Buying individual or family carbon offsets? How about trading offsets for being a jerk!

Now you might consider this posting a little bit of a rant, but that's ok.

As a disclaimer. I know what carbon offsets are. I own a wind turbine that creates clean energy (no carbon emissions) and when I am not using that energy, it goes back to the grid. In a real sense I am doing something personal to help, and it costs me real money. We expect a payback in about ten years or so, if the wind keeps blowing.


I also know what "cap and trade" is. In the 1990's we used "cap and trade" to significantly reduce acid rain production caused by power plant emissions of sulfur dioxide (SO2). It worked. We should expect that "cap and trade" for carbon emissions to work for industries by setting a market price for carbon emissions. The market provides an incentive to bring new technologies on-line or retire old polluting technologies. Eventually the market disappears when the pollutant is no longer emitted.


Now for the crazy part. There is a market for your individual carbon production. You can pay companies like TerraPass (aptly and ironically named) $369.00 for your families offset. Here is what you get for that half house payment:


2 Car decals,
2 bumper stickers,
4 luggage tags
1 fridge magnet


 a "certificate", (read it and weep) and a promise: 

Where your money goes



When you buy a carbon offset from TerraPass, your money supports clean energy and other projects that reduce greenhouse gas emissions. Our offset portfolio consists of a mix of clean energy, farm power and landfill gas capture. If you want to decide the quantities of these projects yourself, you can build your own portfolio.

How the market set the price of $369 is a mystery to me, but I would guess they sat around a table passing  a bottle of McCallan single malt, smoking Cohibas and laughing about how much they could get out of a well meaning family for a couple of pieces of paper and a promise to do good.

OK, you want to do good for the planet and feel good about doing bad things like making carbon emissions in the first place. How about recycling, walking to work or the bus stop, or, god forbid, skipping a trip or two on an airplane. Get rid of the extra car. (no need for the second bumper sticker then).


I don't even want to get started with the big guys who jet around in private aircraft, watercraft and limousines and live in multi mcmansions and then claim to save the planet by buying offsets. It just doesn't work that way. Witnesses to that were Mother Teresa and Ghandi. If you want to change the planet, you need to act as if it needs saving, not just by buying a "get out of jail free" card.


However, you got to admire the TerraPass team, with a straight face it's a slick way to raise some cash in exchange for a bumper sticker and a certificate.


Taking a cue from TerraPass, I will be opening a business called JerkPass.


Ever made a mistake, cut someone off while driving, accepted the wrong change from the clerk and not gone back, made an offhand remark that hurt someone, forgot to flush the toilet or put the seat down, been insensitive to your spouse.etc. Well JerkPass can help.


We promise to do nice things for the population of the planet. We will hire well groomed and friendly people to hold doors for others, to give up their seats to the elderly or disabled, to NOT park in handicap spaces. We promise to spend our money on things that help others. We promise not to waste and always be respectful and cheerful. To be part of the solution, buy one of offset packages or send a gift certificate to the most un-thoughtful person you know. Make them happy in their ignorance.


What you get for $369.00 is


A certificate that allows you to offset your actions as a jerk, by saying "...HEY, CHILL OUT MAN, I HIRED SOMEONE ELSE TO BE NICE TO TOHERS.."


Two bumper stickers that say.


I hired someone else to drive their own car rationally!


You also get the peace of mind that you are doing something (albeit vicariously) good for others while you can just be yourself.


Personal carbon offsets, what will they think of next?


Anyone got some other ideas for other "OFFSETS"?

Merry Christmas, my gift of hope to GenX 'ers and Millennials

One thing a significant downturn in an economy always does is help the next generation afford the things that the previous generation has taken for granted and that they have overpriced.

For instance, maybe homes and maybe the stock market.

With home prices continuing to fall (and they will until all the defaulted mortgage and excess capacity is absorbed or demolished), and when our recent college graduates and Gen Xers start to recover they will find the cost of homes to be within their reach. In a few years a hardy bunch of young home builders will get out there again and start building small, energy efficient and affordable homes

I expect that the government will continue to find ways to keep home mortgage rates as low as possible. However, the curves of price and interest must meet to keep home ownership costs affordable. I think this is a given and maybe the economists idea of supply and demand will make sense again sometime soon.

Although the convergence of low mortgage rates and cheap money helped create our economic predicament, the politics of homeownership is not over by a long shot. (the poster's humble opinion).

When the bankers come to their senses and dump their stock portfolios to take their profits and resume traditional banking again, the prices of stock ownership (again, in my opinion) will return to a realistic level.

In the post-consumerism world, stocks will be priced on a company's ability to make and share profit (that used to be called paying dividends). Stock prices will not be based on your bet that there is someone willing to pay you a higher price for an overvalued stock. (The theory of the next greater fool.)

An added benefit:

In other areas, millennials and GenXers will find that, as the generation that screwed up the economy leaves that economy by death, retirement or other means, interesting jobs will open up. Some of those interesting new jobs will be in post-consumer businesses, green energy, and climate change adaptation.

So with the cheery time of the year upon us my gift to millennials and GenXers is HOPE that: 

• they may be able to own their own mcmansion (suitably downsized)
• they may gain wealth through industrial ownership.
• they may find jobs more exciting than grocery bagger or barista.

And to all a good night!

Swimming in a sea of seasonal waste!

A recent post at the The Pink Slip Blog  pointed me to Scroogenomics:

In the U.S. alone $25 Billion, that's billion dollars, worth of gifts have no value to the receiver and then just become waste, according to Jel Waldfogel economics professor at Wharton.

We are not the biggest seasonal spenders, 12th out of the top 26 nations, isn't that amazing.

Add to that the waste of lighting, packaging, and wrapping, fuel etc and we are swimming in seasonal waste.


The more I think about that, the more I want to scream "I'm as mad as hell and can't take it anymore!" Peter Finch in Network, 1976.


Should this solstice celebration be a completely wasteful season?

No wonder we get crabby and our familial dynamics fall completely apart.

It is like a Potlach (see my July post). A Native American practice where wealth is given away or burn up to prove how wealthy you are.

But this year's waste comes at a time when we shouldn't be wasting precious resources, we need to be investing in our future and investing in those who have been hit the hardest by the ongoing recession.

So my suggestion for gifts this year:

• More money given to charity and valuable non-profit organizations. I upped my amount significantly.
• Gifts of time and energy to friends and families. Certificates for babysitting, dog walking, errand running, etc.
• Gifts of stock in green/sustainable companies for infants and responsible older children.
• Home made food" gifts that necessary, used up and create minimal waste.
• Re-gifting, recycling, reusing.

So I am promising myself to redouble my efforts to use less next year. I have already started thinking of strategies to be much less wasteful and more post consumerist next year.

32% of all mortgaged properties in the US are worth less than the mortgage.

As of June 2009, more than 32% of all mortgaged properties in the U.S. were “underwater,” meaning that the homeowner owed more on their mortgage than their home was worth, according to Brent White of the University of Arizona in his paper Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.


Caveat: before you read this blog and react, make sure you live in a non-recourse state. That's one where if you default on your mortgage the banks can only take the house and are barred from coming after your other assets to make up the difference.


While he doesn't quite come out and say "WALK AWAY YOU IDIOT", I will do it for him: if you are a slave to your bank for their blessing of a roof, run away. You don't owe them your soul. If you can continue to pay the drowned mortgage, continue to do so. (I am able to, so I do.)


In my world view your contract with your bank is just that a "contract" and not a moral obligation to a life of servitude. We had that before with the plantation owner making the slaves build their cabins and stay obligated to the master for food and clothing. We rejected that notion 150 years ago.


If shame and fear are holding you in mortgage slavery, shake it off, there are plenty of rental properties out there and over time you just might be able to save a ton of money.


For the sake of honesty: I am completely underwater on my main residence. Its worth exactly zero dollars. How do I know that? Half the homes in our subdivision are for sale, some for over two years. There are no buyers, nor are there any lenders, so the market value is zero.


Realistically, I am sure if we auction it, we might get something. Maybe about 1/4 of its former price point. I can afford to live in this home because the payments are under control, for the next four years anyway (and then I retire). I expect we will sell it for the mortgage amount or maybe a shade over/under.


I have no fear of having crappy credit. I have great credit and half my credit card banks have raised their rates to the state usury limits (or nearly so). I am lucky that none have cut my limit, so I have plenty of credit but at rates that make loan sharks look like a kinder and gentler business model.


PS I just bought my last car (should last the rest of my driving life) and I have a significantly diminished stash of cash for my impending retirement.


I would guess that if you are considering walking away from your mortgage, you already have nearly wrecked your credit. If you are safely making your payments and you like your house stay, its not worth the hassle.


However if you have $25,000 in credit card debt, no savings accounts, an income of less than $30,000 and a negative home equity of $100,000, then I can't see the downside of becoming a renter. Maybe you should have been a renter all along. If you need to be a mortgage slave to feel good, then I suggest finding a financial life coach to work through the issue of bonded servitude.


In the bloggers humble opinion, we should expect single digit increases in home equity over the next decade: so factor in that the boom is over and the "value" of your home will never go back to the heydays of your youth.


In a nutshell here is what Brent has to say about the non-walkers...This norm asymmetry has lead to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse. (WHITE ,2009)


If you want to read the whole paper, and I highly suggest it you can get it here.

http://api.ning.com/files/CdXtKqMgxHL4M8EYE8FhdO8KVYCEx0nMLUYAjpPIbVo_/walking_away_paper.pdf

Does your Post-Consumer business have a lifestyle coach for your clients?

If 70% of our economy is based on consumer products (and I think food, shelter and clothing are included in that category) then we are going to continue to buy plenty of stuff, it's just going to be a different kind of stuff.

BEA says personal wage earnings are up, those results must come from some world I can't see. If 500,000 people lost their jobs last month and there have been no new jobs in a year, where is the wage growth coming from? Maybe those pesky banker's bonuses have driven up the earnings in gross dollars.

If the incomes of U.S. citizens and residents are down 20% or more (not counting the losses in your savings and real estate), it follows that we will be spending 20% less. We will continue to spend on what we deem to be "essential" to a rational modern lifestyle. We haven't completely made up our minds about what defines a rational modern lifestyle, but we will.

I am sure that only a very select group of Americans are reading the Robb Report (The global luxury source)  to define rational modern lifestyle. But power to those who have more money than sense. (Until the revolution, and don't think it's not coming, history tells us otherwise. Just pray that it is peaceful)

I digress, so let's move on to the central theme of this posting.

I choose to define post-consumerism products/services as something necessary to carry on a rational modern lifestyle, they are not necessarily product  made from recycled materials or a "green service". (Although that is a good idea).If you are selling a post-consumer product or service what added value can propose to your potential buyers
 
How about a Post-Consumer lifestyle coach for your clients?

If your product and service sales force doesn't include lifestyle coaching services, it ought to. Potential post consumerists number over 300 Million in the U.S. alone. Many of us are casting about for someone to show us how to reset our lives and live rationally without moving into a cave and eating raw roots and tubers.

So here goes, five good reasons for adding a post-consumerism lifestyle coach to your small business retinue.

1. It's a about being positive and upbeat. Hey, we can help. use our product to live better!
2. It's about moving forward and not being left behind waiting for things to return to normal. Frugality is the new normal!
3. It's about being rational. If your product or service can lead to a more sustainable world, then go for it.
4. It can satisfy your need to do good while getting rich! I never worried about making money as long as my products and services helped others to live better.
5. It's about the money. Extracting a little extra from happy clients is what capitalism should be about.

Think I'm crazy? The other day I was talking to Bill Inglis of Inglis Homes LLC in Phoenix. The core values of Bill's company are sustainability, renewability, responsibility, and affordability. (Sounds post-consumeristic to me). When I suggested a lifestyle coach as part of his services, he laughed and said that he had just added one to his service consultancy. http://www.inglishomesllc.com/

PS Dubai has asked the banks to delay repayment of $60 Billion of their debt, so don't say the world hasn't changed!

The times, they ARE a changing. Back to basics and the "New" Consumerism.

I apologize for staycating and missing last weeks blog, but here is today's.

Parade Magazine, not the bastion of negative thinking nor teh hot bed of radical thought reported on the economic crisis and its effects on common Americans.

How the Economic Crisis Changed Us
by Michael J. Berland and Douglas E. Schoen
published: 11/01/2009

The Recession Hits Home  

• 79% have personally felt its impact
• 42% delayed or canceled their vacations
• 27% pursued extra work to make money

 
Americans See Benefits, Too  

• 52% are forming stronger bonds with spouses
• 63% have become more do-it-yourself
• 30% are volunteering more for charities

The first numbers aught get the attention of government leaders and market makers. The second set aught to get the attention of all of us. My postings about post-consumerism over the last few months have been pointing out indicators of a change in the way ordianry Americans are going about adjustign to the new economic relaities.

Humans as a species are adaptive, and we Ameircans are especially receptive to change.

Over the last two decades we have gotten way too wealthy and accustomed to having easy times.

It appears with these difficult times we are looking for what's important, and the advertisers have inevitably figured that out. If you google "back to basics" you will get 15M plus hits, by the time you read this, the number will be higher.

I'll grant that "back to basics" as a phrase has been around for a long time and it resonates with us, but  "New" Consumerism as a term for scaling back and shopping around for deals, strikes me as kind of weird.

"New" consumerism is the new normal. Yikes.

I really liked the Allstate ads for back to basics of spending more time with family and friends, finding pleasure in simple things. Now we are faced with the "new normal", spending our time in stores searching out the best deals. In this model just run to WalMart as they price compare. I do too: I know that this week milk and soymilk are cheaper at Safeway than at Sam's and that wine on sale (as it always is) at Safeway is way cheaper than Sam's.  But if we follow the new normal our shopping time will be increased and advertisers will be assured at work trying to find new ways for us to part with our cash once we hit the inside of the mall.

But we can be assured that AARP is on the ball: The 10 commandments of new conumerism were posted in the e bulletin

Best post crash business: Travel to Washignton DC.

The best post crash business is Hotels in and around Washington DC and the airlines that serve DC.

Every hick mayor and city manager and their official posses have been descending on Washington DC for the past six months or so.  Wink, wink, trying to make sure they get their piece of the stimulus pie. Our hick mayor has burnt the city travel budget in four months of DC sightseeing. My guess the 4000 college and university presidents in the United Sates and US Samoa have also done their best to help the DC service industry rebound.

With the massive influx of money, DC cab drivers might be called on to restart the consumer wave rolling again!

What they should be doing is trying to balance their city budgets with a dose of reality. What I have observed around here are government officials with their heads in the sand or up their _____ peaking out their navels, waiting for the recovery to begin.

What recovery, as far as I know 15% of American's are without work and deeply in debt and the vast majority of American households are down 10-40% in their earnings while fundamental household costs of necessary stuff like healthcare and heat and electricity goes up.

Why can't our leaders get their heads out of the sand? Because everything they have been taught and observed revolves around buying stuff. George Carlin pray for us!

If 100% of our income goes to cover basic costs (some extra for food and clothing maybe) and our savings are a few thousand a year, how can we can spend more without getting the country further in the hole.

My suggestion: get over having stuff, and begin to save, and that includes the federal government (Save, for crying out loud!)

When we save enough to feel comfortable, then we can begin to figure out how to spend our incomes. I think we will spend them on common good issues, and not buying useless crap made in China.

High-Speed Trading, the final blow to your 401K and the end to disposable income.

High-Speed Trading,  The legal replacement for derivatives in stealing the wealth of a nation.

As simply put as possible, your friendly hedge fund manager Mr. Friendly, leases space for his computer in the same building that the NYSE has its computers.

Your computer is on your desk hooked up by modem to one in Des Moines Iowa (or Dhaka Bangladesh) which is then hooked up to the NYSE via a complex route that takes time..

You and others like you see a trend for Acme Products and offer to buy. Your friendly hedge fund manager sees this also. Mr. Friendly buys, his exchange is an nanoseconds, yours take one second. In that second minus a nano-second Mr. Friendly has driven up the price of Acme Products and your profits are diminished (or losses increased).

Every time you trade you lose. The more you trade the more you lose and the more Mr. Friendly wins. Eventually you are tapped out, because Mr. Friendly has deep pockets. and you are in Ocean Park, Washington.

If the mavens of Wall Street and our government agents in Washington want the consumer boom to re-ignite, they need to make sure more money flows down to Main Street, and so far I see the money going one way. Straight into the hands of the 1% enters.

Henry Ford knew that to have sustainable consumer growth, employees must be able to afford the products they made, and the time to use what they bought. Hence, Ford's paid better wages than others and made sure his workers had time to use the product up. (enough wages to buy a model T, and the forty hour week to drive it into uselessness). Ford also sensed that more than 40 hours per week diminished productivity and also decreased the number of potential buyers for his product. Once you bought your Model T he didn't have anything else to sell you with your overtime pay, so that money went to hire more workers. (of which there was a steadily increased supply).

That's as simple as it gets. Wall Street wants and has all our disposable income and if you let them have your meager savings, they will eat the rest and leave you nothing.

The inevitable outcome of unregulated capitalism, is the transfer of all wealth to a few.

For the Wall Street investment bankers and politicians, read some history of the French revolution and the Bolshevik revolution  and you might see why it could be a good thing to let a little wealth trickle down.

I'm betting that I am right, and in future postings, I will be musing about paradigm shifts and trends rather than causes.  I will keep my eyes open for new ways that the system will re-allocate your wealth. 

When we get through this mess, we will not be worrying about fashions and ipod upgrades but more fundamentally useful things like friends and family and a shared common wealth (good).

Simplify your life. Six easy and small ways with a link to 72 more.

I know the "baby boomers" are begining the de-acqusition phases of their lives. As I talk to my old and new friends, who are age peers, they are looking  for EASY and SMALL ways to simplify their lives.

They are not looking for leisure retirements, they are looking for ways to dump impediments to continued productivity.

For example, if taking care of my large yard is getting in  the way of my volunteer work, something has to give:

I dropped the yard work!

So here are few EASY and SMALL ways to simplify your lives:

1. Make all your bills into e-billing and direct pays. Most e-bills can be put on credit cards so you don't always face over charging yourchecking account.
• Reduces paper mail coming in and reduce recycling or waste.
• It also saved me $15/month in postage, and the monthly drive to the post office for stamps.
2. Give to charity all the clothing you have not worn in one year. (Of course save the raincoat, even if you live in Arizona, you might travel)
• This simplifies your decision making on what to wear. It also keeps you more up to date.
• It makes it easier to organize your closet.
3. Take ALL your books and magazines to the used book exchange.
• This simplifies cleaning the house and the inevitable internal question of "Tell me again, why am I saving this?"
• Lets you return those "lost" library books!
• Porvides you with a little income to maybe buy a current novel, or self-help book.
4. Burn all that lumber you have been saving for that "project". Skip the project, you don't need a yard shed. (See above: drop the yard work)
• Clears the garage for the car and makes getting into the house easier. I did this one!
• Might save your life, if you need to get out of the garage quickly.
5. Drop all memberships that don't contribute to the benefit of others (than yourself).
• Lots fewer meetings.
• Lots less junk mail.
• More time to be productive helping others. (A very post consumer view.)
6. Have your home phone disconnected (We did!)
• No false emergencies at our houses. (We do have cell and email for close friend.)

Thats my list of six.

If you really want the full monty go to this website. Zen Habits

There are seventy-two ways to simplify. If that's too many read this excerpt from the site.

The Short List 

• Identify what’s most important to you.
• Eliminate everything else.

Indicators of change to post consumerism society.

New indicators of a change in consumerism towards post consumerism.

Main stream media government and “wall street” keep telling us to buy stuff as the recession “has ended”. What a crock. At the same time they are bemoaning consumer spending they are saying look out for more job loses next year. You can’t have it both ways: If we are rightfully fearful of our future employment options why should we buy into their self serving demands.

This week, as your ever watchful post consumerist, I plucked these tidbits:

• Condé Nast looses big and closes four publications.

Condé Nast will be down $1 Billion in advertising revenue this year and will close four magazines and 200 staff are to lose their jobs:

• Gourmet,
• Elegant Bride,
• Modern Bride
• Cookie  

Will added stress from these loses decrease the cost of weddings (another blog opportunity) or raise the rates of bridal suicides. On the upside Bon Apetit and Brides magazines will continue to publish, so we won’t be completely bereft of very glossy very consumerist offerings in this area.


• JD Powers find Gen Y to have negative attitudes to car ownership

Mark Zimmerman of the LA Times reported that according to JD Powers and Associates (the perennial toastmaster of the auto industry) Gen Y teens and early careerists have shifted their perceptions (negatively) towards cars ownership and the auto industry. (Japan is showing “decline” in car ownership).

"The negative perceptions of the automotive industry that teens and early careerists hold could have implications on future vehicle sales," Chance Parker, vice president and general manager of J.D. Power's Web Intelligence division, said in a news release. (LA Times)

What implication?  Less car sales I think, or is it: “If I hate your product and have found a way to live without it, you will still find a way to sell it to me. Think again auto execs. A silver lining: the Chinese are wild about buying cars, and that’s a big market if you consider China has two nations (one the size of the US who are rich consumerists and the rest of their country that is illiterate an poor).

• America’s Top Chef show acknowledges people are entertaining home in latest episode. 

Bravo’s show Top Chef acknowledged that in these difficult economic times more people will be having dinner parties at home. I have found that to be a change in my personal life. Although we are not big on eating out except when travelling and as an occasional luxury, we have found ourselves at more and more backyard diner parties (we live in AZ and on the Washington coast so al fresco is then norm). We have probably held twice the number at our homes that we have in past years. Check out the Bravo episode of Top Chef and see how ten chefs in one home kitchen can really make a mess.

• Live music in our back yards.

Two weeks ago, I spent my Sunday afternoon in a friend’s back yard with fifty folks listening to one of the widest types of music you could imagine. From 16th century harpsichord, to Tom Lehrer’s satires from teh 60's to Gershwin to Joan Osborn. Flagstaff’s long time troubadour Jimmy Deblois.(see his YouTube hit) has teamed up with classical pianist Charles Spinning. They have performed at a variety of community venues and are planning more “backyard’ concerts. The highlight of the afternoon, was Groucho Marx’s ditty “Everyone says, I love you” from “Horsefeathers” sung for the wonderful young couple (and their gracious family) who were having there wedding reception next door, and never called the police

How the stock market works to redistribute wealth and the Vegas Sports Book

In the post consumer world two things will rule. Regular folks will have figured out the stock market is run to move small wealth from workers to large wealth capitalists. No more no less. Its an elite form of lottery with some winners so you can point to them to get the perpetual losers to ante up. Secondly, regular folks won't have superflous money to speculate heavily, like we have for the past two or more decades. Speculative investing will return when we have created a healthy balance of post consumer wealth.

I hadn't set out to write this post, but I can't get it out of my mind I believe in investing as a long term strategy, but I know I can't be an outsider and expect to make money. I have decided to make my speculative investments outside the stock market and in the local "slow money" movement. (See a future posting on "Slow Money")

Most people understand the Vegas sports book, there are winners and losers and the house always gets its cut of he action (win or loose). Simple, if I bet against Duke and they win, I loose, those who bet for Duke win. Except there is the "spread" where no one wins or looses and that's where the house really gets wealthy.

All stock exchanges work exactly the same. I bet that GE is going up and the seller bets that GE is going down, and the traders take a commission from both then buyer and seller. The traders just need to keep the uninitiated convinced that the market is always going up and the only losers are those sitting on the sidelines. (There are derivatives and futures, but at the fundamental level its the same thing, but stupider for the outsider).

The truth is that the stock market is a sports book, where very smart folks who went to the same universities or whose professors went to those universities make the rules and run the book. mnarket makers  know that if they are betting against other smart folks with the same educations they will get a net zero result. Except the house always makes its vig or juice. The "vig" is what you pay the bookie to have the right to make a bet. In the stock market its the traders fees or commissions.

So if the stock market can't work when only smart folks are betting, how do they get it to continue to seemingly work. That's where advertising, propaganda, and the included media come in. The market needs an unending number of "bigger fools" who will be willing to buy your questionable investments at a price higher than you paid. If there are an infinite number of bigger fools, you keep winning. When you are the last of the fools, the market collapses, and you keep lowering your price until you find a buyer.

Where are we now. The market seems to be going up, but that's a ruse. The "smart" fools who make and own the market are artificially driving the market up to convince those on the inside rail to get back in. However, if we buy now the insiders make a profit because they bought their stocks at trash prices from us when we could no longer stand to loose more. My post consumer mind tells me that the whole idea of buying and selling speculatives is a thing of the past that is running on its own momentum and will surely come to an end when the insiders come to realize that there is no one on the sidelines. We were wiped out, and have nothing to go back to the market with. There is another view that the sideline money is the really smart and really rich money waitng for the market to completely tank and buy based on the real value of a firm based on its ability to make profit and pay dividends. Paying dividends as a valuation method was one thing that seems to have disappeared sometime in the early 1990's when the market decided that real value was in "potential to make money" rather than actually making money.

Where do we go. I don't know, but I am moving forward but its not in the stock market. Right this minute, my best investments are at Kiva.org.

NEXT WEEK: super fast trading EVEN THE TRIAL LAWYERS FIND THIS PRACTICE OBJECTIONALE

"Survivor Island, The Hamptons" Sales of $1M plus homes down by 55% from July 2005 in California!.

Maybe a Million Dollars IS what it used to be.  Check out these stats on home sales in the Hamptons.

According to MDA Dataquick sales of million dollar plus homes in California in 2008 was less than half number of 2007 (55% less) and 30% less than in 2004. My guess is that the year 2009 will see even fewer Macmansion sales.

If California leads the country in millionaires then the rest of the nation will see the same shift.

From: LuxuryBrokers   Listed at $19.5 Million (not for the faint of heart)

This leads us to a obvious question: if there are many fewer folks buying (or able to buy) these Macmansions, what happens to them when the banks own them through foreclosures.

A few suggestions:

• The bank owning them should present them as bonuses to executives. The banks can then recover any loss by listing them at the foreclosed amount (not the market amount) to the recipient
• Turn them into lavish branch banks to serve the currently wealthy in the neighborhood. No problem knowing who still has wealth, check to see if the taxes are paid to date.
• Convert them into company housing. This was common practice in the 19th and early 20th centuries. No reason to reinvent the wheel. Offer company script again instead of wages and let tellers and clerks rent the space. (Add vending machines and charge for other amenity use like the pool or sauna.
• Convert them to private hospitals for those with cash or select health insurance carriers. This will cut down on commuting time for Dr's. if the macmansion has a golf course just page her in.
• Ask ACORN to convert select mansions to brothels. Pay off the local law enforcers with sweet deals on other homes in the new "hood".
• Turn them into luxury hotels, resorts, retreats. This is already being done. A colleague stayed at a WAMU (former bank) macmansion that was used for bank executives and is now open to other private companies for rentals.
• Deconstruct them and use the salvaged materials to build entire villages in developing countries. This will create construction jobs (sort of) in the US and abroad. If we get ahead of the curve on this new industry, we can send contractors to Russia and China to do the same, but the salvaged materials will stay in those countries for low income development.
• Downsized shopping malls for those left with purchasing power. With less buying, retailers will need less floor space, a 50,000 SF macmansion/mall, with pool and valet parking might be more economical than a 2 million SF mall in the suburbs.
• With NO apologies to Mark Sanford, let politicians use them as free-trade zones for importing their Argentine mistresses without fear of the paparazzi. They are in gated communities usually, aren't they?. This way our tax dollars stay in the U.S.
• Convert select gated communities to public parks. Eventually the lack of taxpayer concern will cause the macmansions to become derelict eyesores and crack houses. Then burn them down and let the grounds return to forest (reducing green house gasses and slowing climate change). This is the current method if deaquiring parks buildings in California.
• MY FAVORITE: More reality shows. "Survivor Island-The Hamptons" where contestants have tribal council around the indoor fireplace and contests take place in the "game room". Maybe now is the time for the ''New Beverly Hillbillies". This was potential reality show that was deemed to be in too poor taste a few years back. Let's take another look at it after "Tool Academy" has been aired.
• Suggestions Please?

Fashion Week Sept 10-17. Lots of jersey knit, cheesecloth and Snuggies.

I am clearly not fashion minded, I shop discount on line, my wife and I do however enjoy watching any show with Tim Gunn, one of the last gentleman left in any kind of media.

Following the fashion business gives me a good idea how really smart young people (my sister calls them "painfully hip")  in New York, Paris and Milan, think about the rest of us. Forget the fashion, think the business! Be prepared to hit the links in this post, because I believe seeing is believing.

Fashion week NY ain’t like it used to be.

The Spring 2010 fashions were rolled out this week at the Mercedes-Benz Fashion Week.

The economic malaise hung over the week like a storm cloud. Few shopping bags, nearly nonexistent swag bags and not even a C-list celebrity poet to close the G-Star Raw runway show (past seasons have included Dennis Hopper and Benicio Del Toro). From: LA Times

Fashion week used to be for the designers and the buyers, but over the past few years it’s about the celebrity and the wannabe celebrities and for the fashionistas to be seen. In recent years there has not been as much buying. This year has seen a return to the past. The question is:, What can we sell and at what price?

If you want to see what’s up, NY Fashion on-line helps a lot.

Check out the Subversive Jewelry line where you can buy a semi-mass produced Galileo Pendant Necklace for $960. My guess next week, its knock-off on e-bay China for $29.99. I noticed that you can shop direct and skip the middle man’s mark-up. Or are you paying the extra vig to the clothing line owners and cutting out your local business woman/man?

Lots of old stand-by (and inexpensive) materials were seen on the runway. Jersey and even cheesecloth.

Final proof that we are entering a post-consumer economy. Snuggies at fashion week on display 5 Million sold so far.

Post consumerism indicators

What are some of the latest post consumerism indicators.

Smaller homes.
Americans loose their appetite for Mcmansions

For the first time in nearly 14 years, the median size of a new single-family home decreased, to 2,215 square feet last year, from 2,277 square feet in 2007, according to the U.S. Census Bureau.

That doesn't seem like much, but in this case the market is not exactly open. Most homes are still built on speculation, most need to have a mortgage (which limits who is currently buying-teh better off) and the consumer has not completely adapted.

This summer my wife and I completed and obtained a final inspection on an 1,152 SF two/three bedroom, two bath home, with 250 SF of covered deck and another 250 SF of open deck. The kitchen was middle level, the floors were upscale as was the exterior (cedar shingles) and a hefty roof.  My wife's, comment, "I could live in this house", and we do.. Our main residence is about 2200 SF and I have mapped out where my wife and I live (along with the five cats). We live in about 1000 SF of the house. The rest is for show and to house our collection of stuff. As we are rapidly de-aquiring it will soon become obvious that we don't need the extra space. The trick then will be to find someone who needs and can afford it.

Less room to keep stuff. No problem, get less stuff, to bankers chagrin.

No credit.

Consumer credit fell a record $21.6 billion in July from June’s. U.S. Federal Reserve Bank

Consumer credit dropped to $2.56 trillion in revolving and non-revolving lines of credit, a 10% decline at an annual rate.  The amount of consumer credit has been falling for six months. Without credit card buying, consumerism is dying,  however those embedded in the system are still in denial.

Those lousy replacement jobs aren't going to get better.

So you lost your job in banking, but you always wanted to be a baker anyway. You cashed your children's college fund to go to culinary school for six months and you've opened up your cake shop down the street. But wait, where are the customers? You tell yourself, that when things pick up in  few weeks (months, years) your family will be on easy street again. Don't count on it! Small business account for most bankruptcies. Small business bankruptcies jumped by 81% in June. (FindLaw.com)

Small businesses are described as those with fewer than 500 employees. So what chance do you have with your dream job. My guess working as a baker a Sam's club if you are lucky, (benefits of a sort) or at the local coffee shop for minimum wages and no benefits.

Oh, if you are a boomer and have traded down from a $100K+ job to a $50K job, don't plan on moving back up. This is just one of the benefits accruing to employers. A rush to the bottom in wages. When things improve, you will be asked to do more. (while continually reminded of your luck to have a job).

PS. College educated youth will be shut out for a few more years. Ask your friends whose sons and daughters received their MBA's or Law degrees this year how the job search is going. Be prepared to offer condolences, and sympathetic advice that things are getting better.

Continued increases in unemployment.

No sense in belaboring the point. Just read the government reports yourself. (no media filtering)

Most indicative: The bankers are blaming consumers for not consuming enough as they blame them for consuming too much before the collapse of Lehman Brothers.

Solution: Borrow from the local loan shark, the rates will be better than the banks soon, and the transactions support your local economy, and yes, its not likely that you will get that far behind on your payments that your default will bring down the global economy.

BOGO's A sign of the economic times, frugalistas and recession redefined.

It seems that even plastic surgeons are experiencing tough times.

FOX "News"

I hardly need to comment on this "post consumer" world, consumer "sweetener" so I will blog about something else.

Current Factoids:

89 US Banks have been closed so far in the united States this year.

9.1 Million people working part time for economic reasons - like no jobs. (not considered unemployed). These individuals indicated that they were working part time because their hours had been cut back or because they were unable to find a full-time job.

16.8% unemployed or under- employed (highest figure ever)

We may already be out of the recession (I doubt it!) but I am pretty sure that my savings has not been restored to post 2007 levels, has yours? So my tendency will be to spend less, save more and be frugal.

There's a good word "frugal" M-W definition: characterized by or reflecting economy in the use of resources.

During my childhood "frugal" was always a complement, so when I say someone is frugal, I don't mean "cheap" I mean one who reflects on the economical use of resources. Thus should make sense to the "greenies" and I might be one, I have a wind turbine to make my electricity, and a car that gets 37 MPG, and I drive it less than 5000 miles per year and my flying has been reduced to a few trips per year, down from around 50 or more.

Wait there is more, in 2008 the Oxford Dictionary folks short listed the best new words in the English language and one was frugalista, defined as “a person who lives a frugal lifestyle but stays fashionable and healthy by swapping clothes, buying secondhand, growing own produce, etc.” This could become the nom de guerre of the “recession warrior" From NY Times on-line William Safire (thank you Bill)

But wait there is even more. Frugalista has been co-opted to mean a person who spends their hard earned money on new "less" expensive things. It no longer means what it did as recently as December of 2008.

Target Stores has a new advertising campaign for frugalistas, the ones who buy new stuff, not the ones, like my wife, who often shop "lightly worn" stores.

Now here is a revisionist definition. Recession: A short period in the business cycle when lots of people choose not to work and everyone stops to count their money.

Cash for Clunkers: Stimulus Street Theater and Sideshow, with Automobile Death Panels

from" ProCrushers.com

Abbie Hoffman may you rest in peace, you taught them well.

Wikipedia defines street theater and sideshow as follows:

Street theatre is a form of theatrical performance and presentation in outdoor public spaces without a specific paying audience.

In America, a sideshow is an extra, secondary production associated with a circus, carnival, fair or other such attraction.

So my take is the Cash for Clunkers program was both street theater at its best and brightest and a sideshow to the main event of the stimulus program. (albeit as small sideshow).

I will admit here, up front, that I had a front row seat for both.

My 13 year old jeep (191,000 miles and less than 18 MPG) was threatening a large expense in the near future, so I could not resist the chance for the federal government to fork over the down payment (or 18 months worth of payments). So OK I am a communist by "far right wing " definition, but so are 500,000+ other financially challenged citizens.

I would bet that there are some folks who were, and still are, vehement anti-stimulus activists who took the cash.

If you feel guilty about taking the money, repent!, and send me the cash. I promise to use it well.

One of the degrading parts of Cash for Clunkers was the meeting with the "Automobile Death Panel". I am pretty sure health care reform proponents were testing the final care consultations and end of life guidance, e.g. "death panel" as an idea slated for health care reform. (The consultation was eliminated in health care but it was NOT eliminated in the CARS program).

When you hand over the keys and the proof of registration and insurance (for the past year). The auto death panel walks you through the gruesome and painful last few minutes of your faithful ride.

The Clunkers are drained of their oil and given a lethal injection of sodium silicate (liquid glass) that hardens the engine. The engine runs coughing and spitting for a few minutes or more. This is a painful death for sure.

My last thoughts walking off the lot were of Dylan Thomas' great poem of dying:

Do not go gentle into that good night,
Old age should burn and rave at close of day;
Rage, rage against the dying of the light.......
...........................................................................
Good men, the last wave by, crying how bright
Their frail deeds might have danced in a green bay,
Rage, rage against the dying of the light.

But hey, my new ride gets up to 37 MPG on the highway and I bought the 100,000 mile everything warranty so this ride won't be meeting my old ride in car heaven for a while.

PS. The CARS program ends today so be mollified that although you missed the show, you won't have to face a "death panel" when deciding the fate of a long standing companion.

We are all hoarders at heart.

A&E network is launching a new reality show called Hoarders. The trailer is an intriguing look at “hoarding” taken to the extreme. It's extrodinary look at "consumerism" at the extreme.

This week, my wife and I returned from a summer away.

We looked at our life’s collection (accumulation) of junk in a different way. What would an outsider view as of lasting value in our spaces?My wife and I have plenty of "stuff" we need to shed, so that those we leave behind others don' have to do the shedding. (We don’t plan on going any time soon, but its good to get an early start on any journey.

My sisters tell great stories of dispensing with my parents stuff in a forty foot dumpster. My wife dispensed with a lot of her parents stuff by having a contest called "stump the chump". The "good helper" relatives and friends would look at an object from the attic, they would try figure out what it was? or what it had done?. After making the best guess they put the object by the side of the road with a "free” sign and guess how long it would last before someone would drive by and pick it up. Try this when you are cleaning out the garage or basement. Pretty soon, complete strangers will be stopping by to help you get rid of your junk.

Don’t get me wrong, because my wife and I are "loaves and fishes" people. (the more you give away the more you get in return,) we have been forced to be brutal about dispensing with the unnecessary, trying to focus on "things" with intrinsic beauty that will find at least a single "new" life after we have moved on to some other plane.

Another helpful thing is that we have packed up and moved over twenty times in thirty two years of marriage. When all your stuff needs to fit in a Uhaul truck, you make good choices of what is necessary and valuable and what is just junk.

I am sitting in my new office at work. It’s a complete shambles with the detritus of a lifetime of work, absurd plastic awards and plaques, pictures of things I have worked on and hundreds of books (none rare) and a cascade of business training crumbs. There is a faded copy of my master thesis about a topic that is obsolete today. That's going in the paper recycle bin: a copy is in the library at the University of Missouri if I ever need it.

The crappy awards from defunct companies and from groups I can't even remember-in the recycle bin if there is any post-consumerism possibility.

There is hope for me. After the office let’s tackle one of the garages.


PS: TIPS for non-pathological hoarders.


Pack things in boxes, seal the boxes. If in six month you can't remember what’s in the box, throw it away without opening it. Chances are you won't miss anything.

Move often. And to smaller and smaller homes.

Buy a car with a smaller storage trunk or hatchback.

When promoted, throw away everything from your past work that will NOT enhance your career. Trust me, the cheesy award plaque from when you worked in the mailroom as an intern will not enhance your chances for the next VP slot.

Throw away your spouses “stuff” when they aren't watching. Apologize and buy something nicer to replace it, if you get caught.

Marketing Luxury Goods in the Post Consumer Era? Is this an Oxymoron?

In a April 07 Blog by David Armato ( L+E ) presented a great graphic portraying the post consumer marketplace from his point of view. I have copied it here without permission but with citation. By David's own blog this an example of "word of mouth advertising" he should be thankful for the positive lift.

lifted from: http://darmano.typepad.com/logic_emotion/2009/04/why-marketing-in-a-post-consumer-era-wont-look-like-marketing.html

If you read my Blog Britney Spears, Facebook, Twitter and the Post Consumer World. Aug 2, 2009 you already know some of my opinions about marketing in the post consumer era.

Marketing won't die, it will just get more cut-throat, insidious and subliminal.

My response to the subliminal: I will try to avoid buying anything I see advertised or "think" I have seen advertised, without a walk around the block before I make the purchase. Exempting breakfast cereals and other non-branded food items. For me, basic food is non-discretionary spending. Others might consider an iPhone more important than food, and who am I to judge?

What will change in the post-consumer world is discretionary spending. We will have less to spend. (Anyone with a 401K plan, a job that earns normal wages, or a home as part of their equity already has less.)

There will always be those who can afford luxuries without thought. (The One Percenters) Most of us, the Ninety-nine Percenters, will have smaller credit lines in the post-consumer era and our luxury purchases will be fewer and hopefully better thought out.

Maybe the post-consumerist will become a more deferred gratification type luxury buyer. Skip the daily $8 coffee and buy the $400 espresso machine from savings only fifty work days later. (no credit card charges).

Many economists, including Alan Greenspan, say that the same conditions of the human spirit will lead us back to the same place we were in 2007. I agree, however it took us 25 years for the stock market to reached its pre-1929 levels. If thlast year was akin to the great crash then we won't be back to our old ways soon, even if the banks change their current tightened lending. See my July 7th posting for information on the consumer lending crunch.

In the post consumer era, luxury goods will command even higher prices due to a shrinking market place and increased costs in marketing and delivering those luxury goods. (Economics 101).

Will luxury markets ever die. NO, they just will become just that "luxury markets". I might find it necessary to have a laptop computer for my work, but will I buy the most expensive one. I used to, but now I think not.

Some of the post-consumer literature contends that a loanership economy might grow, others like the Eden Project think the Big Lunch will increase social activism and community in the post- consumer era.

I will explore these and other "post-consumerism as social change catalyst" ideas in future blogs.

One thing I am sure of: high powered marketing of stuff you don't really need will continue unabated in the post-consumer era.

You can't make this stuff up. iPhone commits suicide?

I found the following blog "information" both interesting and troubling.

I can't make this stuff up. This was the title of the blog.

iPhone suicide throws light on China's gadget black market

I thought maybe that either iPhone's could commit suicide (good idea in the post consumer world when you don't have money for stuff), or two that the tragic individual used his iPhone to commit suicide, thus obviating Dr. Kevorkian and the Hemlock Society.

But it was simply that a factory worker in China stole a fourth generation iPhone prototype and the committed "suicide". The prototype is suspected to already be in the hands of the Shenzhen's industrial counterfeiters.

"The copying of prototypes certainly happens a lot in the electronics and IT industries," said Dane Chamorro, a regional general manager with consultancy Control Risks. "You don't have to steal them, you just have to borrow one for a day."

In an earlier interview with the New York Times, Foxconn's general manager for China said that Mr Sun had previously lost products "several times" before getting them back again

I saw a blog the other day, and for the life of me I can't find it again, that suggested "virtuality" will replace actuality in the post-consumer world we won't need to buy any stuff that needs to go to the dump (what we called in the pre-post-consumer world the landfill) anymore.

The example used to illustrate this important point was an iPhone gadget spirit level which will replace the "spirit" level used by countless construction and maintenance workers. I swear it! Can you imagine Tom the carpenter, out in the rain, tossing his $300 iPhone into a re-cycled paint bucket after he levels that 20 foot long three hundred pound beam for your deck. I can't. Maybe you will use it to level the really neat giclee print you just bought for $850. But in the post consumer world who will be buying $850 framed prints, not Tom the carpenter.

If you want some real fun with virtual gadgets go to the iPhone Apple Store.

These are the kinds of virtualities that some post-consumerism thinkers believe will eliminate real stuff. I am not one of them.

I didn't go to the details, I just read the Apps headings and wondered outblog!

Apps for working out. Lifting iPhone repeatedly to ear for bicep exercises. standing up with iPhone to increase leg muscles. making faces ion iPhone to tone your facial muscles and reduce dependency on plastic surgeons.

Apps for around the house. Doing dishes with your iPhone or more likely calling for Chinese and insisting on the post consumer cardboard cartons and the recycle service plate. Keeping up with eBay, buying used stuff. Now that's a real "post consumer" activity (no really it is). Decorating with iPhone. if you don't like the wall color just hold the iPhone between your eye and the wall (blocking all view) and put a color on the page and imagine the wall painted a nice soothing color. No painting debris stuff to the dump. Get cooking: virtual food only for this overweight post consumerist.

Apps for travelling. No more leaving the house. Just call it in to Florence Italy and your surrogate will go to the Uffizi for you. No jet lag. Don't want to learn the language, just speak into your iPhone and then hold it up to the lady at the gelato shop and you might just get something to eat, or have your surrogate do it for you and skip the calories.

Apps for getting things done. Tracking expenses. What expenses? Again I swear I can't make this stuff up. Ambiance. Download wind chime music to soothe your soul after having the kids give each other wedgies and scream while you burn the roast and then your wife calls to say she's bringing the boss home.

You can fill in ideas for Apps for Managing Money (what money?) and Apps for Fun and Games.... It doesn't involve going to a sunset walk at the beach. Apps for Going Out. (why bother?)

Better yet apps for bloggers with too much time on their hands.

Britney Spears, Facebook, Twitter and the Post Consumer World.

The July 24th Issue of USA Today Money page B1 had three interesting articles that are best read together. I will take the editorial license to combine them here. In Rally pits optimists vs pessimists the core argument was that the optimists see companies making profits by slashing costs as proof that the economy is recovering. If your revenue is going in the tank and you can increase profits continuously the argument goes, you can make lots of profits on no work. (Sort of like the mortgage industry was for a while) The optimists were gloating that the pessimists were "missing out on gains"

The second article was about the Candies ads with Brittany Spears that were not released on TV but were first introduced on "Facebook" and "BritneySpears.com", as well as to Britney's 2.5 M Twitter "followers" (as they are called) Isn't that what hey called Jim Jones disciples?

See this full article in USA today Back-to-school Pitches go social

Hidden in this article was a gem. Back-to-school spending is expected to be down 7.7% this year. That means your teenage daughter will still get the $199 Bebe jeans, but she just might have to cut down on her designer cosmetics to the tune of about $50. Or god forbid, have to wear something twice. My prediction, lots more teenage crime to get the stuff that they can't live without. Keep your eyes out on that trend.

A 7.7% decrease doesn't sound like much (I think it will be more) but it comes on top of last year's falls and precedes next year's fall in consumer spending. Something will have to fill that consumer need gap for our teenage and pre-teen children. I don't know what it is, but I sure am trying to figure it out.

On another note, in the same article Forrester Research predicts social networking advertising to children will rise from a paltry $455M in 2008 to $3.1Billion in 2014. That's a big bet, and predictably that's a necessary one for consumer products makers who are facing a real decline in available cash for discretionary consumer spending.

All things considered with education costs and health care and other non-discretionary costs rising and wages falling, discretionary spending for students will be heading south for a long long time.

The last of page 1B articles was about the increase of the minimum wage to $7.25. That news should be a counter to post-consumerism. More money for the masses to spend on stuff they don't need! Alas! a good portion of that article was about reduced hours for most minimum wage earners. they have more time on there hands and less cash to spend.

So this is what we should read. Page B1 in one run-on sentence.

The optimists think we can get back on track by cutting costs to zero to increase profits, marketers think we need to spend eight times as much on Facebook and Twitter to chase 7.7% less spending and the minimum wage is rising while wages are falling.

Sounds like a post consumer alert.