You know things are getting bad when...

Harley-Davidson Has It's First Loss in 16 Years

Sue

Okay, here's a little perspective on some things mentioned:

If you get a traffic ticket, there's a little thing called preponderance of the evidence, which basically translates to "guilty unless proven innocent". This means that it is on the perpetrator to prove to the court that the policeman that issued the citation is in error. If the cop says you ran a red light, unless you have a video camera in your car and filmed the condition of the light as you went through it, or you bring three witnesses to court with you that will swear you didn't run the light, you will lose.

Now you may say that isn't the same as getting a citation for running a yellow light. Well, here's the way that goes. If they issue a lot of yellow light tickets and they get contested often, then it is not much of a stretch for them to just say it was red instead. Since they are obviously willing to fraud the court on a yellow light citation, why not just take the fraud the extra step and call it a red light? You say that cops have more integrity than that. Well, cops like to get paid, and if it means the difference between a junior cop on the force having a job or getting laid off due to budget cuts, I am sure the state would have no trouble finding people who would be willing to work as a cop righting red light tickets all day long. This isn't to say all cops, or even most cops, will do such a thing or that cops in general aren't brimming with integrity, but I've watched how the system works, and if a municipality wants to generate revenue this way, it will be done. This applies to radar traps, parking violations, you name it. The government will get their cut one way or another. You can pass all the initiatives and referendums you can imagine, and elect all the politicians who make big campaign promises for reform you want, but government is the biggest business going, and the golden rule applies to them more than anyone out there; he who has the gold makes the rules.

As for a 401k or any other savings mechanism, prudence dictates that one should always face ANY investment strategy with a good deal of cynicism. It is not any different than taking your money to Vegas. All investments contain risk, and all are a gamble, even investments in the government. If you think that you can invest in anything and be assured of an adequate return, then you are preparing to fail.

My greatest asset, and the only one I find worthy of investing my greatest interest in, is my ability to outperform anyone else around me in whatever is paying the top dollar for my abilities. I am not the best at everything, I am not even the best at the things I do well, but I am willing to do things that others won't or can't, and that has real value I can parlay into gain today. I beat inflation and stupid government budgeting snafu's by finding out what is in great demand in the marektplace that I am capable of and then doing whatever I have to so that I can secure a position where someone is willing to pay me a premium for my services. Salesmanship is my greatest asset. Convincing people with money and a need that I can satisfy their need in exchange for some of their money is my greatest success. The next one is delivering on the deal so that my reputation is my bona fide for the next client. I never get fired, terminated, or laid off. I leave when it is time for me to move on and before my client has no further use for me. I don't ever expect to retire, so having a retirement fund is trivial. I save for the unexpected as my needs allow. I keep my debt to a minimum. I don't consider my situation unique; I suspect most people to be able to accomplish roughly the same or better than what I have. I am not worried about the market so much because no matter how bad things get, I am confident that I can always take care of my needs at least as well as anyone else out there, if not better than most. If things get so bad that no one can take care of their needs, then I doubt any amount of money I save now will be of much help at that point, but a can-do attitude might make a big difference.

There are (at least) two movie quotes I live by: "I don't believe in the no-win scenario" and "There are certain levels of existence we are (I am) willing to accept".

Just out of curiosity, Ben... What is your plan under the conditions of runaway inflation (big-time)?

Re: 401-k retirements
Aren't all of these a situation where you take your money and put it in the stock market? Why would anyone put any money that they can't afford to lose in the stock market? The stock market is easily affected by rumor and whim, and can be easily manipulated. That's always been a puzzle to me.

Sue

Historically, the stock market has been one of the better ways of keeping up with inflation. Of course, you must think, use your head, and invest with care.

Most 401-k's (at least the ones with which I am familiar) allow you to expose your money to varying degrees of risk. Usually there is a nice conservative bond fund, right next to the stock straight from Las Vegas. The bond fund is where my dough is right now....

Make your brakes turn red on yellow so you don't pay green!

"Make your brakes turn red on yellow so you don't pay green!"

I just can't seem to figure out how to stop the Suburban before the green light changes to yellow!

Sue

Given that most contemporary/traditional investment strategies are always frought with risk, it seems to me a better deal to simply make more money in time than inflation will devalue.

In volatile times when inflation is expected to increase quickly, I find that switching from one assignment to another affords me a great opportunity to negotiate a better deal on a regular basis allowing for inflationary adjustments. For instance, if I am presently making a $100k per year salary, and inflation goes up 25% this year (an egregious amount to be sure), I would simply seek another opportunity as quickly as possible and set my expected compensation level accodingly.

As I've said before, I consider my 401k and other financial investments a novelty. My hedge against inflation is having a commodity that is market-proof and negotiating a better deal as often as needed. If the market ever gets bad enought that I can't peddle my wares here, then our country is in an extremely dire situation, and I will probably end up doing what I do in China since they haven't the skill set to compete, and will have a huge need for my services there (they already do, but I don't need to pull that string yet).

Gonna be hard for them to take a picture of someone passing through a red or yellow light if the camera iris is burned out. If they really get that stupid then a $1,000 equipment purchase will be money well spent.

"If the market ever gets bad enough that I can't peddle my wares here, then our country is in an extremely dire situation, and I will probably end up doing what I do in China since they haven't the skill set to compete, and will have a huge need for my services there..."

I am not understanding that last step, Ben. By the time something like that appears necessary to you, hasn't the S already HTF? This economic 'problem' (okay, 'disaster') is worldwide, not just us -- we're all going down together if we go.

Our government went for the final solution, printing a lot more money as a solution to the economic problem. Europe is doing the same. Japan and Greece are already in trouble. Why would China need your services when no one will be buying what they're selling?

Do you really see a happy ending for this problem? Not just for yourself, but for all of us? It looks awfully scary to me.

Sue

Keep in mind the government can print all the money it wants. If the banks aren't lending that money out, (they're not) inflation is not likely, yet. But you're certainly right. 2 years, 5 years, or 10 years, eventually we're gonna drive this bus right off the cliff. Crazy as it sounds though, there are some short term gains to be made in the stock market. Still kicking myself for not making lots of buys in Jan. of last year. If you make even $500 to $1000 on a trade and convert that money into something useful, it might be worth it. Just sayin.