One Final Word...

Which candidate has your best interests at heart?

Living here on Retirement Island, I see a lot of people who are retired, or about to be retired, and are dependent on Social Security, Medicare, their Pension Plans, and their Savings, which are usually in Mutual Funds.

Eventually, all of us will be in the situation of these retirees.   And you have to ask yourself, when you are old and dependent on these few sources of income, which candidate is really out to protect your interests, and which candidate is out to protect the interests of people who really don't need protecting?

Consider this:

• One candidate promises, if elected, to cut Social Security for those under 55 and to replace Medicare with "vouchers".   Is this in your best interest?

• One candidate made a career in the private sector by buying failing companies, bundling them up and selling them as IPOs to your mutual fund managers.  These companies went bankrupt a year or two later, decreasing the value of your savings.  Was that in your best interest?

• Those same IPOs, when they went bankrupt, stripped the pensions of the workers and sent them to the Pension Benefit Guaranty Corporation - a taxpayer funded entity - where the pensioners got 40 cents on the dollar and you, the taxpayer got stuck with the bill.  Was that in your best interest?

• When GM teetered on bankruptcy, one candidate said "Let it go bankrupt" so that the interests of the bondholders would be preserved, but the employee's pension plans would be stripped.  His only criticism, even today, of the bailout was that it preserved the pensions of working-class people, over the interests of bondholders.   Is that in your best interest?

• One candidate says we should further deregulate Wall Street so that people can play games with your 401(k), IRA, or investments.   Does this strike you as something in your best interest?

• One candidate says we should cut taxes on the wealthiest people in the United States, and that by doing so, the benefits would "trickle down" to you.   Does this strike you as something in your best interest?

If you are an average middle-class American, who has worked hard all their lives and hopes to retire someday, making plans based on their Retirement Savings, Pension, Social Security, and Medicare, you really should think long and hard about this.  Without these things, you have nothing, really.

One candidate has made a wildly profitable career out of strip-mining the wealth from the middle-class, and has made bold plans to continue to do this on a national scale.   If you are retired and voting for this candidate, you really need to think about where this is going.

And that's my final word on the matter.

i-Fatigue

The new iPad mini is out.   I'm holding out for the iPad Nano, which has a screen the size of a postage stamp and makes a great gift for the people who build your yacht.

People are getting i-fatigue.  You bought an iPod, then a mini, and then a shuffle.  You bought an iPhone, and then upgraded, twice.  Then the iPad came out, you bought that.  Now another pad, slightly smaller?   You've had enough i-spending on i-junk.  And we won't even talk about how much you spend on "apps" which do little more than market to you.

Are people getting i-Fatigue?  I think so.  Apple is mum on the details, but pre-orders for the iPad mini were not as high as expected.  And the lines around the block are, well, not around the block.  In fact, there are no lines.

What is going on?  And what does this mean for Apple?  Simply stated, the market for smart phones and pads is rapidly saturating.   Smartphone penetration is now above 50%, with about 60% of that market going to Android and 30% going to Apple.  Yes, you read that right - Android has trounced Apple, and the rate of growth in market share is twice Apple's as well.   Why is this?

Incremental sales in the smartphone and pad markets are going to be the new customers - who currently don't have a smart phone or a pad device, because they likely don't want one, or think they are too expensive and not worth it.  You know, people like me - maybe you, too.

To nail these customers, you need a cheaper product with a low-cost subscription rate.  And Apple is not well situated to do this, as they have a huge profit margin to maintain, lest their almighty share price drop.  Right now, for the first time in decades, Apple is hugely profitable, as it has some products that people will pay a premium for.   But how long can that really last?  When it comes down to aesthetics versus cost, cost usually wins.

This is why the Android has twice the market share (60% versus 30%) of Apple and is growing at twice the rate.   The people in the media don't get this (an MSNBC story the other day described Apple's iOS as "dominating" the market, when in fact, it has a minority of the market).

The i-faithful will eventually tire of continually upgrading existing products and buying new ones.  An Apple Television?  I guess so.   But part of the problem also is that Apple is trying to limit your software selections (apps, content, etc.) to their iStore.   It is like AOL, and you know how well that worked out.

People want freedom of choice, and the more open architecture of Android is more popular than Apple - just as the PC trounced the Mac in the marketplace, with its open architecture.

My prediction is that in five years, the iPhone and iPad will be in the same place the iMac is right now - a niche product that sells well to people who value style and status, over substance.

Read the reviews of the new iPad mini sometime - more effusing over the aluminum case and the "feel" of the device.  Very little on the functionality and the cost/benefit analysis.  When you are a tech reviewer for a media corporation, you don't actually have to PAY for these things like us plebes do.   And thus the media misses the point, most of the time.

Now some of the Apple faithful argue that the "quality" of an Apple product makes the extra price worthwhile, as the plastic-cased Android products are "disposable".   But I think this is false logic.  Electronics are obsolete long before they wear out.  And Apple's are arguably the worst of the lot - the iPhone is now on, what, a fifth generation already?  Who out there is still using a first-generation iPhone with a black fase?  Tacky, tacky!

So making electronics expensive and of "high quality" (and I would dispute that, with Apple, based on the reports from friends of mine who have Apple products) is pointless.  It is like buying a built-in navigation system in your car.  It is obsolete in two years, but the car may soldier for ten or twenty.  Paying a lot extra for "quality" in something you will throw away in three years because it is slow, incompatible, or obsolete (or in the case of Apple products, no longer stylish) makes no sense.

Apple has made a lot of money in recent years by coming up with "the next big thing!!" every few months to a year, and selling these items to the Apple faithful.   And they have been hitting it out of the ballpark, with the iPhone and iPad.   But ironically, that is the problem with their business model - it is predicated on one hit product after another.   It is their success and their Achilles' heel at the same time.

Markets mature and sales taper off.   The smart phone market is saturated, and growth will slow - it is a mathematical certainty, just as the number of Facebook users has to reach a plateau, eventually (if not already there).

When this happens, the huge profits will pare down to reasonable ones, as the smartphone market matures and it becomes a business of margins - much as the computer market did before then (when Apple lost its way, and they fired Jobs back in the 1980's.  Yes the "genius" Steve Jobs was once booted from Apple back in the day, because management thought he was a moron.   So much for the legend).

When profits decline, this will bring the share price of Apple down, and people will say "what happened?" when in fact, it was a predictable outcome.  The same thing happened with the original Mac.  It was big hit with the Apple faithful and then.... nothing.   Sales stalled as they were unable to grow their client base beyond "people who can't cope with DOS".   So the company stagnated.  Technology goes in cycles like this, always.   Ask the people at the Wright Brothers factory.  Being first to market often means being last in the marketplace, once the dust settles.

While the iPhone is a hit product for Apple, again, it has half the market share of Android, and combined, the two have only half the cell phone market.   The media breathlessly reports every move of Apple, as it is a trendy company, has trendy products, and has a trendy stock.  And people in the media, who are the sons and daughters of the "afraid of DOS" crowd, use Apple products and just assume that the rest of the country does as well.   This tends to overstate the importance of Apple, its market share (again, MSNBC calling it "Dominant" when it is half that of Droid), and Steve Jobs - who is talked about in hushed tones as if he actually invented these things.

But then again, a liberal arts major writing for CNN really has no idea how Engineering works.   If they've even been to an Engineering company, all they did was see some gee-whiz demonstrations designed to impress the press.  They don't really get a feel for it, or how products are created and developed.

The hard reality of Apple, as I see it, though, is iFatigue.   People will get tired of spending hundreds of dollars for jewel-like electronic toys, and eventually stop buying.   Conquest sales will require lowering prices - and lowering profit margins (remember the fiasco with the original iPhone when they cut the price in half?  That pissed people off, and will do so in the future).   Their marketing model is just not sustainable and will hit a growth wall - it is mathematically certain.

(As an aside, this is the same problem for BMW, which makes jewel-like cars that cost twice what the competition is selling.   People eventually get tired of paying $60,000 for a car that lasts as long as a $30,000 car.  And to increase market share, they have to offer less expensive cars, which would kill their profit margin - the highest of any car company on the planet - and piss off the folks who paid top dollar for their products.  You can sell high-priced products as a niche player, but eventually your market penetration stalls).

Even Facebook recognized this mathematical inevitability in their prospectus - that you can't sign everyone on the planet up for Facebook, and eventually, you will sign up everyone you can, and then growth will stall, and then go flat.   It can't just grow exponentially forever - that would be a pyramid scheme.  The folks at Facebook were honest enough to admit that it was a mathematical certainty that growth would stall.

And the same thing will happen to Apple.   The market will be saturated and you can only sell so many "upgrades" before people say "enough already" as they did to Microsoft when Windows 95 came out.   After a while, the "latest and greatest" seems less than great, and you start to think, "Maybe I'll skip an upgrade, as this latest version seems incremental at best".

When that happens, Apple will continue to be profitable, but the P/E ratio will go up, and the share price go down...   Act shocked when it happens.

Bulk Dog Food

Owning a pet is an expensive proposition.  There are ways to reduce costs while maintaining your pet's health.

As I noted in The Pet Trap, a basic dog or cat can cost $1000 a year to feed and maintain.  This is a staggering amount of money for people living at or below the median household income in the United States (about $51,000 a year).   When you subtract living expenses (housing, utilities, automobile, food, health insurance) and savings, this may leave only a thousand or two in disposable income.  Spending half that amount on a pet seems kind of wasteful - yet many do it.

Even in higher income brackets, this can represent 10% or more of your disposable income.  And given that a dog or cat can live 15-20 years, this represents, over time, $15,000 to $20,000, or the price of a new car, which would last about as long.   And yet, many people don't look at their family pet and think of it as an expense along the lines of their family car.

In addition to dog food, there are medications the pet may need for flea, tick, and heartworm control.   And then there are Veterinarian visits, which can run hundreds of dollars apiece.  Throw in occasional boarding expenses, and you have a pretty hefty bill at the end of the year.  We won't even discuss the staggering cost of veterinary dentistry.  A simple cleaning for a dog or can can run $400 or more.

Finding an honest vet is one way to control costs.   In many cities there are "designer vets" that people go to, who charge exorbitant rates to give fluffy her rabies shots.  Some folks spend more on vets that they do on their own health care.  It makes no sense.

Food can be expensive as well.   Dog and cat food runs all the way from bulk "kibbles" sold in 50-lb bags to designer treats sold in tiny tins.   Our vet was constantly railing against the "kibbles" for our cats, claiming they would cause kidney stones and all sorts of ailments.  The cats lived to be over 20 years old, at which point, the vet said, "whatever you are doing, keep it up!"  So we kept feeding them the kibbles - in addition to the canned muck.

Our dog like a mixture of the kibbles, along with a tin or pouch of that glop that they serve those tiny annoying barky dogs.   I think she believes that she really is a small dog, trapped in a large dog's frame.

The problem with kibbles is that they go stale.   If you buy the large bag, the dog will stop eating it about halfway through.   If left at room temperature, it gets rancid and actually starts to smell bad.   Can you blame the dog for not eating it?

The smaller bags stay fresh longer, but they cost, in terms of price-per-pound, nearly double that of the jumbo bag.   But if you buy the jumbo bag, most of the dog food goes to waste.  What to do?

Freeze it.

Yes, if you take the contents of the jumbo bag, put it into a series of large ziplock bags, you can stuff it in the freezer, and it will "keep" for quite a long time.   So instead of having to go out and buy a small bag of dog food every week or so, you can buy the large bag, freeze it, and have it for months.

Does this save a lot of money?  Perhaps not a ton, but it does cut the kibble cost in half.   And that works out to about $20 a month, by my calculation, or about $240 a year.   Yea, that is a lot of money.

Borrowing From Payroll Taxes - A Bad Idea!

Payroll taxes are nothing to mess around with!

The other day, on the Debt Guy site, I read this missive:

Dear Jim,

I own a fire protection company that does around 4 million a year. It is a c corp. We are $500,000 behind in payroll taxes. Our business is picking up substantually and I believe we will make it through this extreme situation.

Can you help me?

What is the best way to work this out with the IRS?

Daniel

Ouch.  First let me explain what payroll taxes are, to those of you who have never employed anyone.   When you become an employer, the government comes down on you to do a number of things.  You are primarily a tax collector, and are charged with collecting taxes from your employess.

You withhold income taxes, of course, and also withhold your employee's Social Security and Medicare taxes - which you then match, dollar-for-dollar.  It ends up being a lot of money.

Depending on your reporting schedule, you are supposed to pay these taxes monthly or quarterly, to the IRS, along with a form which you fill out.   If you hire a payroll company, they will do this all for you, if you set up a "payroll account" and let them cut checks from it.   And this is probably the best way to do this.

However, it is tempting, when a business is failing to rob Peter to pay Paul.   So you put off paying your bills (your Attorney is usually at the top of the list of people who don't get paid) and you delay paying those payroll taxes.   What's the big deal?  You'll make it up next month, right?  Business will get better and things will "turn around" - right?

Wrong.  First of all, not paying the payroll taxes is basically stealing from your employees.  This is their money that they earned, and you are not handing it over to the IRS to cover their tax burden.  And in the past, many employers, particularly in the restaurant business, would play this game, end up going out of business, and leave the waiters and waitresses owing the IRS thousands of dollars.  It wasn't fair.

Today, they don't go after individual employees.  However, the owner of the business and responsible parties (such as the Finance Officer, the President, the person signing the checks, etc.) can be personally liable for these debts.  And when the IRS comes a-calling, they will ask you for a personal check to cover this stuff, or tow your car away.   You are stealing from your employees - and the government - so don't expect much in the way of sympathy.

And even if you can pony up the dough, the penalties and interest can be staggering.  In fact, they can be staggering enough to swamp a business, even if their business is improving (as in the example above).   Basically, the IRS uses these penalties to say, "You should not be running a business in the first place!"  It may seem unfair, but then again, you were caught stealing.

You should never, ever, Ever, EVER think about dipping into the payroll tax fund, to keep operations going.   It may seem like a swell idea, but the IRS is not in the lending business - and neither are your employees.   And like an alcoholic or a crack addict, once you start doing this, the temptation to do it will occur again and again.   And this is why the cut-you-off-at-the-knees penalties are designed to make you stop - one way or another - for good.   It is re-hab for bad businessmen.

If you are getting behind on your payroll tax obligations, or are thinking of dipping into this money to "tide you over" until "business gets better" you should think long and hard about whether your business is in fact, failing.   This is a very typical scenario, and we see it a lot in small businesses.  The suppliers are not paid, and now demand cash for delivery.  Rather than take this as a warning sign or a miner's canary, the businessman dips into the payroll taxes, and remains open for another week, month, or year.

The problem is, when it all goes horribly wrong, and the business finally closes, the tax liabilities are HUGE, and the penalties and interest keep piling on.   Suddenly, a small failure has morphed into a life-changing event - where you will spend the rest of your life paying back the IRS.  You will wish, in retrospect, that you had closed the business and dealt with a relatively painless bankruptcy, early on.

If you are thinking of dipping into the payroll taxes, consider other options.  Maybe it is time to throw in the towel and start over.   Maybe you can lay off employees - or ask them to take a cut in pay.  Maybe there are some expenses you can cut - little things add up.  Maybe you should be raising prices.  Or maybe your personal lifestyle is getting out of hand.   This latter issue is often a real problem for some small businessmen, who think they "deserve" a huge paycheck, even as their business is mired in red ink.  And this illustrates why the IRS comes and tows away the jet skis and bass boat of the business owner.  In effect, these items were bought with the payroll tax money.

I ran into this situation when I ran my own Law Practice.  At one time, I had five employees, and the payroll was pretty staggering.   The problem was, although I had a nice income to support maybe two or three employees, expanding the business with more employees wasn't increasing my income accordingly.  In fact, the more I hired, the less we made, to the point where adding employees was a money-losing proposition.

(As an aside, this illustrates why these tax arguments by the GOP are nonsense.  Increasing a person's personal income tax rates has no effect on the decision to hire or fire employees.   You hire employees to increase productivity and profits.  You fire (or lay off) employees when they are no longer profitable.)

I ended up getting a couple of weeks behind on my payroll tax money, mostly because a client owed me $80,000 that was over six months past due.  It was a nightmare.  The penalties and interest were staggering.  I learned quickly that the IRS is not a lender of last resort!   I used this as a wake-up call, and cut expenses, rented out unused office space, and laid off employees.  A smaller, more nimble business turned out to be more profitable.   In fact, a solo practice turned out to have the highest profit ratio, as almost all overhead was eliminated.  And I also learned to get cash-in-advance, rather than rely on clients to pay in 30, 60, or 90 days - and beyond.

So I used this as a learning experience and as a wake-up call.   If I had kept going down that road of borrowing Peter to pay Paul, I would have ended up bankrupt and likely disbarred.  Yes, not paying taxes is also a crime, too.

It is OK to fail at something.  In fact, you are better off recognizing failure early on and then taking action, than to deny it by playing financial shenanigans, and end up in real trouble later on.  As I noted in an earlier posting:

We see it in business all the time, too.  I mentioned before the young hot-shot Real Estate lawyer in Virginia who seemed to do no wrong.  He came from the "right" family, went to the "right" schools, got top grades, joined the "right" firm and gradually worked his way up - starting his own law firm which became wildly successful.

Then the unthinkable happened - a Real Estate investment scheme of his started to unravel.  Rather than take a loss of a million dollars, which by then he could easily afford to do (although it would have set him back a few years) he decided instead to "borrow" money from client fund accounts - after all, he was the Golden Boy and could not fail!  But of course, this just took a small failure and amplified it many times.

By the time the scheme was uncovered, tens of millions of dollars were lost - and most of it client funds.  Not only did his business collapse, but he lost his job, his law license, his law firm, and was sued and sent to jail to boot.  And all to avoid a small failure - he created a huge one.

That fellow, had he recognized that his Real Estate investments were tanking, could have worked out a deal in bankruptcy, and perhaps even kept some of the properties.   The main thing is, he would have kept his law license and stayed out of jail.  By avoiding a small failure, he courted a big one.

If you run a small business and are struggling to make those payroll tax payments, sit down and think about where this is going, long-term.   Closing the business or dramatically restructuring it might be in order.  The one thing that is for sure, though:  Never, ever, tap into that tax money.  Once you do, it is all over for you!

Hurricane Irony

Hurricane Irony strikes New York!

Having lived through a number of hurricanes in Florida and one in Washington, D.C., (where we were out of power for a week) the irony of post-hurricane cleanup and the nonsense that goes on in the media, never ceases to amaze me.

1.  People spread fake stories and fake images: The above image is, of course, from the movie, "The Day After Tomorrow", and not from any hurricane.  But people are spreading it online as an actual shot from hurricane Sandy, along with a number of unrelated images.  This happens like clockwork, after every major storm - people trot out the same photos, often photoshopping in local landmarks, and then spread them via mass e-mails as "incredible shot of the big storm!"

During Katrina, people spread all sorts of rumors about murders in the Superdome and "bodies stacked in meat lockers under the SuperDome!"   No one asked why there would be meat lockers in a football stadium.  Seems like an obvious question to ask.

During this storm, a campaign manager for a GOP Congressional candidate sent out a number of "tweets" with alarming comments about how the entire stock exchange was underwater.  The irresponsible media reported these as fact (which is scary).    Why would someone just make up stories like this?  Compulsive liar?  Oh, right, campaign manager.

2.  People spend enormous amounts of time in line getting trivial things:   Today on NPR they were interviewing Joey Buttafuco (apparently) who said he spend three hours today driving all over New York looking for gas and waiting in long lines.    Here's a clue, Joey:  If you have three hours to kill, you don't really need gas.  And driving all over the place burning gas to try to find gas is idiotic.   Park your car and just stay home for a few days.

After one hurricane in Florida, the local radio station was blathering on and on about "free ice" being given away in Miami.  The line went around the block.  One of my neighbors went down there and came back with a melting bag of ice and two military "Meals Ready to Eat" (MRE) that they said tasted like crap.   What was the point of all this?   Nothing, except that it was FREE and the radio was hyping it, so it must be good, right?   We were hardly starving or needed ice or anything.  Sheesh!


3.  People act as though Electricity was Oxygen:   Being without power is weird, and it takes a while to stop reaching for light switches every time you enter a room.   But you can live without electricity, unless you are on a heart-lung machine.   One couple on the news reported that they "self-evacuated" on an Army truck and went to a local shelter, because their undamaged house was without power.   I am not sure that sleeping in an army cot in a gymnasium with a bunch of homeless people is preferable to sitting in your own home, snuggled under blankets and reading a good book.

We lived for a week without electricity in Washington, and it was no big thing.  People went back to work within a day or so.   It was annoying, and many folks cranked up generators (with extension cords criss-crossing the neighborhood) and we all got by.   Turns out, you really can do without refrigeration, at least for a few days.  Yea, canned goods gets tiring.  But you get over it, pretty quickly.

4.  The media never reports the undamage:   If you watch the television, you may rightfully think that all of Manhattan is underwater and it will take months, if not years for the city to recover.  Within a day or two, however, buses and much of the subway system was up and running.   What about lower Manhattan?   All those flooded subway lines?   Well, these are largely the same subway lines that were flooded after 9/11 - and we managed to get those up and running again.  The media reports breathlessly about "unprecedented flooding" when the precedent was about 10 years ago.

Similarly, they show endless footage of downed trees, burned homes, and other damage from the storm.  But they never show the streets that are open (most of them) the people with power, and the folks who suffered no damage at all.

5.  People act shocked that beachfront properties are damaged:   From the media reports, you might believe that most of New Jersey is now just a muddy shallow bay in the Atlantic Ocean.   And if you owned a house on the beach, this is probably the case.   For some reason, we act shocked when houses built on barrier islands (and often right on top of the barrier dunes) wash away in a storm.   In some of these neighborhoods, flooding and destruction are so commonplace that the locals don't even take note of it.   You don't hear people in the Outer Banks whining all the time when their beach homes wash away, do you?

My Grandmother lived in Redbank, New Jersey, and she belonged to a beach club - one of several dozen or so located on a sandy strip of barrier island.  During one storm (which was not even a hurricane) the entire island washed away.  Not just "damage" to buildings, but the disintegration of an entire island.  Dozens of these beach clubs suddenly ceased to exist along with the beach.

Storm damage to vacation homes is a predictable event, not some weird outlier behavior.  Stop acting shocked when a beach shack drifts away.

6.  People do stupid things:  With every storm such as this, there is always the jackass who decides to drive through a flooded street, only to discover the water is chest-high.   And people die this way.  During the storm in DC, people would start up generators, but put them in their garage (for fear of them being stolen) and end up dying of carbon monoxide poisoning.

7.  The Police act like idiots:  During Hurricane Katrina and now during this Sandy, the Police spend more time trying to keep people from returning to their homes that they do actually trying to help people out.   One fellow interviewed in New Jersey reported that he was just fine after returning to his undamaged home, despite the lack of electricity.   He went to work the next day and when we came back, he had to negotiate with the Police at a roadblock.  They were "not letting anyone back in" to the "storm damaged area" for fear for their safety as well as "looting".   Here's a clue:  Why not take down the roadblocks and instead search for looters.    The sooner people return to their homes, the sooner the cleanup can commence and the easier it is to cleanup (when a house sits with water in the basement for a week, you have a real mess).

Then, for some reason, three days later, the Police decide that the roadblocks are not necessary.   It is just idiotic Policing - showing authority and abusing power.  In some cases, people end up getting shot over stupid stuff like this.   Frankly, if a hurricane struck our island, this is what would worry me the most - not the storm, but the reaction by the local "authorities" who would let our homes molder and rot with dampness, and keep us away for arbitrary reasons.

Of course, you can't even think to criticize the actions of these "first responders" as since 9/11 every policeman and fireman is now a sainted hero, if not an outright God, even if they are just a redneck cracker Sheriff from Bumfooque County.   Yes, many of them do heroic things.   But a lot of them really do stupid things.  And these unnecessary roadblocks and cordoning off neighborhoods merely because there is no electricity or out of fear of looting is stupid.

* * *

The list goes on and on.   The point is that we recover from these storms, over time.   Except of course, Hurricane Katrina, which for some reason is still flooding the lower 9th ward in New Orleans.  It must be, as we still talk today about the "Victims of Katrina".  (You can't be a storm victim for a decade, sorry).

The cleanup from this storm will go faster than you would expect.   We were in Vermont two years ago shortly after a major hurricane came ashore and washed out a number of roads in South end of the State (including Route 9).   The State Department of Transportation took every contractor and road crew off their construction jobs and put them to work repairing that road.  By the time we got there, not a month or two later, the roads and bridges were largely repaired.   It was pretty amazing, but it is a matter of willpower, not miracles.

And the same will happen in New York and New Jersey.  This isn't rocket science.   Electricity will be back on within a week or two, and most roads will be reopened by then as well.  Rail lines will be repaired.  It will all get fixed.   Of course, it may take longer to repair your beach house, if you can indeed even rebuild on the site.  But that's what insurance is for, right?

But the media will have none of that.   Everything is broken and it is going to stay that way, forever (like with Katrina).

They were interviewing a member of the Army Corps of Engineers "de-watering team" and they asked him how many months or weeks it would take to pump out the Subway tunnels.   You could see the disappointment in the reporter's face when the Engineer replied, "About 48 to 72 hours, once we start pumping".   Hours not days or weeks.

"And where will you pump all this water to?" the reported asked, as if it were some impossible problem to be solved.  Again, the crestfallen look on her face when he replied, "Well, back in the ocean!"

Army Corps of Engineers - the "Get 'er Done!" division of the military.

Listening to the media is always dangerous.  They like to posit that we are all victims and that everything is awful.   Why is this?  Because it sells newspapers and sells eyeballs.  No one wants to hear good news, it seems.   We all like to wallow in "Ain't it awful?" from time to time - or continuously.

But that is no way to go through life, I think.

The Townie (How Not to Ride a Bike)

The "Townie" bicycle sacrifices efficiency for alleged comfort.   Most folks I know who ride them, don't ride them very often.  It turns out that efficiency IS comfort.

Many folks here on retirement island buy these "townie" bicycles, as they feel that a traditional bicycle is "uncomfortable".   A "Townie" (brand name) bicycle has a stretched frame and the pedal crank moved forward of the seat tube, which itself is raked back.   This feels "comfortable" when you are sitting on it in the showroom, as your feet will touch the floor - flat.  But when you are riding it, your legs end up out in front of you, as if you were pumping a church organ.

Traditional bicycles put the pedals beneath the seat post, in a direct straight line.   A mountain bike such as the one shown below, is an example of this.

This positioning is far more effective that the laid-back style of the townie.   When you press down on the pedals on a traditional bike, you press straight down, with all of your body weight to push against it.   With the Townie, you are pumping a church organ, and have nothing to push off against.   Efficiency is horrific, which is why many folks buy these bikes, try to pedal them a few yards, get exhausted, and then give up.   Another expensive piece of junk cluttering up the garage.

A traditional bike allows you to push straight down, which is efficient, as your body weight is behind each thrust.   Many folks find this uncomfortable, and mostly because they have not adjusted the seat properly.  And believe it or not, most folks really cannot ride a bicycle.

When you are seated on your bicycle, your legs should extend nearly all the way when the pedal is at the bottom of travel.   Adjust the seat up HIGH (like the picture of the mountain bike above) to achieve this setting.  Don't hyper-extend your knee joints, however, as this will cause knee problems.

Most folks leave the seat way down low, as they want to be able to "put their feet out" and touch the ground.   They are worried about tipping over all the time (because they don't know how to ride, really) so they end up very uncomfortable, which makes them less likely to ride and also gives them less control and horrific efficiency.

I've seen some folks with the seat all the way at the bottom of the seat post.  When they pedal, their kneecaps are banging against their nipples.  It looks awkward and uncomfortable, because it IS.   And since they are not making effective power, they are steering from side to side and barely moving.    No wonder they are so worried about "tipping over" all the time!   Because they DO!

Most folks also pedal in the wrong gear - too high a gear.  My neighbor saw me riding the other day and asked, "Why are you always in such a low gear?"   Of course, I was in the right gear, maintaining a cadence of 70-100 strokes a minute, sometimes higher.   Many folks plod along at a 30 rpm cadance, and wonder why riding a bicycle is so "hard" and why their knees hurt.  They wobble from side to side, sawing wildly at the handlbars.

A slower cadence might initially seem more comfortable.  However, in order to make any power, you have to place a lot of stress on your leg muscles and knee joint.  A faster cadence means more strokes, but less power (and pressure) for each stroke.   Your knees will thank you for that - and thank you for adjusting the seat post height properly.

A faster cadence also means smoother riding - at a stable speed, not this "about to tip over, sawing at the handle bars, hardly faster than walking" nonsense.  And yes, I see people doing this on expensive "road bikes" - having been sold the Lance Armstrong Starter-Kit by the guy at the local bike shop (sponsored jersey, gel shorts, biking shoes, and racing helmet included.  Steroids are extra).   The have all the right gear, but they don't even have their seat adjusted properly.  The plod along like a child on a tricycle.   It is freaking embarrassing to look at.

But what about when you stop?   So many people are scared to death that when they stop, they will be so "up high" on their properly adjusted seat, that they will "tip over".   The key is, of course, than when you stop, you should get off the seat, stand on one pedal, and then lower your other foot to the ground.   It isn't hard to do, even with toe clips.

Bicycling is a lot of fun.   Unfortunately, I see a lot of folks go out and buy bicycles and have all the best intentions of riding them.   But they buy the wrong kind of bike, such as a Townie - based on comfort, not pedaling efficiency - and they adjust the seat poorly and then pedal too slowly.   Very quickly they are tired out and have little control over the machine.   They end up getting frustrated and giving up.   Another $250 squandered on the credit card, and yet one more piece of junk keeping them from parking their car in the garage.

Just say "no" to Townies!   And raise your seat up, for chrissakes!  You look ridiculous!

Vacation - Spending Money to Relax?

The best things in life are free, or at least pretty cheap.  This campsite at Mistletoe State Park is about $30 a night.

One funny thing about Americans is that they believe that they have to spend money to have fun.  And people who run vacation resorts know this, and set up the resort so that it is just a series of purchasing decisions.

You go on vacation, buy a plane ticket, book a room at a resort, spend money on restaurant meals, spend more money on tropical drinks, buy the t-shirt, shop in the gift shop, go on the water slide, tip the tour guide.  Repeat.

And nowhere is this more true than on cruises.   The cruise takes vacation and boils it down to its essentials:  Spend money, and then spend more of it.  The cruise ship doesn't really take you anywhere, at least for very long.   You parachute into Jamaica, the Bahamas, or Cancun, for maybe four to eight hours and - whaddya know? - everything you can do there is packaged as paid "shore excursion" that basically involves you spending yet more money.

And yet, lying on a beach, drinking beer (which is what the Corona commercials tell us is "vacation") is pretty much free.  I live at the beach.  It doesn't cost much, let me tell you.
 
As a savvy resort owner, however, you should present vacation to your customers as a series of financial transactions.   And your customers will willingly cooperate in this venture.   Most vacationers are at a loss as to what they should be doing.   Completely out of their element, they are starving for normative cues as to what their proper behavior should be.   If you come along and say, "OK, everybody get out their wallets and spend your money - this is what you are supposed to be doing now!" people will do just that.

It is comforting for them.  They have a role to play, just like in High School.  And just like in High School, these roles are often self-destructive.   In this case, these roles involve you spending thousands - if not tens of thousands - of dollars to "have a good time".

Disney is expert at this sort of thing.   A stay at a Disney resort, with all the bells and whistles, can cost thousands and thousands of dollars.  As a shareholder, I say, "go for it!".  On a personal level, I would stay at a cheap motel or RV park and buy a day-ticket.

But a lot of families do this, and you can even get a Disney Credit Card, which is pretty Mickey-Mouse, so you can use the "rewards" on your next trip.  And we see the families who buy into this, driving up and down I-95 to and from Orlando, in their mini-vans and SUVs with rocket boxes or Sears "S-Cargo" boxes on the roof.   They adorn the car with Disney stickers and a little black ball with mouse ears on the antenna.   It is a comforting role model - this is what you are supposed to do when you have kids.

(Mickey Mouse is an interesting phenomenon.  "The kids all like Mickey", we say.  But Mickey Mouse really hasn't been on television or appearing in cartoons since the 1940's, perhaps earlier.  Heck, when I was a kid, we never saw him, except as a trademarked icon.   Bugs Bunny?  Yea.  Scooby Doo?  Sure.   But Mickey?  We hardly knew ye.   So it always cracks me up that Mickey is this icon, when in fact, he really isn't starring in anything anymore.  He rarely gets airtime, even on the Disney channel).

And how do they pay for all of this?  Well you can put it on the Mickey-Mouse credit card.  Or you go to your credit union and get a Vacation Loan.  Yes, people actually borrow money to go on vacation, and then spend the rest of the year trying to pay it all back.   This really sucks, as if you don't enjoy your vacation, you have all year to be miserable about it.

This idea that if-you-are-not-spending-money-you-are-not-having-fun is present in all socioeconomic levels.   As I noted before,  Rednecks are convinced you can't have fun unless an internal combustion engine is operating somewhere.   Whether it is a bass boat, a four wheeler, or just a loud an obnoxious generator, if gas ain't a-burning, it isn't a party.

But perhaps there is another way.   Maybe instead of taking only two weeks of vacation a year and burning through $10,000 in those two weeks (I've seen it done!) you can have fun without the meter running.  And as a result, you can have more time for having fun.

America is unique in that it is one of the few Western industrialized countries that provides only two weeks vacation a year.   Most Europeans get four weeks or more - and they take it.  Americans barely take their two weeks - often squandering it on "long weekends" to get caught up on their laundry.

We work obsessively in this country so we can pay our bills.  And the things we pay bills for, we rarely get time to really enjoy.

Maybe it is just me, but I think there is another way.