"A car is not a house. It is an appliance. It depreciates in value." ~Eric Peters
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October 22nd, 2014
Going into debt for a
"Most new car 'buyers' are in fact debtors. They sign loan documents and make monthly payments. Typically, for five years, the length of the average new car loan. Some extend this to six years – and seven years is not unheard of." ~Eric Peters.
Mr. Peters writes about automobiles for a living. He points out that most new car buyers do not pay cash but finance their vehicles for terms of six to seven years, a far cry from the 1960s and early '70s when a two year finance plan was common. The consequence is many "owners" are underwater on their car debt before the vehicle is paid for.
Our first car was a 1929 Chevrolet which we acquired for $75.00 right after World War 2 ended. It was 16 years old and had seen some hard use, but it was transportation and got us from one place to another without much difficulty.
We have no car now because we can't see reliably enough to drive one, but the Missus has a very nice luxury vehicle that is 18 years old and well maintained. Insurance and taxes are quite low and we can't think of any reason to swap it for something new.
To calculate the price of a new car one must add to the purchase price the high cost of long-term financing. The tab, over time, can be staggering. And, as Eric Peters points out, it is an appliance that depreciates in value. ENDLESS DEBT
This does not make us feel warm and fuzzy about Internet financial privacy.
of top 32 news sites lean Left
ITEM (Washington Examiner): A remarkable survey about the news consumption of America finds that more than half of conservatives use Fox as their main news source, liberals will “drop” a friend if they turn out to be a righty, BuzzFeed is the most distrusted, and partisans are split on the Drudge Report. Pew Research Center’s Journalism Project report revealed the “cleavage” in American media habits, with the Left picking CNN, NPR, the New York Times and MSNBC as their sources, and the right Fox.
So. The majority of news sites lean to the political left? We get an earful of it every day from National Public Radio which is trying its damndest to get thoughtful Americans to become more comfortable with liberal ("Progressive") social issues.
ITEM: LAS VEGAS, (Reuters) - The regulator of Fannie Mae and Freddie Mac said on Monday it was developing rules to let Americans buy homes with down payments as low as 3 percent, part of a push to boost access to credit.
This may give the real estate industry a boost, but if it's an attempt to lead the market back to the boom years of little or no down payments it would be a huge mistake.
Letting our guard down about a possible increase in Ebola cases in the USA would also be a mistake, but the initial fear has quieted and public attention now turns to the midterm elections which are only a couple of weeks away.
In the meantime, the faux Christmas trees are on display at WalMart. We can remember way back to the days when Christmas displays didn't go up until after Thanksgiving. Christmas music didn't air on radio until about two weeks before December 25th.
Deflation At Bay
"Deflation makes people wary of taking out debt in the first place. Too much debt is a problem in itself, but prudent lending is an essential element of capitalism. Without it, investment shrivels and wealth is more likely to disappear than accrue.
"We don’t have deflation yet, but we may be in a period of 'disinflation' in which prices rise but at a progressively lower rate. The U.S. inflation rate dropped from 2% in July to 1.7% in August and will probably come in lower during the rest of the year, if only because plunging oil prices will lower the cost of gasoline and other products affected by petroleum or energy costs." Why Deflation Is Scary
THIS GRAPH SHOWS THE INFLATION/DEFLATION TREND FOR THE PAST FIVE YEARS
'We forgot our neckties!"
There are many clues that reflect the general deterioration of the social graces. Men wearing their caps in restaurants is one. Men wearing dress shirts without neckties at public events is another.
The dress shirt was designed to be adorned with a tie. Wearing a business suit and a tie-less dress shirt is the epitome of bad taste. The open collar may be intended as a signal to the hoi polloi of being "one of the boys" but it just doesn't work.
The men at left are prominent politicians appearing before a crowd Sunday in Maryland. President Obama and Lt. Governor Anthony Brown were attempting to convey informality, but if that had been the goal they should have removed their jackets and rolled up their sleeves.
Incidentally, the gathering was somewhat marred when a number of audience members walked out. A heckler also punctuated the meeting. Sloppy Dressers
INTERNET TAX MORATORIUM ENDS DECEMBER
Bottom line...if Congress lets the INTERNET TAX FREEDOM ACT expire on December 11th the cost could cost consumers more than $14 billion a year tin new taxes.
It's possible to force an extension of the act if voters hold their Congressional members' feet to the fire before the November elections. "Congressman, what is your view of the Internet Tax Freedom Act and how do you propose to vote on the question in December?"
WE CONFESS. WE'RE ON THE DOLE.
At retirement we signed up for Social Security. We had been paying FICA taxes since the mid-1940s and the deal was we could start receiving monthly checks from the government based on this accumulation. Not only had our own money been going to FICA but our various employers had been "contributing" a like amount.
At about six years into our retirement we noticed we had got back everything we and our employers had paid in to Social Security, even adjusting for inflation. We got our money back and were now enjoying somebody else's FICA taxes. As economist Gary North puts it, "The welfare state mentality is close to universal today. Half of Americans are on the dole to one degree or another."
We and the Missus are "on the dole" and know it. If Providence provides us with a few more years those government checks will continue to roll in. It's a sweet deal for present-day old folks but our grandchildren and great-grandchildren won't be so lucky. Social Security is a slow-motion Ponzi scheme.
Potiphar Gride, our staff curmudgeon, got a strong whiff of deflation in March, 2009, and wrote:
Predicting economic trends is an inexact science, despite the reams of historical charts with which economists punctuate their forecasts. The charts are HISTORICAL and don't necessarily forecast future human behavior.
The big question at the moment is: Is our monetary system on track for collapse or can official Washington policy clearly identify the problem and fix it? History reveals that all fiat currencies wind up in the trash can, but we of the high-tech age have mostly abandoned old concepts of circulating currency and have come to depend on "digital money" the creation of which requires little more than precise computer key strokes.
So - are we in for an inflationary outburst, or is deflation going to upset our hopes and dreams?
We don't know. But we get a whiff of that unsavory stink of deflation every now and then and try to plan accordingly.
Politicians claim federal budget deficit has been halved.
"In order to cover the deficit, the government has to borrow money. The government has to pay interest on the money it borrows to cover the deficit as well. The money it borrows is added to the national debt. Financing the national debt means paying interest on all the borrowed money. It also means being susceptible to rising interest rates. Interest rates are low now, but they won’t be low forever and higher rates mean higher costs of financing the debt.
"I am making the obvious but often ignored point that while government numbers may be playthings for politicians, there are real costs and consequences to deal with no matter how artfully the numbers are framed for the evening news." LIES AND MORE LIES.
Charles Goyette does some simple arithmetic and finds the government's insistence that the federal debt doesn't really matter is political obfuscation.
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