will close a few loopholes and change the laws that allow rampant speculation in the energy markets.

If you are younger than thirty-something, you probably haven’t given much thought to Medicare or what kind of long-term care insurance you’ll have in your senior years.  For many of us, our first experience with the bureaucratic maze that is Medicare comes in our forties or fifties when we are helping aging parents navigate their health care options.  That can be a sobering experience as we realize that someday we’ll be facing those same challenges.  And for those looking ahead or living in retirement, the questions about general healthcare and medicare become increasingly important. 

It’s no surprise that healthcare issues are so confusing.  Most of us are still trying to figure out our financial retirement needs let alone examine how much we might need for health care in our senior years.   That’s why Long-Term Care is such an important financial planning issue.  Have you really looked at long-term health care insurance plans yet?  Most of us have not. 

What is Long-Term Care?

In general, long-term care insurance provides financial assistance with physical and/or emotional care for a person who is unable to perform routine activities of daily living such as bathing, dressing, preparing meals, walking, using the bathroom, staying safe in the home, managing the home, etc.  This type of care is continuous and may be due to illness or normal aging conditions. 

What sets it apart from other forms of care is that it is required and necessary, and is usually due to illness, disability or some other chronic health care problem.  Long-term care typically involves a person living in a nursing home or other assisted living care facility that provides specialized medical, social or physical services.  But long term care can also be temporary due to a specific need, and is very often provided by relatives or other caregivers in the home because that’s the traditional way we help family members.  Sometimes it’s the only help someone has.

The vast majority of us live at home in our senior years and have relatives or friends as caregivers when we need help with something.  But at some point, many people do need long-term care and it is very expensive.  Formal long term care costs often range from $30,000 to $60,000 a year or more.  According to AARP, the average U. S. costs for long-term care are:

• $5,566 a month for a semi-private room in a nursing home
• $6,266 a month for a private room in a nursing home
• $2,968 a month for care in an assisted living unit
• $19 per hour for a home health aide 

Those numbers can really add up, and that’s the reason that many financial planners believe that without long-term care insurance, you really don’t have a financial plan.  If you’ve planned for most financial contingencies except for long term care, then what happens when you end up spending your life savings to provide care for a spouse or family member?  If you haven’t planned for that possibility as well, then your financial plan may have holes in it.

Why should you plan for Long-Term Care? 
Because, at least 70 percent of people over age 65 will require some long-term care services at some point in their lives.  And, contrary to what many people believe, Medicare and private health insurance programs do not pay for the majority of long-term care services that most people need – help with personal care such as dressing or using the bathroom independently.  Planning is essential for you to be able to get the care you might need.  Source: National Clearinghouse for Long-Term Care Information

Admittedly however, not everyone needs or can afford to purchase long-term care insurance.  Lets be realistic: Long-term care insurance itself is very expensive. With annual costs around $2000 to $3000 for a basic policy in the early years, those cost may increase as a person gets older.  And it’s not designed as forever care.  Long-term care insurance typically covers a certain period of time, for example a three to five year period.  But it can provide longer care, even over the course of a person’s liftetime, but that will be very expensive.   When do most people get long-term care insurance?  Most financial planners advise looking at it in your early to mid-fifties.  But if you wait until your sixties or seventies, the costs may become prohibitive.  The fifties provide a balance of cost of insurance versus affordability based on income and retirement planning needs.

But it’s important to shop carefully and make sure you knowing what type of long-term care policy you are agreeing to.   From an historical perpsective, long-term care insurance is relatively new.  So are the laws and regulations that govern its use, and practically we are just beginning to see how it works out for people.  The concept is sound, and the need is real.  But as with other insurance products, it may be best to get a second opinion in the early years. 

For those who can afford it, long-term care insurance is just that.  Insurance to provide financial assistance in times of need.  Like many other people, I am learning how hard it is to face these realities.  When you’re in good health in your forties, fifties or sixties, it’s hard to rationalize spending a good chunk of money each month on long term care that you only might need. 

But long term care insurance provides valuable coverage for specific life needs, just as auto or home insurance protects a family from catastrophic financial loss due to accident or disaster.  Long term care insurance protects that same family from catastrophic financial costs due to health care factors that many adults face in their senior years.

And the crux of the issue is that Medicare is not going to take care of most long term care needs.  What does this mean exactly?  Well, Medicare by itself will not meet long term care (LTC) needs because Medicare only covers some home health, skilled nursing and hospice care, all of which have degrees of meaning and definitions.  Medicare does not cover custodial care such as cooking food, cleaning a home or providing nursing home related care. 

Medicare will help pay for home care in certain situations such as:

• A doctor certifies that a patient is homebound, meaning it takes considerable effort to leave the home, and
• The individual needs skilled physical, speech or occupational therapy services, or skilled nursing on an intermittent level (less than 7 days a week) or part-tim (less than 8 hours a day) basis.  If the medicare recipient only needs skilled nursing, they must either need it fewer than 7 days a week (even as little as once every 60-90 days) or daily (seven days a week) for a short period of time (usually 2-3 weeks), and
• The doctor certifies the need for home care, and
• The individual receives care from a Medicare-certified home health agency (HHA).

What about other situations where Medicare does help with long-term care?   Well, if you qualify for the home health benefit, Medicare may cover the following types of care:

1.     Skilled nursing services. Medicare pays in full for skilled nursing, which includes services and care that can only be performed safely and effectively by a licensed nurse. Administration of medications, tube feedings, catheter changes, observation and assessment of a patient™s condition, management and evaluation of a patient™s care plan, and wound care are examples of skilled nursing. Any service that could be safely performed by a nonmedical person (or one™s self) without the direct supervision of a licensed nurse is not covered.
2.    Skilled therapy services. Medicare pays in full for physical, speech and occupational therapy. Physical therapy includes exercises to regain movement and strength to a body area and training on how to use special equipment. Speech-language pathology services include exercises to regain and strengthen speech and language skills. Occupational therapy helps you become able to do usual daily activities by yourself, such as eating and putting on clothes. Medicare will pay for therapy services to maintain your condition and prevent you from getting worse; you do not need to have the potential to improve.
3.     Home health aide services. Medicare pays in full for a home health aide if you require skilled services. A home health aide provides personal care services including help with bathing, using the toilet, and dressing. If you ONLY require personal care, you do NOT qualify for the Medicare home care benefit.
4.     Medical social services. Medicare pays in full for services to help you with social and emotional concerns you have related to your illness. This might include counseling or help finding resources in your community.
5.     Medical supplies. Medicare pays in full for medical supplies provided by the Medicare-certified home health agency, such as wound dressings and catheters needed for your care.
6.     Evaluation services. Medicare pays for evaluation services if performed by a skilled nurse or therapist.
7.     Durable medical equipment. Medicare pays 80% of its approved amount for certain pieces of medical equipment, such as a wheelchair or walker.

Obviously it is best to thoroughly research your situation, talk with an informed health care provider, and seek counseling assistance if necessary.  Did you know that your State Health Insurance Program has representatives available to discuss Medicare related issues with you?  If you have questions or concerns, you can call a toll-free number at this Medicare page and speak to someone within your State about Medicare issues.  These counselors will help you meet a local representative to answer questions if necessary. 

For more information please see the Medicare.gov site on Long-Term Care or the National Clearinghouse for Long-Term Care Information.

We had a quiet weekend at home for Memorial Day, and spent the time catching up and visiting with family. Did gas prices keep us from traveling? No, not really, although we are driving less. It was just time to enjoy being home and getting some things done that we’ve been putting off.

We did change our travel plans for the summer however. Instead of driving across the country in a small RV, we’re now flying. It wasn’t a hard decision- we actually found round trip airfare for less than a third of what it would cost to drive the same distance. So this way we’ll have more time once we get there, and save money as well. Up until a few weeks ago the price was comparable either way. But as gas prices have risen, driving became more expensive. Then we found some really cheap fares to fly, so that made it an easy decision.

I would like to have driven though- and stopped at different towns across the country to see how folks are doing out there. Some of our relatives have been on the road for over four weeks and said people seem busier than ever. But reading the news this morning it seems that consumer confidence has dropped to a 15 1/2 year low as reported by the Conference Board Consumer Confidence Index.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. Says Lynn Franco, Director of The Conference Board Consumer Research Center:

“The Consumer Confidence Index now stands at a 16-year low (Oct. 1992, 54.6). Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers’ confidence in the overall state of the economy. Consumers’ inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead. As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead.”

Consumers’ appraisal of current conditions grew more pessimistic in May. Those claiming business conditions are “bad” rose to 30.6 percent from 26.5 percent, while those claiming business conditions are “good” decreased to 13.1 percent from 15.4 percent last month. Consumers’ assessment of the job market was also more downbeat. The percentage of consumers saying jobs are “hard to get” was virtually unchanged, 28.0 percent versus 27.9 percent in April. Those claiming jobs are “plentiful” declined to 16.3 percent from 17.1 percent.

Last week the University of Michigan Consumer Sentiment Survey fell to a 28 year low. Not since 1980 have consumers felt so negatively about the economy.

It’s not hard to understand why with the challenges we’ve faced over the past year. And with gas prices posting record price increases for over 20 straight days, it makes you wonder what’s really going on. It’s like there’s a buying frenzy taking place… kind of like the dot-com boom except this time with oil and energy commodities.

But for most of us it is what it is. We’ll have to deal with it until the government figures out a workable response. Over the past few months, U.S. drivers have indeed cut back on driving, but it hasn’t put a dent in gas prices yet.

But the Fed is reporting that the credit crunch is easing, and even home sales actually increased a little in April. But sales activity is still very slow and the price of single-family homes has fallen quite a bit over the past year.

Do you lie in bed at night worrying about home prices? Most people don’t. We live in a house, and usually plan to be there for a while. For me it’s a decade or longer asset, and not something we plan to borrow money from. But if you’re trying to move or sell a house, it must be a difficult time.

The economic challenges will continue to affect most of us for some time. Unless energy prices moderate soon, it’s going to get a lot tougher out there.

How long are the elected leaders within the U.S. going to let OPEC, oil companies and investors determine the price of oil and the price of gas that consumers across the country pay to put in their cars?  Oh, well maybe that’s the way the free market works. 

But when the price of oil doubles over the last year, there’s something wrong with the free markets.  Maybe they’re not so free after all, and between the oil producing nations, the giant oil companies and enormous investment and commodity trading practices, consumers are paying a premium that just doesn’t seem fair.

So now the politicians continue to blame the oil companies for these problems, wringing their hands over what to do.  Of course there’s enough blame to go around for everyone it seems, even those of us driving gas-guzzling vehicles that cost a fortune to fill at the pump. 

But the Congress itself is also to blame, even though they recently passed the symbolic NOPEC law targeting the OPEC nations for potentially monopolizing oil.  Some journalists have astutely observed that Congress is really doing the same thing that they have accused OPEC of doing:

“This [law] is designed to make OPEC™s activities illegal. But here™s the problem: All that talk about œlimiting the production of oil could apply to Congress just as much it does to OPEC. Thomas Pyle, president of the Institute for Energy Research, comments:

“The Congress itself is guilty of committing the crimes outlined in this legislation. In fact, it is a repeat offender. The only difference between the Congress and OPEC in this regard is that OPEC is willing to produce oil for its citizens and its economies. The U.S. Congress, unfortunately, is not.”

“Pyle is referring to Congress™s refusal to lease more public lands for oil and natural-gas exploration. His group receives substantial funding from the oil industry, but he makes a point that even an environmentalist can appreciate. Congressional Democrats, together with a few moderate Republicans, have killed repeated attempts to open America™s Arctic National Wildlife Refuge (ANWR) for oil exploration, and Congress has barred states from deciding whether to allow drilling on the Outer Continental Shelf in the Atlantic and Pacific Oceans and the eastern Gulf of Mexico. All these actions were taken, in part, to limit carbon emissions. But if NOPEC somehow managed to reduce oil prices (which it will not), it would do so by pressuring OPEC to increase oil production. And any OPEC increase large enough to lower prices would cause far more carbon emissions than any potential increase in American production.”

But what about the oil companies?  If the oil companies are guilty of something, it’s their ignorance and hubris at failing to understand how oil prices are affecting the American economy and consumers.  Instead of defending their profits, which of course is the goal of any business, oil companies should be working with government to solve both the demand questions and the speculative investment concerns. 

So is the price of oil running up purely because of fundamentals with demand and the price of the U.S. dollar?   From a long term view there’s little doubt that the fundamentals and global demand have determined the prices we pay.  But the debate regarding the influence of investment speculation is valid, especially in recent years.

Some have cited that it’s not like other commodities such as corn or wheat.  No one is “growing” more oil, although they could be doing more exploration to find it.  In the face of increasing demand however, and managed (aka OPEC) production, prices are generally going to head up.  Paul Krugman looks at it as a consumption versus supply storage issue, and hence prices influenced by those dynamics.  Is it that simple? 

I guess it depends on how you look at it.  If consumer demand decreases, we would like to think prices at the pump would fall because inventories would rise.  But what if the oil companies also do not demand enough oil purchases from producing entities?  In other words, rather than store excess oil,when the oil companies see reduced demand they simply don’t buy more oil from OPEC and inventories actually fall.  When inventories fall, supply is reduced and prices are going to head up.   So are the oil companies to blame? 

Maybe the oil companies don’t manage demand per se, but they do influence inventory and refinery production immensely.  Are they making money at the expense of the American consumer?  Sure looks like it.  But so are the investment banks and hedge funds. 

Are we in a speculative bubble with oil prices too?  Probably.  But unfortunately, the long term view indicates the fundamentals of supply and demand will be the primary driver governing oil prices.  Without more oil, and greater oil and gas refinining inventories, we will continue to pay higher prices.

So what else could government be doing?  The politicians could provide incentives for building new refineries, and open up regions for drilling both in Alaska and off the coasts of the nation.  One of the oil company executives made a pretty good statement when replying to one of the politicians in congress:

“This is the only country in the world that denies its citizens access to known reserves of oil and gas.”

Think increasing drilling won’t help?  Actually it would help incredibly, but takes time.  For the past decade too many people- mostly politicians- have argued against it, rather than doing something about it.

“If the nation set a goal of increasing domestic production by 2 (million) to 3 million barrels a day by opening up new sources of exploration and production, we could demonstrate to the world that we are in control of our own destiny,” Shell Oil Co. President John Hofmeister told a Senate panel.

It would probably be a lot more than that.  From the National Review article above,

“The amount of oil we could produce is not negligible. Take ANWR, just one of several untouched sites that contain known oil supplies. Based on figures from the Energy Information Administration, ANWR alone could produce enough oil (in 2004, the EIA estimated 900,000 barrels per day by 2025) to make 6.4 billion gallons of gasoline annually. Because producing and refining five barrels of oil requires energy equivalent to one barrel, this translates to a net energy gain of four-fifths that amount, or 5.1 billion gallons of gasoline annually. That is enough gasoline for 13 days of American consumption at the current rate. Moreover, Uncle Sam would make somewhere between $150 billion and $300 billion on ANWR leases over the estimated life of the oil deposit.”

That’s actually a lot of oil production, and would offset and compete with the prices for imported oil. What about off-shore drilling? We could expand or build new refineries if we really wanted to. I wonder if we’ll reach that point… more importantly, we need to develop an energy plan for the next 50-100 years for the nation.

If our elected leaders would simply throw politics aside for a moment (!), maybe we could get off the Blame Train and have that Energy Summit and start working on a way forward for the nation. 

One of these days we’re going to find ourselves not needing quite as much oil with highly efficient vehicles running around the roads.  I believe technology and the stark economic realities will foster the transition to new types of alternative fuels and the demand for oil will drop over time.  Maybe there will be some cataclysmic event or technological marvel that revolutionizes transportation.  Can you imagine what would happen if we discovered something that effectively negated the need for oil-derived fuels for public transportation across the nation?   Energy independence! What a great concept.

Whatever the future holds, the OPEC nations won’t always be showered with U.S. dollars as we buy endless barrels of oil.   Indeed, OPEC really should get smart and start pumping more oil. 

For more on The Oil Conundrum see:

• The Oil Conundrum Part III: Who’s On First?

One trend that a lot of people have returned to is growing a garden at home.  With gas and grocery prices skyrocketing, it’s not hard to see why a backyard garden is a great idea to help the family budget. 

“It’s a trend that started slowly several years ago, spurred by concerns about food safety, food quality, and global warming, say garden mavens. But this year’s gasoline and food price spikes have had what could be called a “Miracle-Gro” effect on the backyard garden movement. This year, 39 percent of people with backyards told the Garden Writers Association they planned to grow vegetables this year. That’s up 5 percent from last year, after remaining relatively stable with only small increases for much of the past decade.”

When the prices of Cows, Corn and Chickens are all heading up, we look for ways to cut back or become more budget conscious, and a garden is really not that hard to start.  It does take a little effort to keep growing, but it is so amazing to pick your own tomatoes, corn or cucumbers.  It’s not only more healthy for you, it also saves on gas and time at the store!  Of course it takes a little time at home. 

But can you think of anything that is more rewarding and that would provide a great experience and teaching tool for the family?  It can be a healthy and instructive way to add a little extra food at home, but there’s more to the story.

…like other garden experts, Ms. Koivula believes there’s also something more powerful and less tangible coming into play. “There are a lot of different reasons to garden this particular year, but I do think there’s also this innate desire in all of us to actually put seed in the ground because that’s how we all fed ourselves years ago,” she says.

Back in Killingworth, Francis Barkyoumb couldn’t agree more. He’s been gardening since he was a little boy, with his father and his grandfather. “Just growing stuff, being outside, nature, getting your hands dirty, teaching the kids about getting their hands dirty, being one with the earth generation after generation: That’s why I garden,” he says.

This year our son wanted “his own row” in the garden, so we helped him plant it.  He needs to learn how to keep the weeds down and the plants watered.  With a little luck and help from us, he’ll see how the plants grow and produce vegetables, and get to eat “his own” food.  It doesn’t take much room to put in a few vegetable plants, and the rewards can be incredible. 

With or without children it’s a nice way to spend some time outdoors.  Amid the hustle and bustle of our days, working in the garden is somewhat meditative.  Taking care of the plants and the soil seems like an extension of taking care of ourselves.  Our bodies and our spirits benefit in far greater measure than our wallets.  So come on!  What are you waiting for?  It’s only May, and there’s still time to get a garden in the backyard this year! 

Spring sure feels good after a long winter, and now getting ready for summer. I find myself heading outside more often to enjoy the fresh air, clean up the landscaping and garage and ponder the various barbecue dinners for those warm summer evenings. I don’t know why, but then I start tinkering around with and trying to improve a lot of things both inside and outside the home.  That’s not so bad in itself, but then I start making a list of things we need from the store that will help fix or improve those things. 

Too many of us go shopping for a host of reasons other than finding something we really need.  We crave adventure and excitement, and it’s fun to buy things.  But after looking around the house and closets, we’re just buying junk that doesn’t help our family’s economic well-being.  If we’re not careful, we end up caught in viscious cycle that I call The Spending Loop.   

So there I am, wandering the aisles of the nearby big-box store filling up the cart with all kinds of stuff.  It’s a self-fulfilling spending loop that I’ve created from both a real and a perceived need to buy “things we need.”  Nothing wrong with that if spending is balanced against needs versus wants.  But too many of us don’t consider the difference.  When I head to the store to buy something, I’m half excited to be getting things that I think will help spruce up the house and keep it looking good.  

Yet sometimes, for all the good intentions we may have, a lot of that newly purchased stuff just ends up sitting on a shelf, and we don’t get around to finishing the projects we were really motivated about a few weeks earlier.   And if we’re not careful, that shopping and “sprucing up the house” can take on a life of its own, until it becomes a habit that takes real money out of the bank account over time, and we’re caught in that spending loop, piling on enormous debt over time. Honestly when I look in the garage and all the closets, I wonder if we really ever need anything else again!  Even the food pantry is too well stocked, but somehow I feel more secure with that. 

While acknowledging my impulse to head to the landscaping store to find just the right tool or hardware item, I’ve made an effort over the last few months to avoid shopping for the sake of shopping and really think about if we need something or not.  The shopping aspect has never really been a problem, but I just realize that I’ll buy things that I don’t really need sometimes.  So while I still make lists and think of things we need to buy to help finish this project or that, I’m now trying not to rush right out and buy what I think we need right away.   After a few days, some of those items don’t seem so important anymore, and the impluse to go shopping is not as strong.

Maybe it’s part of modern society and our conditioning.  When we shop or buy something at the store we feel like we’ve “done” something and that simple act of buying something will help our situation.  Too often all that we’ve done is decreased the cash in the bank or gone deeper in debt on the credit card. 

If you recognize that smiley face above, it seems to imply a certain level of satisfaction or happiness.  Combine that with a shopping environment, and it’s no wonder why the smiley face was chosen to be associated with price comparisons.  Many of us crave adventure, excitement and something “new.”   And whether we admit it or not, we try to fulfill many of those cravings by going shopping, getting a good deal, or finding something “special.”  Let’s face it, sometimes it really is fun and exciting, especially if you’re buying something you really want. 

But it’s short-lived satisfaction for the most part.  The experience and the excitement is momentary.  Far better to seek adventure and excitement in healthy, practical ways such as working outdoors, gardening, hiking or playing sports.

So while I’m in the midst of a host of spring cleaning chores, I’m working on getting all those other things accomplished that don’t cost much extra money to undertake.  If I really think about it, sometimes my desire to go shopping for “stuff we need” is a disguised effort to procrastinate or improve something else so I don’t have to deal with the stuff I don’t want to finish right now.

I’m no psychologist, but I’m sure there’s a host of other dysfunctional reasons that we go shopping, spend money and buy stuff we don’t need.   Sometimes it’s just plain fun.  But it’s too darn easy to go through money like crazy, much to the delight of the retail store business.    I’m still looking at the shopping issue, and trying to educate a child as well.  Even with kids, their eyes light up when they have a chance to buy something.  So we need to find balance and a healthy approach to spending money when we need to, and avoid the cycle of spending money for no reason at all.

Are there other strategies we can use to structure our shopping needs?  Credit and debit cards are really too easy to use.  Is something like the household budget really an effective tool to prevent binge shopping, or buying stuff we don’t need?   Not for me, at least a lot of the time.   Do you see a better way?    It’s a continuing issue for so many of us, and without really looking at the issue within the family, a lot of people are going to struggle financially while remaining stuck within the spending loop.  But it’s time to break free, to be a little more honest with ourselves, and to begin restructuring our goals toward positive, long term financial outcomes.

Have you had enough of recession-talk yet?  I’ve finally reached the point where if we are in a recession, or if we will be in a recession simply doesn’t matter.  U.S. economic growth has slowed down in many areas.  It may slow even more, or it may pick up a bit.  In either case we’re muddling along looking for new ways to grow the economy.  It’s really not that bad statistically, and yet even with mild economic data, the nation’s mood is gloomy. 

œIf you compare where the economy was at the end of March [2008] with where we were at the beginning of the year, there is no question the economy is down by just about every measure, said Martin Feldstein, the former chief economic adviser to Ronald Reagan who now heads the National Bureau of Economic Research, which formally “declares” U.S. recessions.

Many folks are worried about the job market and are struggling with the worst housing slump in decades. But it also seems that talking about what’s wrong with the economy is like a sport or play-by-play event for the media these days. Everybody’s asking, “Are we there yet?” while some people proclaim that the recession is just beginning.

“Even if the capital markets crisis resolves, it does not mean that this country will not go into a bad recession,” said JP Morgan Chase CEO James Dimon, whose bank saw its first-quarter profit fall by half due to the recent collapse of the U.S. mortgage market. “The recession just started.”

Well, okay.  That’s all fine and dandy.  But while the media keeps looking for a story to spin, one of these days people are going to tire of all the negativisim and look for more positive, constructive approaches to daily life and rebuilding the economy. 

It is an election year of course, and the politicians will continue bashing each other for what’s wrong with our current situation.  But they had better start thinking about 2009.  Whoever wins the election this year is going to have their work cut out for them.  I don’t know about you, but come next year I want all the problems solved!  Lower gas and food prices, a growing economy, a rising stock market, and peace across the world.  A little unrealistic to be sure, but sometimes we need to step back and gain a little perspective.

It could always be a lot worse, such as for the more than 18,000 people in China or between 60,000 to 100,000 people in Myanmar who have perished in recent weeks.  Katrina was pretty bad, but was not even comparable to what these nations are dealing with.  In Myanmar the government is barely acknowledging the devastation and not allowing humanitarian aid to reach the people who need it. And while the people of Myanmar wait desparately to get help, their government is keeping the food for its own purposes.  That’s one of the problems with dictatorships. The numbers of human lives affected are staggering to consider, and what is left for the living will take years of rebuilding. 

From the context of natural disasters, most of us are doing pretty well.  Regardless of how gloomy one feels about the U.S. economy, it’s really pretty darn good compared to most places around the world.  We’ve talked about recessions before, and what’s important.

But on an individual level I submit that what you call it really doesn™t matter.  What matters is what we are doing individually and collectively to improve opportunity and economic well-being for ourselves and our families. 

Nobody enjoys paying so much money for gas, or cutting back spending in a lot of areas just to get by.  But this is where we are, and I find myself looking for ways to appreciate and improve our lives regardless of the challenges. We the living must continue to grow and build our lives and families.  When the economic news starts getting tiresome, a little perspective goes a long way.

Okay, the rebate check is in the bank and we’re going through the budget again.  I was shaking my head at the price of groceries and gas today, but it’s hard to see much of an economic slowdown by the amount of traffic out on the roads.  People must be cutting back though because everything has gone up in price recently. I’ve even heard some of the restaurants are struggling. 

We’re learning like never before how fuel prices really impact consumers and the needs of the family.  Simple things such as a trip to a nearby town are put off until really necessary, and I find myself driving a lot slower than I used to.  Some enterprising automaker should come up with a really efficient vehicle they call the Frugal.   I’d call it our Family Frugal and drive it proudly around.  Not a very sexy name perhaps, but heck I’m all about practical efficiency these days.  Actually it sounds kind of like a Volkswagon… Das Familie Frugal.

Ah but we use fuel for more than our vehicles.  We use propane fuel for some of our winter heating needs, and I usually fill the tank in late spring each year.  But with oil prices out of control, propane prices are crazy high too.  Do I fill the tank now, or wait until next fall or winter?  I’m inclined to wait and see if somebody… anybody, will do something about the rampant speculation in the oil markets out there.  At some point these high prices are bound to blow off.  It’s bad enough with gasoline, but the debate even involves diesel fuel supplies which are tighter and more expensive.  It’s a problem we need to solve because it affects everything- driving cars, trucking and transportation for goods, grocery prices, heating, etc, etc.

Members of the House Transportation and Infrastructure Committee’s Highways and Transit Subcommittee generally agreed that diesel prices have risen faster than gasoline prices, and that increases are reflected in higher food and merchandise costs. But they broke along party lines in suggesting ways to address the problem.”The conventional wisdom is that speculation provides liquidity to the market. But when you have a huge entry of people who have no intention of taking delivery of a commodity but are merely interested in making money by bidding prices higher, that’s a different matter,” Rep. Peter A. DeFazio (D-Ore.), the subcommittee’s chairman, said in his opening statement.

But Tyson Slocum, energy program director at the consumer advocacy group Public Citizen, agreed with DeFazio that speculators are exerting an unhealthy influence on energy commodity markets. “A certain amount of speculation or hedging is essential. But we have a financial bubble resulting from too much speculation. About 95% of the trades today do not involve taking delivery,” he said.

DeFazio still was interested in the possible impact of speculators on oil prices. “What would it hurt to have trades no longer opaque and off the books?”

I’m a pro-business, free market kind of guy, but when you have a critical commodity that drives every aspect of the national economic engine, how can we allow speculators and commodity investors to leverage investments in oil contracts that will never be delivered?  And if oil prices just keep going up, can the U.S. economy and consumers even survive in that environment?

Here’s one for you:  Just yesterday I was talking with the local propane company manager about fuel prices and my propane bill, and he spoke of a close friend who was a truck driver.  This guy regularly drove from the midwest roundtrip to the south and southwest, but his normal routine was to fill up his truck’s fuel tanks in Mexico!   “Why does he do that?” I asked, and the answer was that truckers can buy a cheap $20 pass to cross the border to buy fuel and they pay half the price for gas and diesel that we pay in the U.S.!   

Why does gasoline or diesel fuel cost half as much right across the border in Mexico than it does in the U.S.?

I don’t know how accurate that is, but the propane company manager I spoke with said it was true.  Perhaps Mexico has more reserves for oil, more drilling, more refineries… oh, maybe that’s why it costs less?   Even so, should petroleum products be half-price just across the border?  If it is, then we’re doing something wrong here in the U.S.  Hey, maybe we can tie in some of the immigation issues with cross-border agreements for oil or fuel?

But with the economy still teetering on the edge of a recession, at least Alan Greenspan thinks that ”the worst of the credit crisis is behind us.”   But what about inflationary costs to consumers for fuel and grocery prices?  I’m really not sure what Congress is doing beyond posturing and looking at raising taxes.  Is raising taxes on fuel and energy companies going to save consumers money?  I don’t think so.

I’m still calling for a U.S. Energy Summit however.  We’re not going to get anywhere if people don’t stop pointing fingers.  They need to sit down and map out the issues- start taking proactive measures and move forward with a plan for the nation. 

But in other news at the homefront, we’re busy planting a garden this year.  A different kind of fuel for the family perhaps, and another way to live a little more frugally.  With a little bit of space, how hard is it really to grow a few vegetables?  Especially tomatoes, but this year we’re even planting corn.  It’s much cheaper to grow your own, but admittedly it does take some effort to get started.  But if we’re successful and have enough veggies, it will cut down on the grocery bill.  And we hope to freeze and put up some of the extra to last into winter.  Now if I could figure out how to grow our own fuel for the cars we’d really be doing well. 

In a long-awaited move, the Federal Reserve is setting out new consumer-friendly regulations intended to reign in credit card companies from overzealous and even unfair lending practices by financial institutions.

 The crackdown on credit card companies is finally taking a proactive approach to protecting consumers and reversing practices that have appeared overly greedy in recent years.  I’m a strong defender of free market economics and fair business practices, but too many credit card companies have lost their way in terms of serving clients’ needs, and instead have appeared nearly predatory in their approach to credit card account management.

“The proposed rules are intended to establish a new baseline for fairness in how credit card plans operate,” said Ben Bernanke, chairman of the Federal Reserve, which regulates many U.S. banks. “Consumers relying on credit cards should be better able to predict how their decisions and actions will affect their costs.”

And that’s the bottom line for many of consumers, a desire for clarity and a credit card agreement that isn’t changed at will by a company seeking higher profits.   I’ve noticed in some of my credit card statements that they are spelled-out more, and explained a little better than in years past, which is nice to see. But clarity in Disclosures Alone Won’t Solve Credit Card Issues according to Fed Chairman Ben Bernanke. 

“Twenty-five years ago, less than half of all American families had a general purpose credit card. Since then, the number of consumers holding such cards and the amount of outstanding credit card debt has grown significantly. The development of credit scoring and implementation of risk-based pricing have made credit cards available to more people. In addition to serving as a source of needed credit, consumers benefit from the convenience credit cards offer as a payment mechanism.”

“The rapid growth in the use of credit cards, and a corresponding increase in the complexity of available products, has reduced the transparency of the industry, Mr. Bernanke said at an open meeting of the Fed board. For that reason, federal banking regulators need to make improvements to give consumers “greater control” over their accounts.”

 Of course the banking industry and lobbyists do not agree:

“The Federal Reserve’s proposal is an unprecedented regulatory intrusion into marketplace pricing and product offerings,” said Edward Yingling, chief executive of the American Bankers Association.

With any new set of regulations there are some risks.  Government may overstep the bounds of balanced market dynamics and impose too many rules and binding regulations on institutions.  Those banking institutions may simply change their business practices in a negative way, avoiding regulatory issues and not making credit available to consumers as they have done in the past. 

“Card industry representatives have been quick to warn that the passage of new legislation or additional regulation could hurt all credit card carriers.”

“We are deeply concerned that these rules will result in less competition, higher consumer prices, fewer consumer choices, and reduced consumer access to credit cards,” said Yingling, the banking industry advocate. In short, everyday consumers will bear the real cost of these proposals.”

“Americans with shabby credit histories, for example, may no longer have similar access to credit. At the same time, consumers with good credit could soon find themselves facing higher interest rates.”

Do you agree?  I see their point, but I also think the banking industry is protecting its own at this point.  Certainly businesses are in business to make money, and they should do so as they deem appropriate…. within the bounds of the legal and regulatory structure.  But in this case, many consumers and now politicians and leading economists believe that the financial institutions have overstepped their bounds, unfairly targeting consumers.  

We will always walk a balance between too little and too much regulatory structure in business markets.  But in this case, I personally believe it was time that government stepped in to look at consumers’ interests compared to the financial profit incentives of the banking industry.  Sometimes the balance becomes skewed, and perhaps this is a small step to swing the pendulum back toward consumers’ interests.  

Besides, with today’s lending climate during the credit crunch, banking and financial institutions have lost a lot of credibility in terms of managing risk, and consumers are paying the price for their market turmoil induced by many of these same institutions.  By saying “credit may not be available to consumers” is stretching the truth when credit is really no longer available to a certain segment of consumers anyway at this point.  

As Congress examines the issue, time will tell how these regulations impact the banking industry overall.  Somehow I believe they’ll do just fine and find new ways to make money while lending money.

Depending on the rules that are adopted, credit card companies would be prohibited from:

• Making deceptive offers of credit without spelling out terms and limitations;
• Placing unfair time constraints on payments. A payment would not be deemed late unless the borrower is given a reasonable period of time, such as 21 days, to pay;
• Allocating payments unfairly among balances with different interest rates;
• Retroactively raising interest rates on pre-existing balances when a change in credit status occurs;
• Assessing very high fees for exceeding credit limits solely because of a hold placed on the account;
• Unfairly charging consumers security deposits and fees when issuing credit or making credit available;
• Unfairly computing balances using double-cycle billing;
• Prohibit overdraft fees because of additional “holds” when using debit card (such as when purchase gasoline).

It will be interesting to see what rules are ultimately adopted and applied, and how credit card companies react.  In some cases I expect credit card accounts may be cancelled or frozen without additional steps by consumers. But the banking and financial institutions cannot lash out without consequences to their own businesses.  While they are in business to make a profit, they are also in the customer service business.  There will always be another company willing to take customers who are not happy with their current bank or lending institution.    

Is this the long-awaited Credit Card Bill of Rights for consumers?   Not quite, and the Consumer Federation of America is calling for even greater regulation:

“We commend federal regulators for taking an important first step to stop credit card companies from pumping up their profits by using hidden traps and tricks that drive up the amount of debt consumers owe, said Travis B. Plunkett, legislative director of the Consumer Federation of America. œWe urge Congress to focus on enacting a permanent law that curbs abusive practices not addressed in this proposal.”

If I had the ear of the card company executives, I would advise them to jump right onboard this consumer-friendly train, and even make a huge PR effort to show what they are doing to help consumers. Bottom line?  Consumers want a credit card agreement that is fair and steady, and not at risk of changing overnight by a company who can assess fees and charges at will.  Perhaps in response to increased regulation we’ll see a trend toward term limited credit cards, with fixed contracts?   Hard to say, but I don’t think those offers will stop coming in the mailbox anytime soon.

 Even with a challenging economy and dynamic swings in stock prices, the market has begun to advance over the last couple of months.  While the U.S. economy teeters on the edge of recession, is it really that bad out there? That certainly depends on your individual situation, but for the most part we’re managing to get by, even with gas and commodity prices that are out of control.  Interest rates have dropped quite a bit and that’s provided some relief to homeowners with ARM loans.

But is the Fed finished cutting rates?  Many experts believe so, and that from here will be a long pause to allow the economy to work its way back into growth mode.  Maybe the Fed Has Bought Enough Anti-Recession Insurance for now.  But we’ve got to put our money to work somewhere, and for most of us that means staying invested even in difficult times.

The amount of negativity about the economy and markets have been amazing this past year, and Jason Zweig’s near-contrarian view offers some good advice for Why Acting Bearish is a Dumb Move.

“This has been one ferocious stock market. Not only has Wall Street been flirting with a bear market – conventionally defined as a 20% decline in the major indexes – but we’re now in “the second-worst eight-year period for stocks since the 1930s,” says money manager Martha Ortiz of Aronson Johnson & Ortiz in Philadelphia.”

“…a growing chorus of bears thinks that the worst is yet to come and that investors should get out of the market. After all, everyone knows stocks will keep sagging since it’s obvious the economy is sinking into recession, right?”

“Even if the economy is headed for real trouble, don’t assume that your portfolio is too. Larry Swedroe, director of research at Buckingham Asset Management, notes that the U.S. economy has experienced 11 recessions since World War II. From the first day of those economic contractions to the last, stocks still managed to deliver average gains of 7.1% vs. 5.1% for cash.”

Bottom line?  Stay invested, stay long, and focus on living positively each day.  It’s not always easy to do, but I try to tune out the economic noise, and remember what’s important at home and with family.   If there’s something I’ve learned from this almost-recession and high gas and grocery prices, it’s that we really don’t need a lot of the things we spend money on.

Cutting back spending and becoming more frugal isn’t that difficult.  I don’t know about you, but when I save money or do something more efficiently, it really makes me feel good in other areas of my life.  It helps me to focus on the important aspects of life, and the goals I have for personal growth.  I’m not tied to worries or stress about the market, and how my retirement funds are doing.  

It’s about improving the quality of our lives and experience versus the quantity of something that is always changing.  

Laura Rowley describes it very well as feeling blessed. 

“Money can certainly buy us a measure of freedom or security, but money itself is none of those things. If we think money is security, we’ll never amass enough to feel secure. If we think it’s freedom, we’ll never earn enough to be free.”

“Once we remove the emotional baggage, we can acknowledge that money is just one component to achieve our goals instead of an all-encompassing solution. If freedom is a value, we have to ask which people, qualities, and experiences have made us feel most free in the past: Where do I need to live to be around those people? What should I do for my work, and how should I spend my leisure time? How much money do I need to help me create a life with those qualities and experiences? Being as specific as possible about how to manifest these qualities in our lives will keep us from running on the hedonic treadmill.” 

“… long-term flourishing requires discipline, persistence, hard work, faith, and, most important, pursuing goals that are close to your heart and based on your personal gifts.”

When we take time to appreciate what we do have in our lives, we begin to understand more about ourselves, our relationships and where we want to go.  It’s an essential part of the process of discovery, not only for whatever personal gifts we possess, but for the direction of the journey itself.  

Is money the reason for the journey?   Not by a long shot.  But it certainly helps.  A little balance and reflection helps even more.  Growing our money, like growing our lives, takes time and staying invested.  Money provides a lot of things in life, but it can’t buy long term happiness.  Money is simply a tool to take along the journey.  Sure it’s important, but if we forget our goals and what’s important in our lives, then we really haven’t gone anywhere have we?