There's something about watching a soil sample rebound from consolidation that encourages reflection.
Boredom, perhaps?
This week between Christmas and the New Year has always seemed like an odd sort of interval of no-time to me ever since my Army Days. Back in the Eighties, at any rate, this week was usually a period of massive "ghosting"; we'd fall in for a ridiculously abbreviated morning PT - often distinguished by pure fun-PT like basketball, dodgeball, or the usual exercises but led by the junior privates for the entertainment and mirth of all involved - and then go hang around the aid station for the morning, clean already-clean weapons, dick off doing small PM chores in the motor hole, or find reasons to go "inventory our TA-50" which always seemed to entail fiddling with the field gear in our racks with our boots off while watching He-Man cartoons.
After midday chow even this pretense of military activity ceased, and we would spend the rest of the afternoon just goofing off; hanging out in the chow hall, or at the gym, visit our married pals at their quarters, watch bowl games in the dayroom or just chill in the barracks with our friends.
I remember one particular mid-week afternoon that turned into a "Faces of Death" marathon from noon until well into the following morning.
Remember those videos?
In the pre-cable era I recall that the "Faces of Death" videos were considered shocking evidence of the decline of Western Civilization; amateur (or professional outtake) films of people getting waxed in various either horrible, or comical (or both) ways. Hangings, electrocutions, falls, plus all the usual gawdawful atrocities humans have always managed to figure out how to perpetrate on each other...packaged in a tidy ninety-minute VHS tape perfect for bored-GI entertainment. But the usual finger-waggers and professional morals nannies considered them the nadir of human morality and signs that Western civilization was headed for the depravity of Rome and Babylon.
How innocent were we..?
Anyway, this week was also the time when young troops would get involved in all sorts of insane horseplay; it was this time in 1986 when Private Black pioneered "drainsurfing" during an unexpectedly-intense dry season downpour and ended up in the swamps behind Venado Beach. Given Blackie's penchant for bizarre nonsense I'd have to say that this was fairly subdued for him; nothing was set afire, nobody but him ended up naked, and there were no arrests. This week was for "Jackass"-grade stunts before there was a "Jackass".
Today I'm a sedate middle-aged, middle-class father and husband and the notion of jumping in a raging drainage ditch with a foam sleeping pad wouldn't occur to me any more than running for mayor of Portland. But this week, this dead-week between the two holidays, still retains an odd sort of surreality for me.
It has always seemed to me that the old year really dies with the solstice and the Jesus-come-lately graft of religio-commercial holiday glitter we've pasted to it. The silly alcohol-fueled celebration of the New Year a week later marks the beginning of another year's journey around the sun.
But for now we wait, idly diverting ourselves with desultory work and the bright nonsense of our new toys, through the short, dark week as the earth spins through the no-time that spans the end of the old year and the beginning of the new.
And, perhaps, take some time to reflect on where we've been. And wonder where we're going.
Yeah, this always was kind of a weird time for me too. And boy, I had completely forgotten about those "faces of death" videos. I only saw one or two and the only thing I remember was a video of some poor guy in Africa getting his dick cut off before he was killed. Cut to 2004 and we've got Nick Berg literally beheaded in Iraq.
ReplyDeleteHell, I remember a couple of them where people got their noggins whacked off, and no wogs were involved; there was one where they had a flight-deck cam clip from some carrier where the guy is walking around an E-2 and the prop goes right though his bean. We must have replayed that about fifteen times - I remember this guy Varney in my ambulance section just shaking his head repeating "Fuckin' stupid squid fucker..."
ReplyDeleteThat and there always seemed to be dozens involving electrocutions.
Ah..good times...(snort!)
And Nick Berg!
ReplyDeleteGawd, I had completely forgotten that poor bastard.
I'll bet he didn't contribute a quote to the Iraqi Chamber of Commerce brochure about "business opportunities in Iraq"...
I only remember him because I watched the video of him getting killed and, like the poor guy who got his pecker cut off, it's stuck with me. Wish I hadn't watched them frankly.
ReplyDeleteThis in-between time is atypical for us this year since we're moving this week. However, this is one thing I'm thinking about in between the chaos of moving.
Speaking of which, the wife is telling me my break is over and I have more crap to prepare for the movers tomorrow.
Well, McMeghan has a point. I'm getting killed by the fact that while my classmates were getting their first "real" job I was out playing in the woods. Then I went to work at a piss-poor-paying job to support my ex-wife through school. THEN I went back to grad school. So I saved pretty much bupkis from 1980 to 1992.
ReplyDeleteAnd THEN my 401K went into the tank like everyone else's in 2008.
The problem is that I don't make 100K; I make 50K. So saving 15% a year doesn't mean I miss a few meals out or don't get the newest iPhone - it means we eat freaking cat food.
Same-same for a lot of people in my boat, or worse. I see that a lot w/McArdle's stuff; it works great if you're in the 80K+ world, not so much if you're pulling down 50-80K...and below that?
Don't turn on the heat, use the phone, or get tired of ramen noodles and you might be able to put 10% up for retirement.
We are trying to make up the ground. But it's way harder than it looks, and keep in mind that my wife and I have three master's degrees between us. I can't imagine how the poor bastards driving TriMET buses or working at the bottling plant manage.
And speaking of moving my father moved constantly when I was a kid; not as much as a serviceman but, still, a lot. He was a midlevel exec for a chemical firm from the middle Fifties to the mid Seventies. Y'know what they did?
His company paid for his entire move.
No shit. Soup to nuts. Hired a mover who showed up, boxed the entire house, loaded it, hauled it to the new house, unloaded and carried it into the right rooms. All we had to do was unpack and put things in the right place.
Nice, eh? The sweet days of corporate paternalism! Mind you, those days are dead as the dodo - his last move (back from Germany) he had to arrange and pay for all by himself. He told me he was damn glad he hadn't had to do THAT before because he'd have quit and become an inker at a tattoo parlor...
No doubt it's tough, but I think it's always possible to save something, even if it's not 15 or whatever percentage.
ReplyDeleteMcArdle's post reminded me of a couple of things. First are some segments that ran on NPR's "planet money" podcast about a year ago about how poor people save money - and by poor people I mean those who live on $2 a day in a third-world shithole poor.
The second thing I was reminded of was this guy I knew in the Navy right after I first enlisted. He was an aircraft mechanic and a 30-something Argentinian of German descent. He was new to the Navy too and was about to pin on E-4 when I left the unit. He was a bit strange, even by Navy standards. He ate almost every meal in the chow hall (I think he went out to each once a month). He lived in the barracks by choice. He didn't own a car. He mainly read books (never purchased) and saw movies at the base theater for entertainment. He was pretty quiet and kept mostly to himself. Everyone thought he was a little weird, which I guess isn't surprising. There aren't many 30-something Argentinian E-3's with German names running around the US Navy. Somehow, probably because I was, like him, older than our peers, we became friends.
Anyway, as I was about the PCS he confided in me that his whole purpose was to save money. He had a family back in Argentina and he planned to save as much as he could and then go back and start a business. That's why he didn't blow through his paychecks like most of the 18-something E-3's did. Turns out in a little over three years he'd saved about $30k. That's in 1994 when an E-3 only pulled in a bit over $1k a month. I was, naturally, astonished at first but it made sense considering his ascetic lifestyle.
I lost touch with him but he's remained a kind of financial Jesus for me - he demonstrated a financial discipline that I aspire to but will never hope to achieve.
Anyway, the McArdle article got me thinking about saving again and PCS time and the end of the year is a pretty good time for reevaluating things. What really caught my interest though, was the link in it which suggests that the stock market will probably underperform in the future as compared to the historic trend. That trend is one of those mantras - that over the very long term, stocks will average 7-10% a year in returns. But what if the article is right and that isn't true anymore? It seems like a good time for skepticism. After all, the define benefit pension was supposed to be a guarantee and most of them failed to keep their promises. Equity in a home was supposed to be a reliable nest-egg, but that mantra turned out to be false. Social Security and Medicare are in trouble and it's difficult to see how they can be reformed without cutting at least some of the benefits. All these promises and assumptions about the future we built up over decades about what to expect turned out to be less than we thought. Why should the stock market be any different? What happens to the billions of 401k money and corporate and public employee pension assets that depend on stock market returns? Those pensions assume a rate of return of 8% a year in order to meet their future obligations. People saving in 401k's are told to expect similar returns by financial "experts." Such assumptions drive how much we, collectively, put in these investment vehicles today. If the rate of return goes down then the math requires more upfront contributions if future promises are to be kept. The alternative is that future promises won't be kept.
ReplyDeleteSo I wonder if this is the next house of cards to fall. If the market under-performs this historic trend then the remaining defined-benefit pensions are going to collapse. Similarly, individuals will get near to retirement and find their savings are inadequate. This is already happening to a nontrivial number of people. And what happens when this is added to all the other problems we face - like the endless rise of education and health care expenses and the inability of the government at all levels to provide promised services at a level of taxation people are willing to bear, etc.
And of course I worry about how all this will affect my own family.
Anyway, that's what I'm thinking about as I spread spackle and get ready to move all my crap 1000 miles south. Once I get settled into the new digs I plan on looking at this more.
I don't blame you. It's a complex and to a large measure not a pretty picture, and, I'm afraid, the more you look at it the uglier it gets.
ReplyDeleteFor example; we're putting by about 10% for retirement now; it's about as much as we can without having to cut back to ramen-noodles-and-50's-thermostat levels.
But as you noted, our 401K's are not providing the sort of return that would enable us to retire in our sixties and not outlive our savings. We're fortunate in one respect; we're both in relatively non-physical professions where we can reasonably expect to be ABLE to work into our seventies.
But can we? The prospect of being laid off at 65 is daunting; who will hire a senior geotechnical professional at 66, given my salary expectation?
So we need to be putting aside more; 15, even 20%...but where?
McArdle's below-7%-market-return prediction is quite feasable, especially given our current situation; we're in a liquidity trap and the likelihood of our experiencing a lost decade - or longer - with a subperforming economy similar to the past 10-15 years that Japan has seen is extremely possible and even probable.
And to make things even MORE...interesting, as a late-saver my 401 was heavily weighted towards small-cap, high-risk and venture-type issues, and those stocks are taking a beating now and look to continue to underperform for some time.
But if I shift over to a steadier portfolio and my return rate - and this is in a high-performing economy - drops to something more like 4-6%. In our current economy it becomes more like 3-5%.
I've got my DA retirement but given the percentage of time I spent in the RC versus AD it's miniscule. An even bigger joke is the PERS "retirement" I'll get in another decade for my year of teaching public school...but that's it.
And we've got the boy looking at college costs in another decade!
Hopefully the Coast Guard is looking for a few good men at that point...
But now I'm just depressing myself.
Hopefully the change of skies will provide you with a change of view that reveals a better picture and the gods of PCS provide a smooth and hassle-free transition!
Damn, you guys caught up in the middle of life make me ashamed of my good fortune. I live on $12,000/yr SS, plus a few thousand from book royalties. It’s enough for rural Mexico with money left over for an annual visit to the States.
ReplyDeleteAs soon as the present book is finished, plans are to move the shop further south to a tiny coastal community. Pushing 80, it’s time to put the tools – lathe, milling machine, welders – in the hands of younger people. There will probably not be enough business in the area to justify a machine shop, primitive as it is. But the tools are paid for and will be useful. Will to rent a room from a family that needs a little money and can tolerate an old gringo.
Living here, steadily becoming more Mexicano, puts me in mind of my father, born in 1890. He loved this beautiful, tragic country. Sometimes, being a foolish old man, it's almost as if he were at my side.
Paul: I've always told my father that he and his generation had the sweetest deal they never knew they had.
ReplyDeleteHe was too young to have really been hammered by the Depression or to have been caught up in WW2 and just right to have prospered along with the rest of the nation in the Fifties and Sixties.
He went to college on the GI Bill - at a time when the GI Bill COULD pay for a five-year Chem.E. degree, got hired by and worked for one company all his life (mind you, he was and is sharp as a razor, which helped him get promoted...) at a time when he could in on one of those terrific defined-benefit pension deals (and cashed out before his original company got bought out and the buyer shiked the retirees by dumping the pension plan)...and then sold his house right before the bubble burst and bought into one of those household-to-ICU retirement joints. He and my mother are set until they take their dirt nap.
My in-laws, OTOH, (about half a generation younger - they're in their late sixties to my parents middle eighties) are in much the same boat my wife and I are in because they were blue-collar, never made or managed to save anywhere near enough despite living at subsistence level for decades, and are now looking at eking out their final years with little more than SS. Either we or my sister-in-law will probably have to take them in when they become truly infirm. I have no idea how either of us will pay for that if their Medicare cannot cover it...
I have to say that while I don't know whether I'd be willing to retire to Mexico the tale of that land is one of the great true telenovelas of history. Talk about your grand tragedies...
Exactly who is McArdle talking to when she says that a 15% savings rate is feasible? And what economy? Let's say that the "McArdle save for the Golden Years Act" is put in place today. Everyone would have 15% of their income placed in a low risk investment in an IRA type of account.
ReplyDeleteItem 1. The US is a consumer spending driven economy. Withdrawing an additional 10-12% of income from spending (current savings rate in US is about 3%, and was down to zero in the most recent "glory years") would depress GDP significantly, and jobs as well.
Item 2. A 2005 Conference Board report stated that the average discretionary income for households at the $50,000 level (about 53% of the population) was about $2,100. That same report indicated that some 45% of the households effectively had no discretionary income. Where is the 15% going to come from?
In short, McArdle is offering an individually possible answer for those already of some means, but a societaly impossible one, as least as our society is now structured. As off the mark for the bulk of the population as GWB's "Ownership Society".
The issue is much more complex than the simple compounding of savings model that McArdle relies upon. If we, as a society, are going to provide an answer, like it or not, that means some of will pay more so that others do not end up in society's trash heap at age 65. In short, there is probably more potential in a re-visited "New Deal", addressing the current and projected America, than an "Ownership Society". Unfortunately, the former requires a lot more intellectual and personal effort and sacrifice.
Aviator, I'm seeing stories from Greece, truly sad cases, of crumbling safety net programs there, like this one.
ReplyDeletehttp://www.guardian.co.uk/world/2011/dec/28/greek-economic-crisis-children-victims
As Greece prepares to endure a fifth consecutive year of recession, as the crisis extends its reach, as cuts take their toll, as poverty deepens and unemployment climbs, evidence is mounting that society is tearing at the seams.
Like the middle class, society's great connector, families are beginning to unravel under the weight of a crisis that, with no end in sight, is as much human as it is financial.
Tell-tale signs abound that in its quest to beat off bankruptcy, Greece is being hollowed out, a little more, with each passing day.
"People are going hungry, families are breaking up, instances are mounting of mothers and fathers no longer being able to bring up their own kids," said Ilias Ilioupolis, general secretary of the civil servants' union ADEDY. "Until now there has been a conspiracy of silence around the tragic effects of the austerity measures the IMF and EU are asking us to take."
From cases of newborn babies wrapped in swaddling and dumped on the doorsteps of clinics, to children being offloaded on charities and put in foster care, the nation's struggle to pay off its debts is assuming dramatic proportions, even if officials insist that the belt-tightening and structural reforms will eventually change the EU's most uncompetitive economy for the better.
Propelled by poverty, 500 families had recently asked to place children in homes run by the charity SOS Children's Villages, according to the Greek daily Kathimerini. One toddler was left at the nursery she attended with a note that read: "I will not return to get Anna. I don't have any money, I can't bring her up. Sorry. Her mother."
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Al,
ReplyDeleteI would like to see Social Security "plussed up" a little bit but how likely is that? Hope about what might happen is not a luxury any of us can afford. I'm assuming the opposite - that social security won't be there, or will be greatly diminished for me and my generation.
As far as personal saving goes, most people can save more than they currently do. Most people - and I'm one of them - confuse luxuries with necessities. Somehow when we were a much poorer country, our personal savings rate was much, much higher. For my Dad's generation, which came of age in the Great Depression, saving became a way of life. It's about priorities, and like you say, "personal effort and sacrifice." And you're quite right that if everyone actually took that advice, made the sacrifices and saved a lot more then our economy would take a hit - at least temporarily. But there are no free lunches - forcing additional saving through an invigorated social security program would have a similar effect - maybe smaller if the increased taxes were highly progressive. But that seems as likely as me becoming the next Hollywood action hero.
bb
ReplyDeleteThe item at the end of the Guardian article, where an Athenian family rose to assist a needy family in Patras is more indicative of the situation. Hardest hit, however, are the immigrants, many undocumented, who cannot find work, do not have families and are reluctant to seek assistance, lest they be sent home. We have noticed that at the office where we process our resident permits, the list of denied work permits has gotten longer. No permit means an impending departure back to their home country or "illegal" status.
Fortunately, for many on our island, homes are owned outright by people of all income levels. Mortgages have never been the way to home ownership. Landlords are forgiving, as an occupied residential property is better than a vacant one. Some businesses centered on tourism have shuttered, as a fair portion of our summer business is Greek holiday travelers, and they have cut their Summer stays significantly. However, a fair portion of these businesses are owned and operated by off island people with other business interests the rest of the year elsewhere.
However, the social support systems are in place. A bit longer wait at the health Center, for example, but quality health care is still available to all.
Our island philanthropic organizations are focused on helping, and since it's a small community, those in need are known and discreetly assisted. We pitched in yesterday at an event to make clothing available to those in need, as well as raise some funds for other works.
The Greeks have some tough times ahead, as they pull themselves out of this mess, but they are survivors, as history has shown.
Andy-
ReplyDeleteOn a brighter note, I made only one mid-winter PCS of note. Stewart Field, NY to NAS Glenview, IL in early Feb. Had to move three cars ("family car" and my two Brit sports cars), so the trip was made twice, both in the teeth of serious snow storms. Not pretty trips!
Have a safe move.
Read McArdle, her view reminds me of an article I read in the WSJ a couple of weeks back, essentially about how the baby boomers are profligate and don't save. Maybe that's the case from her perspective, but it seems to me to be more the nature of the latest meme being manufactured to paint the collapsing middle class to have been responsible for their own fate . . . the rubes will obviously buy that . It couldn't the system of course, no NEVER THAT!
ReplyDelete15% is a joke. With kids? Sending them to a decent private school? We invested an awful lot in our kids' education and it paid off. We could have saved that money, but then . . .
Two other points. First, the assumption here seems to be that there will not be any prolonged periods of unemployment. Who can assume that today? Being unemployed for say 18 months wrecks havoc with one'S savings, believe me. Transitioning from Cold War work to civilian employment (translation/education/sales) was wrenching for me as well. I was well paid back in the bad ole days, and let's face it, teachers just don't make the same. Had the CW lasted another ten years we would be sitting pretty indeed, but that was not the case. So just hope the War on Terror lasts forever, even if there's no actual reason to have a WoT . . .
Second, a middle class job can go south really quick. For example technical translation for the automotive industry. Before the focus was on quality and accuracy, but since 2008 the market has profoundly changed. This means that nobody is really worrying about quality now and agencies are going to the lowest bidder rather than the best qualified . . . so if you're good and demand a decent rate, you're out . . . but then I suppose pro-market ideological propaganda is always a growth industry in what passes for the USA today, so McArdle will do fine . . .
To Andy, don't read any of this as something to do with you, the problem's much larger than any of us. Hope you have an easy PCS move and all the best . .
McArdle's personal financial guidance might work for the top 50% of the working population. But that's all it is personal financial advice, not a society-wide approach.
ReplyDeleteJust for chuckles, I did the math. I took the median income by age group (10 year intervals) and figured what 15% savings would result in doing so without fail from age 25 to 64 at a 3.5% compounded interest rate. Ends up at about $600K. To do this would require 562/mo from 25 to 34, $712/mo from 35 to 44, 762/mo from 45 to 54 and $687/mo from 55 to 64. I am too old and tired to try to figure "future value" of the dollar in that exercise. However, the numbers are passable if you are at or above the median (only half the population is) the entire time and can afford to stash away 15%.
The question is whether, as a society, "we are in this together" or Darwinian.
The other fallacy in the US is that consumer spending is "The Answer". Since we manufacture so little (except housing, and we know what happened there), a significant portion of the jobs created via consumer spending are low wage retail related employment. Thus, to increase consumer spending in a society of flat or declining real wages, debt is required. Over the past 20 years or so, debt has grown more than wages. That is not sustainable. A more prudent approach, right now, would be a serious, long term infrastructure repair and improvement (even just repair!) program, using some long overdue tax dollars from the highest earners, who already own the country, and are letting its infrastructure go to crap. That would create skilled construction jobs well into the future. Jobs that cannot be outsourced to Asia.
As long as we try to offer individual solutions to societal issues, we are going to continue downhill. But hell, I got mine, why don't you have yours?