Never be satisfied with what you achieve today, it pales in comparison with what you are capable of doing tomorrow.

When we look back on previous generations, we often associate them with the fads, fashions and technologies that accompanied them. Take Generation X for example, as adolescents we spent Friday nights at the roller rink, listened to .38 Special and the closest thing we had to reality TV was the News.  A few years later while Gen X matured and the roller rinks were closing down… something else was happening.  Without warning, like in a science fiction movie, dangerous alien forms of plastic had invaded our culture, taken control of our practicality and systematically began snatching away our financial stability.  Fighting for supremacy, living in codependency and feeding off one another for survival,  Generation X and the Credit Card Revolution had taken flight.

I often think back to when I was a child and how my father, a blue collared civil servant, would go about making purchases.  He had a system.  It was a common practice used by the Baby boomers and every generation before them.  Now-a-days, to the MTV Generation, this method of obtaining goods and services is just something they touched on in school, primitive backwards thinking and the kind of thing you would only find etched in prehistoric cave drawings. Do you know what this process is called..?  

It’s called… SAVING.  

That’s right, despite what you’ve bee conditioned to believe, it is not illegal to purchase something when you have the money to pay for it.  And believe it or not (Here comes the real shocker)… It is also possible not to buy something you currently can’t afford (even when it means not keeping up with the Joneses).  Honestly… ask yourself… when was the last time you actually saved for something? 

Growing up the youngest of three in a lower middle class family, I would often hear things like “Money doesn’t grow on trees, “There’s nothing wrong with your old jeans.” and the ever timeless “No!”  Nothing was worse than being on the checkout line of Woolworth’s asking for something (for the third time) and having your mother belt out (loud enough for the rest of the line to hear) that “We can’t afford it”.  As a child, it was downright embarrassing.

I spent countless unbearably humid, hot summer nights lying helplessly in bed beneath my breezeless window with my sweaty body sticking to the sheets staring at the ceiling listening to the torturous hum of the air conditioning unit in my parents room above… I remember angrily tossing and turning, thinking how cheap they were for not getting us central air.  You know what?  He wasn’t being cheap… Dad was being smart.  We couldn’t afford it.  Therefore, we didn’t get it.  Those rules haven’t applied here in Credit Card Nation for quite some time.

An unfortunate but accurate alternative name for Gen X would be the Abusive Credit Generation.  Over the course of twenty five years, finance companies had reversed the natural order and mindset of the average American consumer by replacing healthy saving habits with toxic debt. Why save money when you can have everything you want right now for one low monthly payment. 

As a nation, people lost sight of their growing debt balances,  mounting  compound interest and grew too comfortable making bare minimum monthly payments.  Instead of saving, people were playing credit card roulette. 

Before long, Gen X’ers, now in their prime, had started families of their own and were fast becoming happy home owners.  After a lifetime of conditioning, the average American consumer who brought home $30k a year was spending $35K, those making $100k were spending $130 and so on… Everybody was comfortable subsidizing their incomes with credit.

Just in the nick time, while credit limits were maxing out and folks were starting to feel the pinch of snowballing, not so small anymore, minimum payments… along came the ‘Housing Bubble Fairy’  who slipped a whole new bag of debt building tricks under Gen X’s pillow.  The housing bubble then opened the door to a whole new breed of predatory lenders that thrived on the ’not afraid to get in over your head’ crowd.

The world had become a great place.  Since home prices would always appreciate 20% a year, lenders were giving loans to any idiot who could sign his name.  And for those who were lucky enough to buy their house ahead of the boom, they were convinced to get rid of any pesky home equity (that was just sitting there doing nothing anyway), and transform that into debt.  Now the game of credit roulette could continue.  Home equity was soon being used to pay off irresponsible credit card balances (freeing you up to charge more unnecessary crap), buy new cars and make colossal home improvements.  Nobody cared that their principle balances were rising 10% a year when the value of your home was always going to go up 20%.  Big mistake.

Surprise surprise.  The housing bubble burst, credit is tightening and as we head deeper into recession folks are coming back around to the concept of saving. Unfortunately not everyone had the luxury of gently waking up to a cool morning breeze and chirping birds.  A large portion of the population had fallen asleep at the wheel, drifted into the wrong lane only to be violently awakened by the heart pounding air horn of an oncoming semi-trailer truck.

Unless you can predict the future, the sooner you start saving, the better. Shit happens. You could wake up tomorrow and find out you need a new boiler, lose your job or get side-swiped by an unexpected, uncovered and costly medical expense (not to mention retirement).  Worst case scenario – you’ll get better sleep lying on top of a nice fluffy emergency cushion than you would a crunchy stack of credit card bills.  

Whether your in your 20′s, 30′s or 70′s, here’s some good news… since “tomorrow is the first day of the rest of your life”,  it’s not too late to get time on your side and start saving – now.   But, before you can begin to save, you’ll need to focus on unhealthy habits.  Start by cutting up those credit cards, plug leaks in your frivolous spending and begin shaving expenses.  Once you’ve tightened up the ship and battened down the hatches you need to quickly get yourself into a routine and start put money away regularly. Even if you start small and increase your savings whenever possible, your on the right path.  In the perfect world, you should be saving 80% of any income above your water mark.  In other words… If you make $30k a year and after paying for all you basic needs (rent, mortgage/rent, utilities, groceries and other necessary monthly expenses), your left with $5k, you should be saving $4k or 80% of your above water number.  Where you put and what you do with that savings depends on your investment prowess, risk tolerance and overall position in life.  However, if you’ve really clamped down on your spending, trimmed expenses and still can’t manage to get yourself into regular savings groove, then you need to take a good look around.  You’re probably living above your means and need to make some real difficult but necessary life style changes.

You’re other option is to keep signing up for those high interest credit cards), take out a third ‘interest only’ equity loan against your rapidly depreciating home and use those funds to buy some highly speculative financial stocks on margin.

You don’t have to be Warren Buffett to understand that the best way to  increase your odds for having enough money tomorrow is to start planning and saving today. 

-Regular Joe

“…now I want you to remember that no bastard ever won a war by dying for his country. He won it by making the other poor dumb bastard die for his country… we will cut out their living guts and use them to grease the treads of our tanks“.  

Meanwhile, as General Patton pushed his troops to the edge of Nazi lines, Major Franks Burns was making the most of the Korean War by banging the Head Nurse,Major “Hot Lips” Houlihan in her barracks.  Now unfortunately for them and what Major Burns and Hot Lips didn’t realize was that while they were heavily engaged in friendly fire, they were unintentionally broadcasting every grunt and groan of their sexual escapade over the PA system providing quality entertainment for the entire 4077th and movie goers alike.

By 1971 the box office battles had abandoned the fields and moved to the streets of San Francisco where Inspector “Dirty” Harry Callahan and his trademark .44 Magnum were tracking Scorpio the manic serial killer…

“I know what you’re thinking. ’Did he fire six shots or only five?’ Well, to tell you the truth, in all this excitement I’ve kind of lost track myself. But being this is a .44 Magnum, the most powerful handgun in the world and would blow your head clean off, you’ve got to ask yourself one question: ‘Do I feel licky?’ Well do ya, punk?”

Charlie Bucket certainly felt lucky when he peeled open the wrapper of that “scrumdiddlyumptious” Wonka Bar, found the last Golden Ticket and headed off to “everybody’s non-pollutionary, anti-institutionary, pro-confectionery factory of fun!”   Unlike bad seeds Augustus, Veruca, Violet and Mike Teevee who were positively rotten to the core… and despite having a sip or two of some Fizzy Lifting drink with Grandpa Joe, Charlie, the poster boy for niceness, proved his honesty by not handing over Wonka’s revolutionary Everlasting Gobstopper to that sketchy Arthur Slugworth. In exchange for his selfless act, the eccentric mischievous genius Willy Wonka hands over the magical candy factory to Charlie and invites his whole family to move in and live happily ever after… An offer too good for Charlie to refuse.

Later that same year and thanks to Mario Puzo and Francis Ford Coppola, “offers that couldn’t be refused”, defined a genre. The Godfather soon became the gangster movie all mob movies would be judged against.  Don Vito Corleone’s refusal to do business with drug dealing Sollozzo sparked a war that would involve all five major New York crime families, last for years and shake the Corleone family to it’s roots.  

“Someday, and that day may never come, I’ll call upon you to do a service for me. But until that day accept this justice as gift on my daughter’s wedding day.”-Don Vito Corleone

1973 started out with four condescending suburban professional men on a weekend river canoe trip that quickly becomes one of the most intensely humbling and disturbing cinema experiences of all time. Plausibility was the key component that made this banjo country flick such a chilling experience.  After watching Bobby (Ned Beatty) held down at knifepoint while being violently sodomized by an inbred redneck, I guarantee you’ll never listen to a banjo the same way again and you will undoubtedly think twice about the truck stops you choose along the way. Now “Squeal like a pig!”

1973 may not have been the year of the Dragon, but that didn’t stop Bruce Lee’s Kung Fu film, Enter the Dragon, from becoming the first Asian American pop culture cult classic.  Lee’s skill, physical prowess and unforgettable double nunchaku scene had set the tone… from that point on… America was Kung Fu fighting.  After being humiliated,  punished by Lee’s lightning fast backhand slap down and never once landing a single blow, sore loser scar-faced Oharra, visibly mangled and unable to grasp defeat decides to waste two perfectly good Tsingtao’s, smashes the bottles together and attempts to kill his tormentor.  That might of seemed like a good idea at the time, but the second the camera shifted into slow motion, it was clear that his decision was going to prove fatal.   Bruce Lee clearly infuriated over the needless waste of beer is finally given the chance to avenge his sister and brings Oharra to the ground, crushes his neck and releases his trademark Death Cry. “Oharra’s treachery has dis-craced us.”

In 1974, Regan MacNeill infected Generation X with the worst outbreak of the heebie-jeebies the world had ever known. Hands down, the Excorcist was (and still is) the scariest movie ever to hit the silver screen.  Demonically challenged Regan gave her mother, Father Damien and movie goers alike the most intensely bone chilling ride of their lives as we watched that unforgettably haunting scene when Regan, with her face covered in lesions screamed out obscenities in that deeply disturbing gravely voice while violently jamming herself raw with a crucifix.  This film, frightening as the devil itself, taps into your fear with remarkable realism, gets deep with your being and rattles you down to the core like nothing you’ve ever experienced.  This film scares the living shit out of you.  Never has there been such a film that possessed such ability to haunt it’s viewers even after they’ve left the theater and for the rest of their lives.

As Exorcist induced nightmares subsided, movie goers eventually worked up the nerve to head back into theaters but would soon find themselves never wanting to go back in the water… Motion picture history was being made, theaters were jam-packed and beaches across the country were justifiably deserted.  Without warning, terror had declared the beaches of Amity Island harbor it’s feeding ground.  It was up to Chief “We’re going to need a bigger boat” Brody, Matt Hooper and salty old sea captain Quint to put an end to the Great White people eater.  Below deck Hooper’s scars proved no match for Quint’s unforgettable monologue describing his survival of the gruesome shark frenzied attack on the Naval officers of the sinking USS Indianapolis.  “…eleven hundred men went in the water; 316 men come out and the sharks took the rest, June the 29th, 1945.”   Three barrels weren’t enough to finish the job, but that “Son of a bitch” finally smiled long enough for Brody to fire a shot, pearcing the SCUBA tank lodged in monsters mouth and blowing him to Kingdom Come. 

The worst Idea award for 1975 goes to, 38 year old, Randle McMurphy (Mac) for attempting to cushion his prison sentence by declaring insanity and getting transferred to a mental asylum. Wisecracking non-conformist McMurphy and his rebellious card-shark skill immediately enters into an intense battle of wits with sexually-repressed Nurse Ratched, winning over viewers and the likes of some of cinematography’s most memorable mental patients like the massively silent, gum chewing “Chief“, Billy B-b-b-bibbit, Cheswick, “hard-on” Harding, Taber and Mister “I bet a nickel” Martini.  Underestimating Nurse Ratched’s absolute power, Mac made his second biggest (and last) mistake after flying into a  violent rage, locking his hands around Ratched’s throat and attempting to strangle the sadistic nurse for her cruel contribution  to the suicide of his new impressionable friend stuttering B-b-b-b-billy  B-b-b-b-babbit. 

1976 brought us ringside and to the streets of Philadelphia where southpaw underdog, Rocky “the Italian Stallion” Balboa, who needed to prove to himself that he “wasn’t just another bum from the neighborhood”  took on the undefeated World Heavyweight Champion (and “Master of Disaster”) Apollo Creed.  After intense raw egg drinking training with perpetually disgusted ex-bantamweight fighter, Mickey Goldmill,  rib breaking meat locker combination punches, Balboa’s conditioning climaxed along with “Gonna Fly Now”  as he ran to the top of the Philadelphia Art Museum steps.  In round one, loud mouth Apollo Creed, expecting nothing more than a New Years Day publicity stunt, soon realized he was getting more than he bargained for when Rocky dodges his haymaker, swings, knocks Apollo to the ground and sends the crowd into a complete “Rocky” chanting frenzy that carries the Italian Stallion through all 15 grueling rounds of the most famous shoot-out boxing match in movie history.

“You’ll be able to spit nails, kid. Like the guy says, you’re gonna eat lightning and you’re gonna crap thunder. You’re gonna become a very dangerous person.”-Mickey Goldmill

Since 1977 had such a long list of movies and a short time to watch them… let’s start with Bo (aka the Bandit) Darville’s  legendary twenty-eight hour, $80,000, 400 case beer run from Texarkana to Atlanta.  With smokies hot on is trail, Bandit made matters personal by taking Sheriff Buford T Justice’s simpleton deputy son’s runaway bride along for ride.  In his black trademark Trans Am and in constant high speed police car crashing, road-block breaking pursuit and with the help of his truckin’ CB buddies, life long pal Cledus (the Snowman) Snow and Snowman’s hound dog Fred, the Bandit took us for the most fun-loving, good time, carefree movie ride of our lives.

“There’s no way, NO way that you came from MY loins. Soon as I get home, first thing I’m gonna do is punch yo mamma in da mouth!”             - Sheriff Buford T. Justice

Later that same year in a movie far far away from Texarkana, George Lucas had redefined science fiction and ascended movie merchandising to levels never before seen by convincing everyone under age 20 that their Star Wars experience wouldn’t be complete until they’d collected at least 50 action figures…  After stumbling upon a distress call from the captured Princess Leia, Luke Skywalker searched out old Ben Kenobi(Obi-Wan) who informed Luke of his Jedi heritage, armed him with a lightsaber (“the formal weapon of a Jedi Knight”) and introduced him to “the force”. Meanwhile, the Evil Galactic Empire’s sinister DeathStar was nearing completion and getting ready to destroy the Rebel Alliance.  Along withC-3PO, R2D2 and aboard the Millennium Falcon with the hired help of space pilot/smuggler Han Solo and his Wookie Chewbacca, they set out to free the princess and eventually destroy the Death Star.  

Perhaps it was from breathing in all that X-wing Fighter exhaust or maybe remnants from the extinguished Death Star had permeated earth’s atmosphere that had contaminated Gen X… but what ever the reason, everyone (especially Brooklyn Itallian Tony Manero) had contracted a severe case of Night Fever.  If only on Saturday night’s, Tony had found a way to break loose from his boring everyday dingy hardware store life.  After hours of styling his hair in his bedroom mirror, Tony would leave his dysfunctional home and head out with his buddies to the 2001 Odyssey disoteque where he lit up the already illuminated dance floor to the Super 70′s sound of the Bee Gee’s. Travolta’s lead role as Tony Manero with his wide collared shirts, platform shoes, and revolutionary dance moves  had indisputably and overnight led him to be forever known as “the King of Cinema Disco” and had universally become a living icon for Disco itself.

Basking in his Super 70′s stardom, America’s favorite Sweathog turned back  the cinematic hands of time to the nostalgic days of doo-wop where blue jeans, tee shirts and black leather motorcycle jackets were all the rage.  Leader of the T-Bird’s Danny Zuko gets the surprise of his life when Australian summer love, goody-goody Sandy turns up at  Rydell High.   While gum chomping “lady with a baby” Rizzo gets knocked up in the backseat of Kenickie’s new car, Frenchy and the other Pink Ladies helped to break virginal Sandra Dee out of her ingénue cocoon.  Split after split amidst the pep rally, dances, drive-ins, and a drag race, Danny, finally throws in his greaser towel, shows up at the school carnival in a letterman sweater only to find his sweet little innocent Sandra Dee has transformed into a pelvic thrusting Spandex-clad hottie that any man would be happy to Grease in the back of his hot-rod.

Sandra-Dee wasn’t the only one with silver screen legend to break out from a mousy shell and parade around in tights…  No longer able to repress his superhuman powers, Clark Kent (Christopher Reeve in the role he was born to play), compelled by a green glow stick, headed to the North Pole where the crystal gave rise to his “Fortress of Solitude”.  After 12 years (2 minutes for viewers), via space age crystal technology, Jur-El, educated Clark about his home planet, power and responsibility’s to the people of earth.  Eagerly accepting his duty to fight for truth and justice, Superman flies off to Metropolis, lands himself a job as a mild mannered reporter for the Daily Planet where the man of steel soon develops a weakness for Lois Lane second only to Kryptonite.  While our caped crusader was hard at work ridding the city of bad guys, Lex Luther, the world’s greatest criminal mind, was busy hatching his dastardly get rich quick plan to send most of California crashing into the sea.  Faster then a speeding bullet, in true comic book super hero style, Superman takes to the sky diverting missiles, allows a would-be train wreck to pass over his back, saves falling Jimmy Olsen from the bursting damn and turns back time to save buried alive Lois Lane.

After the first 20 minutes of persistently terrorizing anonymous  phone calls to Jill Johnson, not only were movie goers paralyzed with anxiety, but baby sitting rates were going through the roof and even Ma Bell herself was afraid to answer the phone. “Have you checked the children, lately?”… “Why haven’t you checked the children?”  After a series of increasingly creepy calls leading up to a want for “your blood…all over me,” , Jill’s emergency calls to the police finally pay off and the bone chilling calls are traced.  “Jill, we’ve traced the calls… They’re coming from inside the house!”   Audience’s were glued to the edge of their seats, hearts pounding and wanting to scream out loud… DON’T GO UPSTSTAIRS!  One narrow escape and two dead children later, the police capture and institutionalize the maniac crank call killer Curt Duncan until the blood curdling suspense filled terror continues when he escapes several years later and pays homage to Jill Johnson’s own children and their baby sitter. 

You didn’t need to lay in bed hippie-notized by your lava lamp, wear bell bottoms or grow up listening to southern rock to appreciate the timeless classics of the 1970′s.  In fact, these films weren’t about the 70′s at all – but what they did do, was mark movie making’s creative highpoint.  Legendary film maker’s like Steven Speilberg, George Lucas and Frances Ford Coppola explored new story telling techniques that would change the industry forever by taking more risks then their predecessors, stretching boundaries and twisting genre’s.

It wouldn’t be hard to name 50 movie greats to come out of that decade.  But, since I had to draw the line somewhere, I went with the films that left the biggest impression me.  If you haven’t seen any of the movies mentioned above then sign onto Netflix or get your ass over to Blockbuster.

If you feel strongly about any I’m missing… I would love to hear your thoughts.

-Regular Joe

Let the reality check record show that neither portfolio managers, economists or government leaders know for certain if the stimulus plan under consideration will help stop the bleeding or even stabilize markets at all.  

What we do know..?  The subprime mortgage crisis, credit crunch and weakening dollar have crippled capital markets sending financial giants crashing to their knees and pushing our economy to the brink of collapse. Making matters worse, the housing market continues to plummet, there’s no credit for anyone with anything less than perfect credit history and the consumer is dying. People on fixed incomes, who thought  they were on cruise control, are now feeling the inflationary wrath of raging fuel, food and healthcare costs.

Bail Out Plan or no Bail Out Plan  - the economy is in horrific shape and about to get worse… a lot worse. As the current economic downturn gains momentum and we drift deeper into recession, it’s time to start thinking defensively about protecting your assets. Americans could soon be in for a devastating awakening.

For those of you with large portions of your net worth invested in the stock market, it’s time to take a good look around.  More likely than not your money managers, mutual funds and stock brokers will encourage you to keep your money “working for you” in the stock market during these challenging times.  They’ll have impressive charts, valid data points and proven statistics demonstrating why it makes so much sense to keep your funds in the market. If… after reviewing current conditions, your investing prowess, risk tolerance and market savviness should steer you down that path without endangering your lifestyle or plans for retirement then good luck to you.  However, do keep in mind and realize that most of these “keep your money in the market” statements are biased. All these financial gurus you see on television and quoted in the newspapers that manage money – can only make money when they have money to run (your money).  As our country evolves and times change, our economy, financial system and political system evolve with it becoming more and more complex… giving way to future events and crisis’s that aren’t fare to judge against the past events of a simpler time.

Picture this… You’re on a weekend trip to Atlantic City where you sneak a thousand dollars past the little woman and head off to the black jack tables with your buddies.  After only 2 hours of getting there, your sitting at the table rubbing your burning eyes from cigarette smoke, sipping on Jack Daniels and you’re getting your ass handed to you… Would you: (A) leave it up to the dealer to decide if you keep playing because she thinks the shoe is warming up?  Or (B) make the decision for yourself?  …I hope for your sake you said (B) choose for yourself! The dealer works for the house, you’ve got all weekend to play and you’re not going to let somebody else put you out of the game when you’ve still got so much time left to play. 

As the economy weakens, the general investor’s tolerance for risk lessens with it. We’re headed deep into a recession where money will be increasingly tight, harder to come by and can’t be borrowed.  Without the consumer, companies will have a tough time turning profits and be forced to downsize.  Thousands of people are already losing their homes, assets and are in severe financial stress.  Mass layoffs are around the corner and will lead the way to levels of unemployment, bankruptcies and foreclosures like Generation X never thought fathomable. I can promise you that the money you made yesterday will be significantly harder to make tomorrow, so protect what you have.  Choose your investments wisely. 

Forget about fundamentals, intrinsic values and stock market trends for a minute.  When it comes down to brass tacks, two things drive the market… Fear and greed.  The Dow Jones Industrial average is currently down roughly 22% from it’s high in 2007.  Who says its can’t go even lower?  If your financial advisors have you thinking these depressed levels are showing signs of a bottom… then take a look at Japan’s Nikkei Index.  In 1990 the Nikkei 225 Index was trading at 40,000.  By the end of 1991 the index had fallen 25% to 30,000.  Do you know where the Nikkei is trading today?  After being down 25% in 1991,  eighteen painful years of enormous life changing losses, the Nikkei 225 is currently trading down an additional 60% from 1991 and 70.5% lower than it’s high.  I’m not saying this is what we should expect. But what I am saying is that… It’s not impossible.

Here’s what scares me:  Shortly Mr and Mrs Average America will be receiving their 3rd quarter brokerage account, IRA and 401k statements.  Two minutes after opening the envelope they’re going to realize these giant banks and financial institutions, that have been blowing up one after the other, isn’t just a “Wall Street problem” like they had thought and they just lost 25% of their life savings, children’s college funds or even worse… their retirement.  Now they turn the TV back on and every channel they turn to has government officials and market professionals frantically trying to strategize plans that may or may not help stabilize the financial markets, loosen the credit crunch and tips on how to survive in a recessionary economy.  You know what happens next?  Panic sets in and out of fear they pick up the phone, get online or drive over to their brokerage house and sell everything.  

Generation X has never been exposed to such unsettling economic and financial uncertainty.  The sell-off we’ve seen over the past few weeks could soon pale in comparison to the mass-redemption landslide we could potentially endure when Tom, Dick and Jane get a taste of what’s about to be served for dinner.  Up until now the bulk of the market pressure has come from mutual funds, hedge funds and other money managers.  It’s not going to be pretty when the average investor, who can no longer sustain such losses, fear the unknown and start panic selling like rats scurrying to the surface of a sinking ship.  I’m not calling Armageddon just yet. But when you take into account the severe headwinds the economy faces, the stock market’s decline with no end in sight and unemployment going through the roof… you wouldn’t want to be the last one to the life boats.

Investing is not just about setting financial goals.  Smart investing requires you to continuously reevaluate and adjust your portfolio according to your age, current income and risk tolerance.  If you think the world’s going to hell in a hand basket, you can’t sleep at night or reading this blog has gotten you even half as nervous as I am… then act now, make the appropriate changes and protect your assets.  Since I can’t predict the future, I’ll have to rely on current economic data, bankruptcy filings, foreclosure fillings and historical comparisons chillingly similar to the times leading up to the Great Depression.

I hope I’m wrong.  In the meantime, it wouldn’t hurt to fasten your seat-belts and hold on.

-Regular Joe

The prudent man’s rule when calculating how much one can afford to pay for a home without getting in over your head is typically no more than 3-4x your annual income. 

In 2005 (the peak of the United States housing bubble) the economy was booming, jobs were plentiful, consumers were spending and the real estate market was unstoppable. However, irresponsibly unnoticed the median home price had become six to nine times greater than median income.  That was the sign banks chose to ignore.  Despite this dislocation, lenders were tripping over themselves to make loans based on the unrealistic misconstrued concept that property values would always continue to soar.

Competition became so fierce among lenders they began seducing the unfortunates, people with bad debt, low paying jobs and sketchy credit histories.  Based on their less than adequate financials, this subprime underclass that had no business even buying property, had become mortgagors.  Both the lender and the buyer knew they couldn’t really afford that dream home – but what the hell, those teaser rates were just too good to ignore.

To better understand the “Subprime Crisis”

 DOWNLOAD THIS PRESENTATION

Enormous risks were being taken as American lending institutions continued to rapidly fuel what would eventually lead to today’s subprime mortgage crisis, credit crunch and the meltdown that is currently crippling the U.S. financial system.

During the boom, owners would draw from their rapidly growing home equity to pay their bills (including their mortgages).  Essentially, people -a lot of people, were making mortgage payments with funds borrowed agaist their home equity to pay the mortgage.  This twisted cycle of financial ineptitude worked just fine… that is, until the housing bubble started to burst.

In 2006, the real estate market was clearly headed south, by the 3^rdquarter, foreclosure filings were up 45% from the year before and instead of putting tighter restrictions on mortgage loans, lenders continued to issue even more of these risky loans. WTF!!?

No matter how risky the loan or unreliable the applicant, the only thing mortgage brokers cared about was the commission they were receiving from the lender.  Lender’s on the other hand, needed the short-term profits they generated by re-branding these risky subprime mortgages into Mortgage-backed securities (MBS) and collateralized debt obligations (CDO) and selling them in the secondary market to third party investors. 

Since these underestimated MBS and CDO, that no one fully understood as much as well as they should have, carried such promise of high yield… corporate, individual and institutional investors backed up the truck, piling them up like too many eggs in a basket.   Once the real estate market started to fade, underlying mortgage assets declined and these people who were already stretched too thin could no longer afford to make payments. The holders of CDO and MBS faced significant losses causing the stock market to weaken significantly.

Realizing just how wide and deep this credit risk had spread, lending activity significantly cut back for individuals and corporations as money lenders increased spreads on higher interest rates since it was unclear how financial institutions would be effected.  This is what you hear referred to as a credit crunch.  Soon liquidity concerns over the high number of MBS drove central banks around the world to take action to provide funds to member banks to encourage lending to worthy borrowers and to restore faith in the commercial paper markets. The U.S. government also bailed-out key financial institutions, assuming significant additional financial commitments.

Seemingly overnight, the subprime crisis had begun to drag on the economy, pressuring growth. Fewer (and more expensive) loans resulted in decreased business investment and consumer spending. And as we break through record level inventories of homes on the market, the housing market continues its downward spiral from it’s 2005 highs. New home construction has been crippled on count of the abrupt reduction and shift in demand versus supply. 

Pay attention. The economy is under serious pressure and in significant trouble.  People, corporations and even banks cannot borrow money.  What you can borrow, comes with a very high price tag.  Without credit, the consumer is dead.  Without the consumer, the economy is dead.  Stock markets gain strength from earnings and growth, so when the consumer isn’t buying goods, services and new developments are debilitated from lack of funding, you can expect Wall Street to suffer.   Here comes the bad news… It’s going to get worse. Much worse.

Here in 2008 it’s the ”Masters of the Universe” making the front page while they were brought humbly to their knees.  Lehman Brothers, Bear Stearns, Fannie Mae, Freddie Mac, AIG and other financial giants either went bankrupt, near bankcrupt or were left crippled.  Don’t think for a second that this is just a high roller “Wall Street problem”…  This recession is about to hit Main Street like a Tsunami and rattle this economy to it’s core.

“Wall Street made a lot of mistakes, regulators made a lot of mistakes, we are going to have to get through that… people on Main Street who think Wall Street is too far away, has no implications for their lives – are just misunformed.” – Bernanke

How could things get worse?  For starters… Since interest rates on a tremendous number of subprime and other ARM are due to adjust upward over the next year, you can expect much bigger payments for people who were fucked to begin with, leading to more delinquencies and foreclosure filings.  Unemployment numbers are hitting new highs every month, those employed are working for less money and real estate values are expected to continue to slide yet down an additional 20%. 

What happens to consumer confidence when Mr and Mrs Smith open their 3rd quarter 401K statements and realize that 20-25% of their retirement just melted away.  I’ll tell you what they won’t be doing… They won’t be running off to circuit city snatching up 62″ plasma’s, planning extravagant European vacations or loading up their calenders with pricey dinner reservations. 

These are dire times and current economic conditions are the most challenging Gen-X has ever seen.  As this recession continues to gain momentum, you should focus on two things… saving money and holding on to your job.  Money is worth less, harder to make and impossible to borrow.  Fasten your seat-belts, get any and all credit/debt issues you have under control and live within your means (below your means if possible).

If there was ever a time to stock up on canned goods, ammo and hide your money in the mattress, this is it.

-Regular Joe

1970- In the early days we were entranced by the slap stick off-the-wall shenanigans of Bugs Bunny, Tweety, Sylvester, Heckle & Jeckle, and Woody Woodpecker.  And who could forget that pathetically mischievous, yet ingenious, Wile E. Coyote and how his dastardly plans to capture the Road Runner were consistently foiled by those faulty ACME rockets or simply out-witted by the Road Runner himself (which usually ended up with an explosion and trademark puff of smoke).

1975- Kung Foo Fighting was at the top of the charts, Saturday Night Live premiered with George Carlin as the host, Bill Gates & Paul Allen were in the midst of forming a small partnership they called Micro-Soft and Bugs Bunny continued to promote orange flavored Tang (the drink that astronauts drank).   Sales of color televisions had finally surpassed those of black & whites – and NBC’s Pink Panther (the most popular cartoon that year) was making the most of it.

Meanwhile… Scooby, Shaggy and the gang, motivated mostly by the muchies, continued to comb the country side in the Mystery Machine in search of clues, suspects and determined to prove those monsters were just regular everyday low-life bad guys in disguise…

“And I would have gotten away with it, if it wasn’t for you meddling kids!”

Children’s television series were also jumping onto the Saturday morning bandwagon with the introduction of new shows like Shazam, featuring America’s first and only trailer park super hero, Billy Batson.  Who’s idea was that anyway?

Many little X’ers got their first taste of science fiction by being transported along with Marshall, Will and Holly into the action packed dinosaur infested alien world of the cult classic Land of the Lost,  where they met up Cha-ka, the freaky little chimp-like caveman, and maintained strategic relations with the Sleestak. 

The return of Gilligan’s Island, which consisted purely of reruns, was watched by more people on Saturday mornings then when it originally aired back in th 1960′s.  In fact, the young X’ers went on to spend so much time watching these reruns, Gilligan’s Island was said to be the ‘baby sitter for the Boomer’s generation.” … On a side note: Ginger Grant, the sultry movie star may of had all the right curves and the seductive  moves enabling her to extract information from all the male castaways,  but you didn’t need to be a outcast to see that Mary Ann made the best coconut cream pie on the island.

Over the next couple years kids would soon get to know the likes of Yogi Bear, Alvin and the Chimpmunks, the new Popeye and in order to satisfy 70′s demand for super power,  the networks introduced us to the Fantastic Four, Flash Gordon, the Super Friends and the goofiest super hero of all time – Captain Caveman.

1980′s- Income averaged $24k a year, Gas cost just $1.22 per gallon, Funky Town, Crazy Little Thing Called Love, and Another Brick in the Wall were topping the music charts.

Technology, in the way of personal computing and video games, finally had lift-off, was rapidly entering our homes and what seemed like overnight, had become part of our everyday lives.  Commodore began shipping the VIC-20 (soon to become the worlds most popular computer -costing only $299.95) and the wildly popular ATARI 2600 video game console seized control of our adolescent minds with classics games like Space Invaders, Pac-Man, Asteroids, Pitfall and Frogger.  Networks responded to this this new technology craze by adding popular video game based cartoons like Dragon’s Lair, Donkey Kong Jr. and Pac-Man to the Saturday morning roster.  

The 80′s also debuted the mega-merchandised Smurfs.  Every drug store, supermarket and toy store had the shelves packed with these little blue creatures… everything from Smurf figurines, Smurf books, Smurf action figures, even Smurf cereal… you name it – they had it.  Smurfs merchandising was off the charts.  Smurf figurines were the Webkinz of their time.  Ironically, Stuart Ross, the creator of these happy little gnomes, is not only penniless after blowing his Smurf fortune, but was busted just last week for trying to extort $11 million dollars from his well to do son-in-law and now faces up to seven years in prison if convicted.  Let’s hope Stuart doesn’t drop his Smurf soap allowing some of his fellow inmates to unload their little blue balls.

Anyway, the years have rolled by and I’ve now got young children of my own.  With kids comes the opportunity to go back in time, play with toy cars and gives you an excuse to sit back and laugh out loud at all the great cartoons that were once a big part of your life.  If you enjoy the old cartoon classics half as much as I do, then I suggest you pour yourself a big bowl of cereal, lay yourself on the floor in front of the TV and steer your remote over to the Boomerang Channel for all the classics mentioned above and more.

That’s all folks,

Regular Joe

There were no handheld gaming devices or cell phones – we had one of those primitive triangular peg board puzzle games and the Rubic’s Cube.  Most of the time we would just sit back there and watch the other cars.  Like many kids on long trips we found amusement in waving to anyone who would wave back, signaling truck drivers to blow their horns… but, our favorite pass time was One Eyed Jack.

If you were playing One Eyed Jack, you had your nose pressed against the window and would once-over every car driving on the road… the shiny cars, the dirty cars, the new cars, the old cars, the fancy Cadillac’s and the dilapidated rust buckets. What you were looking for was a car with a broken headlight (a one eyed jack), and when you spotted one, you had to be the first to yell out “ONE EYED JACK!”, and then punch the other kid in the leg as hard as you could.  The game doesn’t sound like much now, but it sure helps time go by when your eight years old and trapped in the back of the family wagon.  Your average thirty minute car ride would typically yield 6-7 One-Eyed Jack’s.

I don’t know about you, but it’s been quite some time since I drove through town and saw anyone driving any automobile that was more than five years old.  When you stop and think about that… Doesn’t that seem odd?  Everything is big, brand new and shiny.  Is this natural?  How can it be, that all of a sudden, EVERYBODY can afford to drive new cars, drink $5 Starbucks twice a day and spend hundreds of thousands of dollars on home improvements? The answer is… they can’t.  

Chances are at some point in your life you’re going to buy a home that requires financing, take on an auto loan and for convenience’s sake, manage a credit card balance.  Get a mortgage the makes sense (something that actually pays off principle), something traditional (like a 30 year fixed) and more importantly – make sure that payment is comfortably within your means. 

For many, credit too often becomes a highly addictive hallucinogen enabling it’s dependants to bite off more than they should chew with no regard for current or future financial situations.  Ironically, at first credit casts the deceptive appearance of being your best buddy, when in actuality, it’s the devil in disguise. Credit lets you imagine yourself into another league, it allows you to live over and above your means while it quietly digs you deeper and deeper into debt. 

• Make no payments for 12 months!
• Open a Sears Charge Card and save 10%
• Make the most of soaring home prices and open an equity line of credit today!
• Apply for an interest only mortgage while your new dream home continues to appreciate and build equity! 
• You won’t be turned down!
• Simply transfer your balance and pay no interest for 12 months.
• Call 1-800-UR-SCREWED now to instantly qualify for a $20,000 line of credit.

Millions of Gen X’ers have been stumbling around too long with credit goggles.  Apparently, when you look through these lenses -everything is affordable. Why not have everything you want for just one small payment?!!

Nothing beats the smell of a new car, but the last thing you want to do is spread yourself too thin with auto payments.  If you’re at a point in your life where you can afford the new Lexus ES -then have at it, if not, then take a look at the Camry – they’re both Toyota’s anyway. And if that’s not comfortable enough for you, then go for the real value and purchase a pre-owned.  Most dealers now give a three year bumper to bumper warranty’s on pre-owned vehicles and you can save yourself ten’s of thousand’s of dollars since they’re not brand new.

High ticket items target two types of people – those who can afford them and those who have enough credit.  Credit is especially dangerous when used to subsidize income.  Once this snowball starts rolling, it doesn’t take long for debt to start showing its true colors often proving to be detrimental to your financial health, stability and has the uncanny knack of spiraling out of control while it feeds upon greed and want.

In the end, we are all responsible for making our own decisions, but with the full support of the government and it’s borrowing more money to make the economy stronger philosophy,  those crafty banks and credit card companies sure did make it easy for the average American consumer to get themselves into a heap of trouble.  

Adding high priced fuel to the fire… As real estate values tumble, commodity prices violently move higher, wage/employment growth continuing its slide through 30 year lows and after 20 propitious years of playing bad loan hot potato, the capital markets have been rapidly disintegrating with the banks and money lenders leading the way to Armageddon.

There’s an old cowboy wisdom that states “If you find yourself in a hole, the first thing you should do is stop digging.”  If you’re one of the many X’ers out there who has spent yourself into a corner – Get your debt under control, cut up those credit cards and sit down with a financial planner to figure out the best way to manage your current debt so you can start saving. 

These recessionary times are tough and getting tougher by the day.  Spend wisely and use credit sparingly.  There’s not a  new car in the world can make a man feel as good as a sound nights sleep.

Regular Joe

Sleep is the interest we have to pay on the capital which is called in at death; and the higher the rate of interest and the more regularly it is paid, the further the date of redemption is postponed.  ~Arthur Schopenhauer

As Seen by Yourself

As Seen by Your Buyer

As seen by Your Lender

As Seen by Your Appraiser

As Seen by Your Tax Assessor

Technology lacks the depth that feeds our souls.  When the children of today grow up and enter their 30′s, 40′s even their 80′s, it’s not going to be the Xbox, the Blue Ray disc player or the sixty inch plasma in the family room they had as a kid that gave them character.

Explore nature.  Go for a walk in the park, take hour long hikes in the forest -be sure to check under every rock along the way. Search for frogs, lizards, snakes and anything else you can find.  Go bug hunting.  If you’re lucky enough to come across a stream, kick off your shoes and appreciate the crisp cool water as you wade through it.  Go Camping, take them fishing and have picnics in the grass. Teach your children how to skip stones.  

These are the gifts that count, the ones that can be passed down from generation to generation – but you have to take the time.  It’s too easy to get home from work, pop in the latest Disney DVD in order to keep the little guys busy while you sit in front of your PC and recap your brokerage account.  

I’ve got nothing against Range Rovers, Plasma TV’s or video games but make sure your children realize that those are mere extras in life and not the things needed for happiness.  I know too many people who spend so much time trying to keep up with the Jones’s, that they lose sight of the things that truly matter.  Life is about the simple things.

When your kids get older and move out on there own, some of them my achieve financial success, some may not.  Some children will make it big, but then lose everything.  Money may come and money may go, but there will always be mountains to climb, streams to fish and trails to hike.  If you can teach your children to love and appreciate nature, then you have given them valuable memories of time spent with you in the great outdoors that won’t be forgotten, can never be taken away and can someday be shared with their own children.

-Regular Joe

“It is not how much we have, but how much we enjoy, that makes happiness.” -Charles Haddon Spurgeon