Stimulus Package Needs to Stimulate Public Perception.

Posted on | February 7, 2009 | No Comments

The Obama administration, so good at delivering their message during the 2008 presidential campaign, has failed to deliver any clear message concerning the economy. The White House, Congress and the media’s inability to explain the package and how it will stimulate the economy drags down America’s perception of the nearly $1 trillion dollar bill nearing a vote in the senate. It is also damaging America’s perception of the economy and confidence that things will ever get better. America’s perception of economic policy is a crucial factor toward stimulating the economy.

Knowing that the White House is currently filled with some of the brightest minds, I am very surprised that they have not been able to mount any kind of communications strategy concerning the stimulus package, which could end up being the most important thing Obama pushes through legislation in his four or eight years as president. President Obama and the White House must address America in clear terms how the stimulus package will work, and, further, where they stand concerning the economic crisis. I may not have agreed with his policies, but Ronald Regan was a genius at communicating difficult economic problems by talking like a grandpa to the television, and using props on his desk in the Oval Office. He could even convince the poor that they would somehow be better off in the long run if their social programs were cut!

My hunch is that the White House’s current failure to explain anything about the economy clearly reflects the frightening possibility that no one can really understand how the financial mess got so bad, and no one really understands how to fix it. Language surrounding the economic crisis became increasingly incoherent after Henry Paulson failed miserably to explain to Congress why Wall Street needed a bailout. In the past four to five months, everyone from economic experts, to the White House, to news journalists recycle the same words and phrases: meltdown, catastrophe, tsunami, freeze . . . all kinds of frightening adjectives and superlatives for disaster that never really specifically define the disaster itself. For instance, immediately following the expectedly dismal January job’s report just this morning, Obama announced that the we have to act on the stimulus package now or the “crisis” will “meltdown” into a “catastrophe,” repeating that the conditions are “dire.”

Language is crucial in a “crisis,” and words carry a heavier weight than they would during a quieter time. My cynical argument is that even if the brightest minds who currently occupy the White House have not the slightest idea how the economy got in this “dire” situation, and even if they have no idea how to get it out of this “meltdown,” they need to frame their language in such away that explains where we are and how we might get out. We need Obama and other leaders to use language in such a way that shows that they have a confident grasp of how difficult the situation is.

A great deal of the reason why the Bush administration destroyed public confidence in Washington is that they failed miserably in communicating effectively. They could barely form complete sentences! Bush began his eight years telling the American people that if we did not go to war with Iraq, we would face a catastrophe of proportions never seen before in history. Bush ended his eight years telling the American people that if we did not bailout Wall Street, we would face a catastrophe of proportions never seen before in history. Iraq turned into a protracted fiasco. And now TARP, too, has rapidly degenerated into a protracted fiasco. In both cases, no one could coherently articulate the how and the why.

Now, Obama and the White House is recirculating the same language. I do not think that America can survive another inexplicable and nebulous threat of catastrophe of proportions never seen before in history. I and the rest of the country have no doubts that we are in a confusing, difficult and dangerous economic condition. And no one has any doubts that it is time for action. But instead of preluding action with bombast, leaders need to instigate and accompany action with clear and articulate voices.

If you tell people that horrible danger lurks in the darkness in their neighborhood, they will lock their doors and hide, paralyzed with fear. If you explain calmly and with confidence what might be hiding in the darkness and how to possibly manage it, you make people less frightened, and perhaps more willing to walk out the door. Right now, since the most we can clearly understand is that we are on the verge of apocalyptic disaster, the most we can do is shrink up in fear and confusion. If we could hear some concrete, confident and perspicacious discourse, we might feel more “stimulated.” Hell, we might venture out of the doors and become consumers again.

President Obama Lectures Wall Street. My Lecture on Symbolic Expression.

Posted on | January 30, 2009 | 4 Comments

President Obama’s statements at a press conference yesterday lecturing Wall Street does not help the economic crisis. By chastising bank executives for their billions of dollars in bonuses they paid themselves only months after the federal bailout, however, Obama points out to America how out of touch Wall Street is with the rest of the world.

Corporate executives cannot seem to recognize the symbolic significance of their actions! How did the auto industry expect Congress to receive them back in December when they arrived in Washington in private jets begging for billions of dollars in taxpayer bailout money? Did banking executives expect the American people to understand the economic subtleties of paying each other multi-billion dollar bonuses after they received billions of dollars of bailout money based upon the argument that the entire flow of cash in the country was about to freeze up and destroy civilization as we know it?

Desperate economic times turn anything into symbols of the large

maladies of human behavior for which we blame our financial plight: greed, avarice, apathy, ignorance, snobbery. It is hard to understand why masters of finance and industry do not know that in an economic crisis, all of their actions become symbolic. In others words, when John Thane installs a twenty-four carat gold toilet in his executive bathroom, and hangs shower curtains encrusted with rubies, or whatever outrageous interior decorating he did while Bank of America and Merrill Lynch were going down the tubes, it becomes symbolic.

This is what Citibank must have in order to stimulate the economy. Couldn't you get a tax break to buy one of these back in the 80s?

Why executives do not grasp the importance of symbolism boggles my mind. What public relations strategy did the conference room at Citigroup come up with when they decided to buy a private corporate jet for tens of millions of dollars just a couple of months after their bank became the blueprint and poster-child for TARP money? What bright forward thinking mind said, “The American people will understand that we need a brand new state-of-the art private jet in order to do business”?

This is not the time for executives to buy air conditioned dog houses for their lapdogs, or to trick-out stretch limousines to woo clients. Anything that does not have the semblance of concerned frugality will glare as a symbol for all those things that we believe brought the economy down: greed, avarice, apathy, ignorance and snobbery.

Accountability and transparency are not just political catchwords that we can use to play drinking games when we watch CNN. These words describe a philosophy being put into action now. As the public and the political eyes increasingly probe the actions of anyone who we associate with Wall Street, TARP, automobiles, Iraq, Pentagon, oil, gas, White House, CIA . . .anyone who screws-up in the symbolic expression of their attitude will be singled out, publicly humiliated, burned in effigy, tried in court, or thrown in jail. So the consequences of being ignorant to basic symbolic expression are steep. If you have any authority over surplus money, do not flaunt it.

A glaring example of the symbolic importance that actions can have during this recessionary period is Governor Blogojevich, convicted by the Illinois senate yesterday on Articles of Impeachment. The Governor, who sports a fashionable “crazy psychopath from No Country for Old Men haircut,” is charged with abusing his power in office by engaging in various pay-for-play schemes. If you listened to any of the television journalism programs last night, barely anyone interviewed (including members of the Illinois senate) could state a clear and specific crime of which the Governor was proven guilty. But it does not matter. The sworn F.B.I testimony, the 1930s-Chicago-mobster type conversations captured on wiretap, and the tapes of he and his wife yelling expletives I use every ten minutes of the day create a picture symbolic of greed, corruption and political avarice.

The political reality that most politicians engage in some form of Blagojevich’s financial shenanigans all the time will not work as a defense. Defenders of Nixon say the same thing. The point is that, like Wall Street tycoons, politicians need to be very mindful of the symbolic significance of their actions. The defensive arguments from the world of finance that corporate jets, commissions in the form of bonuses, and lavish interior decorating as a means to promote business happens all the time just does not cut it in these days of recessionary angst.

When actions and attitudes take on symbolic importance in history, the media and the government turns certain people into examples. It won’t be long before key players of the financial meltdown are lined up before a senate judiciary committee. And then it won’t be long before key players in the dangerous and often illegal operations of the Bush Doctrine will be lined up, too (and I hope many of them will face real criminal charges).

History repeats itself. Once the economy settles down and returns to good-times, Wall Street tycoons will start paving their bathrooms in gold again, putting chandeliers made of real diamonds in their living rooms, lighting their cigars with $1,000 bills, flying around in his and hers private jets, and throwing giant multi-million dollar birthday parties on remote islands. And we won’t care because we will turn our complete attention to several sex scandals in Washington.

And if you must make a huge mistake in your symbolic expression, don’t wear your hair like the crazy psychopath from No Country for Old Men.

Jim Cramer’s MAD MONEY: A Defense.

Posted on | January 26, 2009 | 5 Comments

Jim Cramer, the host of the stock trading television show Mad Money on CNBC, has received a lot of unfair attacks during this economic crisis. I first started watching Mad Money a couple of years ago as a guilty pleasure. With Cramer’s myriad sound effects, turbo charged segments—like the famous “Lightning Round” in which callers pitch him a stock and he gives a thirty second assessment and a buy or sell verdict—and a loud and brazen delivery, his neon flooded program is garish to say the least. After becoming a daily viewer of Mad Money, however, I discovered that beyond the entertainment, Jim Cramer is the most intelligent and clear-minded voice concerning the economy in the current media world saturated with Wall Street pundits pitching their opinions, tips and criticism.

The biggest attacks lodged at Jim Cramer have been purely reactionary and misguided. Last March, Cramer told a viewer that his money was safe in Bear Stearns. The media went on a blitz against Cramer when the brokerage giant collapsed within a couple of days and its stock became nearly worthless. In reality, the viewer did not ask about stock. He was wondering about his checking and savings accounts, a big difference. Cramer tried to alleviate concerns that people were going to lose their cash. If he had told his viewers that their money wasn’t safe, he could have irresponsibly caused a run on the banks.

I have also noticed a lot of nay-sayers claim Cramer has made exaggerated doomsday warnings ever since the market began to collapse. In reality, Cramer gave his viewers the sound advice to turn 20% of their investments into cash.

Critics love to attack Mad Money by tracking what would happen if one invested in a portfolio made up entirely of

Cramer’s “buys,” claiming it either underperforms or loses you disastrous amounts of money. What such critics do not address is the fact that such a “field test” uses a “buy and hold” strategy. Cramer repeatedly tells his viewers that his show does not give advise on (or advocate) a “buy and hold” strategy of picking stocks. Of course you could lose a lot of money if you bought the stocks he recommends, never monitor them, and hold all of them indefinitely! Frequently, Cramer makes the distinction between a “trade” and an “investment.” The first are stocks you thoughtfully and strategically build positions to trade around, whereas the latter are stocks you hold for the long term in things like mutual funds, ETFs or a 401K plan. His show focuses almost exclusively on picking stocks and building positions to trade around while monitoring each one closely. He never says this is all you should do.

So the other fallacious attack against Cramer is that his show rejects and ridicules mutual funds and retirement plans. Quite the opposite. One of Cramer’s biggest rules is that you should have a solid allocation of your portfolio in a passive investment, like a mutual fund that tracks the S & P 500, before you pick and trade your own stocks. Cramer’s critics claim that he advocates fast and impulsive stock trading. To the contrary, Cramer (particularly in the past several months) emphasizes above anything else remaining alert to the downside of any trading or investing, keeping 5% or more of your portfolio in cash, and always remaining diversified, no matter what.

He frequently reminds his viewers that you should never invest money you will need in the next five years. You should never invest money until you pay off credit card debt. You should never invest money if you don’t have a steady job and health insurance. You should never invest money if you do not already have some sort of retirement fund. And, most importantly, you should never pick stocks if you cannot dedicate one hour a week to each stock. Those who attack Cramer always forget this last rule. Far from impulsive and ruthless, Cramer demands that his viewers “do their homework” every week on each stock they own. If you cannot do your homework, you should not be picking your own stocks, and you should invest in a mutual fund or an ETF. And he never ridicules anyone for doing so. He just feels that a person can do better taking more control over their investments and taking the time to do their homework.

I think the biggest thing that his show has offered me is a sense of gaining some knowledge, authority and control over both my own finances and my understanding of the economy. Since I started watching Mad Money, I have grown far less passive toward my own investments. And it has paid off, even in this horrendous market. In a couple of previous posts, I reported that my own stock picks performed much better than my mutual funds last year. But he has also inspired me to be less ignorant about the economy and to become more interested, inquisitive and critical. It is easy as an academic in the humanities to remain uninterested in the business world.

Of course, Cramer is not always right. On numerous occasions he has been overly enthusiastic about a stock. But he always owns up to his bad calls. He does so every week. I am more impressed, however, with his economic and political insight, and the warnings he makes that are usually on target. He will probably be forever famous for his “they know nothing” meltdown concerning the Federal Reserve on CNBC in the summer of 2007. Now that we are suffering one of the worst financial disasters in history, we realize that Cramer was right. He voiced (very loudly) his warning well in advance of the meltdown by having a meltdown of his own. His idea at the end of 2007 that the government should buy the bad paper from the banks was right on, too. And we would have saved a lot of money if he had been listened to.

Listening to Jim Cramer in the context of other voices in the media has helped me to form my own ideas and feelings about the economy, and economic problems in political contexts, in ways I never had been able to before. As an academic, I want to understand and engage in many different discourses, and to see the world from many various perspective. Mad Money might be loud and garish television entertainment, but Jim Cramer has influenced me to see and understand the world differently. On his show, he always says, “we’re not here to make friends. We’re here to make money.” If I don’t make any money from Jim Cramer, at least I earned some knowledge.

Below is a link to his famous “they know nothing” meltdown in August of 07 on CNBC. Some people have suggested that it should be placed in the Smithsonian.

they know nothing

Scam Lotteries. I’m Rich! I’m Rich! I’m Stinking Filthy Rich!

Posted on | January 25, 2009 | No Comments

This morning I won 2,500,000 pounds sterling from the United Kingdom National Lottery! Five times! I have five separate reference numbers so that I can quickly claim each of my winnings in lump sums!

But wait. Last week I won 1,750,000 US Dollars from the Ugandan Scholastic Lottery. THREE times! And I have three separate reference numbers so that I can quickly . . . claim my

. . . winnings . . . in lump . . . sums . . . hm.

And all I have to do is send is send a Mr. Van Williams at van_williams1943@yahoo.com.hk my name, occupation, gender, address, fax number and COUNtry (as it is typed). Oh, and now I’ve noticed that there is a discrepancy between the numerical amount on the ticket, 2,500,000, and the written-out version, two million five hundred pounds. Hm.

But who cares? Mr. Van Williams is working with the United Kingdom Gaming Commission! And he has a YAHOO e-mail address! and he has three different international phone numbers! Between England and Nigeria, I have a lot of phone calls to make, e-mails to type, and faxes to send.

By now, most people whose brains are at least partially functioning know that these e-mail notifications are an egregious attempt on the part of money-grubbers to steal your identity and suck your bank account dry. Particularly in this economic crisis, there are a lot of desperate people vulnerable to phony lottery authorities promising gigantic winnings in countries most Americans never heard of. Would you feel morally comfortable taking 10 million dollars from the Zambian Lottery Commission, if there was such a thing, when most everyone in the country is doomed to slow death by starvation?

Rule number one to avoid getting sucked in by outrageous lottery promises: If you did not physically buy a lottery ticket, or register for a lottery or sweepstakes, you cannot win a lottery or a sweepstakes. So if you never, ever in your life bought a ticket for or signed up to be part of the Zimbabwe Scholastic Sweepstakes Fund, quickly move your cursor to the delete button.

Rule number two: Any lottery, sweepstakes, promotion or invitation that has e-mail addresses to respond to that end in yahoo.com, hotmail.com or gmail.com are gimmicks. No authentic and professional business or organization uses yahoo, hotmail or gmail.

Rule number three: Any notification letter that has even one glaring grammar or spelling error is phony. The professional and authentic lottery, sweepstakes and gaming organizations hire teams of copywriters and lawyers who comb every iota of letters, notifications and promotional material.

Rule number four: Why, oh why, oh why on earth would anyone ever provide a third party through e-mail registered at hotmail.com with information that gives a Reverend Doctor Tombi Tumbaka, Jr. Esq. Phd access their bank account? Why? Yet, from what I have read, it happens everyday! There are plenty of struggling people today vulnerable to these hucksters whose basic human intelligence disappears at the promise of 10,000,000 US DOLlars from the Swaziland Gaming Fund, and who relinquish the safety of their life savings and their recently posted paycheck.

I received my first lottery winning notification four years ago on the e-mail account at the college where I teach. I have to admit, at first glance when I opened the e-mail, my heart raced. The first thing I saw were bold, capitalized letters spelling out YOU HAVE WON, and then INTERNATIONAL SCHOLARSHIP LOTTERY FOR SCHOLASTIC ACHIEVEMENT, and then 1,500,000.00 US Dollars. I mean, I am a scholar, a professor, and I had recently won a pretty prestigious teaching award.

Then I started to read the letter. It was from a Reverend Doctor Tommy K. Robertson, Esq PhD, Minister of the Nigerian Consulate for International Relations and President of the World United Church of Brotherhood . . . or something like that. I suppose there are Protestant ministers who also have a PhD and who received their JD at law school. But I have never come across anyone who wanted to be taken seriously and title themselves in such a way, except for a couple of truly pompous Brits I knew at Cambridge who went by long names like Simon Winchester Cromwell Hawkins III, even though nearly all of their compatriots thought they were idiots.

It was the grammar, phrasing, spelling and punctuation of the letter itself that was a flagrant give away. For one thing, I was addressed as Loving Child of God several times. And if he was trying to dupe scholars into thinking they had been selected to receive a huge sum of money for their contribution to academics, Reverend Doctor Robertson was failing with such sentences as, “And it is for you because of God you have made so many children of heaven informed of great educating services your reward is bountiful truly granted by Nigeria and my government’s process selection which grants God bless you to continue your loving contributions.”

The ending of the letter was beautiful. Like all phony gaming notifications, he provided a few long international phone numbers. But in a post script he wrote, “Why don’t you Loving Child of God call my personal, private number so that I can have the honorable of speaking in personable with you and this momenterous occasion of your heavenly rewarding,” followed by a cell phone number.

I called. I actually got the Reverend Doctor Esq. Phd. himself, and played along like an eager and thunderstruck winner of money rewarding my contributions to scholarship that happens to be more than twice the size of a McArthur or a Guggenheim. In a thick (what I suppose was) Nigerian accent, he profusely congratulated me, proclaimed me a Loving Child of God, and blessed me. I asked several times, “I really won one and a half million dollars?” to which he would affirm, along with another barrage of benedictions. Of course, I wanted to get to the nuts and bolts. “How do I receive my 1,500,000 US Dollars from the Nigerian International Scholarship Fund Mr Reverend Doctor Robertson Esquire Pee Eightch Dee?” In more grave and official tones, he told me that he will e-mail a form in an attachment. All I had to do was fill out the form and follow the instructions. Oh, and just before he hung up, he added that he would e-mail an attachment that contains a jpg image of his American passport and his consulate credentials. Hm. Then he blessed me a dozen more times and we both hung up.

Within a minute I did indeed receive an e-mail with two attachments from him. One was a scanned image of his American passport with some official looking Nigerian document from some official consulate. But the form I had to fill out. Ah, the form. If the ridiculous title and the outrageous content of the notification does not make you suspicious, then you need to consider checking with a doctor concerning senility or dementia. If the form you receive from one of these guys does not tell you to run, perhaps you had a frontal lobotomy that you cannot remember because you had a frontal lobotomy.

The form looked like one of those ornate things you could buy at Walmart and that have virtually no legal weight but can impress stupid people and little kids who want to play office. The font was actually a subtle Gothic! Along with the usual identification information, it wanted my social security number, driver’s license information and my primary bank account.

And then the finale! At the bottom of the form were instructions about starting the process to receive my 1,500,000 US Dollars. I needed to send a a $500 check for Mr. Reverend Doctor Robertson Esq Phd merely to cover the costs of wiring and transferring the funds from Africa, to England, to America. He offered some garbled reasons why he just couldn’t make the wire transfer happen himself, involving some sort of melodramatic story of international injustice he and his people suffer.

This is, of course, what most of these lottery vultures hope for. They want you to not only send the vital information to your bank account, but they want quick money.

Well, instead of faxing the form to Mr Reverend Doctor Robertson Esq Phd, I faxed everything to the New Haven field office of the FBI, who I happened to know were in the middle of a stakeout on the top floor of a building in which I used to work
downtown.

I have never heard from Mr Reverend Doctor Esquire Ph.D again.

Economy Tanking: Ominous Signs Spell Need For Hope.

Posted on | January 24, 2009 | No Comments

The Economy is Tanking.

The economy is tanking. The signs are clear that our financial system, our manufacturing, our gross domestic product, and our consumer spending is on life support. Each time it seems that things cannot get worse, things get worse. Wall Street journalists have been using the phrase, “It’s always darkest before the dawn” since last January, in 2008, when everyone still debated whether or not we were in a recession. Daybreak has been very delayed.

I work in academia. The economy never affected me in the past. I survived the recession of the early 90s unconcerned about my job security when I worked in an administrative capacity at Yale. I survived the burst in the tech bubble in 2000, and I got through the post-9/11 recession of 2001-2002 as a graduate student at the University of Connecticut when my occasional student loans and my stipend as a graduate assistant always remained secure.

This 2008/2009 recession (depression?) is a completely different story.

Awful Time for Recently Graduated Undergraduates and Graduates.

Gaining a full-time job at a university after transitioning from graduate work and my contract jobs at Albertus Magnus College looks almost impossible this year. I have never seen so many hiring freezes in higher education. Three jobs I applied to disappeared in one week not because other people got the interviews, but because each institution froze hiring.

Jobs in the humanities have always been few, but the few is turning into nothing. Additionally, the credit crunch has made it more difficult for students, undergraduate or graduate, to get loans, which has meant that the courses I teach under contract that depend upon enrollment are getting canceled.

Budget Deficit in the State of Connecticut.

The Comptroller for the State of Connecticut announced a few days ago that the budget deficit is billions of dollars worse than anyone expected. Governor Jodi Rell has been warning residents that Connecticut has to “batten down the hatches” for a few months now, and last week she said that the inevitable cuts

in the budget are going to “hurt.” At the end of last year, the English Department at the University of Connecticut was informed by University officials that they have to trim their budget by a practically impossible amount. A couple weeks ago, the Department chair told me that nothing can be cut right now without eliminating classes and reducing the workforce. Most departments have hiring freezes now, and adjunct programs are evaporating. The Department head told me that part-time staff must anticipate unavailability of adjunct teaching next fall.

The most recent statistics from the Modern Language Association indicated that it takes a PhD student in English an average of two years to land a tenure track position. The ability to adjunct for one or two years always offered people, like me, a safety net after receiving the PhD and going out into the job market.

There is no doubt that the State of Connecticut will try to cut graduate student benefits at the University of Connecticut starting the next academic year. Although graduate students do not have a union, various graduate organizations from department to department were able to stop Governor Rowland from cutting graduate student health benefits back in 2002-2003, but I do not think they will be as successful this year. So I guess I am lucky that I went through my nine years in the program with my stipend and all my benefits intact.

Although this may be a good time to go back to school to receive a professional degree while the job market recovers, it is the worst possible time for someone to receive their graduate degree and enter the desert that was once a job market.

Ominous Warning Signs

There were startling events that happened in the financial world this past week that do not make the future seem very bright. Microsoft reported much worse than expected earnings, and they are going to lay off tens of thousand of employees. Microsoft! One of safest blue-chips out there! Aflac, one of the most stable financial institutions and a common stock as stable as you can get, reported exposure to bad foreign investments, and the shares tanked. Aflac! As Jim Cramer said on Wednesday’s Mad Money segment, “Wall Street killed the duck!” Unbelievably, the stock of State Street and Sun Trust, two of the most stable and reliable financial institutions on the S & P 500, tanked.

GE lost another 10% this past week, a company that essentially functions as one of the biggest banks in the country. When GE took a big hit in the October crashes, Warren Buffett bought a large, multi-billion dollar stake in the company. A value investor who buys in widening margins as a good stock goes down, Buffet has not bought any more shares of GE. If Buffet isn’t investing in it, things can’t possibly be good. This is the man who told America when the crisis hit like a hurricane in October that now is the time to buy stocks, not sell stocks. Where is he now? Why isn’t he buying?

To me, this is a sign as ominous as the silent run on the banks back in September and October when the wealthiest Americans pulled billions of dollars out of money markets and spread their money out over treasuries and secured debt around the world. That was a warning similar to flocks of birds flying away from an unseen storm brewing over the horizon.

I am almost 43 years old, and I have never seen the economy this bad. People older than me have said the same thing.

Obama’s Stimulus Package

With the inception of the Obama administration, I think that we have a great opportunity to try different ideas to stimulate the economy, ideas that have more permanence than the billions of dollars that seem to have evaporated in the vacuum of AIG, Bank of America, Citigroup, et al. We, the American taxpayers, feel hoodwinked by Henry Paulson’s mysterious movements of TARP money.

At the same time that the country needs a fast cash infusion to jump start crippled consumer spending, Obama is very wise to apportion a large chunk of the stimulus package for projects that can only begin two years from now. Although there are some critics of his plan to defer certain financial allocations, promised money can be more effective to stimulate economic growth by creating healthy anticipation. If a municipality knows that they will receive funding two years from now for specific projects, they will be more apt to begin work now. A city might be more comfortable hiring a contractor to begin preliminary work on a bridge or fixing roads. If any entity knows that money will be available in the future, it becomes more likely to act in the present to start work on projects that are being put on the back-burner. The promise of future help creates hope. And for many right now, only hope can inspire the type of confidence to get the economy functioning again.

A major reason that the economy tanked is that America was a glutton for a decade, buying houses and cars they could never afford. Ironically, the only way the economy can come back to life is if America gets out and starts spending again. This might sound like an odd philosophy coming from a frugal and fairly non-materialistic person like me, but right now I think we are all too restrained in our consumption because we do not have any hope or confidence that things will get better. We are putting off taking that vacation, fixing that driveway, buying that new mattress because we are afraid that we are going to desperately need that money next week, next month, next year.

Seven years ago, I experienced financial difficulty. As a result, I barely spent money at all, and horded whatever bits and pieces of savings I could because I completely lacked confidence that I would be more solvent in the future. A year later, however, I won a lawsuit in a civil case. Even th0ugh my lawyer told me I could get the settlement money anywhere from six months to two years after the decision, I felt far more financially hopeful and confident. As a result, I bought some things on credit that I needed but had been putting off, things I would never have purchased if I had not had the certainty of money coming in the future.

America desperately needs the same kind of confidence. We need to know that, even though things are frightening right now, they will get better sometime in the next year or two. Obama’s repeated campaign litany of “Hope” and “Yes We Can” was very effective because hope and confidence are exactly the two things that most Americans need today.

English Professor’s How To in the Stock Market: For Those of Us Wall Street Outsiders.

Posted on | January 21, 2009 | No Comments

How to invest and trade in the stock market. This is the opening line to countless articles by how-to gurus in the financial world. Particularly since the collapse of housing, banks and the major Wall Street brokerages, the gurus are out telling everyone that they have the secret to locking in gains in a down market.

The truth is that the stock market is a vicious, brutal place right now more than ever. It is particularly a cruel and dangerous place for a novice who just wants to save money for the future. Never before has investing for the future in stocks been so uninviting. In fact, it seems that only the foolish would put money into stocks.

A few weeks ago, I wrote a post offering some of the insights I gained as an English professor stepping into the Wall Street onslaught. I gave some fundamental and general rules I learned from two years of amateur trial-and-error concerning what not to do, hoping to help other outsiders, like me, to invest for the future. One more rule I will add: just because the market is so down right now does not mean that stocks are cheap. After the horrendous sell-offs over the past year, my adage has been, “what goes up must come down. And what goes down will go down some more. And more. And more.” Just take a look at the chart for Exxon.

One reason why I decided to post how-to advice about investing is that, despite the Depression Era-style crashes the market has endured, I made gains (albeit, very minimal) in the stocks that I pick and trade as opposed to the gargantuan losses I made, along with everyone else, in the mutual funds that pick stocks for me. After I did calculations for 2008, using TD Ameritrade’s Gain/Loss function on my account, I was pleasantly surprised to discover that, instead of the 35% unrealized loss on my mutual funds, I had a 1/2 % gain on my individual stocks. If I had invested my whole portfolio in my stock picks, I would have have been ahead, although minimally, by the end of 2008.

I analyzed particularly the last few, horrible months of 2008 to try to figure out how I accomplished this. I had put into practice some strategies that I think could be helpful for others who feel like lost outsiders to this ruthless world of investing and trading.

Right now, I will offer one rule that worked in my favor. Always have a substantial portion of your portfolio in cash. Always. Never be fully invested. Most advisers tell you to have at least 5% of your portfolio in cash. Particularly in this market, I would suggest always having 30% cash in your portfolio. And this is on top of the 10-15% of your portfolio that you should invest in short and intermediate term bonds, corporate funds, long term treasuries and a good municipal fund.

Yes, I know. Cash and bonds are boring. Cash in particular doesn’t grow. But it doesn’t die, either.

If you were fully invested when the Dow Jones plunged from 11,000 to 7,500 from the summer to the autumn of last year, all of your finances would be down in a hole. The beautiful thing about having ample cash is that you can take advantage of the big dips in stocks to buy shares of companies whose fundamentals suggest the value will eventually go up. I’ll write another post about determining how to find the good stocks from the bad (which is very difficult these days when even sound fundamentals and good valuations don’t always work). But the winning strategy is to buy more shares of a stock as it is going down, and when it goes back up, particularly if it has a fantastic rally, sell some of the shares for profit. These days, never ride a stock rally for days on end. Take profit when you can! Then you have more cash that you can reinvest when the stock goes back down.

Keeping ample cash requires discipline. I use the gas-tank-of-my-car approach when monitoring my cash position. Whenever my tank is less than half full, I fill it up. Accordingly, I always try to keep at least 30% of my investments in cash, and if I dip below that, I sell stocks for a profit to get back to or above 30%. I do the same for bonds. If they drop below 10%, I sell stock and replenish the bonds.

Most of the pros will probably tell you that you’re dragging around a lot of dead wood keeping 30% of your portfolio in cash. But I say, particularly to any outsiders out their like me, wouldn’t you like to have have cash on the table rather than everything in your portfolio clocking in at an unrealized loss of 35 or 40%?

How to Fix the Economy: Obama Gets to Work.

Posted on | January 21, 2009 | No Comments

Before this past fall, 2008, the Iraq War concerned most Americans. As September stumbled into October, the stock market crashed, the flow of credit froze, and money began to evaporate in banks and the auto industry, suddenly the economy concerned Americans the most. As the adage goes, people vote their pocketbook.

I think that Obama is smart to begin discussions immediately with the Pentagon concerning the removal of troops from Iraq. But I believe that the new President needs to make an address concerning the economy to America immediately, perhaps as soon as tomorrow night. Even if the Obama administration is not going to take concrete action concerning the very frightening collapse of the major banks in this country in the next few days, an address to the American people goes a long way to boost confidence. In particular, the stock market needs some kind of sense of where things might be going. I’m not sure how others feel, but the fact that the Dow Jones Industrial average broke through 8,000 once again is pretty darn scary. Don’t forget, the markets are forward thinking.

Republican leaders today are already voicing their firm conviction that America needs tax relief to stimulate job growth, not government bail outs. I imagine this will be their mantra as, more than likely, the Obama administration within a few weeks federalizes at least one of the large and ailing banks. I am a pretty liberal Democrat, but I agree that certain Americans need tax relief. And I also believe that Obama is shrewd to consider putting off increasing taxes on that 5 or so percent of the wealthiest Americans, and leaving capital gains alone for a while.

Most importantly, homeowners need tax relief, and the administration ought to offer tax breaks to new homeowners in order to get people to buy and sell real estate once again. The economic downturn started with the housing crisis, and I have no doubt that the only way that the economy will move again is when housing finally bottoms out.

At the same time, the Obama administration needs to form a team to probe into all the Wall Street shenanigans that have occurred over the past several years. The insiders to this mess need to be pulled out of obscurity not only to owe up to their responsibility–which usually involves a congressional kangaroo court–but so that they can explain the best they can what happened. From what I gather, hardly anyone understands how most of these mortgage backed securities work. It will be hard to fix a mess if no one understands how the mess happened to begin with.

Some pundits yesterday and today criticized Obama’s Inauguration speech for not being inspirationally memorable enough. But I am glad that his speech was more rhetorically sober. We have been inspired by  his rhetoric enough to give him a majority of the popular vote. By dishing out reality, and getting right to his desk yesterday before his evening festivities, Obama is making it clear that now is the time for more action and less words.

There is a lot of work ahead.

THE END OF BUSH-CHENEY REIGN OF TERROR ! !

Posted on | January 20, 2009 | No Comments

OBAMA IS THE PRESIDENT OF THE UNITED STATES!

The Bush-Cheney Reign of Terror has come to an end!

It is time to renew, rebuild and to reinvent.

It is time to stop thinking in terms of blue states and red states, but the United States.

It is time to put the resources, the equality, the opportunity and the prosperity back into the hands of the middle class.

It is time for America to earn its title as Leader of the Free World.

It is time to move in earnest toward Martin Luther King Jr’s consummate vision of a nation in which everyone is treated with the equality by which they were created.

It is time to embrace the audacity of hope, to believe that it is not futile to yearn for ideals. To believe that dreams can be fulfilled.

It is time to roll up our sleeves, and to make the sacrifices that previous candidates for office were scorned to advocate.

It is time to put our own selfish needs behind the needs of the community for which we are all members.

It is time to put our children, their education, their physical and emotional well-being first, above and beyond anything.

It is time to work toward making available for every American a card that states in simple terms that he or she has the right to all and any medical care.

It is time to start removing our troops from Iraq, and it is time to engage conflict in the world with clarity of purpose, wisdom and honesty.

It is time for race to make no difference whatsoever in the context of the inalienable rights of life, liberty and the pursuit of happiness for any American.

It is time to put beauty, aesthetics, humanities, science, spirit and truth above material possessions and weapons of mass destruction.

It is time to begin a new era.

Go to the Obama Administration website, http://change.gov

Make your voice heard. They are listening. The days and months ahead are not going to be easy. There will be triumphs and failures. Obama will make mistakes. Not everything will work. But one man alone cannot put a nation back on its feet. We should stand behind Obama and stand behind each other, and work as a community for the one great community, the United States of America.

BIG BLACK HOLE FULL OF CRAP IN MY FRONT YARD

Posted on | January 19, 2009 | No Comments

A CRAPPY DAY.

This morning I woke up, excited and optimistic about tomorrow’s Inauguration of Barack Obama, inspired by Martin Luther King events on the television, ready to begin the Spring semester tomorrow morning with renewed academic vigor, and my waste disposal service backed their garbage truck up my driveway, slid in the snow and landed its back tire smack dab into the septic tank, opening a crack in the earth, and exposing the bowels of me and my family’s waste. That’s right. As I sit here, after hours on the phone with my insurance company, the waste disposal company, and a septic service company, a big gaping hole bubbles with black bilious waste.

That’s right. One of the many joys of owning your own home is that you are responsible for the 500 gallon tank of your own shit festering beneath the ground somewhere on your property. You also have the joy of seeing and smelling it when, for some reason, a several ton garbage truck falls in it.

I had the additional joy of slipping and sliding, nearly falling into the gaping cavity as I took pictures of this abyss of shit dwelling in a crescent shaped cavity, staring up at me like a sneering smile. Yep. There’s my shit, smiling up at me. There’s my reservoir of shit normally hidden beneath my $360,000 spread of prime New England property.

I wanted so badly to spend my day watching documentaries on Martin Luther King, watching Obama painting a homeless shelter, and CNN reporters broadcasting with proud, excited, here we are in the middle of history gleams in their eyes. Instead, I’m taking photographs of my shit and broadcasting proof of my shit in e-mails and here. Instead of cozy Inauguration television watching, I’m talking to my Allstate agent about my shit. I’m talking to a garbage disposal company about my shit. I’m talking to shit-tank people about my shit.

Aw crap, the dog needs to go out and take a shit.

Well, shit.

Presidential Facts:The Benefits of the White House.

Posted on | January 18, 2009 | No Comments

The upcoming inauguration of Barack Obama has inspired my ten year old son to ask me specific questions about the President of the United States’ job. They are the kind of questions about the White House that occur to a ten year old–who can’t remember the tragedy of the 2000 and 2004 elections–and which I, trying to be the fatherly-historical-expert, answered without knowing what the hell I was talking about.

I decided that, instead of bullshitting my way through my answers, and instead of actually coming to believe that my bullshit is true, I would do some digging and look up the answers to my son’s questions about the President of the United State’s job, the benefits of the White House, etc etc. So, here are Henry’s questions and here are the answers I could find.

1. How much money does the President of the United States make every year?

As of 2008, the President of the United States makes $400,000 annually. The President also receives a $100,000 Travel Account, $50,000 in discretionary expenses, and $19,000 for personal entertainment. As of 1958, the President receives a pension. As of 2008, the President’s pension is $191,300.

In todays dollars, George Washington was one of the most highly paid Presidents.

2. The above answer I delivered to Henry spurred another question that sent me back to cyberspace: How much money did George Washington make when he became President of the United States?

George Washington made the steep salary, for the time, of $25,000, which would be approximately $600,000 in todays pathetic dollars. Washington, however, already a wealthy man, donated his salary to charity. Teddy Roosevelt made double that salary as President, $50,000, which he spent entirely on entertaining friends in the White House.

3. Does the President of the United States and his family and friends get all of their food paid for?

This question arose from all the cartoons and movies in which Presidents and other people in the White House can call the kitchen at any hour of the day and night and order whatever they want. I was quite interested in finding the answer to this one because, quite frankly, I had no idea. It turns out that, yes, there is a White House kitchen that will cook the President anything he wants at any hour of the day. But the President pays for any personal meals for himself, his family and his friends. The cost of meals from the White House kitchen comes out of his paycheck. Nancy Regan recorded in her autobiography her shock upon receiving the balance for her and Ronald’s meals after their first week in the White House. However, any meals that the kitchen staff at the White House prepares for state events are paid for by the state. So, in the end, it is highly likely that the President does not pay for very many meals.

4. Can anyone be the President of the United States?

This is an understandable question, since it is drilled into children’s heads that, if you work hard, you could become President of the United States. But, constitutionally, to be President of the United States you must meet three prerequisites. 1. Natural born citizen. 2. You must be 35 years old. 3. You must be a permanent resident of the United States for at least fourteen years before you take office. Although Obama is the first President who was not born on the continental United States, Hawaii was a state in 1961.

5. Who was the oldest President and the youngest President of the United States?

At the age of 69, President Ronald Regan was the oldest president to take the oath of office. At the ripe young age of 42, Teddy Roosevelt was the youngest president to take the oath of office.

6. Yesterday, there was a debate on television over whether or not using the Bible and invoking God should be eliminated during the Inauguration. Henry asked me if every new Presidents placed his hand on the Bible and swore to God, and if he has to do this.

I answered yes to both questions, but then I realized I had no idea. I looked into the issue, and found, to my surprise, that there is nothing anywhere that enforces using the Bible and swearing an oath to God upon taking office. In fact, neither Chester Arthur or Teddy Roosevelt used Bibles in the inauguration. Teddy Roosevelt is the only President who, when sworn into office, did not say “so help me God.” It isn’t required that a Supreme Court judge must swear in the President. Calvin Coolidge’s father, who was a Notary Public, swore his son into office.

As the Inauguration of Barack Obama approaches, I have been unearthing more trivia and tidbits of fun information about Presidents and White House culture I’ll report on. Since this Inauguration is such a momentous occasion, and since we would like to forget 2000 and 2004 like bad bad dreams, there is a heightened curiosity about the transition of power, the benefits of being Commander in Chief, and, with the hope of more transparency than the dark, underground nature of Bush-Cheney, what the Commander in Chief does in the halls and offices of the White House.

It has been fun to learn the answers to many of these questions with Henry. COUNTING DOWN TO JANUARY 20th!

keep looking »

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