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Let’s Say You Manage Finances Like They Do In D.C. September 27, 2011

Posted by Michael in News.
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It's time to cut up the credit cards!

Thanks to Retired Geezer.

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1. Retired Geezer - September 27, 2011

I had seen these figures before in an email but the picture is worth 1000 words.

2. divemedic - September 27, 2011

Close, but you don’t understand how government does budget cuts. That $385 cut does not mean that the government will spend $385 less next year than they did this year. What it means is that the government will spend $385 less next year than they planned on spending. That amount will still be more next year than it was this year, they just reduced the planned increase by $385, called it cuts, and made it look like they care.

3. Cathy - September 28, 2011

This image is very good.

Cut up the credit cards is a start…but is that doesn’t stop the out of control spending then someone needs to go to jail.

4. Mark in NJ - September 28, 2011

I agree – this microeconomic approach is a great way to look at the problem.

Let’s say I’m this guy and I’m a true conservative, so revenue raising is off the table and I’m going to resolve this via spending cuts alone.

First thing, I cut up the credit card and slash the family budget ~45% until spending = income. No problem — I’ll just switch to non-premium cable and start drinking Pabst.

Problem is, I’m still $142K in the hole, and if that’s credit card debt, it’s growing ~20% a year. Even if I dedicate all of my $21.7K income to paying off the debt, I can’t stay ahead of that interest — I’ll never be able to pay it off.

My choices are: (1) declare bankruptcy or (2) decide my conservative ideology really isn’t going to work for me in this instance…so I get a second job, make my wife get one, too, and put all that additional income into paying off that debt.

Within about 10 yrs, I’m debt free, I’ve got a sensible budget and I can go back to being a conservative!

5. daveintexas - September 28, 2011

It’s immoral for a government to confiscate wealth and use it to buy votes (and therefore power). If it refuses to be constrained, then constraint must be forced upon it.

Or we could just go along with Gov. Bev Perdue’s suggestion that we suspend democracy for a couple of years, to see if DC just “works it all out” without accountablity to the governed.

6. geoff - September 28, 2011

if that’s credit card debt, it’s growing ~20% a year

You’ve forgotten that the government borrows at 3% and that income (GDP) can grow over time. You’re breaking the analogy by taking “credit card debt” too literally.

I get a second job, make my wife get one, too, and put all that additional income into paying off that debt.

All the while cursing the name of the spendthrift in your household who doubled your debt in a mere 3 years.

I suppose this is intended to be analogous to raising taxes. In that case you have to remember that when you take the extra jobs, the salaries of both jobs will drop. Increasing tax rates suppresses GDP.

Within about 10 yrs, I’m debt free, I’ve got a sensible budget and I can go back to being a conservative!

If you’ve been paying attention, you’ll realize that there is no plan that retires the debt in less than 50 years. Most of them take about 10 years to become deficit-neutral. Fortunately, economists tell us that we don’t have to retire the debt – there’s no penalty until interest rates get too high.

I’m a true conservative, so revenue raising is off the table

Revenue raising isn’t off the table because it’s a conservative principle. Revenue raising is off the table because there’s no point until you cut up the credit cards. If conservatives saw a balanced budget amendment, I think they’d be much more open to a temporary tax increase. After the recession, of course.

7. Retired Geezer - September 28, 2011

Or we could just go along with Democrat Gov. Bev Perdue’s suggestion that we suspend democracy for a couple of years

FIFY

8. Retired Geezer - September 28, 2011

Nice rebuttal, Geoff.

9. geoff - September 28, 2011

Fortunately, economists tell us that we don’t have to retire the debt – there’s no penalty until interest rates get too high.

I meant that half-ironically. Many economists seem to think we’re nowhere close to being penalized, while some say that 90% of GDP is the critical debt number (at current interest rates). Personally, I think it’s already dragging on the economy.

10. Car in - September 28, 2011

I don’t see the problem here.

11. Michael - September 28, 2011

We have been living on borrowed time, because the dollar is the world’s reserve currency and enormous amounts are in circulation outside of our economy. India buys stuff from Africa with dollars. So the “credit card” has had very low interest and no understood credit limit.

We have hit the wall when it comes to exploiting the unique status of the dollar. U.S. sovereign debt just got downgraded. New Zealand has a better credit rating than we do.

12. Michael - September 28, 2011

And, in case you haven’t figured this out, interest rates and inflation are going to go up.

Best hedge — refinance your mortgage now, and make sure you get a fixed rate loan (they are not even available in Europe). Interest rates are at historic lows during our lifetime, because the housing market is fucked up with unsold inventory and won’t normalize until 2014 at the earliest (thank you, Fannie Mae, Freddie Mac and the CRA) and the credit market is fucked up (thank you, FRB and “quantitative easing” to bail out Obama’s failed economic policies).

You can probably do this with your current mortgagor with minimal closing costs, just by calling up and asking. We did this. Jeez, they even drove out to our house with a notary public to do the closing on our dining room table. It was effortless.

If you need a car, buy it now on credit. Make the minimal down payment. Get a new car — there is worldwide oversupply. Used cars are overpriced and trade-in values are high (thank you, President Obama and your stupid Cash for Clunkers program to appease the UAW).

If you are living in rented property, lock in the longest lease you can get at your current rate. Your time is limited, because the market is already shifting from home ownership to rentals, due to the newly discovered risk of owning real estate.

You get my point. Hedge. Against. Inflation.

13. Michael - September 28, 2011

Jeebers, I don’t know why I give away this advice for free.

Yes I do. WordPress won’t let me put a PayPal button on this site to receive donations. You can still mail me cash. Let me know if you want to do so.

14. lauraw - September 28, 2011

We have to cut up the credit card, AND grow the economy. Instead of just raising taxes, why not take the government’s foot off the neck of business and let people become prosperous again?

You cannot grow the economy while simultaneously scaring the shit out of businesses by making the true cost of hiring employees an unknown quantity, and when you’re regulating them out of business or out of the country.

This economy will not grow, no one will hire, and businesses and individuals will continue to watch their wealth disappear into the ether (if they aren’t already eating their seed corn), until the day these bullshit appointed czars are relieved of their power.

Nobody is going to twitch an asshair until ‘spread the wealth to people who haven’t earned it’ Obama is told to get his fuckin’ feet off the Resolute Desk for the very last time.

And what a sweet day that will be.

15. BrewFan - September 28, 2011

As soon as my life settles down a little #14 is going into the Comment Hall of Fame! Nicely done lauraw! *smooch*

16. daveintexas - September 28, 2011

Hey Laura, how many people lined up for free cash this week near you to collect “hurricane relief from FEMA?”

Also, how much more of your revenue should we confiscate to buy more votes for Democrats? Is there another regulation you could suggest, did we miss any?

17. Michael - September 28, 2011

I think Laura should stop her bitching and just work harder. Needy Americans are counting on her.

18. lauraw - September 28, 2011

Brew, you guys in WI heard about that deal before we did here where it was happening. The local papers were silent. We had to hear about it from the national media! The folks here are nail-spittin’ mad over it.

The parasites have a pretty good grapevine. Nobody with a damn job who really did have damages, as in, they lost thousands due to flooded basements or trees crashing through their roofs and have a high insurance deductible, heard about it until it was too late.

This is the type of thing that happens when your government has a parasite-first philosophy. A government employee actually said that they knew the claims were 75-95% fraudulent, but they couldn’t do anything about it because nobody cares.

The fish rots from the head down, people.

Michael, that is the word from the Governor. Just pull harder. Even as we’re bleeding residents.

19. lauraw - September 28, 2011

Sorry, that response was supposed to go to Dave.

And Brewfan, **SMOOCHES** right back to yuz.

20. daveintexas - September 28, 2011

On a much larger scale it’s the same thing that happened after Katrina. There were some billions thrown at people in the same way, it was damned near impossible to verify claims.

21. lauraw - September 29, 2011

It wasn’t impossible here. All they needed was to check addresses against the outage map. A little info. from CL&P would have saved a lot of money or at least gotten it to people who really lost things. All these people from Hartford were there, waiting in line to see if they can get hurricane money.

Nothing happened in Hartford. Some areas may have had an outage of a few hours or half a day. No food spoilage, no flooding, etc.

But word spreads and suddenly these lines are wrapping around the block.

They didn’t ask anybody for an address, an ID, nothing. Just give us your sob story, and here’s a check. Talk radio was awash with stories of how people got away with basically stealing this money, and what they said to get more. They invented extra children, claimed bullshit damages, etc.
No problem, here’s your check.

I want these thoughtless, wasteful people running my healthcare and my life, oh please yes.

22. lauraw - September 29, 2011

There wasn’t even a system in place to prevent people from getting in line and getting another check the next day! And so people did! How do you perform this kind of service, without at least having the very minimum kind of accounting in place that prevents you from paying someone twice??

Nobody here was washed out of house and home. All these people have ID’s. They’re on assistance, of course they have ID.

Furthermore, everybody on food stamps was given an extra $100 automatically. It simply appeared on the balance of their card. Just in case they had lost any food during the storm.

23. daveintexas - September 29, 2011

Obama’s Stash

24. kevl - September 29, 2011

Did you have any damage Laura?

Yup, this nation is not going to budge until the election. We are in a holding pattern. A holding pattern of doom.

25. lauraw - September 29, 2011

No, we were out of power for a couple of days, but nothing spoiled because we prepared ourselves.

26. daveintexas - September 29, 2011

Tell her about the grill-shower.

27. lauraw - September 29, 2011

Oh yeah, the water in the tank was still hot even after a whole day without power, so we could still shower comfortably after that first day, if quickly.
Day two, not so muuuch.

Scott got a long coil of thin copper tubing and connectors, and rigged it up with the garden hose on one end and a shower head on the other. He put the coil on the gas grill, cranked it, checked the output with a thermometer, and soon I had a nice hot shower out on the back patio.

A little while later my girlfriend stopped by to offer us showers at her home which had power. I was squeaky clean with sopping wet hair in a bun on the top of my head and said, “We’re fine, thanks.”

And was secretly thankful that she hadn’t shown up a 1/2 hour earlier.

28. daveintexas - September 29, 2011

I have a personal anecdote that captures that sentiment completely.

My first car, my dad’s older brother found it for me. A 1965 Chrysler 300, 13,000 miles. It was sittin in a barn in Georgia on blocks. The man who owned it bought it for his wife who became unable to drive only a year later.

The engine hadn’t been turned since 1968. I bought it in 1976.

Uncle Rodney negotiated the whole deal, $650. Dad and I drove out to go pick it up, we put tires on it and pushed it onto a flatbed trailer and took it to my uncle’s place (also a trailer). This lifelong auto mechanic started working it over.. belts, hoses.. plugs… new wiring.. he broke down the carb and rebuilt it. The last spark plug broke off when he was trying to back it out.. and it was kind of in a tough place. He pulled it, and re-tapped the threads, and went inside to take a break.

His son showed up, my cousin, and picked up a plug and worked it in, fastened the last wire, connected the new battery and started it up. My uncle had been working on that car all day, in 90 degree heat.

When he came out, the look on his face almost broke my heart. He was nice about it, but I could see the disappointment in his eyes, he wanted so much to do that for me. To see my face when he fired it up.

To his everlovin credit, that goddamn 383 4barrel purred like a kitten. Old man knew his shit.

29. lauraw - September 29, 2011

Well, the sentiment that I had was pretty much centered around not having been discovered naked outdoors scrubbing my stuff, but your anecdote is pretty awesome too, Dave!

30. daveintexas - September 29, 2011

Oh.

I kinda missed that sentiment thing.. I sorta was thinkin the look of disappointment Scott mighta had.. ok never mind

Other than that I’m pretty good at reading people.

31. lauraw - September 29, 2011

Hah! I got that wrong. I was figuring you were thinking about my GF, offering to help but getting upstaged by Scott.

We are nearing Three’s Company type sitcom misunderstandings here.

32. daveintexas - September 29, 2011

I’m not Jack Tripper. I’m Mr. Roper.

Which kinda sucks.

33. lauraw - September 29, 2011

Your vignette was way better than mine. By many miles. This is why the chicks dig Dave.

34. daveintexas - September 29, 2011

nah, I was just trying to relate how Scott worked so hard to do that for you, like my uncle Rodney did all that for me years ago, and the disappointment he mighta experienced if after all that, your neighbor had showed up and said “hey, come shower here”.

But it wouldn’t have happened. Assuming your “water test” didn’t blister anything.

35. kevl - September 30, 2011

A grill-shower. That is some brilliance there.
Men Who Tinker are awesome and run the world.

A few years ago I asked Mr Kevlar for a laundry chute that would put the dirty laundry in the laundry room, in front of the washing machine. I was sickened by the daily man-clothes funk on the second floor.

He spent a few hours gazing at ceilings, floors, tapping support beams and measuring. By the end of the day I had a perfect square cut in the corner of my closet floor that fell precisely on the washer. It was even lined with carpet so any unmentionables would not snag, but glide down like snowflakes.

The obligatory small boy (nephew) dove thru the chute a few weeks later. Done.

36. Retired Geezer - September 30, 2011

I was sickened by the daily man-clothes funk on the second floor.
…It was even lined with carpet so any unmentionables would not snag, but glide down like snowflakes.

That’s not just Writin’, that there’s Literature

37. daveintexas - September 30, 2011

I’m a man. I built the Eiffel Tower, with brawn, and steel.

38. kevl - September 30, 2011

I should write a book compiling the best Men Who Tinker stories.

They have to be true and factually documented, unlike the McGyver bullshit that Dave tries to pass over on us.

39. daveintexas - September 30, 2011

Bullshit? Bullshit?

I have built a fusion reactor with a toaster, some duct tape and old watch dials. I rebuilt a 57 Chevy transmission with my eyes closed and a severe hangnail. I passed the bar exam in seven states with nothing but a number 2 pencil, my handsome smile, and 7 Thai sticks.

40. sandy burger - September 30, 2011

If conservatives saw a balanced budget amendment, I think they’d be much more open to a temporary tax increase. After the recession, of course.

Which is what smart liberals are supposedly supposed to believe, too. As I understand it, the Keynesian approach is supposed to be that you increase spending and lower taxes in a recession, then decrease spending and raise taxes in a boom (to pay off the debt you ran up during the recession). But these fools in DC aren’t even Keynesians; they’re just socialists.

41. geoff - September 30, 2011

I passed the bar exam in seven states with nothing but a number 2 pencil, my handsome smile, and 7 Thai sticks.

Oh yeah?

I did it without the smile.

42. Tushar - September 30, 2011

Completely OT: the best comment of the decade was when ace called Contessa Brewer ‘Ed Shultz with a smaller rack’.

The ewok pulled four insults with two nouns and an adjective. Hats off to him.


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