Sushi Money

How many of us watch American Idol these days? I do… I just enjoy the passion and singing of the competitors, and even getting to know their on-air personalities. David Cook is amazing, but then they are all doing an incredible job. Tonight I was amazed with Jason Castro’s version of Over the Rainbow. Gold awaits many of these performers, and a marketing bonanza for the promoters. And tomorrow Idol Gives Back brings us a wonderful charity special.

Somewhere over the rainbow
Skies are blue
And the dreams that you dare to dream
Really do come true

I believe in dreams, and that we can help others to realize their dreams. What an incredible, heartfelt song.

That’s the mantra this week as Congress is set to grill oil company executives about fuel prices and supply concerns.  Well it’s more like the political folks have a chance to give some of the heat they’ve been taking from their constituents, back to the oil companies.  I’m all for that- not just to give the oil execs an earful, but also to see our politicians trying to find some answers.

What argument can be made in defense of big oil when they are reaping enormous profits each year?  It’s a business to be sure, and they are in business to make money like any other business.  But when the oil companies profit seemingly at the expense of the national economy, and mom and pop in small towns across America, then you have to wonder where our priorities are.

The problem is that Congress in all its wisdom may decide to tax the he#l out of the oil companies, and while that money goes straight to Uncle Sam to help pay (or expand?) government programs, it’s not solving the issue of getting more oil, or becoming more oil independent.  Think it’s going to change anything for the average family?  I don’t think so- in fact, gas prices will probably get more expensive because the oil companies are paying extra taxes.

Realistically, U.S. consumers pay some of the lowest fuel prices in the world compared to many other net importers of oil.  But that doesn’t change the fact that we are paying more than we have ever paid here in the U.S., and it affects the household budget at home in many, many ways.  Not the least of which are higher grocery prices.  Overall it’s sad that we have put ourselves in this position- but it’s the truth.  When no refinery has been built in the past 30 years in the U.S., what does that say about our priorities?  When we can’t further develop off-shore or Alaskan oil fields because the politicians are too concerned about their re-election and don’t want to appear anti-environment, then we are left to import oil from every third-world nation that has it. 

We are truly slaves to the oil trade- and we will pay what the market will bear.  The oil companies are not the really bad guys, but they aren’t helping matters either.   They’re going to grit their teeth and smile that toothy smile to make their margins.  But some of those margins are squeezed as well.  For example, in order to find and get at some of the vast resources of deep oil, they need specialized deep sea rigs.   These are amazing feats of human engineering. Billionaire John Fredriksen is Norway’s richest man, worth at least $7 billion, and he leases these things.

“His units are in such demand he can charge major oil companies nearly $600,000 a day to use them. Similar rigs were earning about $70,000 a day just five years ago. With leasing rates like these, a vessel that cost half a billion dollars to build can pay for itself in as little as four years.”

So who pays for the use of such beasts?  We all do.   We are all faced with limited supply, and too much demand across the world.  The oil is there- we just haven’t planned ahead and there are too many pigs at the trough.     I say bring back the Oil Price Wars, and let the government cut out the middle-man.   Oh wait… there’s probably not enough supply to have an oil price war.We do need to lessen our dependence on foreign oil. 

We need to foster alternative technology, and yes- we need to develop and build nuclear power plants to help supply our energy needs so we aren’t using natural gas or coal to do so.  And we need to stop kicking the empty can and try to produce enough of our own oil to fulfill the needs in our own country. Or we can abandon all that when someone invents the next miracle engine, fuel or transportation device…   

Personally I think we should build out a vast network of maglev trains and small commuter vehicles.  Begin in the suburbs of the major metropolitan areas and let them grow.  This could be the rail and gold spike victory for the next century.  And somewhere during that timeframe, we might even be able to abandon the use of oil for fuel altogether.

Economic buzzwords are all over the media these days.  How many ways can we describe what’s happening out there?   Business Week says the economy Looks a Lot Like Stagflation… a word we’re seeing more often.

A dark memory still haunts the U.S. economy: The Great Stagflation of 1973-80, a time defined by an uncomfortable mix of high inflation and stagnant growth. Well, everything old is new again, as they say: A number of recent economic reports point to an early 21st century return of the two-headed beast.

But the Fed Chairman disagrees with that view:

“I don’t anticipate stagflation. I don’t think we’re anywhere near the situation that prevailed in the 1970s,” Bernanke told the Senate banking committee as he testified for a second day in Congress on the central bank’s semiannual forecast.

Since when did economists become so popular anyway?  Well, probably since about 2005 when the housing market toppled over.  But it seems like every third financial article (or blog post!) has something to do with the economy these days, quoting the best (or most willing) of the economists available. Someone making one of the comments for the BW article above says, “I don’t understand why everybody quotes economists so much… they’re always wrong!” Well that may be true, but if you can quote other people being wrong it’s much better than making predictions and being wrong yourself! “Oh my… I can’t believe that guy predicted that… my goodness he was sooo wrong…!”

But the President believes we can avoid a recession.  Wall Street may disagree, but I think its important for him to show a constructive view, not out of any sense of political gain, but to shore up consumer confidence and provide stability in whatever way possible.  We don’t know if we’re really in a recession yet, although the U.S. economy slowed to a near stand-still in the fourth quarter of last year.

There’s too much skepticism these days for me, but I suppose that’s as much a part of the election cycle as it is the business cycle.    Do you know what the average length of a recession is, going back all the way to 1948?  It’s just under 12 months long, or about a year on average for a recession.  Yes we hear people say “This time it’s different…” and “Housing is a bigger factor.”  Could be.  I prefer to believe our nation is a lot more resilient than that.  We’ve been through some pretty tough times and will get through this one just fine.  The economy will just keep moving along, albeit a little slower.  Who knows maybe it’s even pretty healthy and will reform millions of too-big spenders and debtors.

For argument’s sake, if we assume we entered a recession in January, then by July we’ll be half-way through it already. Or maybe not.   Either way, recessions don’t last forever.  If the business cycle is contracting, then it’s going to pick up again in a matter of months.  In another year or two, it should be a whole different ball game.  Think I’ll go out and buy something- anybody for pizza?

Okay, I’ll admit it- my wallet is usually a mess. It’s filled with coupons, receipts, notes and sometimes even money. In no particular order of course. I wasn’t always this way however. I think when I was younger my wallet was much more organized. Probably because I didn’t have very much money in it.

But according to Bankrate.com I am most like the Unruly Receipts money personality:

Unruly receipts — Your wallet is stuffed with receipts, but there’s no sense of order to them and you never really do anything with them. This is the person who is trying, says Thakor.

“You want to know how to keep tabs on your money — otherwise you would have thrown the receipts away. But you just can’t take it to the next step to get them all organized and do something with them. You are like the person that buys all the latest exercise equipment but doesn’t get around to using it,” she says.

Hmmm. Well, I’ll take Unruly Receipts over the Chaotic Cash or Running on Empty personalities. And truth-be-told, I’m never going to be the File Folder Funds type where every single receipt or financial item is meticulously organized, with money in the wallet organized by bill type. More power to those of you who are so organized, but I find it hard to find the time to do that every day. I probably go through everything a couple times a month, and I do organize receipts in a shoe box to save for taxes each year. I like the part above that says “This is the person who is trying…” That’s me alright, always trying!

But I think I also have a split personality when it comes to my wallet! How? Well, my regular wallet doesn’t hold credit cards in it, just the normal bills and receipts, etc.. For the fancy stuff I have a second wallet. “What?!” I can hear you say. Well, it’s true. I use one wallet for the paper stuff, and things I can “afford” to lose. But I keep a separate little credit card wallet that I hold in my front pants pocket. Why do I do this? Glad you asked… primarily because I like to have all the ID, credit cards and other important plastic cards in one safe place. But also because as I’ve traveled around the world for many years, I found it best when visiting foreign cities to safeguard important belongings from pickpockets, etc. Now besides keeping a little extra money in my shoe (or other strategic place), I would keep the important cards and money in my front pants pocket. It’s harder for someone to try and “pick” your pocket when it’s up front. So that’s it… a messy wallet, and an extra credit card wallet. Just a habit I’ve become used to.

So what’s your money personality? Are you well organized? By the way, I’m really glad I don’t have a purse, and I don’t envy you ladies. That’s just more room to accumulate stuff. Who knows how many of those I’d have! Oh- and sometimes I actually do use my exercise equipment.

Emotions and frustration are still running high among eBay sellers over changes the company is making. The situation has received a lot of attention from both the blog community and now the major media sites. When U.S. News starts showing boycotting sellers the alternatives to eBay, it makes you wonder if eBay really understands how concerned their community is. Today eBay reacted to some of the anger by cutting fees for some merchants, but not really responding to seller concerns.

Ms. Norrington said the seller’s concerns are simply less important that counteracting the widespread view that shipping costs on eBay are often sky high.

“Let me be clear: our goal is to improve the buyer experience,” she wrote. “We will closely monitor the data. If buyer trust in the marketplace is not improving as intended within the next six months, we will take action.”

What does that mean? It really seems like eBay is making a bad situation worse, and acting like a corporate bully. Why on earth would they be so dismissive of seller concerns? Because they can I suppose. Nobody really likes arrogant corporate or political types who forget “the little guy.” And eBay’s sellers are “the little guy” who happen to be their strongest assets. The little guy is now trying to boycott.

EBay isn’t too worried about the possibility of a seller’s strike, according to spokesman Usher Lieberman. He said the company isn’t considering altering or postponing its policies due to the outcry.

“We’ve had hundreds of threats in the past, and they don’t seem to have had much impact,” he said.

Has eBay forgotten the long-held secret about auctions? A lot of buyers are also either sellers, or would-be sellers. Countless millions of eBay’s buyers also sell stuff, or secretly want to sell stuff. That’s the eBay magic… “Wow! Maybe I can sell my stuff too? Maybe I should try it… Look what I found! This looks easy… I wonder if…”

Lately its been more like “Why bother?”

I wonder in a few years if the advertising slogans from eBay will say, “We want you back!”

* Full Disclosure: No ownership of eBay at time of writing.

If your community is typical in America, most of the public school districts in the local area struggle to make ends meet and ensure there are enough financial resources to pay for textbooks, salaries and maintenance. Every few years taxpayers groan at the mention of bond issues or a tax proposal to increase revenue necessary to help our kids acheive the best education possible. Many people differ that this is an efficient way to fund public education at the local level, but it is the model for most districts across the nation.

Yet knowing how difficult it is for many school districts to simply pay for expenses every year, I was amazed to read how several large financial institutions have snookered many Pennsylvania school districts into signing derivative interest rate contracts with exhorbitant hidden fees.

“The Pennsylvania deals show that school districts routinely lose when making derivative deals. They pay fees to banks that are as much as five times higher than typical rates and overpay advisers by as much as 10-fold.”

“In 15 Pennsylvania school districts, officials entered into interest-rate-swap deals worth $28 million since 2003, according to data compiled by Bloomberg. Of that dollar amount, the schools took in $15 million, and banks and advisers got the rest as fees, Bloomberg data show”

I think this has the propensity to turn into a scandal of national proportions, and something the public may be shocked to learn has happened frequently throughout the years.

How can community school district officials explain losing millions of taxpayers dollars with these investments? And how can the government inadvertently sanction these practices by letting them continue? I’m not a big government kind of guy, but in this area I think we need much stronger oversight. From the Bloomberg article above, it sounds like the SEC agrees, but this is not in their regulatory focus.

Christopher Cox, chairman of the U.S. Securities and Exchange Commission, says he’s concerned that municipalities are taking on more risk than in the past when they raised money primarily from bond sales.

“It’s a serious issue, not only in Pennsylvania but across the country,” says Cox, 55, who has headed the SEC since 2005. “That is what we have seen repeatedly. More often than not, the municipalities aren’t configured to have financial sophisticates in charge of these offerings — and the result is that the firms are the only ones who know what’s going on.”

While the SEC doesn’t regulate derivatives, it has authority to oversee how banks conduct transactions. SEC Chairman Cox says all financial firms should tell clients what their fees are before signing any deals. “Brokers and advisers should disclose their compensation and conflicts of interest to their customers, and to the extent that they are regulated by the SEC, they must,” he says.

“Cox also says school district officials have a responsibility to the public and to bond investors to ensure their advisers are actually independent and acting in the best interests of taxpayers. “To the extent that municipalities are participating in transactions they are not qualified for, there is an obligation to get good independent advice,” he says.

Let’s hope more school districts, and other public financial entities, think twice before entering into these types of deals in the future. And if any district is thinking of some type of investment that brings in money for the district, then taxpayers should be aware of the risks and costs as well.

     Personal finance involves many considerations… especially during an election cycle when whomever is elected may have a great influence on our pocketbooks in terms of taxes and government spending.  But I was bothered by this news bit yesterday and wanted to comment.   Remember during the 1990’s when someone famously said, “That depends on what the meaning of the word is is…?”   Now we’re not talking about the same, well, life passions perhaps.  But when it comes to politics, few things stir the passions of voters as much as candidates who are funded and run by lobbyists (which many of them are on both sides of the aisle). Yesterday, in the middle of a speaking to reporters at an office supply store in South Carolina, Romney says “I don’t have lobbyists running my campaign…” and was shortly interrupted by an AP reporter who challenged that comment.  It seems Romney does have lobbyists riding around with  his campaign, on his jets and as an  advisor.  Oh, and maybe as a friend.  But not someone actually running his campaign. 

“Did you hear what I said? Did you hear what I said, Glen?” Romney asked. “I said I don’t have lobbyists running my campaign, and he’s not running my campaign.” 

Uh…. okay.  If you say so.  It’s hard to understand how someone can criticize so many others for having lobbyists running their campaigns, but it’s perfectly alright to be surrounded by them, and to have them as advisors?  And in this case, his advisor (not lobbyist mind you), is Chairman of a communications firm called Dutko Worldwide.  Which, among other things, has been reported as being a federal lobbying firm for Citgo… the U.S. based company from Venezuela?   How much money has Citgo paid to Dutko over the years?   Something else that bothered me… the way Romney challenged the AP reporter.  Easy to get defensive when you’re caught with your hand in the cookie jar.  And I guess it depends on what the meaning of the word lobbyist is?