All posts by Ken Martin

Simple financial considerations

OK, folks. This will take about one minute and you don’t need your thinking cap. It’s about budgets and stimulus and stuff.

  • Total U. S. Population: $280,000,000
  • Proposed 2010 U.S. spending: $3,400,000,000,000
  • So, 2010 per person (man, woman, and child) spending: $12,000
  • Average number of people in a family: 3.1
  • So, 2010 per family spending average: $37,200
  • Average per family household income: $50,233
  • (All numbers found at census or Wikipedia and rounded to put spending in best light)

So, the government is planning to spend 74% of the average family’s household income this year.

With the remaining 26% you may pay for your food and clothes, your bills and mortgage.

Oh, I know, no one’s taking all of that money from us right now. It’s on credit; the government is borrowing the rest on your behalf. But don’t be fooled; this one year the government wants to spend that much. Next year will be something similar. And so on. There’s no extra paycheck coming. No catch-up year with no spending. They want to spend something like 3/4 of the money an average family makes in one year. Spent. Gone.

And if there’s anything the current financial crisis has taught us, it’s that if you’re facing an uncertain future, the best thing to do is borrow a whole bunch of money.

I’m just sayin’.

John Quincy Adams birthday reflections

I am forty-five years old. Two-thirds of a long life are past, and I have done nothing to distinguish it by usefulness to my country or mankind. I have always lived with, I hope, a suitable sense of my dutes in society, and with a sincere desire to perform them. But passions, indolence, weakness, and infirmity have sometimes made mwe swerve from my better knowledge of right and lmost constantly paralyzed my efforts of good. I have no heavy charge upon my conscience, for which I bless my Maker, as well as for all the enjoyments that He has libersally bestowed upon me. I pray for his gracious kindness in the future. But it is time to cease forming fruitless resolutions.

John Quincy Adams, July 11, 1812 (while United States Ambassador to Russia)

I’ll just post these… you decide.

Two images. Interesting juxtaposition, I think. Especially considering President Obama’s recent words: “It’s with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and invest.” (Emphasis mine.)

First, our projected deficit:

And then this:

Updated: A couple more recent quotes from President Obama… 

“To kick these problems down the road for another four years or eight years, that would be to continue the same irresponsibility that got us to this point.”

“I didn’t run for president to pass on our problems to the next generation, or the next president.”

Apart from the need to dig his predecessor, I do like his words. But when a person buys on credit, they are kicking the financial problem down the road. When the credit obligation being created is has the word “trillion” in it, there’s no way this generation is going to pay it down.

Please spend just a minute thinking about this.

So am I just a grumpy conservative?

Well, probably. But I saw this commentary on the economic plan by Jim Cramer of Mad Money With Jim Cramer (a show which I’ve only seen when I travel because long ago I trimmed down my cable… see post below).

Basically, he’s really worried about the “stimulus plan”, too. And if you read the article, you might think it’s just one more sore-loser, conservative whiner. But I hope you keep reading; on “page 5”:

I actually embrace every part of Obama’s agenda, right down to the increase on personal taxes and the mortgage deduction. I am a fierce environmentalist who has donated multiple acres to the state of New Jersey to keep forever wild. I believe in cap and trade. I favor playing hardball with drug companies that hold up the U.S. government with me-too products.

And he goes on… six figure donations to democrats, etc.

It’s really simple: we as individuals and we as a nation cannot afford this spending spree. This isn’t a partisan assertion; it’s just common sense. A couple of years ago we all understood that Social Security is in danger because it didn’t have enough money to meet it’s obligations. Now we want to commit to more obligations while having less money and a struggling economy.

We never did fix Social Security. Funny how no one talks about that right now.

By the way: this isn’t about President Obama. President Bush did the wrong thing by opening this Pandora’s box. He spent a big glob of money: what did it get us? Why are we chasing that failed concept?

The “Making Home Affordable Plan”

So, let me get the straight. Those who are close to defaulting on their mortgages (and also those who have defaulted?) can get their mortgage interest rates reduced to a set percentage of their income. “The Treasury Department” would subsibize this:

For a loan modification, lenders would have to reduce the mortgage payments to no more than 38 percent of the borrower’s income. The Treasury Department would share the cost for lenders to cut that debt-to-income ratio to 31 percent. (link)

Since I’m not about to default, I can’t take advantage of this. So I pay the same as always because I have acted responsibly and made adjustments as necessary to meet my obligations. But those who haven’t get a discounted mortgage and a partial subsidy from the government.

Of course, “The Treasury Department” has no money with which to “share the cost”. They can only spend what they have collected or plan on collecting in taxes, or what they print (and if they print too much, it’s inflation, and the dollars we have are worth even less). And since our government really doesn’t have a surplus of collected taxes, they will borrow money and pay interest on it to fund this.

I don’t really want to pay a percentage of someone else’s mortgage.

And I really don’t want to pay interest for the privilege of paying for a percentage of someone else’s mortgage.

This is a dreadful idea.

Rough start

I’m only three days into three year and I’ve got mysteriously failing house wiring, a backed up main line, a flat tire, and a broken refrigerator shelf. Oh, and I slipped and fell on the stairs (and thus broke a coat hook). Sheesh. May I have 2008 back, please? It was pretty good. :)