A tempting target…

Back in April, Senators Jeff Merkley of Oregon and Maggie Hassan of New asked the GAO to launch a study on “risks that fossil fuel stocks currently present” to those invested in the federal government’s Thrift Savings Plan (TSP). The distinguished senators then go on to imply that the TSP should create funds that “incorporate climate change risk” as part of the 401-k style program’s offerings.

Part of the allure of the TSP is its remarkably small fee structure – it’s very cheap in comparison to many other funds. Fees are low, in part, because TSP is simple. It’s got five basic index funds and five “lifecycle funds” that automatically reallocate participant’s money based on target dates. It’s got an elegant simplicity that’s historically effective at creating wealth for its participants over their long careers.

Look, I accept that climate change is a real thing. I also don’t have any particular love of the energy sector – many leaders in the area are losing value. That’s my real issue with them, though. If we’re going to drop energy companies from a portfolio, do it because they’re not making us money – not because some holier-than-thou senator wants to score a few political points.

Congress never saw a big pot of money sitting around that it didn’t want to stick its whole hand into. With $500 billion in assets under management I can understand why the TSP is an awfully tempting target. That said, the very last thing I want to see is a good thing turned on its ear by driving TSP to respond to whatever political views happen to hold sway at any given moment. Treating retirement funds as just another political football is almost a guaranteed way to manage to take another slug of cash out of my pocket.

There are already fund options out there for just about any special interest that wants to play in the market – whether your “thing” is gender diversity, sustainable energy, human rights, or a laundry list of other causes. TSP should remain a broad-based set of fund options targeted at replicating the market overall and building wealth over time for the wide swath of federal employees. Catering to the few individuals who can’t seem to be satisfied with that just doesn’t make senses… unless of course you’re more interested in enforcing ideological purity than in making good financial decisions. Surely no member in the United States Senate could ever be accused of that.

The “right” causes…

While the smoke was still rising from Notre Dame, social media lit up with posts decrying the ultra-wealthy who were anteing up sums measured in hundreds of millions of dollars for the rebuilding of the cathedral for not giving to the “right” causes. I lost track of the number of posts that said something to the effect of “Don’t give to Notre Dame because water in Flint or because the church is rich (which is a half truth at best because the wealth of the Roman church tends to be in items they can’t sell off or borrow against like St Peters or the Vatican museum) or because Puerto Rico.

It’s utter nonsense, of course. If you bothered to know anything about how cathedrals across Europe were originally financed a thousand years ago, you’d pretty quickly find that the local nobility and ultra-wealthy of the day gave lavishly to the cause. These symphonies in stone wouldn’t exist if it weren’t for the funds that flowed in from those elite sources. 

Ultimately, these posts illustrate one of my unreconciled problems with the left – the simple fact that I don’t need their help and certainly not their permission when deciding how to allocated the money I put in the time to earn. It’s like the they just can’t resist telling me how they know better where and for what to spend my money than I do. I guess being a holier than thou do gooder is easy as long as someone else foots the bill. 

As for me, everyone can piss right off with that nonsense. Every time one of these lunatics tries to jam their hand a little further into my pocket, you can expect me to resist with all available energy. I’m no billionaire, but I’m proud of knowing that some small portion of my donation will go to restore or preserve such an important part of western civilization… But the hand wringing bleeding hearts should feel free to send their own check to the charity cause of their choice. I promise I won’t say a word about it, no matter how pretentious and attention seeking a cause they’ve selected.

A dark and rainy Friday…

As I was sitting here on a dark and rainy Friday morning seething quietly after cutting a check for a $1825 special assessment from my condo’s governing HOA, I realized it’s been a few days since I posted anything. What can I say, rage, it seems, beings out my inner soul as a writer – or maybe it’s just the catharsis I need after getting gang banged by a homeowners association board who must have been holding on to a shit ton of proxies when they voted.

I’m always curious about those who see rental income as a surefire pathway to wealth. Maybe it is under certain circumstances – if you’re local and can do many of the repairs yourself, if you paid cash and aren’t using at least a portion of the rent to make the note, or if you aren’t governed by an HOA that’s at least as good at spending other people’s money as the United States Congress. I’ve been renting out this condo since 2003 and I’ll admit that there have been a few good years – those years when nothing breaks and there’s no damage to be repaired. Those years are the rarity. Far more often it’s a break even proposition where you’re lucky to be about $500 into either the black or red by year’s end. Then, of course, there are those years where you end up pouring your own cash into the place hand over fist. No one talks about those years when they tell you what a great idea it is having a rental property.

At least the bastards got the bills out in time to use the whole damned mess as a 2018 deduction instead of having to wait an additional year to recoup a few pennies on the dollar. When your “bright slide” is consoling yourself that you have something to help offset the decreased federal deductibility of state and local taxes, you’ve really got to rethink the whole plan from start to finish.

This dark and rainy Friday is going to largely be about resisting the temptation to drive down there and nail a for sale sign to the door and being done with the whole bleeding mess.

I’d just waste the rest…

So last week Mark Zuckerberg promised to divest himself of 99% of his fortune over his lifetime. About 13 seconds later, the chattering class filled the internet with complaints that he wasn’t giving it away fast enough, or to the right causes, or that he was just structuring the donations to be a tax deduction.

Without coordinating with the founder of Facebook on where he stands on the issue, my initial response was 1) Who the hell empowered anyone to decide how fast someone should give away their own money; 2) You go ahead and pick your causes and I’ll pick mine; and 3) If you are going to give away the better part of $49 billion, you’d be absolutely insane not to plan for the tax consequences of doing so.

The super-wealthy in America have a long and noble tradition of charitable giving. The barons of the industrial age built libraries, universities, and other public institutions that still dot the country. While even in my wildest, most avaricious dreams I’m not in the company of a Rockefeller, a Carnegie, or a Zuckerberg, I pretty much want to be left alone when it comes to what I give and the causes I choose to support. In my case the causes tend to be local and animal focused almost exclusively – figuring that sick kids and the disease of the moment are always going to find reasonably strong support.

No matter how worthy your cause, telling people that they’re wrong for not donating exactly the way you do (or would) is a pretty ludicrous proposition. If you don’t like what Zuck is putting is cash behind and how it’s being structured, go on out and raise $49 billion of your own and give it away any damned way you’d like… and then remember not to claim any of it at tax time. Unless you’re planning on doing that, I’m not sure I even know what you’re talking about.

It might be helpful in this circumstance to just be glad that people like Mark Zuckerberg, Bill Gates, and Warren Buffet are doing their bit. Under the same circumstances, I’m not at all sure I’d be able to restrain myself from spending half of it on gambling, alcohol, and wild women and then just plain wasting the rest.

With that in mind, my hat’s off to the lot of them.

Capitalism doesn’t work…

I’m never quite sure how to respond when someone tells me “capitalism doesn’t work” or that it only works for the uber-wealthy. I generally deflect the issue, because even in a well-reasoned discussion there’s virtually no chance of them changing their position – and there’s absolutely no chance of me changing mine. I’m not a philosopher and I’m not an economist. I’m just a guy from coal country who got a decent public school education and has had some life experience. I accept that my experiences are different than others, but I don’t consider them particularly unique to me in any way.

Growing up I was never in danger of being described as ultra-wealthy. I’m not in that position now, either. Thirty-seven years hence, that still doesn’t seem likely to be the case – though I do still buy a weekly Powerball ticket in case the fates have declared otherwise. At best I’m part of that vast swath of people who consider themselves middle class. I’m somewhere in the middle part of the curve of income distribution.

I made about $30,000 as a first year teacher. That first year I put $25 every two weeks into my IRA. That’s $50 a month towards what was then a very distant idea of retirement. Some months that $50 was painful – and in that first year as a “professional” I still ate a hell of a lot of ramen and lived in an efficiency apartment way off the beaten path because that’s what I could afford. Still, over that year I was able to scrape together a very modest downpayment. I found a mortgage company who was willing to take a risk on someone with little real credit history and bought a condo for $72,000. It was a 742 square foot, ground floor bunker of a place, but it was mine. Instead of paying rent I was building equity and paying 5.25% (which at the time was a real sweetheart deal) interest for the privilege.

A few years later I took another job (another risk), and rented out my little condo for $200 more a month than I was paying on the mortgage. Some months got awfully lean while I was waiting for a new tenant or the refrigerator needed repair, but you see, that’s capitalism. I used my own money to build value over time. I still have that little place and today it’s renting out for more than twice the mortgage payment. That’s capitalism… and I hardly feel like I’m taking advantage of the person who’s paying the rent. I’m still the one taking the risk that the air conditioner won’t conk out or the building won’t burn down.

I’m still making twice a month deposits into my retirement accounts. Planning for that part of my future is my responsibility. Despite the “correction” of the last few weeks, all told those accounts are still doing well over time. The growth of those early deposits, driven by overall increase in stock prices and the beauty of compounding interest is simply staggering. Some months are obviously better than others. Risk is a real mother like that. Sometimes she gives and sometimes she takes away. Even so, I don’t blame JP Morgan, or Citibank, or GM for doing what they do. There’s a reason we have the phrase “it’s just business.” They all seek to maximize profits at the macro level the same way I do on the micro level with my small rental property.

Populism and distrust of big business and big banks has a long history in this country stretching back to well before William Jennings Bryan’s cross of gold. Socialism hasn’t had it’s roots here quite as long, but it’s no spring chicken in America either. I’ve done the reading. I’m not sold on either model.

I choose to believe in my own experiences – of every time Amazon sends me a check for selling a short story and every time the rent is deposited into my account and every time a stock pays out a dividend. So I have no idea how to respond to someone who says capitalism doesn’t work. I’m seeing it work every single day.

What Annoys Jeff this Week?

1. “Being robbed by the rich.” Based on what I see popping up from time to time on social media I should be furious because the money I’m supposed to have has apparently been stolen by the uber-wealthy. A quick look at this month’s bank statement will show without a doubt that I’m not one of them. Somehow I don’t feel like I’ve been the victim of theft, though. I started saving when I got my first job, made some good trades, and got lucky on more than one occasion. I’ve managed to stash a little back for the proverbial rainy day and for the far off day when I’m neither willing nor able to work any longer. Because there isn’t as much there as I’d like isn’t an indication that it was stolen from me so much as it’s an indication that I need to do a better job saving. There’s a vocal little group out there who apparently think the “rich” have snuck into my account and walked away with a bag of cash. Truth be told, I’m far more worried about long term inflation and the devaluation of the dollar than I am the “Wall Street Banksters” raiding me for pocket change.

2. Low grade crud. I’ve been suffering from some kind of low grade crud for weeks now. Some days are worse than others, but mostly it presents as a stuffy nose, occasional cough, and sore throat that sort of comes and goes of its own accord. It’s annoying, but not to the level of being worth having anyone check it out. Whatever’s in there coming and going needs to just go because it has more than worn out its welcome.

3. “Islamophobia.” Rest assured when I use the phrase Islamic terrorist I know exactly what I mean. I mean a terrorist who is either motivated by their Islamic faith or one who is using it as a justification for barbaric actions. Despite what some busybody old bat standing near me in line last weekend thinks, it’s not an indication that I am “Islamophobic.” I most assuredly don’t fear Islam or any other religion for that matter. I use Islamic terrorist to denote an asshat or asshats who claim to use one of the world’s great religions as justification for everything from petty crime, to mass murder, to acts of war. Rest assured, just as soon as a Methodist or Catholic shoots up Mad Magazine because Jesus told them to I’ll be among the first in line condemning them for it. I don’t blame a whole faith for the actions of a few, but I damned well do blame that faith when they don’t rise up in one voice to condemn those splinter elements who are pirating the name of their God for a decidedly ungodly purpose.