OMB: Owner-Managed Business

That is good advice. I am constantly amazed at how many people are fooled by the anomalous pattern of price increases for residential real estate that we have witnessed since the late 1970s. As a Californian, this is the pattern I have witnessed:

• Prices started to rise rapidly in the late 1970s in urban and suburban areas of California


• The rapid increase in prices caused property taxes to increase, even for those who had owned their homes for many years


• The failure of the legislature and then-governor Jerry Brown to pass legislation dealing with the underlying increases in housing costs, restrict real estate speculators' funding, make it easier and less expensive to establish and operate a small business in California, or to reign in the growth in state and local government employment and therefore, costs. (Thus, former Governor Brown is directly responsible for the precarious condition of the state of California, because his administration set us on the road that leads to bankruptcy.)
  


• The voters' reaction: Proposition 13, which capped the growth in property taxes


• Local governments increasing the use of zoning restrictions as a way to keep the sales prices of local homes higher at the expense of hindering the formation and growth of the small, locally-owned businesses (SLOBs) that help make neighborhoods resilient against the ups and downs of the economy.


• The deep recession of the early 1980s, when the Federal Reserve, under then chairman Paul Volcker, raised interest rates and crushed inflation just as President Ronald Reagan cut taxes and regulations on business. This had the effect of causing local governments (and especially school districts) to cut services, including parks & recreation and Summer school. This recession was when I first heard the promoters of zero down payment real estate schemes.


• The recovery of the 1980s through 2001, which (except for a recession near the end of George HW Bush's term in office) continued almost uninterrupted for over ten years. This was accompanied by rapid growth in residential real estate prices, by people cashing out in urban California and taking that money to buy outright in other areas (including neighboring states Arizona and Nevada), and increasingly by people using their homes as magic piggy banks--refinancing or taking 2nd or even 3rd mortgages in order to pay for increased spending. This was also accompanied by a massive expansion in financial institutions taking advantage of people who believed the oft-stated proverb real estate always rises in the long run because there is a limited amount of it available.


• During this growth period, corporations moved most higher-paying jobs overseas, so they would no longer be higher-paying. Household incomes increased because workers worked more hours and because more households became multiple-income households. However, the individual worker's pay was stagnant or declining relative to the cost of living, especially toward the end of the growth period. Since spending by individuals and families is about 70% of our gross domestic product (GDP, a measure of the size of the economy), the only way for this growth to continue was increasing debt, in particular, using homes as magic piggy banks.


• By most financial guidelines, the price of one's home should not exceed three times annual household income. If you take a look at the figures for your own community, you'd likely see that prices are far too high for widespread home ownership across much of the country. If we ever get rational regulators that crack down on the financial industries' practices, funding for buying real estate will dry up quickly and prices will nosedive.

Your home is not a money-maker, but it can be a money-saver. For example, your back yard can be used as a playground for your children and their friends. This saves you the price of theme parks and other for-a-fee play areas. Your home can save you money when you decide to launch that SLOB (small, locally-owned business) you've been dreaming of. You can use a spare room as your office, saving hundreds or thousands of dollars each year in office rent. There are potential tax benefits, but I'm not a tax advisor, so if you're interested in that aspect, go hire one. And if you decide to move, you may retreive some or all of the money you've paid on a mortgage when you sell it. Just don't count on getting more than you paid.

The article gives six things that the author believes are holding back the real estate market. It is a good read.

I think, however, that real estate is headed downhill, and rightly so, until prices more closely match people's incomes in each community. In areas where the job market consists primarily of low-paying service jobs, home prices need to decline to levels unseen in twenty or thirty years. I'm not saying that they will--the only thing I can accurately predict is that there will be someone waiting to get paid when my paycheck comes--but it is necessary to restore balance to our economy.

Now, I happen to think that the days of easy-to-obtain credit are ending. We think they've already ended, but people are still financing the purchase of vehicles that cost a year's income. When this financial shakeout finishes, we might not have a bank on every corner waiting to issue high-interest credit cards to college students and others who can least afford them. Instead, we may find ourselves needing to save up most or all the money required for our purchases.

If this does occur, we cannot expect it to pass the real estate market without stopping to knock prices way, way down. In essence, the past sixty-five years have been an aberration in which easier access to loans enabled real estate prices to rise far above their natural levels, which served to attract more "investment" in real estate, which served to raise prices even further. The mortgage interest deduction (on the federal tax forms) merely served to accelerate this trend, as people stopped paying attention to their interest rate and other important terms of their loans because they felt that the costs were borne by taxpayers in general, and not by the individual purchasers in particular.

I have to make it clear, this is speculation, just like so-called real estate investing is really speculating. Neither I, nor anyone else, have knowledge of what will happen in the future or even any realistic way of assessing likelihoods. Real estate prices could begin recovering tomorrow and reach new highs by the end of the year. Or they could collapse so low that even the poorest renter can afford to buy his dwelling place. I happen to think that real estate prices are too high, and have been too high (at least in California) since the late 1970s or early 1980s, and that therefore, a once-in-a-generation price adjustment is ahead.

Dennis Kneale actually has some good ideas, but he buries them in his defense of Wall Street's pay excesses.

Simply put, Dennis, we all know that the companies that brought down our economy are not really well. What we've done is permit them to cover up their desperately weakened conditions in the hope that many of their contingent liabilities never have to be paid out. And, for those firms that got bailout funds (including but not limited to TARP funds), taxpayers provided and may be continuing to provide backup capital to protect them against further losses due to those liabilities.

It simply isn't possible to justify paying these bonuses when the industry as a whole is still on life support.

And that is before we face up to the weakness of the case for such bonuses at all. In theory, these are supposed to align the interests of executives with the interests of shareholders. And, in the case of many financial firms, the biggest bonuses are not paid to executives, but to the traders who conduct the business upon which company profits are earned. But the truth is, the best way to align interests is to:

1. pay part of each person's compensation in common stock
2. seek to pay out fairly high dividends upon each share, so that stock ownership isn't about gambling on share price appreciation, but is about sharing in the fortunes of a (hopefully) successful, well-run business

We already know, from the poor performance of corporate America over the past two to three decades, that bonuses don't work. We know that whenever performance craters, boards of directors move the goal posts, so that managers still "win". We know that management stops focusing on strong and sustainable business operated in cooperation with the employees that make it all happen, instead concentrating on short-term game-playing (such as mergers and restructuring), whenever their pay is partially based on stock price growth.

If you have had a real job, you certainly figured out that most of your upstream is useless. Whether you work for a consumer-focused company or one that deals primarily with other businesses, top managers generally have no clue about what the business does for its money. Bonus-giving rewards those who generally have no better success at their jobs than they would throwing the money down at the roulette tables in Las Vegas.

I urge you to go read the article, however, because he has some really good ideas, such as the clawbacks and direct shareholder approval of compensation packages. His ideas fail, however, whenever the majority of shareholders are institutions (e.g., mutual funds, insurance companies) or insiders (including lower-level employees, who may face retailiation if their votes were known).

This brings up an important point. This economic mess we are in isn't "just something that happened". It happened, in part, because people pretended that their actions and those of those in real estate and financial industries and in the agencies which should have been regulating them would not and could not cause the party to end. That is, people went on telling others to borrow against their properties and to put the money into the stock market. They told people that real estate always goes up, never down, and pressured those whose incomes or credit were marginal to accept loans because "this may be your last chance" to own your own residence. They told people to buy multi-unit rental properties, then refinance and take out equity in order to add more and more properties.

When things changed, the change was sudden, catching many people off-guard. Even many who recognized the signs were not able to change course and avoid the shipwreck. So saying that no one could have foreseen the mess is demonstratably untrue. What I want to see is who said what and when. I want them to have to acknowledge that their pet theories were wrong about this. And chief among those who must eat their words are the public policy wonks, television economists, politicians from both sides of the aisle, and various investment speakers (including the "no down payment" real estate gurus).

No, this was thoroughly predictable, just as the storm that is currently buffeting the East Coast was predicted. Anyone with basic financial knowledge knew that increased debt meant increased susceptibility to wild swings when the economy rises or falls. Anybody with basic financial knowledge knew that real estate prices were growing far faster than personal incomes--in fact, personal incomes have been basically stagnant for at least a decade--in an unsustainable race to grab as many dollars as possible in a dwindling time period. It was clearly visible that the party had to end, and soon.

Even widely-read commenters like Bill Fleckenstein could see that the party was going to end soon. So why didn't our regulators? Why didn't the Federal Reserve see that the party was ending soon? Why didn't the people on CNBC, MSNBC, and countless financial news programs? I don't know the reason, and they probably don't either. But miss it they did, and now many of them are cheerleading the whole "green shoots" and "recession is over" message.

Nice try. Let's see. Are real estate prices around 1/3 or less of the median income in most of the country? That is, are real estate prices affordable yet? No? Well, are more people getting hired or starting profitable businesses than are losing their jobs or businesses? Are more openings being created each month than the number of people entering the workforce? Are real wages at least keeping up with prices? Are some people being brought back into the above-ground economy (because of an increasing number of opportunities and pay scales that warrant a close look at a real job) and leaving the underground economy?

Think about this: around 70% of the economy is consumer purchases. Most consumers spend all they can earn or borrow, but when ten to twenty-two percent of the workforce is unable to obtain employment, it doesn't sound like consumer purchases are going to rise any time soon. In fact, it sounds to me like there are probably some long-term changes in spending and saving patterns going on here. Given the nearly zero interest rates that consumer deposits are earning, it doesn't make a lot of sense to keep a lot of cash in the bank. It also doesn't make much sense to go into debt to buy most things. On the other hand, stuffing dollar bills into your mattress is a sure way to attract robbers.

This means that there are about three ways to allocate one's surplus funds that make any sense:

1. Lend your money to people you know, in the hope that it will come back when you need it.


2. Use excess funds to start side businesses, ventures that can earn a small, but steady, income stream for you.


3. Donate your excess funds to religious and charitable organizations. This isn't because of tax benefits (although those benefits do exist for those who itemize their deductions and give more than a certain percentage of their taxable income; see a tax advisor to find out how it works), but because storing funds is both risky and costly. Better to devote those funds to helping others. It makes sense to support local ministries (especially those ministering to homeless and addicted individuals / families and those in abusive situations) and overseas groups that carry the Christian good news message (and provide food, water, vocational training, and youth education alongside the good news message) into nations and cultures that are caught up on traditions and belief systems which hold them down (on earth and afterward)..

... And, of course, putting funds into small, locally-owned financial institutions (SLOFiI), which can then help finance the activities of individuals and small, locally-owned businesses in that area.

But I would really like to see those whose cheerleading helped lead Americans into this mess like sheep to the slaughter exposed, and in some cases, prosecuted. Like those who talk up gold without telling you that they are getting paid for doing it, those who talked up real estate or investments without revealing their paid connections should face whatever legal penalties the law provides. (Note: I am not a lawyer, not an investment advisor, nor am I an investor at all [other than some US savings bonds that are directly pulled from my paycheck]. What I write is motivated from a desire to see others freed from dependence upon big financial institutions and the control of big corporations. I've never even earned an advertising payout.)

I, too, am wondering where these big banks that were so horribly broke are suddenly getting the money to pay back the TARP funds. It certainly isn't like they are making money by lending money to consumers and small businesses like we expect banks to be doing. Where are the banks getting this money?

The author of the linked article points out that the banks have access to all sorts of taxpayer-funded capital, and posits that they very well could be shuffling money from less-restrictive government funding to pay off the more-restrictive TARP funds.

What "Banana Boat Ben" Bernanke's Federal Reserve and Tim Geithner's Treasury Department need to be doing is shutting down these humongous banks, and favoring local and regional banks which will not be able to endanger the whole financial system the way that the larger ones did.

Think about it. If the corner market got into financial problems, would the government step in, saying the food supply to that neighborhood is threatened by the impending failure of said establishment? No, of course not. Neither should they step in to save overly-large financial institutions, but should instead allow the institutions' stockholders and bondholders to bear all the risk (in exchange, of course, for assisting those investors' efforts to "claw-back" excess compensation should those institutions fail).

If Joe's Market closes its doors, the Sheriff puts up a bunch of legal notices on the windows, and the banks and suppliers go after Joe and his spouse for any unpaid bills. If BigBankCo closes, taxpayers cover the losses, and the managers and investors lose only the right to get anything in the future. Yet, Joe is trying to make an honest living, while BigBankCo lives by sticking it to the company's customers (and the more BigBankCo sticks it to customers, the larger the bonuses get).

I often put it this way: If you or I tried to do the same things the banks and insurance companies do, we would be in prison. It isn't that any particular company in the financial industry is crooked, but the whole business is based upon dishonest practices. The funds that the bank lends are do not belong to the bank, they are your deposits and mine. Placing our money at risk by lending it out would be bad enough, but the bank lends in its own name, as though those funds truly belonged to the bank. Can you say, conversion?

Therefore, it is not out of the realm of possibility that the speculations of the above article could be substantially true. Obviously, I do not know, not having access to the banks' internal financial records. But thinking people (which should include you and I) ought to be asking questions and not simply accepting the answers they give us.

Like all other potentially life-ending scenarios, global warming is going to eventually fade. The cooling in the from the 1940s to the 1970s turned out to be a temporary effect of a natural cycle. The current warming trend will likely turn out to be mostly caused by the warming side of the same cycle. If you allow financial schemers to separate you from your money based on global warming, you will lose.

Note that I am not saying that the climate is not warmer now than it was 150 years ago near the end of the Little Ice Age. In fact, the added warmth is the reason we have six-plus billion humans alive on the planet. Without the additional warmth, and the additional crops that this enabled us to grow, billions of us would have starved or frozen to death.

But don't let the shysters in the stock market trick you into making bad investments. I am not an investor, nor am I an investment advisor, but if you cannot find products in local stores made by the companies you invest in, you are always going to be playing a guessing game. If I buy stock in a company that makes canned vegetables, for instance, I can see when the stores start replacing brand "X" goods with some other brand, and I can revise my own estimate of potential profits. And after all, if you do not expect a company to make a profit, your money does not belong there.

The other thing in this is that there is probably a small, locally-owned business right there in your community that could compete better if it had access to the additional funds you have available. As I said, I am not an investment advisor, so you should be sure and speak to a real advisor before you invest anywhere. Just be sure you are not easily persuaded to place your money into speculative and foolhardy investments, based more on fads than on sensible analysis of the data.

One other point to consider: if a company or industry requires government subsidies in order to keep the doors open, why would you place your capital at risk? As soon as the political winds shift, your investment could become worthless.

Use your brain. Think for yourself, and you will not become prey to the schemers who not so long ago were begging for government help because their surefire schemes flopped and endangered the whole financial system.

Glenn Atias explains the way that all of the financial turmoil was caused by a giant game, and the recovery plan is based around trying to camouflage the fact that we are not dealing with the causes. Rather than correct the problem, we have covered it up, hoping that the happy-happy times will return if no one knows that the schemers are still reaping the benefits of their schemes.

Whatever your political perspective, I still suggest you listen to this (21-22 mins) audio. I just ran across this, and thought we all needed to hear this.

And that, my fine readers, is the problem. When 70% of the GDP consists of consumer spending and consumers aren't spending because of job losses, it takes more than a decline in the numbers lost each month to bring about a recovery. Until people start getting new jobs or at least feeling stable in the new world of work, they are not going to spend more money.

The Federal Reserve's regional bank presidents all know this. It is a fundamental requirement--below entry-level--for their jobs. The purpose of their speeches, then, must not be to inform, but to persuade. The Fed, like the government that created it, is approaching the recession from entirely the wrong angle. Their emphasis on "saving the banking system" means that those whose reckless pursuit of profit threw the whole nation's economy out of balance are also the very ones who receive taxpayer-backed bailouts. The financial industries, those who caused the crisis, would have been better served if a few hundred managers and deeply-involved employees were marched before the cameras in orange jumpsuits and leg irons. The remaining people whose actions caused the crisis would have mostly sought plea deals.

Would this have made credit more available? Probably not, but whether you are an individual or a business, you are probably overusing credit anyway. And your overuse of credit threatens your personal (and business) financial stability. The concept of "financial leverage" is probably foreign to you, but it refers to the way that adding debt to a firm's capital structure can make good times much better at the expense of making bad times worse. The debt makes profits more responsive to changes in revenue. Sales go up 3%? Profits might rise 5% or more. Why? Because once the debt and operating costs are paid off, the rest (however large or small that is) goes into profit. On the other hand, when sales drop, the fact that debt payments are relatively fixed means that it is easy to be thrown into a loss situation.

As I mentioned above, people were using loans too readily. A person or organization receiving a loan is trading future income for present spending. This is why California is in such deep trouble. In addition to the state's never-ending appetite for spending, the state is faced with coming up with the dough to make payments on money borrowed for *past* spending. And this is also what is happening with many of us: as incomes diminish, payment on debt is more or less fixed, taking an ever-larger proportion of one's income. It means that many more people will have to go through the bankruptcy process (and Congress is going to have to revisit the anti-consumer provisions they added to the Bankruptcy Code in 2005 or face an incumbent-free House of Representatives).

It seems to me that asset prices are still far in excess of sensible values, while we continue to ship our productive capacity overseas to low-wage countries. The result of this is likely to be a severe asset price deflationary spiral that stops consumers from buying non-essential items (they won't have the funds to do so anyway) and knocks us on our collective economic rump. As the "circular flow of income" stops flowing, holders of debts (that is, financial institutions like banks) and owners of taxable properties (that is homeowners and car-owners) alike will be squeezed to the breaking point by the lack of payments flowing in and the fixed or growing payments they are required to outflow. Yes, that sounds a lot like today, but this is just a practice run.

We see that the Federal Reserve, for instance, found that its monetary tools grew less effective as interest rates approached zero. Now imagine what happens when consumers won't spend or borrow, but won't put any money into banks, either. Banks will find that people will likely become less enamoured with electronic payments--because banks will crank up the fees, since they won't be able to generate any interest income--and unwilling to leave funds in their bank or other financial institution accounts.

I want to interject something here: When I took "Financial Institutions and Capital Formation" at California State University's San Bernardino campus, the instructor (who advised some of the newly-independent Baltic nations on forming financial markets and institutions) said that bank safety funds like the ones administered by the FDIC had a 100% record of failure, given a sufficiently strong financial crisis. It won't take a 25% failure rate to collapse the FDIC's funds. Remember that our banks use fractional reserves. When they accept a deposit, the reserve a portion of it and then lend a portion out, which becomes a new deposit in that bank or another one. And the process repeats. So an original deposit of $100 can end up as several times as much in the banks' ledgers. The reserved value, on the other hand, can never exceed 100% of the original value. Be aware also that this added value on the banks' ledgers is equal to the principal value of the loans they make that are derived from that original deposit. It all works, as long as consumer and investor confidence allows banks to avoid paying back all deposits at once.

If ever there was a 100% run on all the banks, most of us would not receive our full deposits back, nor would borrowers be able to repay the full value they owed. This is not an excuse to pull your funds out of the banking system. Remember that our money only has value because the banking system and the government says it does. Fortunately, that megasize bank run isn't likely to happen, but if it ever did, everyone would suffer, with nothing that we could do to ameliorate the pain. If someone tells you to buy gold as preparation, ask yourself how buying gold is going to help you if the banking system collapses. (Answer: it probably isn't going to help.) Now, let's get back to our topic.

The regional presidents of the Federal Reserve went out of their way to say that the recovery could take years before it starts replacing jobs, even though they know (and we do, too) that there won't be a recovery until the job losses stop. Why do you think they are saying this, then? Could it be that they are hoping to persuade you and I to once again borrow money we don't have any realistic expectation of repaying, perhaps using our now-depressed-value homes as collateral? After all, a return to the heyday of borrowing and payments would be a quick way to restore our financial sector to profitability, even if it comes at the expense of those individuals and families that do business with them. Could it be politically profitable to be able to announce the end of the recession, even as a tenth or more of the people who formerly had jobs remain jobless? This would be a major feather in the new administration's cap. So I ask you, does it seem strange to you that these political, financial, and regulatory leaders, people who should know better, are throwing their hopes for a recovery on a return to the very things that caused the problems? Wouldn't they be remembered in a better light if they supervised a true restructuring, such that the asset price bubble could never recur, and neither could the abuses that the financial sector perpetrated, nor the lapses in oversight that the regulators allowed?

With a limited time in office (eight years maximum, assuming he wins re-election after the first four years), a wise executive would seek to make the longer-term changes that enhance his legacy, rather than concentrating on re-election. That is, the President should be pushing the Fed, the Treasury, various federal agencies, and Congress, toward the singular goal of getting rid of the things that caused our present crisis and preventing a recurrence. Mollycoddling too-big banks is not going to accomplish this. Nor will pulling all the little regulators (SEC, CFTC, NCUA, FDIC, etc) into one big agency, remembering how the federal agencies prevented state agencies from tackling the burgeoning crisis earlier in the decade, before the wave crested and broke on the shores of overleveraging.

On the one hand, goverment bailout may well have prevented global economic diaster; lessons learned from the Great Depression were appropriately applied. On the other hand:





1. The government remains the driving force of recovery.


2. The fundamental economic problems facing most Americans remain.


3. There is no substance behind the Dow?s rise, which is fueled by false hopes.


4. Old business practices are back; one new fad is to bundle together insurance polcies as investments.


5. Economic recovery is still kilometers out of reach and will remain so as long as consumer debt chokes spending.





The true beneficiaries of government stimulus spending are many of the institutions responsible for the econolypse. Where is the moral hazard?

Joe Wilcox writes the above. It is a worthwhile article to read. Follow his links. See the full story. In it, he shows that even a former government official admits that the fundamental conditions in society and the economy still point to quite a far run of "recession" before a true recovery begins. Following the links, you'll find "There is no recovery now, and there isn?t going to be one in the foreseeable future." He's right. Don't let those who pronounce untruths for selfish reasons deceive you into piling on the debt again. This is not the time for it.

NOTE: I am not a fan of any politician (other than Ronald Reagan) or party. Do not mistake this for some kind of anti-Obama screed. The situation started before I ever heard of Barack Obama, and its roots date back before his involvement in politics. His only connection is that he continues to follow the road blazed by his predecessors.

We run headlong into the future, not stopping to think about the fact that whatever we save today is what we'll have to live on tomorrow. We spend hundreds or thousands of dollars per year on entertainment and electronic trinkets. And by living so lavishly, we train our next generation to expect to live like this. Instead, we should be living in the smallest home that will meet our needs, insulating it, adding a garden in the backyard and solar power in sunny areas or wind power in windy areas. We should be diverting as much as we can to savings, eschewing spending on present-day luxuries in favor of providing for ourselves in the future.

Not that we should put those funds into banks, where they'll earn two or three percent if we commit to leave the money in there for years at a time (less than that if we won't make that commitment). Instead, much of that should be placed in federal savings bonds, where we can expect the funds to be repaid with a decent interest rate and to be secured from loss up to an unlimited value, for as long as the government stays in business. Perhaps some could go into stocks, into state and local government bonds, and into investing in small, locally-owned businesses (SLOBs), the engine of the economy and source of 70 to 80% of all jobs.

It is exceedingly difficult to imagine how rough things can get, but many who were born toward the end of the "baby boom" generation or in the succeeding generations will find out that our lives of luxury were bought at the price of leaving nothing to live on in our twilight years. Further, our corporate overlords have shipped almost all our production overseas, because of the much lower labor costs. When Social Security is gone and we can't even get jobs as greeters at that Big Blue Discount Store, we will be getting what we earned.

I know what you're thinking: "The government will not allow Social Security to go down". Not that you can live comfortably on Social Security alone, anyway, but you know better. Deep inside, you know that even the AARP cannot forever resist the population curve. Thanks to our modern economy that is not based around small family-owned farms focused around subsistence farming, people are finding the cost of having and raising children to be very high. Thus most couples use birth control and other measures to keep themselves from having large families. The time is coming when we won't have enough births to replace everyone who dies. Only immigration will keep our population from declining, and even that will only continue until neighboring countries get far enough with economic modernizations that fewer of them need to leave home and they also start having smaller families as a result of the changes.

There is a "hump" of baby boomers working its way through the workforce. It is now starting to reach the far end, where death and retirement pulls people out of the workforce. The size of this hump is such that it will only be a ten or twenty years before there could be two retirees for every three workers. I mention this because that's the time when supporting retirees could take half or more of a typical worker's income, and that's not counting all the other government agencies and programs out there that will require funds. Yes, Social Security as we know it is going to go down, and all the increases in withholding rates will do little to change that. It just isn't sustainable with the inverted population curve ahead of us. (You can tell I'm not a politician. You cannot get them to admit this yet. They won't admit it until the very day they vote to replace the present SS system, but any thinking person can see that they'll have no choice about it.)

Wherever you are, this is the time to start. Instead of spending hundreds of dollars on music and movies and dining out, join Netflix, Gamefly, or similar services, to keep your costs down while you eat your home-cooked dinners. Now, Netflix doesn't support streaming to Linux devices yet, so if I ever did have time for entertainment, I wouldn't use them. But you may not spend six to ten months per year working out of state or you may be using a supported platform, so their model may be right for you.

The days of eating out more than once or twice per month, likewise, have to end. Whether it is breakfast, lunch, or dinner, you cannot afford to give away money that you should be using to provide for your future.

Unfortunately, we are not teaching our younger generation this. I found that even providing the tools and the opportunity to train oneself in skills that could help earn more income does not motivate them to use those tools and the opportunity. They'd rather spend their time posting suicidal-sounding "emo" lyrics on social networking sites and moan about not having any skills to start a band than actually study and practice a skill. That goes for any skill, including guitar-playing, computer graphics, speaking a foreign language, or shooting a basketball, once they get to the point where they have to expend effort in not-very-enjoyable practice sessions.

The main point is that you and I must change what we are doing, or we can expect to join the ranks of those sitting at busy intersections with signs saying "homeless; anything will help". We also have to get it through to our descendants that they also have to change. At the rate they are going, they'll be homeless before we will. They will then try to come home, without dealing with their spending problems first.

Think about this: you already know that your company job is in danger. You know that the management will try to give you the least possible amount of advance warning before they dump you and close their local operations. Why haven't you kept your resume updated and sent occasional copies to other employers? Why haven't those who have always dreamed of independence gone ahead and started doing business on the side when they are not at work? In general, it comes down to allocation of efforts. In order to provide for your future, you have to be active and you have to be watching for opportunities to change what you are doing--changing positions, changing employers, changing locations, changing professions, changing outside-of-work activities--and you have to be faithful in looking out for your own interests (and often those of your family and close friends).