5 Ideas for New Year’s Resolutions

BLOGGER: JULIE WEBSTER

We are always thinking of ways in which we can lose weight, eat better, exercise more, and so on.

How often do we think outside of that box? Here are some ideas for making our lives and the planet healthier!

1. Change the Way You Eat

Idea #1 - Make it a point to sit down with friends and family for at least three meals per week.

With the change in schedules and the availability of fast food, our society has moved far away from the relaxing social meals of the past. When eating with friends and family, we eat slower because we are talking and enjoying the conversation. Not only will we feel better physically but we will be filled much more emotionally.

Unfortunately it is not only our country that is compromising the way we eat. In John Robbins book, Healthy at 100 he notes the following:

“In almost every culture in the world, eating dinner together has been a place for families to strengthen bonds. The French in particular have long cherished mealtime as a family ritual, so much so that children have traditionally not been allowed to open the refrigerator between meals. But the days of sitting for hours around the table savoring small portions of several courses and relishing each other’s company seem to have passed. Instead, it has become commonplace for the French to eat in front of their television sets, while talking on the telephone, and even alone. As McDonald’s has become more popular in France than anywhere else in Europe, the average French meal, which twenty-five years ago lasted 88 minutes, has been reduced to only 38 minutes today.”

Idea #2 – Stop eating in the car, in front of the television, or standing at the counter.

Our digestive system is not meant to adapt under any of these circumstances! When we sit down, relax, focus on our food, and breathe, our bodies are prepared to produce the appropriate amount of digestive enzymes and we get the most benefit (nutrients) out of our food. Part of the reason we overeat is due to these unconscious methods of eating. We hardly chew our food and inhale it at such a rate that our brains have yet received signals that we are actually full. Consequently we overeat and feel bloated and gain weight. The crazy part about the whole process is we have no idea just how much this type of eating has compromised our health.

If this is you, maybe one of your resolutions is to make the time to sit down, relax, and take a few deep breaths before taking your first bite. Appreciate the amazing fact that food is our lifeline to health. Enjoy it fully.

Although this has sounded crazy to most people that know me, even if I am alone at home for dinner, I actually prepare a delicious nutritious meal, pour a nice glass of wine, set the table, light a candle or two and really enjoy the time of eating a wonderful meal in a relaxed setting. I am sure this sounds off the charts for many of you but I encourage you to try it once or twice. It is a great experience!

Idea #3 – Learn about Slow Food

Slow Food is a movement that counters fast food. It is about creating a way of eating and living that associates the pleasure of food with community and the environment. There are many Slow Food movements throughout the world. Here a some sites to learn more: http://slowfoodcu.wordpress.com/about/

http://www.slowfoodusa.org/index.php/slow_food/

2. Change your Shopping Habits

Idea #1 – Stay out of the middle of the grocery store!

The most natural and healthy foods are found around the periphery of the store. You will find the most nutritious and least processed foods in this area. Not only is the food more processed as you wander down the aisles but can be more expensive. Plus the amount of packaging adds to the increase in waste products in our landfills.

Idea #2 – Take a list and Do NOT go when you are hungry!

I realize that neither of these ideas are new yet can save you a lot of money and keep you on a healthier track of food. Think about what you would like to make and jot down the ingredients you need. Make it an intention to get only those ingredients. Of course if you see some great sale on fruit or vegetables you might want to get extra while you are there. The main thing you want to avoid is picking up that junk snack food that you know isn’t good for you and yet is so tempting when you are hungry and just mindlessly wandering the aisles of the store.

Idea #3 – Change one/two buying habits into healthier choices.

Although eating organic and antibiotic free meats can be expensive, in the long run it is cheaper than eating a bunch of junk and ending up sick! Besides, by watching for specials in the produce, meat and fish section of the stores, you can find deals that are worth the purchase. For example, not too long ago the Whole Foods in Boulder had grass fed ground beef on sale at an amazingly cheap price. Now I don’t often eat ground beef but at that price it was worth purchasing it and keeping it in my freezer for that unexpected time I might want to make something with it.

The same goes for produce. Although you can’t necessarily store it, there are certain foods that I (now) only buy organic. The reason being is that certain plants are sprayed much more with pesticides and the produce absorbs more of it. Two examples are strawberries and spinach. I only buy these if they’re organic!

So start with one or two things that (you feel) are easy to change in your diet. Maybe it is organic produce or antibiotic free chicken, whatever it is, it will have a positive impact on your overall health over time.

3. Become a Part-Time or Full-Time Locavore!

What is that you ask? The term Locavore started in the San Francisco area not too many years ago. The premise was to encourage people to only purchase food that has been grown within a 100 mile radius of where you live.

Eating local foods is a great step towards saving our planet and increasing our health. When you purchase food that is grown within 100 miles of home, you are helping the environment. It requires much less fossil fuel to get it to the store! In addition, the food is much fresher as it is picked when ripe, thus allowing time for all the nutrients to get into the food. You are also eating foods that are in season; something we are designed to do.

Although this might not always be easy, start with your local Farmer’s Market. You will meet some great people - the farmers and ranchers. You will find you have a much greater connection to the person growing your food, the food will taste amazingly so much better, and you will feel a greater part of the whole food chain. If you are in a cold climate where this is only available in the summer, start there and get to talking to the farmers. Chances are that many of them will be able to provide you with food in the winter months as well.

I have found a local organic farmer, Jay Hill Farm that grows greens and various other produce all winter long. I just have to email her and it will be picked the following morning and ready for pick up after 11am. I have made salads with her mixed greens and arugula for many friends and family. I always get the same reaction, ‘wow this is the best salad I’ve ever had!’ In so much as I would like to think it is my amazing ability to make a salad, I know better. The main difference is the fresh and vibrant taste of the greens!

Want to learn more about the ‘locavore’ movement? Here is a link and quote:

“The “locavore” movement encourages consumers to buy from farmers’ markets or even to grow or pick their own food, arguing that fresh, local products are more nutritious and taste better. Locavores also shun supermarket offerings as an environmentally friendly measure, since shipping food over long distances often requires more fuel for transportation.”

For the full description from Oxford, read this. http://blog.oup.com/2007/11/locavore/

For additional benefits on the locavore lifestyle, check out this site. http://www.locavores.com/how/

For ideas of the closest Farmer’s Market and where you can find local ranchers, here are some websites:

Local Harvest is a great source for finding food grown close to you.

http://www.localharvest.org/

This USDA site might offer you some farmer’s market information.

http://www.ams.usda.gov/AMSv1.0/FarmersMarkets

Eatwild.com is your source for safe, healthy, natural and nutritious grass-fed beef, lamb, goats, bison, poultry, pork, dairy and other wild edibles. You can go here to find ranchers in your area.

http://www.eatwild.com/

If you can’t find one, the U.S. Wellness Meats in an alternative place to get grass fed meat and more.

http://www.grasslandbeef.com/StoreFront.bok

4. Change your Water Drinking Habits

Idea #1 – Purchase water in larger quantities and fill your own bottles.

To begin, water is life. Without it we will die and yet we don’t drink enough. Many people are walking around dehydrated and don’t even know it. For more details on signs of dehydration and more on the benefits of drinking water, read this article.

Meanwhile there are many more people drinking water-like products than ever before. First, many of those are processed and have various types of sugar and more. Rather than purchase these expensive products drink good water! Second, realize the environmental consequence of using all those bottles!

Last, if you do not have good water available in your area, purchase a water filter. There are many types on the market and are worth the cost.

Idea #2 – Purchase a healthy reusable bottle for your water.

BPA is a chemical that is found in hard plastic. It is very toxic and has been proven to cause cancer. Although more companies are aware of this and changing their bottles, not all are there yet. If using a plastic bottle, look for one that says, “BPA Free.”

One of the companies that have taken on this change is Nalgene. I really like their bottles as they have a variety of designs to meet everyone’s needs. If you cannot find them locally, here is their website. http://www.nalgene-outdoor.com/store/

The second option is to use one of the Swiss made bottles. They are stainless steel on the inside so no worries about the plastic. Again you might be able to find these locally but if not, here is their website. http://mysigg.com/index.asp

5. Find Ways to Help Sustainability and Decrease your Carbon Footprint

In addition to the aforementioned, here are some relatively easy things you can do that have a positive effect on our environment.

Idea #1 – Decrease the amount of animal products you eat.

One of the ways we can have the greatest impact on our planet is to change our diet towards a vegetarian one. Now I am not proposing that we all give up animal products. I personally cannot imagine doing this and yet I am very impressed by those that have.

What I do realize is that even with eating grass fed and antibiotic free beef, cage free and natural chicken, and non-farmed fish, we are still using a great deal of the resources available on our planet. According to the United Nations Food and Agriculture Organization, “Livestock production is responsible for more climate change gasses than all the motor vehicles in the world. In total, it is responsible for 18 percent of human induced greenhouse gas emissions. It is also a major source of land and water degradation.”

So what do we do about this? Well, my goal is to start by having one day a week that I eat no animal products. I will then work towards two days. If each of us gave up one or two days a week, we would have a huge impact on our planet. With this being said, I intend to put more vegetarian recipes on my website!

Idea #1 – Change your lIghtbulbs!

As your light bulbs burn out, replace them with Compact Fluorescent Light Bulbs. They are 75% more efficient and last 10 times as long. http://www.rodale.com/cfl-and-led-lightbulbs

Idea #2 – Start unplugging what you are not using!

Unplug lights, stereos, printers, heaters, and anything else when not in use. Even if the units are turned off, many of them continue to use energy. The only way you can be assured they are not is to unplug them from the wall. It only takes an extra second but can have a huge impact on our energy output.

Idea #3 – Recycle!!!

Make it a goal to have a minimal amount of non-recyclable trash. Last year I made my goal to not have more than one (kitchen) bag of trash for two weeks. So far I am there all but those times that I have a big party. Once you get in the habit it is really easy. If you have a local recycling program, learn about all that you can recycle. If you are lucky enough to live in a place like Boulder, then you also have compostable recycling. If not, get a bin and start composting. Here is some information on how:

Idea #4 – Buy products with the least amount of packaging.

As mentioned earlier, if you stay along the periphery of the store, you will find the packaging to be at a minimum. Even at this however you need to think! I do see these plastic containers for spinach and mixed greens. Don’t buy them! Instead buy in the bulk.

To support this concept even more, I just purchased some reusable vegetable bags. I haven’t tried them yet but am excited to decrease the amount of plastic bags I accumulate. Check out their website! http://www.3bbags.com/

Idea #5 – Use less paper products.

Two ways that are extremely easy is in the kitchen. Rather than purchasing paper napkins, get some really nice cloth ones. It is a much nicer feel on your mouth and hands and they last forever! I still have the original ones I bought about 25 years ago! (I use them for outside picnics and camping.)

The other easy change is in using dish towels rather than paper towels. Dish towels or sponges are great and can be reused for a long time. Of course we do still need some paper towels but not so many.

Idea #6 – When Purchasing Paper Products, Get Recyclable Products

You can avoid the bleaching process and save the trees! “ If every household in the United States replaced one roll of virgin-fiber paper towels with 100 percent recycled paper towels, we could save 1.4 million trees.” Source: Care2 http://www.care2.com/greenliving/paper-towels-and-napkins-vs-cloth.html

Idea #6 – See how you’re doing!

Calculate your Carbon Footprint now and then again every few months. There are a lot of different sites to figure out this process, just search for carbon footprint calculator. This one is pretty simple but a good place to start: http://www.nature.org/initiatives/climatechange/calculator/?src=l12

If you have information or ideas that are along these thoughts, please share them! I look forward to hearing from you and HAPPY NEW YEAR!!

ulie Webster is a Certified Massage Therapist and Certified Health Counselor. She provides health education online and through seminars. In addition she has written a book titled “Regaining Good Posture” which is available as an ebook, with videos performing each of the stretches, through her website: www.julie-webster.com Julie is also available for presentations on posture and various health topics to corporations. To reach her visit her website or email her at info@julie-webster.com

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FINANCIAL HOUSE OF CARDS

Financial House of Cards

BLOGGER: BEN PIERSON

We have just seen earnings reports come from many of the major financial institutes and I thought it would be worth discussing their results.  Frankly, they scare me a bit.  The numbers they are reporting – especially the headline earnings per share numbers – are misleading.  Based on how their stocks have reacted, people don’t generally seem to care either (update: up until today, that is).  The system is now stacked to encourage this as well.  We love watching our 401k accounts go up, not down.  Politicians around the globe and the Financial institutions all want the public to believe the stimulus programs are working (to some extent they actually are) great, the banks are on the mend, and there’s light at the end of the tunnel.  That way may prove correct, but the way companies have been slick-talking their earnings makes me wary this light might in fact be another train… and this whole process reminds me a lot of how we got into this mess in the first place.

I will try to take a tip from fellow blogger Arin Goldman’s piece, “Financialese Simplified” (http://blog.imagineage.com/financialese-simplified/) and keep this discussion so non-financial folks can understand.  In other words, I’ll try to avoid using the kind of convoluted language and expressions the CEOs of these firms have been using.  For example we have this gem from Citigroup’s CFO Ned Kelly:

“My suspicion is, and somebody will quickly correct me if I’m wrong, I think the marks by and large are basically booked in New York. The European results reflect the fact that the marks are booked in New York so the relative out performance of Europe on one level given that in terms of that $4.2 billion of traditionally disclosed marks is what drives that.”

Wow.  If you’re reading that and thinking, ‘is this English?,’ the answer is no.  It’s gibberish.  More importantly the earnings numbers many of these firms presented are suspect as well.

Among the great headlines of the last week:  Goldman Sachs reports $1.8 billion in earnings; Citigroup declared their Q1 2009 revenue exceeded that from Q1 2008 by a staggering 99%; Wells Fargo says they completed their most profitable quarter… EVER.

Does anyone care?

This optimism has been reflected in the stock market.  As you can see here, since the market bottomed on March 9^th, financial shares have moved up at an incredible pace. 

Now, I’m not saying these banks are doing anything illegal.  However it’s important to understand some of what is going on under the hood.  As the government has progressed through all these TALF, TARP, PIPP programs they’ve realized banks needed additional help.  This help comes in the form of accounting regulations however, not cash.  I won’t rehash Arin’s discussion (in the post linked to above) of mark to market accounting changes, but to summarize:  the banks now have more discretion to price their own ‘toxic assets’.  Some of these assets may be priced more accurately now, but some may also be marked worse.  The point is that banks used huge changes in the way they priced their own assets to create some of the many gains in profit they are quick to brag about. 

Jonathan Weil writes a great piece on Wells Fargo for Bloomberg.com:  http://tinyurl.com/c3q2xa .  This is a fairly understandable piece and worth a quick read.  The crux of Wells Fargo – they reported great earnings, the stock went up 30% in one day (!), but these numbers were filled with more junk than a, errr, junk yard.

From Goldman Sachs:

Happy times!  They reported $1.8 billion in earnings for the first quarter in 2009.  Interesting, they decided to report their December earnings in a completely separate press release.  Also of interest, they lost $800 million in December.  So they report their bad month in a separate release and the good press release gets all the headlines.  Coincidentally, they are also selling $5 billion in new stock now, thus a higher share price is much better for them.

Now contrast all these glowing earnings reports from Wells Fargo, Citigroup, Goldman Sachs to the candor coming from UBS.  They reported a loss of $1.8 billion and their CEO admits that, “it will be a long road back to success without any quick fixes.”  Now, I’m proud to be an American as well, but it’s not like UBS is much dumber than everyone else and that’s why they lost money this quarter.  No, they are just being more straightforward.

Update:  Bank of America’s numbers came out today and the market fell hard with the S&P 500 losing 4.3%.  Bank of America dropped nearly 25% and many other banking stocks followed.  Even though Bank of America had good earnings, they significantly increased their loan loss reserves – the amount of loans they don’t expect to get their money back on – to $13.4 billion.

Dangerous Times:

We’ll probably see this type of ebb and flow for a while, especially now with earnings numbers coming out.  What Bank of America said, and what they reported in their finances, was not much different from what the other companies said…. Just today the market decided they were more fearful then greedy.  Please don’t take this as investment advice.  While I believe the banks are all in bad shape, the deck is also stacked in their favor.  Hearken back to my post on incentive systems (http://blog.imagineage.com/?s=incentive+systems).  Right now every global leader wants banks to look and act healthy.  Every bank also wants to look and act healthy (UBS’s candor being an exception).  As the numbers on the chart above show, these are very powerful cards. 

Bottom line – or ‘net net’ as we say – the banks are very far from being out of the woods.  These headlines on their earnings are misleading.  This cavalier attitude of deception reminds me way too much of some reasons we got into this mess.  There are many positive developments in the system, but this new course of deception is not one of them.

To find out more about Ben, click here.
   

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BUY NOW, SAVE LATER

Buy Now, Save Later

BLOGGER:  BEN PIERSON

Seriously, if you have savings and good job security (even if we hit 11% unemployment that means we’re still at 89% employment after all), go out and spend.  I don’t consider this a civic duty or patriotic act – I consider this a selfish one.  America is on sale.

Barring us slipping into a depression - not very likely considering the scope of worldwide government intervention - this is the best all around sale event we’ll see for at least the next decade.  By that point if you follow the plan, you’ll have saved again and be ready to again take advantage of the next cycle of sales.

In economics there is a term called consumption smoothing.  Essentially what this means is that if we knew exactly how much money we would make during our entire life, we would be happiest spending the same amount every year.  We would find a lifestyle that fits and then ride happily (happiest) into our sunsets.  For the first time in my life (I’m 30), I now see the greater wisdom behind this.

Economic cycles have gone on for thousands of years.  There will always be a next “up” and there will always be another “down”.  End of story.  The angel (and angle) lies in the details.  During those “up” periods, everyone has money and is buying.  Supply and demand says:  if more people are trying to purchase a finite set of goods, the price of these goods will go up.  So during the up cycles, goods generally cost more.  Houses cost more, vacations cost more, and cars cost more.  In a down cycle, houses become cheaper, vacations become cheaper, and cars are cheaper….  And so if you have money during these times, go out and spend!  It’s all on sale!!

I know someone who just took his family of four on vacation to Jamaica.  7 days at an all-inclusive resort, including airfare:  $2,200.  Yup, only $2,200 total for all 4 people.  I’m not saying $2,200 isn’t a lot of money to most of us, but the point is this vacation would have cost him over $5,000 anytime during 2004-2006.  I’m sorry if you paid $500,000 for a condo in Palm Beach over the last three years, because you can now buy that same condo for $300,000 or less.  One friend who works in Manhattan lived about a 45 minute train ride away in order to avoid Manhattan rents.  Well guess what?  Several buildings downtown now offer two months rent free and the rental prices themselves have gone down.  Thanks to his having saved up over the last two years he is now living in Manhattan at 30% off what he would have paid two years ago.

I’ll be the first to admit that I’ve done a very poor job of this myself.  Like many of you, perhaps, during the good times of the last several years I spent more and saved even less… the exact opposite of what I should have been doing.  In the midst of an economic boom of course it’s tough to think prudently and save up for a rainy or opportunistic day.  It’s tough not to take the $5,000 vacation when that’s what your neighbor is doing.  Well, Love thy Neighbor but don’t act like them.  When times turn good again, save save save!  Practice prudence and practice patience.  The boom times may go on for years, but they WILL end once again.  You may get jealous of your neighbor’s tan once or twice, but you’ll last laugh when you pay half as much for the trip he just took.

Arin Goldman wrote a great post earlier (http://blog.imagineage.com/?s=spend) on this question of spending.  Not to ruin the ending but she bought a pair of boots on sale and, slightly tongue in cheek, considers it her contribution to economic stimulus.  Certainly every extra bit of stimulus helps right now, but that’s not what I’m telling you to do.  I’m saying be selfish.  That shirt won’t be 70% off forever.  That car might not be this cheap again for years.  Do be prudent and don’t spend money you don’t have.  But if you have it, now’s the time – America’s on sale.

To find out more about Ben, click here

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FINANCIALESE SIMPLIFIED

 

Financialese Simplified

BLOGGER:  ARIN GOLDMAN

I’ve noticed that many people are having a hard time keeping up with a lot of what’s going on these days in the financial world.  Even the language seems foreign. Credit Derivatives, mark-to-market accounting, securitization, up-tick rules, what does all this stuff mean?  Why don’t those banks just hold on to mortgages the way they used to?  What’s a muni bond anyway?  I’ve spent most of my adult life immersed in banking and finance, though I am not sure it is safe to admit that anymore, and I frequently find myself baffled by what I hear on CNBC, Fox and Bloomberg. Sometimes that’s because the commentators are even more confused than I am but other times its because the concepts they are reporting are just so arcane.  So here’s my first attempt at simplifying some of the terms and concepts being bandied about these days.  I’ll address more in future blogs.  I am only skimming the surface here and am more of a generalist than an expert so I caution all that my explanations are basic, still I hope they help and at the very least I will try hard to avoid using financialese as much as I can.  If there’s anything else that you’d like me to take a stab at translating please post your question to the comment section and if I have a clue I’ll try to respond.     

Why don’t banks hold onto mortgages anymore?

Banks haven’t held mortgages to maturity for a long time.  In fact, previous banking crises have been caused by financial institutions going long low yielding mortgages in the face of rising interest rates. Since low yielding debt decreases in value when interest rates rise, mortgage lenders who held onto their portfolios sustained some huge losses.   Securitization initially came about to help  banks sell their mortgage portfolios, freeing up funds for additional mortgage loans.  A good deal of the problem in the current crisis is related to credit quality rather than interest rate volatility.  Many mortgages were made to borrowers with weak credit histories or previously solid borrowers who were stretching themselves too far.  Many of these borrowers either couldn’t or never intended to repay their loans.  At the same time the value of the property securing some of these mortgages was either overstated on day one and/or assumptions that increasing property values would bail out weak credits proved ridiculously optimistic. Further complicating all this, there was opportunity for unscrupulous behavior all the way along the line in the mortgage origination process as even legitimate borrowers, mortgage brokers, appraisers, securities firms and rating agencies all pressed the edges  of their collective envelopes. When the real estate bubble burst everything came crashing down at once. 

Just what is this securitization thing anyway?

In the old days, when a bank or other financial institution wanted to sell a mortgage loan they bundled it with other loans and sold thousands of them together as a package.  Overtime, the banks got more sophisticated and realized that they could deposit these bundles of mortgage loans into some type of trust instrument, hire one firm to service the borrowers and sell the collective cashflows.  Although the action of an individual homebuyer is hard to predict the collective behavior of thousands of borrowers is fairly predictable.  Bankers were able to allocate these predictable payment streams  to debt instruments with different maturities and/or different credit ratings.  They then sold these new securities to institutional buyers (insurance companies, pension funds, money managers, etc) with distinct credit and maturity preferences.  Since these securitized transactions maximized the value of the pool of loans, securitization became the favored way for banks to sell their mortgage loans.  After a few years this securitization technique was applied to other types of loans including car loans, corporate loans and just about any loan out there.  Anything that had a reasonably predictable income stream became a possible securitization candidate.  Securitization remains a useful tool. The problem comes about when the underlying loans don’t behave as predicted because of unexpected delinquencies and defaults or in the worst case, because the loans shouldn’t have been made in the first place.     

What’s the story with the uptick rule?

When you sell stock you don’t own you are “shorting” the stock.  Although shorting can be risky it is a legitimate financial tool.  For a long time rules governing the shorting of stocks required that a short sale could only be completed following a trade that had been completed at a price higher than the  the one that had preceded it - in other words  you couldn’t sell stock short unless the price of the stock was moving up or was reasonably stable. I am leaving out some details about the actual rule, but hopefully have gotten the concept across.  The uptick rule had been put into effect after the market crash of the twenties in an effort to stabilize the market and prevent bear runs on specific stocks.  Whether or not it worked is debatable but it stood until a few years ago when it was eliminated.  The SEC is now considering reinstating the uptick rule because many people believe that the absence of the rule accelerated the demise of companies such as Bear Stearns and Lehman Brothers last year.  Others argue that the uptick rule won’t do much given current technology and volumes.        

Mark-to-Market, not to be confused with a shopping spree with your friend Mark.

This is a concept that’s gotten a lot of press lately.  Rules governing how banks value their financial positions were rewritten a few years ago by the accounting standards guys.  Basically, rule changes required banks to adjust their financial statements to reflect the market value of all their securities positions, even the ones that weren’t in trading accounts.  This sounds pretty straightforward.  If you buy some US Treasury securities for $100,000 and interest rates move so that you portfolio is now worth $95,000 why not show them on your books at the lower, more accurate value?  Well, when it comes to US Treasuries and other highly liquid securities, this is pretty easy because the securities trade all day and everyone knows what they are worth. But it gets harder and harder to value securities that are further down the liquidity and credit scale.  Corporate bonds are harder to precisely value than Treasuries. Mortgage securities are significantly more challenging with their mix of credit issues and funky payment characteristics and subordinate subprime mortgage backed securities are among the toughest to value and sell.  Not surprisingly, it gets even harder when everyone needs to dump their positions of those unusual securities at the same time.  Even though many of the illiquid securities are still generating significant cashflows, their market values have gotten so low that these cashflows may not be fairly valued.  The banks argue that given time and the return of some market stability many of these securities will regain a significant portion of their value.  The mark- to-market guys argue the value is the value dictated by the market, period.  Since a number of very smart hedge fund managers are anxious to have the opportunity to buy the so called toxic subprime paper at current “market” prices its fair to assume that the banks probably have a point.  These securities are probably undervalued at the current time; just how undervalued remains hard to assess.  Recent changes in mark-to-market accounting seem to be geared to finding a bit of a middle round.    

To find out about Arin, click here to read her bio. 

 

 

 

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To Spend or Not to Spend, That is the Question

Out walking my dog this morning I ran into a former colleague from my investment banking days who was also out with her dog.  As our two pets tussled joyfully, blissfully ignorant of the dreadful state of the economy, we reminisced about our old banking days and the sad state of our former firm, one of the acquisitions that had been subsumed into the now teetering behemoth Citigroup.   Quietly she confessed that that she was close to completing a major renovation of her apartment.  Though her financial position is stable, her husband gainfully employed and their collective expenses under control she had considered cutting back on her apartment work, not because of any financial pressures on her family but because of the general economic mood.  She  didn’t want to be seen as insensitive, spending money while others were facing hard times.  Her embarassment at undertaking an apartment overhaul at this time made me think about expectations and attitudes in the face of our challenging economic times.  Without a doubt virtually all of us are substantially poorer, or should I say less weathy, than we used to be.  That said, do we all really need to cut back dramatically?  How will we get out of this mess if all of us, even those who haven’t lost their jobs or savings, stop shopping, going to the theatre, eating out, and going on vacation. I am not suggesting that we should all be throwing money away, but maybe now is a good time to take a realistic assessment of our financial positions.  If your expenditures were pretty reasonable to begin with and your job or income remains relatively stable, doesn’t cutting back now make things worse overall? 

Over the past few years I’ve gotten pretty lax about monitoring my spending.  With my income and savings impacted by the current environment I decided it was as good a time as ever to examine my cashflow. Essentially, I wanted to know precisely how much I spent last years so that I could compare it against what I expected to earn this year.  In mid-January I stopped thinking about this and began my examination.  Since I remain a Luddite when it comes to bill paying, my personal analysis involved pulling out my check book and calculator totalling all of my checks, netting out any offsetting deposits such as insurance reimbursements.  A tedious activity to say the least but still it didn’t take long to figure out how much I spent last year. The good news was that I hadn’t gone all that overboard.  After I netted out a few things that fell into the extraordinary category I felt even more comfortable.  Nevertheless, since a number of my 2009 expense items are on the upswing I wasn’t out of the woods yet.  Like most people my health insurance rates have jumped dramatically, followed closely by my apartment maintenance, a victim of the significant increase in New York City real estate taxes.  My garage costs, another uniquely New York City phenomenon, were also moving up for the first time in 20 years.  To help offset some of my expense increases I also took a look for places to shave a few outgoing dollars.  To this end, I cutback on my landline phone service and reduced the number of my premium cable channels.  Neither of these provide dramatic savings but still I’d rather spend that money on other things.  Net, net I’ve concluded that though I am not as well off as I used to be I can still maintain my standard of living without a draconian cut in my expenses.  Still like most people these days I’ve got to improve my own personal attitude because I have to admit though I am probably okay financially I am still stunned by the stock market’s swoon and the demise of the financial sector.  Last week I took my first step.  After avoiding all shopping during January and most of February,  in an effort to help the economy, I did buy a pair of not necessarily essential boots (on sale of course). Consider it my contribution to the economic stimulus!         

To find out about Arin, click here to read her bio.

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It’s 3 Am do you know where your 401k is?

To learn more about Arin, click here to read her bio

 

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