This Old Economist: “Adjust the Dream Dial”

There has been a change in our economic vocabulary.

From ‘driving, relentless, unlimited, easy’ to ‘dampening, weakening, shrinking, contracting.’

Someday a government, business or economic leader will tell families they must “adjust the dial downward on the Canadian, American or European Dream” and families will get it. They’ll realize the economy and environment have been pushed past sustainable limits for many years.

Start saving change and fivers for tough times.

‘Be Prepared’ like good little Cub Scouts.

[Photos by G.Harrison]

***

Please click here for more This Old Economist

Austerity without Anxiety: By the ounce

My parents grew accustomed to thin times over the course of their lifetimes.

Some of their frugal habits rubbed off on me.


For example, I like to dilute juice from the supermarket. 10% juice, 90% water. Saves money. Tastes fine. If I turn into my parents by diluting juice, that's fine by me.

When more thin times come, maybe such habits will come in handy.

***

Please click here for more about austerity.

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It Strikes Me Funny: New iPad2 doesn’t compare with myPad

[“When Best Buy opened their doors this morning, only one person was waiting to enter in order to buy the new Blackberry. One person.” April 19, CBC Radio]

I haven’t been this well-organized since high school.

This morning I reached for myPad* and happily realized all I needed was at my fingertips. The two minutes I’d spent yesterday putting myPad together feels so well worth it now.


["The all new myPad - at my fingertips": photos GH]

I opened it, read a note to myself (no download time), took out an accessory (one second elapsed) and wrote my first brilliant thot for the day: Assemble two more birdhouses for The Roaster.


The Apple iPad declares “it's not a tablet, it's iPad 2. Starts at $499.”


["myPad comes with its own sturdy storage folder."]

MyPad isn’t a tablet either. It’s myPad** and didn’t cost me one thin dime.

About iPad. Battery life varies by use and configuration; features include Wi-Fi and 3G.


About myPad. No costly batteries required; features include stereo if I work at myDesk*** and 3P (two pens and a pencil) and zip area for notes or memos (zip files).


["myPad stores easily beside my dictionary on my shelf"]

You could knock me over with a feather.


* Copyright pending. Don’t touch this.

** I had all necessary materials in myDesk.

*** Copyright pending. Don’t touch this.

***

Please click here for more It Strikes Me Funny.

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Live Small : Thing$ Going North Revi$ited

Short Intro: March 4, 2010 I started a series of posts about the price of things going North.

The series, in a word - brilliant.

I listed 10 things going North. $$. Simultaneously. Almost unheard of in this day and age.

Idea: Revisit the list. Add two more items.


["A Hard Rain's A-gonna Fall": photo GH]

The original list, in brief: “Canada’s debt, Ontario’s debt, pension plan deficits, interest rates, core inflation (What’s that mean? It doesn’t say), price of oil, price of gasoline, domestic electricity costs, two other hydro charges, a 1939 Batman comic.”

Two new items: 1) U.S. debt.

It stands at about $14 trillion today and will likely hit $20 trillion in 4 - 5 years. Because it will be a BIG economic drag in the U.S., Canada and the London region for a long time we’ll eventually become quite familiar with it.

2) Food costs.

It has been predicted that “food prices will likely increase 5% to 10% over the next year or so.” (Feb. 14, London Free Press)

There, we’re up to date, I think.

***

Please click here to read more Live Small.

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This Old Economist: There is always so much to learn

Someday I’ll be 70 years old (really, a long, long way off) but I still won’t know much about how The Bank of Canada (the big kahuna) and other Canadian banks operate.

I don’t even know why I received $0.01 interest at one particular month’s end a few years ago.

Never mind. I press on. I learn a bit here, a bit there. And it’s all very fascinating.

Did you know that banks lend or borrow money amongst themselves overnight, seek or make payment the next day, then do much the same the next night, every night?

They don’t charge each other very much. 1.00 percent right now, says the Bank of Canada (the big muscle), the rate-setter. And the rate hasn’t changed since Sept. 8, 2010 (from May 2000 - Jan. 2001 the rate was 5.75%: the economy must have been huge!), for many of the same reasons rates on my line of credit haven’t changed.

The economy and other factors must be in the toilet if the banks can’t charge each other very much to exchange money, even for 24 hours.

According to latest news:

“The Bank of Canada left changes to borrowing costs on hold Tuesday, saying Canadian growth was slower than expected and risks to the global recovery have increased.”

Well, that got the attention of this old economist. (“What about my savings? What savings? Gaaahhh!”)

“The central bank cited weak exports and the sovereign debt crisis in Europe as being among the key concerns...” (Dec. 8, London Free Press)

Only two ‘key concerns’?

I’d add growing debt in the USA and Canada, if I were you. And future costs related to environmental change and damage.


["Reduce spending, pay down debt, feed the pig"]

Fortunately, to help me end on a more positive note, I learned that “on the upside, Canadian household spending and business investment remained strong...”

Thank goodness Christmas is coming and there are still a few Canadians with room on their credit cards!

***

This Old Economist spouts off again here.

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This Old Economist: Go for a walk, then have tea

Did you hear that Canadian growth in the third quarter (i.e., July - Sept. for those not in the loop) “expanded at its slowest rate in a year?” (Dec. 1, London Free Press)

Good for you. There are millions of better things to do than listen to economic gabble.

Economists had been expecting GDP to rise by 1.4% in the quarter - where do they get this stuff? - but didn’t take into account Canada’s weak exports and a cool housing market. Poor dears.


["Put on warm boots and a toque": photo GH]

Economists may also forgotten that many Canadians are now trying to be frugal, live under their means, reduce spending, pay down debt and save money for tough times ahead.

Many people also see benefits to a smaller economy still. Sustainability is such a good thing, isn’t it?

So, to everyone, including economists, I say go for a walk today, take a picture or two of any fresh snowfall, then enjoy a cup of tea when you get back home.

***

Economic gabble is almost like a religion to some folks, isn’t it?

Please read more from This Old Economist here.

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This Old Economist: Which country will need a bailout next?

The European Union approved an 85 billion Euro ($115 billion US) rescue for Ireland yesterday.

Who is going to be next?

Portugal is in the running. So is Spain.


["Who will save us from our economic woes?": photo of GH, circa 1955]

But can the 16-member Euro-zone afford more emergency loan packages to cover, for example, bad bank debts and huge budget deficits (as in Ireland’s case)?

Perhaps it won’t be a country that next needs a bailout.

Perhaps it will be a zone of countries.

This old economist believes our economic model may require an oil change and lube job. Maybe it needs a new road map in the old glove box too.

Until governments agree to try something other than Globalization, perhaps we should practice our own austerity measures.

I.e., reduce spending, pay down debt, and save money for tough times ahead.

***

Read more from This Old Economist.

My brilliant economic plan is outlined here.

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The Thrift Report: I spent a bit of money to make a bit more

Thanks to my wife, our small house is now more spacious - and at least 100 pounds lighter.

Yesterday she filled our car twice with odds and ends we were not going to use again and delivered them to Good Will Industries and Value Village.

On her trip to the Village of Values I tagged along.

As you may recall, I am in need of a leather belt... to hold my pants up, so my neighbours don’t think I’m down and out.


["My old belt needs a rest now and again": photos GH]

Hey, good news.


I found a leather belt for $5.00. Same price as my old one (circa 1969, from Quigley’s on the Thames), and if it stands up to the daily grind, it may one day be known as “my last belt.”

I found a perfectly good pair of Levi jeans too for 10 bucks. With proper care they’ll last 5 - 10 years. That comes out to $1 - $2 per year to hike myself to The Roaster for coffee. A good deal, in my opinion.


As well, I found an old shelf for $5 that will soon be worth $30 or $45. The lumber is dry, straight and painted a cheerful colour, and after I disassemble it and cut and sand the boards just right, I’ll end up with at least 2 or 3 nice birdhouses out of the deal. And coffee money for December!


Not bad, eh?

***

Is THRIFT under-rated?

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This Old economist: The future of driving - not the E-car

GM’s Volt plug-in electric car can win the Green Car award every year for the next 20 years but will never become the future of driving.

Too many things are stacked against the E-car.

- price (e.g., the Volt is $41,000 US)

- limited range (e.g., the Volt runs only 64 kms or 40 miles before requiring a recharge)

- limited numbers (e.g., battery technology lags behind)

The future lies elsewhere.

GM and other car builders will likely be the last to admit that fuel scarcity and rising fuel prices will end our love affair with the car - and sooner than later. They’ll keep trying to whet peoples’ appetites for toys for boys (and girls) and the desire for convenience and comfort for each and every individual on the planet long after personal transportation vehicles lose their cool factor.


["The Thrift Bank in Sidney, Ohio"]

This old economist says that as personal and national debt loads mount, the common bicycle may squeeze the car out of the hallowed place in our hearts that cars have ruled for so long.

Highways may be the site of future suburbs to cities. (See back issues of DWELL magazine)

Some may already have switched allegiance to rail or buses, hardy, sensible transportation systems that are jeopardized as well by rapid climate change and our growing demands for clean fuel, any fuel.

And as an aging economist I would say that as money and fuel grow more scarce, people will see walking shoes and running shoes in their future. (They both have great benefits attached, do they not?)

But E-cars, dependent upon coal (to a large degree) and expensive infrastructure, will not be seen in a growing, positive light for long.

Look elsewhere.

***

I recommend the 850 series of New Balance running shoes.

More from This Old Economist here.

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Freedom 75 PT 1: Oh, you can make big bucks on CPP

Time for a bit of good news, for Pete’s sake.

While passing along the troubling news that retirement ages may be rising on the other side of the Atlantic Ocean, i.e., to age 66 in England, to 67 in France and to 102 on the island of Sardinia (though that may just be an ugly rumour perpetuated by a Sardinian shuffle board player with a snarky attitude), I forgot to mention how lovely and different things are here in Canada, home of 100-proof Maple Syrup and kind-hearted shuffle board squads.


[Meet the Sardinian Shuffle Board Champeens: photo details]

Unlike in England and France (possibly Sardinia, an Italian island that is not only synonymous with taut, tanned bodies and good looks, but also has the world's highest percentage of people who have passed the 100-year-old threshold), where retirement and pension changes are rammed down throats with an iron fist (so it seems to some), in Canada a few nice little changes are being proposed - here and there, perhaps - and citizens are mildly encouraged to consider them when they have a spare moment.

Maybe you’ve heard, if you’ve had the time.

A recent newspaper article, entitled ‘Expert: Avoid CPP shock’ (see how nice we are in Canada; we don’t want anyone to receive a shock) I read the following:

“Upcoming changes to the Canada Pension Plan will have a major influence on what age people retire, with those opting to work longer standing to get significantly more cash.” (Oct. 27, Brantford Expositor)

Now, is “ significantly more cash” not good news?

Sure, there’s this little (bitty) downer:

“The changes will mean anyone who chooses to retire early and begin collecting benefits at 60 will have about $4,000 a year less than if they had retired at 65.”

But, you likely already knew about that mild downer.

However... (here’s where it get so good!)

“If you stay on the job until 70, payments could be $4,600 a year more, based on maximum CPP benefits.”

Good grief. Money will be spilling out of your baggy pants if you only work 5 years longer than you may have originally planned.

Do the math. $4,600 MORE per year is about $383 MORE per month or about 13 bucks MORE per day.

(When I typed 13 bucks I almost wet my pants. I’m not kidding).

Oh sure, you’ll be five years older but don’t think about that. Think about $13, or $12.78 actually, and what it can buy.

Now, I’m not here to tell you how to spend your money or ask you to make a list of all the things you can buy with $12.78.


["Buy batteries for your old radio. Live it up!": photo GH]

I’d rather tell you the best news yet from the same report.

First, I’d better go to the bathroom.

More to follow.

***

Excited yet?

You’re probably wondering why I sat on this news.

More news about THRIFT (not half as good) while you’re waiting.

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Live Small: Corporations may be an enemy to thrift and prosperity

I believe there is a strong link between thrift and prosperity.

Architect Louis Sullivan illustrated the link when he “carved the word THRIFT over the door of his ‘jewel box’ nearly a century ago, for it was private virtue that made public prosperity possible.” (Oct. 2008, Time magazine)

Also, the Concise Oxford dictionary lists the following key words beside ‘thrift’ and ‘thrifty’:

frugality

economical management

thriving

prosperous

As well, from personal experience; when I wanted a new transistor radio in the mid-1960s my mother told me to save twice as much as the purchase price of $44.

So I did, and learned a valuable lesson, i.e., saving money is hard work but it pays off when you want to listen to your own tunes when you’re sitting on the beach in Long Point, Ontario during summer break.

(At present, I’m saving $4,000 for a trip to Esquimalt and Comox, B.C.; not a penny will go on plastic or line of credit and I’ll listen to tunes on a pristine 10 transistor radio all the way out and back).


But, thrift is dead it seems, and the list of ‘usual suspects’ is long and includes individual consumers, economists, government and business leaders and corporations.

I started saying something (it wasn’t good) about corporations yesterday and believe they must be the worst of the bunch. Thrift and prosperity takes on a whole new meaning behind board room doors and not one thought concerning the individual or family is involved.


["THRIFT - RIP, old buddy": photos GH]

For example:

“The private sector’s industrialized vision of agriculture - which is all about mass production, large machines, and a great deal of artificial additives - is in the same optimistic tradition (...as other big industrialized programs imposed on the developing world by the World Bank, which destabilized rural areas and created vast slums).”

“Curiously enough, this vision has always included large public subsidies. What those who live in the West have seen is that this industrialized approach to agriculture can produce food surpluses, but drives the farming population off the land, bankrupts smaller communities and, at the end of day, leaves even the largest producers struggling to break even.

“The real profits of the last quarter-century have gone to the managerial organizations - the middlemen - wholesalers and large retail distributors of machinery, additives and bulk food.

“The implications for the developing world are enormous. In low-income countries, 70 per cent of employment is agricultural, in middle-income 30 per cent. In the West it is 4 per cent, and, even at that, the sector has been in permanent financial and human crisis since the ‘70s.

“The application of industrial agricultural methods to low- and middle-income countries is a recipe for social catastrophe. Yet that is the dream of open markets.

“The most efficient will win out.” (The Collapse of Globalism, pg. 86 - 87)

Youch.

Let’s recap the corporate method:

fewer jobs

dependence on fossil fuel

unnatural products

subsidies funded by taxpayers

community bankruptcies

vast sums for middlemen

catastrophe for low- and middle-income countries

Nothin’ but good news, eh?

When I began writing about THRIFT, I didn’t realize the virtue had so many enemies, i.e., from the individual (and oft-times insignificant) consumer to the largest of corporations.

In spite of that, all is not lost. In pockets here and there, thrift remains a virtue. And shortly after the next recession it will likely make a healthy comeback.

In my humble opinion, when the meek inherit the earth, the thrifty will be right behind them.

Until then, let’s live under our means and strive for happiness apart from things and material goods.

***

Is this a good time to repeat my mantra?

“Reduce spending, pay down debts and save money for tough times ahead.”

Yeah, it fits right in.

THRIFT PT 1

THRIFT PT 2

THRIFT PT 3

THRIFT PT 4

THRIFT PT 5

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Freedom 75: Boomers and mortgages... yuck

(This post will end with a positive recommendation you’ll want to “hope to follow.”)

Freedom 55? Fuggettaboutit.

Freedom 75 will be the new normal one day soon.


["RIP, Freedom 55"]

(England is proposing Freedom 66. France, Freedom 67. Canada is hoping citizens will buy into Freedom 70).

A contributing reason for many aging boomers to stay in the workforce will be the size of their mortgage.

This headline just in:

Boomers see mortgages as part of retirement

WTHeck?

Here’s the jist:

“Roughly half of baby boomers in this country are planning a move, but many of them won’t be able to do it mortgage free as they had hoped. Although the vast majority of boomers say it is important that they pay off their mortgage before they retire, less than half (44%) have been able to do so.” (Oct. 29, London Free Press)

Me? I’m planning a move someday too - to something smaller than 1,000 sq. ft. - but my mortgage is gone, and I’m definitely not planning to get within smelling distance of another one!

And here is some more cheerful news:

Not only are many boomers still carrying a mortgage, but...

“...of those with a mortgage, one-quarter have a long way to go having paid off just 25% - or less - of their mortgage.”

Good grief!

Whatever happened to THRIFT?

***

Recommendation:

Start looking for a small, cozy apartment near a coffee shop, grocery and hardware store.

Think about moving out of your house between the ages of 70 and 75 so that Freedom 75 - at the very least - is possible.

More brilliant thoughts about Freedom 75.

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Live Small: THRIFT - RIP. Who is to blame?

According to my handy dandy copy of The Concise Oxford Dictionary, the key words associated with ‘thrift’ and ‘thrifty’ are as follows:

frugality

economical management

thriving

prosperous

Notice how ‘frugality’ is so closely linked to ‘prosperous.’

Without piles of debt (and yes, we have piles), many individuals would actually be quite well off.

Also, according to my recent thoughts (I’ve got a million of them), the line up of suspects associated with the death of THRIFT is quite long.

The suspects include the following:

economists

politicians (including US and Canadian leaders)


banks (Bob Hope once said that a bank is a place that will lend you money if you can prove that you don’t need it)

reckless consumers (How many credit cards in your wallet?)

In my opinion, the line up of ‘usual suspects’ must also include many large corporations and corporate philosophy.

When did you first realize you were viewed primarily as a consumer or an economic statistic and not as a citizen or person with important rights and responsibilities?

And who primarily views you as a consumer or stat on a financial spreadsheet?

I would say the corporate world, and through a prism chiefly governed by self-interest and profit, and not kindness toward you.

As I’ve been reading The Collapse of Globalism by John Ralston Saul, I’ve been underlining key phrases that suggest corporate philosophy doesn’t promote thrift, or health or prosperity for all consumers.

For example;

“The moralizing message (re the negative aspects of public debt) came from the private sector and from economists who didn’t believe in public programming. Yet the Globalization era would see the most extravagant and irresponsible indulgence in debt by the private sector since the days of the South Sea Bubble.” (pg. 84)

In other words, the private sector will call for thrift in the public sector but not care about it in their own.

“By 2000 the yearly world total value of mergers and acquisitions was $3.5 trillion. That is $3.5 trillion of debt, often attributed to the corporation taken over.” (pg. 81)

High debt loads led to downsizing and loss of jobs on the bottom floors - and the disappearance of thrift and prosperity in millions of homes and thousands of communities world wide.

One of the biggest blows to thrift and prosperity - for the individual - in the US and Canada comes from the corporate world in the field of agriculture.

Want to live close to nature?

I wouldn’t advise it.

Stay tuned.

***

THRIFT PT 1

THRIFT PT 2

THRIFT PT 3

THRIFT PT 4

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Live Small: THRIFT is dead, thanks to the usual suspects

According to ‘The Decline of Thrift in America’ by David Tucker, the Depression invited economists to recast thrift as “the contemptible vice which threw sand in the gears of our consumer society.”

THRIFT. Rest in peace, say some economists.

The book went on to reveal that a White House report in 1931 "urged parents to let children pick out their own clothes and furniture, thereby... teaching him that his personality can be expressed through things."


THRIFT. RIP, say some politicians.

Nancy Gibbs, in a two-year-old essay wrote, “Thrift is one virtue he (US President G.W. Bush) never invokes, and a restoration of restraint is a strain of conservatism he seldom promotes.”

“In fact, it was after the most tragic day in modern U.S. history, when Bush urged people who wanted to help to “go shopping,” that profligacy officially replaced prudence as a patriotic duty.” (Time Magazine, Oct. 2008)

Did not Prime Minister Harper give similar advice to Canadians at the height of the most recent recession?

According to an article entitled ‘Economic Crisis Slams Canada’, “As the financial decline broke over Canada that month (September 2008), Harper famously declared that it would be a good time to invest in the stock market. By November, Canada's largest stock index had declined 44%. In March 2009, it still stands 39% lower.” (by Roger Annis, March 29, 2009)


THRIFT. RIP, say US and Canadian leaders.

In the aforementioned essay by Nancy Gibbs I read that “Americans once saved about 15% of their income. By the roaring 1980s the rate was 4%; now the numbers are negative... the average American has nine credit cards with a total $17,000 balance.”

Whereas some early banks declared thriftiness a virtue, many today provide easy credit at the drop of a hat.

And consumers fall for it, abuse it, demand it, and blow it without looking back.


THRIFT. RIP, say some banks and reckless consumers.

In my opinion, the line up of ‘usual suspects’ must also include many large corporations.

More to follow.

***

Would you consider yourself a reckless spender or one of the usual suspects?

Do you know the cure?

Reduce spending. Pay down debt. Save money for tough times ahead.

THRIFT PT 1

THRIFT PT 2

THRIFT PT 3

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Live Small: How did THRIFT disappear from many households?

Thrift at one time was the cornerstone of a household’s financial picture.


The word even appeared over the front door of a beautiful bank in Sidney, Ohio, built in the early 1900s.

However, according to a book entitled ‘The Decline of Thrift in America’, the Depression invited economists to recast thrift as “the contemptible vice which threw sand in the gears of our consumer society.” (Nancy Gibbs, Time, Oct. 2008)

Thrift. A contemptible vice? Good grief, Charlie Brown.

The book went on to reveal that a White House report in 1931 urged parents to let children pick out their own clothes and furniture, thereby creating in the child “a sense of personal as well as family pride in ownership, and eventually teaching him that his personality can be expressed through things.”

I say, that thought is downright scary! If our personality is expressed through things then I’m spending far too much time looking inside the fridge for lunch. (Cheese dog anyone? Anyone?)

Nancy Gibbs herself says, “Somewhere along the way, thrift did not just stop being a value; it became a folly.

“Saving was for suckers; you’d die leaving money on the table when you could have lived it up.”


“There are no pockets in a shroud, as the saying goes.”

Think.

Should we be filled with family pride when we look at a big house? When we look at a big mortgage?

Are we the type of creature that would be filled with even more pride if the house had another bedroom or bathroom we would barely ever use?

Should we swell with personal pride when we look at our new big screen TV? Or a bigger car that would get us to the mall 3 seconds faster?

Could the 1931 White House report possibly lead people down the wrong path?

I say, in 2010, after 70 - 80 years of heavy spending, saving for the future is not an idea for suckers.

***

Living it up may not be as healthy as living it down.

Anyone who leaves debt on the table for future generations to deal with should reconsider their spending habits.

Get Small before you Get Low.

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Live Small: Does thrift draw you to the bank?

“Thrift comes too late when you find it at the bottom of your purse,” warned Nero’s adviser Seneca. (Oct. 13, Time Magazine)

Almost 100 years ago, Senaca’s words may have inspired Louis Sullivan’s work during the building of the People's Federal Savings and Loan Association bank in Sidney, Ohio.

It is an early-modern building, designed by the Chicago architect, the mentor of Frank Lloyd Wright.


"It was designed and built in 1917 for use by Peoples Federal Savings and Loan Association, which still operates out of it." (More details at Wikipedia)

Imagine walking into a bank built to inspire thrift. Wouldn’t your main impulse be to make a deposit into your savings account?

Not today, it appears.

Though Sullivan “carved the word THRIFT over the door of his jewel box bank nearly a century ago, for it was private virtue that made public prosperity possible” (N. Gibbs, Time), today we seem chiefly to enter banks to pay bills, withdraw money or take out loans.

THRIFT is no longer a big part of the equation here in Canada.

Gibbs continues:

“That virtue died with the baby boom, but it had been ailing ever since the Depression, argues cultural historian David Tucker in ‘The Decline of Thrift in America.’ That crisis, he writes, invited economists to recast thrifty as “the contemptible vice which threw sand in the gears of our consumer economy.”


In my opinion, we do not save at our peril.

This is a good time to reduce spending, pay down debt, save money for tough times ahead and not worry about a wee bit of sand.

***

In which direction is your savings account going?

Sure, Christmas is coming, but we can still put a bit aside for the future, can’t we?

Even if it means we spend less at Christmas? Sure!

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Thrifty Soup: And it’s not even soup - but it's something

My wife was out of the house at lunch time yesterday so I poked my head into the fridge - all by myself - to see what I could see.

I’m a pretty good scrounger and easily pleased when I'm quite hungry and my eyes settled on a covered dish with something red inside.


["My, such a refreshing flavour": photos GH]

Hmmm, soup, I said. Excellent.

So I pulled the dish out of the fridge, grabbed a soup bowl, then looked under the cover.

It saw diced tomatoes.


["Diced tomatoes from another angle - still refreshing"]

I’ll add some Spanish onion and it will be my lunch, I said. And I bet it will be better for me than a can of Campbell’s tomato soup.

Tell you the truth - it tasted quite good and I still bet it was better for me.

Thrifty soup, eh?

***

Have you ever heated up canned tomatoes for lunch?

Did you dress it up?

These days, it’s important to be thrifty!

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