Robbing the Future to Pay for the Present

Pretty major snowstorm up here in the northeast today. I left work at 11am and was home by 12pm, and the snow started at 1pm. By 2pm a 20 mile commute was taking about 3 hours! You would think residents in this area would figure this stuff out by now, but then again it is the same folks that bid up home prices and pay for gas with a credit card.

I am going to give the readers here at Economic Disconnect a present idea that is totally free! If you have ever gone through the blogroll you may have made a stop at the site I have marked as "Hilarious Pictures". The site is named ICAN HAS CHEEZBURGER (http://icanhascheezburger.com/)
This site is totally non-political, totally work safe, and outrageously funny! How many sites can you say that about? I suggest you present it to anyone that needs a laugh or anyone you like. All will find the content very amusing. And it's free!

Snowstorms and Holiday Office Losers
I interrupt the usual financial blogging for a brief commentary on the most annoying people in the world. The people I am talking about are the ones that:

• Come in late (around 10am) and leave early (around 3-4pm) all year long


• Take well over 1 hour lunch breaks


• do about 1/2 the amount of work you do on a consistent basis


• Have innumerable doctor and dentist "appointments" all year long

What is it about the person above that during the holiday's they then decide that they will work full days the two weeks right up to Christmas? Why during a major snowstorm do they insist on "toughing" it out at work? Why is it that they suddenly feel the need to comment on you using your vacation time at years end as "slacking"?

Sadly, you probably know the answer. It is these type of people to whom perception is everything. Style and looks over substance if you will. They are not really fooling anyone, especially a good manager, with their silly antics but the charade makes them feel like they are making a real effort. All about appearances? No real meat? Fake and pathetic? Yes to all and it sounds just like the US economy! Join Economic Disconnect in saying "You Suck" to those that qualify!

Robbing the Future to Pay for the Present
Saw this article over at Calculated Risk, and it was sad and expected at the same time:

Employees Raiding 401(k)s, CFOs Say
The economic slump will cut into employee bonuses, new survey results show, even as many workers are already taking hardship withdrawals from their retirement funds.
Alan Rappeport CFO.com US
December 5, 2007
The weakening American economy is beginning to take its toll on corporate employees where it hurts the most: their salaries and savings.
The latest Duke University/CFO Magazine Global Business Outlook Survey, which polls 573 finance chiefs in the U.S. and 1,275 globally, finds that year-end employee bonuses will fall by 10 percent this year compared to 2006. That decline could be especially painful at a time when more employees are dipping into their retirement accounts in order to pay bills. The survey finds that nearly 20 percent of companies have seen increased hardship withdrawals from 401(k) accounts, often to cover mortgage payments or to avoid personal bankruptcy.
"In the last four or five months we have seen an absolute onslaught of people trying to do hardship withdrawals and loans out of 401(k)s," Mark Anderson, CFO of Granite City Electric, told CFO magazine in October. "What has happened with housing and the economy has really blown up for people at the lower end of the spectrum."
We can debate the merits of various investment options here at Economic Disconnect. We can argue about how much the housing bubble might hurt the economy. We can even debate what will be on Friday rock blogging! But what is not debate able, what is abject lunacy, is the withdrawal of retirement funds early to pay for current expenses. No financial consultant anywhere would ever suggest such a thing. If you are being advised to do this, or feel you have to do this I would suggest taking a "time out" and getting yourself together.

Retirement funds in all their iterations rely heavily on compounding and long term return building. Accessing that money carries heavy up front penalties, and even worse, severe long term penalties through loss of growth. I must disagree with Mr. Anderson from the article when he states that the housing problems and economic issues are hitting the "lower end of the spectrum". 401k's and retirement plans are the hallmarks of a professional job, meaning a bit higher end than the lowest rung of the employment ladder. If there is indeed anything worth raiding, the fact is that person has a significant salary that has been used to finance the fund. This is a key point. The mainstream media would have you believe that all the problems are "subprime" and the people with economic problems are "those type of people". The sad fact is the culture of consumerism has swallowed people whole at all levels of society. It is people like you, me, and our neighbors that are in over their heads with debt, mortgages, car payments, credit cards, etc. This is another example of Economic Disconnect that I try to highlight here.

When you take money from a retirement fund, when one takes money from home equity, when someone pays for food and gas with a credit card, they are robbing the future to pay for the present. People look at retirement age folks and people like their parents or friends' parents and see them with a paid for home and reasonable income from a retirement fund and they assume they will have that too. They will not have any such thing if the capital in those assets are accessed and spent. This is a long term problem of the current debt and credit mania that has yet to be recognized as a major issue.

The Dollar on a Comeback!
The dollar has shown some real strength as of late. The talking heads I saw today attributed it to the "flight to quality" or something to that effect. Whether the dollar is indeed undervalued right now, or if shaky credit conditions mean buyers want dollars for their perceived "quality" is inconsequential. The fact is, just like the market playbook calls for rate cuts irregardless of anything else, when things get dicey foreigners and other buyers will buy dollars. It is all they know. It is what is in the playbook. Fundamentals make no difference to a playbook buyer. The dollar will probably continue a run here. That means Gold is in trouble. The money tsunami from all the central banks should have pushed gold sky high. The inflation numbers today also were strong for gold. Future aggressive rate cuts should also be pushing gold. None of it is. Will it keep up this way? I am not sure. But you have to respect what is happening and not get hung up on what you want to happen sometimes.

Holiday Wishlist
As we get closer to the gift giving time of year, I like to put out the items I really want!
I would love a true, authenticated Martian Meteorite. Imagine holding in your hands a piece of rock that was expelled from the SURFACE OF MARS, made the long journey towards Earth, made it through the atmosphere, and was found! That's quite the trip! Real authentic martian rocks are both rare and pricey. What an amazing thing to hold though! This is one I was able to find. The Zagami Meteorite, at $2600 for a small slice!:

ZAGAMI Achondrite, Shergottite, (SNC). The Zagami meteorite was the second Shergottite witnessed fall. This meteorite fell in Nigeria in 1962, on October 3rd. It is a basalt, and is one of the SNC grouplet from the planet Mars! A single stone fell, narrowly missing a farmer working in his field.

Have a good night.