Mendolonium

So, in keeping with the advice of my last post, I will assume that you have gone and informed yourself about the economy. And I will assume that you don’t like what you have heard and read. Now what? You didn’t cause this mess, but unless you are already living on your fully paid for self sustaining farm with some gold bullion stashed next to the squash in your root cellar, you are certainly going to be affected. The first order of business: protecting your assets. I am going to broadly lump assets into five categories:

• Monetary Assests: savings accounts, retirement accounts, etc.
• Property Assets: home, land
• Community Assets: schools, libraries, parks
• Health Assests: your and your family’s physical and mental health
• Job/Skills Assets: your job, your education, other useful skills

And you thought I was just going to talk about money.

Monetary Assets

Savings accounts: Most of us have one (or more of these). First off, whatever you do, don’t keep more money in any one institution than is covered by the FDIC deposit limits. Now I realize, that most of us don’t nominally have $250,000 sitting in our bank account, however, there are situations where this might apply. For example, you might receive an inheritance. Or perhaps after selling your home you may have a small gap before purchasing another – even just a few days where a couple of hundred thousand dollars or more (if you’re lucky) might sit in your bank account. It would be rather unfortunate for you, if the bank happened to fail on one of those days. For more information on the current limits go to the FDIC website. Second, there have been 15 bank failures this year – expect more. I would be wary of most commercial banks. Yes, your deposits are insured, however, in the event of a failure you may have limited access to them. Furthermore, given enough failures the FDIC insurance fund will be depleted and then there will be trouble. We use a relatively small, local credit union. Credit unions are not for the profit of shareholders, therefore they generally took on much less risk than the commercial banks. As an added bonus, credit unions almost always offer better interest rates on savings accounts than a traditional bank. Finally, I think it is always a good idea to keep some cold hard cash on hand. Enough to buy a couple of weeks worth of groceries and gas. Even if the economic apocalypse never comes to pass, the next earthquake/hurricane/flood might be just around the corner.

Retirement plans: I am not going to tell you whether or not pull your money out of the stock market, although I will say I doubt it has hit bottom yet. For many young people, such as myself, there is nothing much you can do about the money in my retirement account even if you wanted too. For example, I simply am not permitted to access the money in my retirement accounts unless I retire. So we are stuck. I was joking to Jeff that I am just going to consider the tens of thousands of dollars we have lost as a sort of indirect campaign contribution for Obama since the economic crisis has clearly helped him in this election.

Property Assets

If you own a home, it is probably your most valuable asset. As such, treat it like you would a family member and keep it in good health. Take care of things such as roof repairs, leaks, termites, etc. that have the potential to become major expenses and/or render your home uninhabitable. If you have some land associated with your home, treat it as an asset as well. Land is good for much more than a manicured green lawn, you can use it as humans have for thousands of years – to grow food. So treat your soil well – don’t use pesticides/herbicides, fertilizers, etc. Build up your soil and it’s fertility through composting. If you are lucky enough to have shade and/or fruit trees maintain their health. For more information on how to turn your lawn into food check out the book: Food Not Lawns.

Community Assests

Unfortunately, as resources tighten and government appears increasingly bankrupt you can expect that many public services and institutions will be given short shrift. But remember that long before public schooling, libraries, and parks became the responsibility of the government, they were the responsibility of the people and were built up through volunteers. Become an advocate for the things that you care about. Personally, I have a great love for our library system. It provides us with books, movies, children’s music/storytime, and internet access all for free. If services do shut down or become so ill-funded that they are no longer useful remember that you can create your own. Get together with a bunch of other moms and start a music class, consider homeschooling, exchange books with friends, invite kids over to your park-like backyard.

Health Assests

Your health, and the health of your loved ones, is obviously one of the most important things to protect. That said, it is not easy in a severe economic downturn, particularly if you face the loss of your job and it’s health insurance. Now is the time to make sure you are current on your and your children’s vaccinations, go in for that dental check-up, get into therapy, and pick up that spare pair of glasses. This issue hits very close to home for me. For example, I nominally take a combination of drugs to treat my rheumatoid arthritis (RA). One of those medications, Humira, is insanely expensive. Without insurance it is $17,500 a year. Seventeen thousand five hundred dollars. Even with insurance, we pay a couple of thousand dollars a year for my medication. Needless to say, I don’t see how we would make ends meet if we lost my job and my health insurance. That said, RA is an aggressive, damaging, and potentially fatal disease. Not treating it is not an option. So I have a back-up plan. There is a cheap, generic, medication (prednisone) that I can take in fairly large doses to keep me alive and walking with a total cost of $48 a year. Despite the vast price difference I don’t rely on alone now as it has significant side effects. However, it is good to have a back-up plan. If you have a chronic health condition, mental or physical (remember that your mental health is just as important to you and your family as your physical health) it is a good idea to talk your doctor now about low-cost solutions should the need arise.

Job/Skills Assets

Job: Your job is a huge asset, particularly if it comes with insurance benefits. Now would probably be a good time to make sure that you are a “good” employee. You don’t want them to think of you first when the lay-offs come around and if you should lose your job you will want excellent references. No matter how secure you think your job is, you should also update your resume and keep it current. If you have an inkling that you may lose your job, start looking for a new one immediately. You want to beat the rush as much as possible.

Skills: Remember that you almost certainly have skills beyond your job. For example you might work in IT, but also spend your free time working on your car or motorcycle. Many hobbies can be turned into marketable skills. If it isn’t too expensive, perhaps now is a good time to polish your cooking skills with a culinary class, take an advanced carpentry workshop, or learn how to brew beer. You’ll be protecting yourself against the loss of your job and you’ll have fun in the process.

I strongly believe that the economic turmoil we see now is only the beginning of what is to come. We face not only the potential collapse of our financial system, but the (not unrelated) problems of climate change and the end of cheap, abundant energy (e.g., peak oil). Despite that, this post reminds me of how much I do have and how much I want to preserve what is good. I have a beautiful (if rather dusty and furry) house, a garden full of ever increasing amounts of food, a fantastic family, great neighbors and friends, and a good education and set of skills. That’s what is important and that is what I am working to protect. I hope that by that definition, you are all rich as well.

You take one down, you pass it around, 450 pages of bailout to read…

OK, I give up! I tried to read the final version of the Emergency Economic Economic Stabilization Act of 2008(The Bailout), but real life intervened.  The truth is, much like watching a train barreling towards a car stuck at a crossing, most of us could see that what was going to happen, but were powerless to stop it.  Even the engineer, or in this case members of Congress, who saw what was about to happen and attempted to throw the train into emergency mode could not avert the disaster this is the bailout.  There was simply too much momentum. 

While you and I can’t stop the worldwide economic mess we find ourselves as pawns in, it is important to realize that WE ARE NOT POWERLESS.  There are steps that we can take to protect ourseleves, our loved ones, and even those that we do not know but who are also suffering.  Briefly, I believe that those steps are to (not necessarily in this order):

1. Become an informed citizen
2. Protect your assets
3. Prepare for the long emergency
4. Change your lifestyle

I am going to discuss each step in separate posts starting with “Become an informed citizen”.  As someone who has experience in the intelligence field, I have found that the key to forming an accurate assessment of a situation is to use multiple sources and multiple types of sources.  Meaning, do not get all of your information from one “source”, (e.g., CNN, cnn.com, and Time magazine  – all are produced by the same media conglomerate.).  Likewise, use multiple types of sources, the internet, print media, radio, television, and the guy next door.  I’ve listed my favorite sources of information below:

• This American Life:  A weekly show on NPR covering all manner of topics.  There are two recent episodes which do a phenomenal job of explaining the details behind the current economic implosion.  Those episodes are the aptly named:  The Giant Pool of Money and Another Frightening Show About the Economy.
• The Economist: In my view the Economist is rather conservative; for example, they were generally pro bailiout.  They are refreshing for their global, rather than U.S. centric, perspective and their extensive research.  I have a print subscription, however, over half their content is available for free online.
• Bloomberg.com: An excellent source for information on the day-to-day happenings in the financial world.
• The Automatic Earth:  A blog devoted to prophesying and analyzing economic collapse.  These guys were warning of the exact scenario we are experiencing now long before Paulson was even Secretary of the Treasury.  The authors also do a fantastic job of compiling the relevant articles of the day from around the web.
• CNN:  Ah, CNN, I think much of it is sensationalistic, repetitive, and biased.  However, it is the most popular news source in America so if you want to know what everyone else is hearing, it is useful to watch in limited doses – perhaps with brownies.
• Everyday people:  The guy you know who works (or used to work) at Lehman Brothers, your friend who is trying to buy a house in the current market, your aunt that runs a small business.  Real people that you know can help you to reconcile what you hear and what you read with reality. 

“But Gina”, you ask, “if we can’t stop this train wreck from happening, why should we bother to watch it and read about it afterwards?”.  Because what you learn will change your response and empower you.  Based on our reading of “the way things were headed” we actually made a number of financial and lifestyle changes months ago which we believed would serve us well and we continue to make changes based on what we learn.   In addition, while this crisis is global in scope, it will play out uniquely for different regions of the world and the country.  For example, do you live in central California with one of the highest foreclosure rates in the nation and where you have a 90% likelihood of owing more on your house than it is worth if you purchased it in the last five years?  Or do you live in a city in the Midwest, where there is no public transportation and you are dependent on a car?  Being informed about the conditions in your community is vital in preparing for what may come.  Finally, being informed also allows me to give my elected representatives an intelligent opinion.  While I believe that most of those elected are not doing what needs to be done, they’re what we’ve got and I am committed to trying to make democracy work in the midst of a time when it seems that our democracy is being eroded. 

I would love to hear what you, my readers think about these issues and if you have any favorite sources for information please leave a link in the comments. 

I haven’t been posting much lately for reasons completely unrealted to the environment or the economy, but I am feeling a renewed inspiriation for discussion today.  What have we been discussing almost non-stop at the Mendolo household this past week?  The economy.  

I believe that one of the most difficult aspects of this entire discussion is that we all feel out of our depth when it comes to these issues.  It is true that these financial and economic problems are quite complex.  It is also true that it is in the best interests of those in power that we do not fully understand them.  But it is within our power to understand these issues and develop an informed opinion on them.  To start, I reccomend that you turn off your television and start reading.  Our first reading task:  The Emergency Economic Stabilization Act of 2008 (aka “The Bailout Package”).  This is the exact text of the bill that your elected representatives are voting on at this very moment. 

After we see whether or not it passes the House today, I’ll be back to give you my opinion on the bill and its effects. 

A little while ago a friend of ours asked “what exactly is the greenhouse effect and how it is related to the problems of global warming and high gas prices?” It was right then, that I realized that the majority of the public is very ill informed about the state of our environment. Now this friend is well educated, and for the most part well connected to current events. But he, like so many others, has been overwhelmed by contradictory information, subtle misrepresentation of facts, and outright lies – and has long since given up on determining the truth. I would like to fix that. There is no reason that the truth about the greenhouse effect and global warming should be clouded by misunderstanding.

Over the next few days I am going to attempt to clear the air on global warming. My three part series will cover
1. The Greenhouse Effect: Mother Nature’s Cozy Blanket
2. Global Warming,: The Evidence for an Anthropogenic Greenhouse Effect
3. The Results Are In: What Can We Do and How Far Do We Need To Go

The greenhouse effect is actually a natural phenomenon which allows life on this planet to exist. Without natural greenhouse gases like water, carbon dioxide, methane, and others we and all other life would be frozen solid. However, with the increased use of fossil fuels which power our economy, the balance of these greenhouse gases has shifted and we now are in a state of excessive greenhouse warming. The evidence for this is unmistakable. Increases in greenhouse gases have been measured back to before the industrial revolution. Temperature increases have been measured around the world. Subtle changes to natural ecosystems have been observed, affecting birds, grazing herds, and farmers.

But what do we do? The first thing to do is reduce the amount of carbon dioxide in the atmosphere by 10% and we need to do this in the next five years. It doesn’t sound like a lot… 10% in five years, but currently we are increasing the amount of carbon dioxide in the atmosphere, and we are increasing it faster than we have ever increased it before. To change the planet’s atmosphere we must have a planet-wide effort. “Green” can not be a trendy ad campaign driven by short term sales figures, it must be a way of life for everyone driven by our future self preservation.

***Part One of a Four Part Series***