Driving around the Lake Minnetonka area today because, well, what else do you do on a 78 degree day when there is no work to do and while listening to the news I slowly saw the Dow drop 100, 200 and then 300 points and then had an interesting thought.
"Based on the number of retirees, pensioners, present and future, and considering the amount of money being invested in the stock market, and based on average life expectancies and cost of living requirements, how much will the stock market have to go up by in order for traditional retirement plans to succeed?"
In all of my studies and research there was always that 8-9% annualized price appreciation in the stock market that was assumed to go on into perpetuity. With the collapse in long term economic growth, what if the entirety of Americans relying upon their 401k's and IRA's, just plain don't get 8-9%? What if it's going to be something more like 5-6%, or maybe like Japan, 0 to -2% for the next 20 years?
Regardless, I am curious what the "Dow would have to be" in order for everybody's retirement plan to work out the way it's supposed to. If somebody wants to take a crack at it (on account that I am lazy) I would certainly be interested in seeing the numbers as well as the methodology.
And then I will laugh heartily when we see how egregiously and impossibly high that number is compared to the reality of American economic productive capacity.
Friday, June 04, 2010
Enjoy the Decline!
Hey, look at that booming economy!
Anybody want to join me for a scotch on the top floor of the Titanic?
Anybody want to join me for a scotch on the top floor of the Titanic?
Thursday, June 03, 2010
Or Courtney Munna Could Have Just Read This
I don't know how much clearer I can make it. (or if you prefer paperback, here)
But then again, reality doesn't matter. It's what you want to do and what your heart tells you and that's all that matters. I'm sure majoring in communications will land you a job somewhere.
If you want to see denial (or just an outright lack of spine on the part of people telling Courtney the reason she doesn't have a job is because she majored in a worthless subject) just read the comments here. It's amazing and appalling the sheer ignorance these people display.
But then again, reality doesn't matter. It's what you want to do and what your heart tells you and that's all that matters. I'm sure majoring in communications will land you a job somewhere.
If you want to see denial (or just an outright lack of spine on the part of people telling Courtney the reason she doesn't have a job is because she majored in a worthless subject) just read the comments here. It's amazing and appalling the sheer ignorance these people display.
Wednesday, June 02, 2010
The $64,000 Question Is...
Will people now change their minds and realize this was a cowardly attempt by terrorists, guised under noble, humanitarian clothing to smuggle weapons in (and thus in part admit there is now a desire of lefter leaning elements to combined forces with terrorism) and therefore condemn it
or
Will they refuse to admit they're wrong and tacitly support terrorism because their leftist ideology blinds them from any kind of capacity for intellectual honesty
or
They will cowardly claim this report is false and that the Israeli's made it up.
It is a very important question because it's going to test whether people (primarily of the lefter persuasion) can set aside their ideologies and as adults acknowledge they were wrong and condemn terrorism or if their ideology is so strong they will still maintain their positions and thus tacitly APPROVE OF TERRORISM.
I shall now sit back and watch this unfold like a movie, much like a did the housing crash, without an utter care or concern because simply it's a lost cause and life is too short to worry about things you don't control. So, enjoy the decline!
or
Will they refuse to admit they're wrong and tacitly support terrorism because their leftist ideology blinds them from any kind of capacity for intellectual honesty
or
They will cowardly claim this report is false and that the Israeli's made it up.
It is a very important question because it's going to test whether people (primarily of the lefter persuasion) can set aside their ideologies and as adults acknowledge they were wrong and condemn terrorism or if their ideology is so strong they will still maintain their positions and thus tacitly APPROVE OF TERRORISM.
I shall now sit back and watch this unfold like a movie, much like a did the housing crash, without an utter care or concern because simply it's a lost cause and life is too short to worry about things you don't control. So, enjoy the decline!
Today's Idiot Is...
You have to read down a bit to find out why this moron is out $100,000 and unlikely to ever pay it back.
The crusade against worthless degrees will continue.
The crusade against worthless degrees will continue.
Tuesday, June 01, 2010
Three Blind Mice
Imagine the smile on the Captain's face when he saw not one, not two, but THREE banks he had approached before regarding having him do their loan analysis for them mentioned in this little article.
Now if only...ah, never mind. You know the rest of it.
Now if only...ah, never mind. You know the rest of it.
Monday, May 31, 2010
Friday, May 28, 2010
Big Oil vs. Big Banks
I'll send somebody a shinny new nickel if they can explain to me that when BP screws up we make sure they pay every dime in damages, but if a bank screws up we bail them out with taxpayer money.
Rita Wilson
I love how they use children to extort money from the taxpayer.
Yes, won't somebody please think of the children.
Another question is would you really want this woman teaching your child in any subject, simply because what kind of warped ethics would she be teaching them?
Yes, won't somebody please think of the children.
Another question is would you really want this woman teaching your child in any subject, simply because what kind of warped ethics would she be teaching them?
Steve Wynn
My new hero.
Of the many things I like in it those that I like the most;
1. He's essentially shorting America by investing in its vices. Spend money you don't have, sex, live for the moment. He'll be the one with the cash after it's all said and done.
2. He finds it easier to deal with the Chinese government than the US government.
3. His quip on EBITDA. EBITDA, for those of you without the benefit of an accounting degree is your "Earnings Before Interest, Taxes, Depreciation and Amortization."
This measure is basically the most liberal and handicapped measure of a company's profits because (as far as lenders are concerned) this is the amount a company has to pay any loans that are made to it - the money you have before you pay out interest, taxes and account for depreciation and amortization.
I've never liked the concept of depreciation and amortization. I do understand the "matching" principle of accounting in that you spread out the cost of long term fixed assets to match the overall expense with the revenue it helps generate over the years, but for larger companies that are always buying fixed assets to replace the old ones, would simply expensing your purchases outright really make any difference between your cash flow and net income.
I also have a distaste for EBITDA because it was always used by bankers as the measure to see how much debt a company could afford. LITERALLY ignoring the fact the company would have to spend some money SOMETIME in order to keep its operations going. So if you based your loan on the amount EBITDA showed, you were pretty much guaranteed to be lending beyond the payback capacity of the borrower.
Alas, it was these sort of "rocking the boat" observations that attracted the criticism of my now insolvent previous employers, but as Steve Wynn has pointed out the "City Center" project which was financed by the likes of my previous employers, is belly up and bankrupt.
Of the many things I like in it those that I like the most;
1. He's essentially shorting America by investing in its vices. Spend money you don't have, sex, live for the moment. He'll be the one with the cash after it's all said and done.
2. He finds it easier to deal with the Chinese government than the US government.
3. His quip on EBITDA. EBITDA, for those of you without the benefit of an accounting degree is your "Earnings Before Interest, Taxes, Depreciation and Amortization."
This measure is basically the most liberal and handicapped measure of a company's profits because (as far as lenders are concerned) this is the amount a company has to pay any loans that are made to it - the money you have before you pay out interest, taxes and account for depreciation and amortization.
I've never liked the concept of depreciation and amortization. I do understand the "matching" principle of accounting in that you spread out the cost of long term fixed assets to match the overall expense with the revenue it helps generate over the years, but for larger companies that are always buying fixed assets to replace the old ones, would simply expensing your purchases outright really make any difference between your cash flow and net income.
I also have a distaste for EBITDA because it was always used by bankers as the measure to see how much debt a company could afford. LITERALLY ignoring the fact the company would have to spend some money SOMETIME in order to keep its operations going. So if you based your loan on the amount EBITDA showed, you were pretty much guaranteed to be lending beyond the payback capacity of the borrower.
Alas, it was these sort of "rocking the boat" observations that attracted the criticism of my now insolvent previous employers, but as Steve Wynn has pointed out the "City Center" project which was financed by the likes of my previous employers, is belly up and bankrupt.
Thursday, May 27, 2010
The Bachelor Budget
Many years ago, when the Captain was but a wee private, he put himself through college working at the campus police department doing campus security. It paid $6.90 and after three years and several promotions he was making $9.10 per hour.
I worked full time while going to school full time, but not once did I ever make more than $20,000 in any given year. However, I didn't need to, because by the end of my college days I had a surplus of $6,000 (which I bought a converitble with to celebrate finishing college). And while there has no doubt been inflation over the past 15 years, this spartan existence behooves the question;
"What is the absolute minimal amount a single person can live on today?"
I ask the question because whereas 15 years ago your young and naive Captain had dreams of working hard and establishing a long and successful career, observations of mortality and a limited life starts to make one think how does one spend their finite time on this planet. You throw in a recession, a-soon-to-be overall tax rate of 40%, the increasing likelihood Roth/401k's/IRA's will be rescinded and nationalized, and a general deteriorating future for the country it's like being the navigator on the Titanic. Inevitably you should give up trying to convince the captain to change course and just pony up to the bar and get the finest bottle of scotch.
Thus some back-of-napkin calculations to find out what, if necessary, is the absolute minimal a single person can live off of and pursue a life of leisure fully intending to maximize their free time on this planet and not to build up an estate or empire.
My estimate is in today's dollars $16,200 in annual income should cover every bachelor's basic desires and needs. This of course assumes several things;
1. Never a new car, always used.
2. Liability insurance only
3. No children
4. Catastrophic insurance only
5. No traditional "$25,000" wedding should he/she get married.
6. Living in an area that is NOT New York or San Francisco or some other expensive area to live
7. Roomate or a cheap one bedroom apartment
Now I am being serious here because I want to make sure I've caught everything. Do any of the Cappy Cap readers see something in my budget that is missing? The reason for my adamancy is because if we can calculate a precise number, then it will allow people to look at their personal finances, see if they can live on that amount, and if so, then weigh whether a life of slaving away for $60,000, $35,000 net, not to mention the standard corporate political BS that comes with it and complimentary high blood pressure and 2 hour commute, is a better existence than working some night time security job for $18,000 a year and fishing and reading books.
"Where are We Going?"
A colleague of mine asked and I thought this e-mail might be of some humor and entertainment;
Without going into detail, I predict a general decline ala Japan from 1989 to today. YOu will see the "Herbivore" movement in Japan come to the US and (gender politics set aside) men just frankly leave their traditional roles which will have large implications for future economic growth as well as stagnation in corporate profits and thus stock prices. This decrease in economic growth, combined with a decrease in asset prices is going to impair and underfund not just private pensions, but 401k's IRA's and 457's. Spending commitments made by Obama will essentially make the future so uncertain and taxes so likely that everybody, regardless of gender, will be less incented to work. Productive, hard working people who would have normally bred future generations of workers will opt for vasectomies instead and choose a life of leisure over work. This will bode ill for current and future pensioneers who were relying upon others to essentially work for them and pay for their retirement, not to mention health care. Nothing will change until the younger generations get a rude awakening that "unfortunately, yes little Jimmy, you do actually have to produce something of value in order for society to succeed, let alone, survive," but this lesson will be delayed as the rest of the world panics and throws money into the US dollar as a flight to safety simply because its "the US" permitting us to borrow more money and live the Barbie World lifestyle where we produce nothing, but buy everything as if the US was one big shopping mall. Financial crisis inevitably ensues, Keynesian fiscal stimulus never works, economy collapses and now people will finally have the free time to study economics and figure out how we got there in the first place because nobody will have jobs.
And everybody will blame Bush.
Without going into detail, I predict a general decline ala Japan from 1989 to today. YOu will see the "Herbivore" movement in Japan come to the US and (gender politics set aside) men just frankly leave their traditional roles which will have large implications for future economic growth as well as stagnation in corporate profits and thus stock prices. This decrease in economic growth, combined with a decrease in asset prices is going to impair and underfund not just private pensions, but 401k's IRA's and 457's. Spending commitments made by Obama will essentially make the future so uncertain and taxes so likely that everybody, regardless of gender, will be less incented to work. Productive, hard working people who would have normally bred future generations of workers will opt for vasectomies instead and choose a life of leisure over work. This will bode ill for current and future pensioneers who were relying upon others to essentially work for them and pay for their retirement, not to mention health care. Nothing will change until the younger generations get a rude awakening that "unfortunately, yes little Jimmy, you do actually have to produce something of value in order for society to succeed, let alone, survive," but this lesson will be delayed as the rest of the world panics and throws money into the US dollar as a flight to safety simply because its "the US" permitting us to borrow more money and live the Barbie World lifestyle where we produce nothing, but buy everything as if the US was one big shopping mall. Financial crisis inevitably ensues, Keynesian fiscal stimulus never works, economy collapses and now people will finally have the free time to study economics and figure out how we got there in the first place because nobody will have jobs.
And everybody will blame Bush.
Wednesday, May 26, 2010
How William Shatner Could Reform Health Care More than Obama
So I apply for health insurance online because the Captain is one of those swashbuckling, self employed entrepreneur types that answers to no one, drives a motorcycle, calls his own shots, and ultimately as a result of his non-conformance has to get his own catastrophic health insurance.
I shopped online at esurance and noticed the application process was nearly identical to looking for hotels and flights. The only difference was that unlike Hotels.com, you can't "name your own price."
Thus I wish I had the Priceline Negotiator with The Big Deal backing me up when I got my quote.
It was a fair quote, but I noticed the one sidedness of it all. I either had to accept or not. There was no way for me to talk to the underwriter and say, "look, I use tobacco, but it's a cigar every 2 months. I'm not smoking a pack a day, cut me a deal or I'll go look elsewhere."
Alas, this option does not exist. However, if it did, I wonder what effect it would have on health insurance prices? Not that there are a lot of margins to be squeezed out of the insurance industry, but by simply having The Negotiator and The Big Deal on your side, perhaps some savings, or at least cost control would be realized.
I shopped online at esurance and noticed the application process was nearly identical to looking for hotels and flights. The only difference was that unlike Hotels.com, you can't "name your own price."
Thus I wish I had the Priceline Negotiator with The Big Deal backing me up when I got my quote.
It was a fair quote, but I noticed the one sidedness of it all. I either had to accept or not. There was no way for me to talk to the underwriter and say, "look, I use tobacco, but it's a cigar every 2 months. I'm not smoking a pack a day, cut me a deal or I'll go look elsewhere."
Alas, this option does not exist. However, if it did, I wonder what effect it would have on health insurance prices? Not that there are a lot of margins to be squeezed out of the insurance industry, but by simply having The Negotiator and The Big Deal on your side, perhaps some savings, or at least cost control would be realized.
Tuesday, May 25, 2010
Liberal Arts Majors Get Hit Upside the Head By Reality
This is absolutely priceless.
It's a 30 minute long podcast from NPR and basically it's the host taking calls from listeners, specifically, recent college graduates to tell him about their current job prospects.
It's a lengthy broadcast, but if you have the time I suggest downloading it because you will get a good guffaw out of it.
In any case, allow me three quick points;
1. The only people calling in are liberal arts majors who cannot find jobs. This unto itself makes it worth listening to, but what is really great is how the host and guests cannot get up the gumption to tell these children their degrees are worthless. The hiring expert users terms like "that's one of the weaker degrees for the current labor market." I especially like how they explain to the "environmental science" major how green jobs are not there for her.
2. They then turn their attention to the employment gap between minorities and whites. And instead of actually helping out minorities by pointing out a disproportionate number of them major in fields that are not in demand, they lie and say, "they don't know" why there is an employment gap. Their cowardice angers me because if you really cared about helping out minorities you would grow a spine and tell them they should major in engineering and computers. But no, that would be "hurting their feelings" and we can't have any of that tough fatherly love (no matter how much it would help out our fellow minority brothers and sisters) now can we?
3. At the tail end, what do you suppose the solution is they recommend? Federal government intervention.
Ah, liberal arts majors and the adults who lie to them.
If only they read my book first. It could have all been avoided.
It's a 30 minute long podcast from NPR and basically it's the host taking calls from listeners, specifically, recent college graduates to tell him about their current job prospects.
It's a lengthy broadcast, but if you have the time I suggest downloading it because you will get a good guffaw out of it.
In any case, allow me three quick points;
1. The only people calling in are liberal arts majors who cannot find jobs. This unto itself makes it worth listening to, but what is really great is how the host and guests cannot get up the gumption to tell these children their degrees are worthless. The hiring expert users terms like "that's one of the weaker degrees for the current labor market." I especially like how they explain to the "environmental science" major how green jobs are not there for her.
2. They then turn their attention to the employment gap between minorities and whites. And instead of actually helping out minorities by pointing out a disproportionate number of them major in fields that are not in demand, they lie and say, "they don't know" why there is an employment gap. Their cowardice angers me because if you really cared about helping out minorities you would grow a spine and tell them they should major in engineering and computers. But no, that would be "hurting their feelings" and we can't have any of that tough fatherly love (no matter how much it would help out our fellow minority brothers and sisters) now can we?
3. At the tail end, what do you suppose the solution is they recommend? Federal government intervention.
Ah, liberal arts majors and the adults who lie to them.
If only they read my book first. It could have all been avoided.
Dow 8,000
A new twist I hadn't factored into my Dow 8,000 prediction was the risk of war on the Korean peninsula. Regardless, enjoy the decline!
Monday, May 24, 2010
You Mean We Have to Grow Up and Be Adults
Seriously, this article should be titled, "Europe realizes it has to grow up and become an adult."
I grow so tired of trying to explain the simple concept that in order to have such luxurious benefits a country must produce an insane amount of wealth and production in order to have the tax base to raise such a infantile-dream level of benefits. I then get enraged when I hear not only people my age (35) but people who should know better (50 year olds) dismiss it as "right wing talk" as well as dismiss all my research and experience and a triffle with youth and a cute childish experiment in economics. But then I have to tell myself;
"Cappy, Cappy, now come on now. You told yourself you were going to ignore this and just hunt fossils and go fishing and play Bio Shock 2 and purposely force yourself to enjoy life. You can't let the ignorant people of the country get you down. Besides, you don't have any kids and you are not encumbered by any real financial obligation. And even though becoming the world's next best and highly paid economist will be a never-realized dream, the next best option is to barely work and head out to North Dakota and Wyoming on multiple fossil hunting expeditions. Nobody is going to listen to you now. Nobody is going to listen to you tomorrow. But someday, when they've slaved away, socking hundreds of thousands of dollars into an IRA account, only to have it confiscated by the government they voted into office, you will bit sitting there pretty with over 4 decades of fishing, fossil hunting and video gaming under your belt asking them the ultimate question in economics;
"Did you spend your finite time on this planet wisely?"
I shall now go ride my motorcycle and NOT contribute to GDP today.
I grow so tired of trying to explain the simple concept that in order to have such luxurious benefits a country must produce an insane amount of wealth and production in order to have the tax base to raise such a infantile-dream level of benefits. I then get enraged when I hear not only people my age (35) but people who should know better (50 year olds) dismiss it as "right wing talk" as well as dismiss all my research and experience and a triffle with youth and a cute childish experiment in economics. But then I have to tell myself;
"Cappy, Cappy, now come on now. You told yourself you were going to ignore this and just hunt fossils and go fishing and play Bio Shock 2 and purposely force yourself to enjoy life. You can't let the ignorant people of the country get you down. Besides, you don't have any kids and you are not encumbered by any real financial obligation. And even though becoming the world's next best and highly paid economist will be a never-realized dream, the next best option is to barely work and head out to North Dakota and Wyoming on multiple fossil hunting expeditions. Nobody is going to listen to you now. Nobody is going to listen to you tomorrow. But someday, when they've slaved away, socking hundreds of thousands of dollars into an IRA account, only to have it confiscated by the government they voted into office, you will bit sitting there pretty with over 4 decades of fishing, fossil hunting and video gaming under your belt asking them the ultimate question in economics;
"Did you spend your finite time on this planet wisely?"
I shall now go ride my motorcycle and NOT contribute to GDP today.
Thursday, May 20, 2010
Dow 8,000
Another post in my series "Dow 8,000"
Apparently the "Puppies and Flowers and Unicorns" fiscal policy isn't working. Who would have thought!
Apparently the "Puppies and Flowers and Unicorns" fiscal policy isn't working. Who would have thought!
Tuesday, May 18, 2010
GM Payback
This math reminds me of the good ole days when a client would have one LLC hemorrhaging money, but another LLC that was just squeaking by on profitability. Of course overall his entire business was losing money, but we were supposed to make the loan to the one profitable LLC and ignore his collapsing "business empire."
Ahhhhh, fuzzy accounting.
Ahhhhh, fuzzy accounting.
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