I may have lost faith in Wall St., but today I regained faith in Congress.  The House shot down the $700 billion bail out… and I could not be happier.  And you wanna know why… Ok, but first let me lay the groundwork just in case

The gist of the bailout plan

HR 3997 would have allowed the Secretary of the Treasury to establish the Troubled Asset Relief Program.  This program would have been allowed “to purchase and to make and fund commitments to purchase, troubled assets (shaky mortgages and mortgage-backed securities) from any financial institution.”

My president, our president decided that it would be a good idea to use $700 billion of our tax dollar to save the finance industry.  He wanted to buy shaky mortgages and mortgaged-backed securities.  We all know what a mortgage is, but…

What is a mortgaged-based security?

It is sort of like a bond… an IOU.  Potential homeowners go to banks to apply for a home loan.  The bank issues the mortgages.  And then, the bank pools the loans into neat little packages and sell them on the market.  The people who buy these neat little packages receive interest and principle payments every month whenever the homeowners pay their mortgage.  In essence the investors are lending the money to homeowners and expected to receive payments every month.  The bank’s role in this is as the middleman.  For its services of connecting the buyer and lender, the bank receives a service commission.

Plan English…

Ok I got 10 friends who need a hundred dollars each.  They all ask me if I can loan them the money.  I shell out the $1,000 at 15% and get them to sign an IOU.  Then I turn to my friend Joe Blow and I say look Joe, buy these IOUs from me for $1,000. And when my 10 friends pay the bill, I’ll send you all the principal ($1,000) and interest ($150).  All I want is a small services fee of $2.

So I make $2 and Joe gets $148.  However, Joe now assumes all the risk.  If any of the friends don’t pay the bill, it is Joe who will be shafted, not me.

The problem with mortgage-backed securities

Generally, there is no problem.  Most times mortgage-backed securities are a safe bet.  Yeah, there is some risk involved, but usually not much.  The way it works is that the IOU is secured by an asset… the house.  The house is appraised by the bank, the applicant has adequate income to repay the loan, and the bank verified the homeowner’s financial credibility.

But… What happens if the house is over-valued, if the applicant overstates his ability to repay the loan, and if the banks did not adequately qualify the mortgages? 

So here enters the problem…

Well what happens is… that those mortgage-backed securities are worthless and investors will lose a lot of money.

Lately, investors have been taking a lot of losses on these mortgage-backed loans because the mortgage pools are filled with subprime products, foreclosed properties, soon to be foreclose properties… just a mess of worthless assets.  (I’m not really sure if “assets” is the right word to use here because asset implies value.)

Who are these investors?

Mortgage-backed securities are big business.  And because of the perceived low risk, many entities buy them…banks, hedge funds, pension funds, mutual funds.

Alright now back to why I am glad that this bailout was voted down. 

The bailout would have rewarded corporation for bad behavior

The bailout would have alleviated the mortgage risk exposure of financial institutions (and only financial institutions).  Aren’t these the people started this mess in the first place?  Financial institutions were being careless and greedy.  They knowingly exposed themselves to subprime lenders in order to increase short term profits.  Not only did these financial institutions give money to those with questionable financial credibility, but they also engaged in other greedy and deceitful behaviors.  They overvalued houses so that they can issue first and second mortgages.  They came up with all these colorful ways to qualify borrowers… balloons, no interest mortgages, one year ARMs, etc. They made stupid choices in order to fatten their pockets, but it backfired. 

I hate to get on the Harper story again, but just think about this… JP Morgan Chase loaned a family a half a million dollars.  The borrowers… a house wife and a home security alarm installer (not wealthy people).  The loan was secured with a house that cost almost a million dollars to build (the house was a free gift from Extreme Makeover: Home Edition).  At one point the family was trying to sell the house for $950,000.  It did not sell.  Why… because regardless of how much the house cost to build… a house (or anything else for that matter) is only worth as much as someone is willing to pay for it. 

The house is Lake City, GA.  The median income in Lake City $38,000, the median house value, $125,000… both less than the medians for the state of Georgia. 

Now granted I don’t know much about the neighborhoods in Lakeland, GA… but the Harper’s old house was ummm… a dump (I’m not trying to be ugly, but it was).  The dump was torn down and replace with a mansion.  Great! 

But if the Harper’s old house was a dump… then chances are that the houses around it are dumps too.  What sane person with a million dollars or even a half a million dollars would buy a mansion that was surrounded by dumps? I know if I had that kind of money to spend on a house, I would not be looking to buy a mansion that sits in the middle of dumps.  I would want a mansion that is surrounded by other mansion. 

No matter now much it costs to build, nobody is going to buy that house for so much money.  The house is not worth a half a million, it is only worth what someone is willing to sell it for.  Location, Location, Location - that is what the realtor says.  I am no realtor and I understand that.  So why would JP Morgan Chase value that house at a half a million dollars plus. 

Anyway, the family could not repay the loan and it went into foreclosure.  The house went up for auction.  I am not sure what it sold for, or if it even sold at all… but either way, that was a horrible business decision on JP Morgan Chase’s part. 

Taxpayers should not have to foot the bill for the bad decisions of borrowers and lenders.

The federal government has never come to my rescue when I did something stupid.  So why should they help stupid… (greedy) banks? And anyway a bailout out does not solve the problem.  It is just a band aid.  Bailing out banks just frees them to go out and make poor bad decisions.  So way to go House!  I think you all really voted for the people on this one.

On July 24^th, the federally required minimum wage increased to $6.55.  This is the second hike of a 3 tier increase.  The third hike will occur on July 24^th of 2009 and the minimum wage will go up to $7.25.

There has not always been a minimum wage.  Minimum wage laws were first established by the Fair Labor Standards Act in 1938.  The law was brought about to protect unskilled workers. 

In the thirties, there was a high supply of workers, yet a limited number of job opportunities.  Often unskilled workers were cornered into accepting extremely low paying and hazardous jobs.  Enactment of the wage law required employees to be compensated a minimum wage, at that time… 25 cents per hour. 

Since then, there have been several changes to the act.  It has been amended to extend coverage to more employees and, of course, to adjust the minimum wage as to keep up with inflation and the changing economy. 

More often than not, the issue of minimum wage makes its ways into political platforms.  Some candidates focus their campaign agendas on increasing the minimum wage.  Senator Obama proposes to index the minimum wage to inflation so that the wage increases with inflation.  Senator McCain has no strong stance one way or the other on the issue.

Though many people support an increase in the minimum wage, often the economic implications of forcing a minimum wage is overlooked.  In the short term, increasing the minimum wage has negative economic effects.  And in the long run, the impact is nullified as markets adjust to accommodate for the changes.

Let’s look at this a little closer…

In the short term

There is a limited supply of jobs and a certain amount of demand for those jobs.  Generally, the demand is greater than the supply.  This is what creates unemployment.  As the minimum wage increases, the labor force tends to grow as well.  This is because there are more people willing to work more jobs or longer hours at the higher wage rate. At the same time, the supply of jobs decreases because the jolt in labor costs causes employers to scale back jobs or hours.

So you have… more demand for jobs and a lower supply of jobs … or… more supply of labor and a lower demand for labor… either way you look at it, the end result is more unemployment.

Increasing minimum wage may benefit the few who are fortunate enough to have or find minimum wage jobs.  They get to bring home a bigger paycheck.  But that bigger pay check for one person may mean a smaller or no paycheck for another person. So, for the economy as a whole, changing the minimum wage is not a good thing.  It just means more people are looking for jobs, but there are fewer jobs to go around.

In the long run

In a free economy, over time the supply and demand markets will automatically adjust to new equilibrium.  In order to accommodate for the forced wage increase, other markets change.  The higher labor costs are eventually distributed to everyone in the form of higher prices for goods and services.  These higher prices affect the Consumer Price Index (CPI), which contributes to inflation rates. 

So in the long run, the economy is basically right back where it began.  The increase in wages eventually results in market adjustments… which results in higher prices… which results in inflation.  So whether you are making a lower minimum wage a year ago and a higher minimum wage two years from now… it still buys the same thing because of the changes in prices and inflation. 

Bottom line, while it sounds nice when politicians say they will increase the minimum wage… changing wage laws does little to improve the economy overall.

Indy Mac Bank is the most recent on a long list of banks that did not make it. The FDIC has shut down 6 failed banks in the past seven months. That is the same number that they closed down in 2007 and 2006 combined.

Indy Mac was one of the power movers in the industry. If they could not mange to stay afloat during the mortgage bust, how can the regular ole’ banks survive?

When the big ball starts rolling… it is sure to knock down quite a few little balls along the way. Can the FDIC keep up at this pace? Will the insurance money run out?

This FDIC has been around since 1933. Its sole purpose is to encourage consumer faith in the banking system. When thousand of banks failed in the 20’s, many people lost their life’s savings. Consumer confidence in banks was shot. No one would dare put a penny in a bank for fear it would not be there tomorrow. So the FDIC was created to assure people that is was safe to bank. The government, by way of the FDIC, promised that even if the banks lost, consumers would not lose.

Eventually, people began to believe in the banking system again. Well some people… I still know many elderly Americans who do not trust banks, FDIC insured or not… they would rather stick their cash in a mattress where it’s safe. But for the most part the FDIC has served its purpose of building people’s comfort and trust in knowing that their money is A Ok.

Over the years the FDIC has had to come true on its promise many times over. As it now stands, the FDIC insurances bank deposit up to $100,000 for checking and savings accounts and $250,000 for retirement accounts. Although the FDIC is a federal agency, they are managed by a 5 person board and operate like a corporation. (The C in the name is for Corporation.) And unlike most other federal agencies, it operates solely on revenues it earns, i.e. our tax dollars does not support them.

So where does the money come from? Well, just like every other insurance company, they make their money off of insurance premiums. Nearly every bank in the US, which there’s more than 8,000 of them, pays a hefty price to put up that FDIC-insured sticker in their window.

At last count the FDIC had about 50 billion dollars set aside to insure more than 3 trillion in deposits. So that takes me back to my original question… with the increasing pace of bank failures, will the FDIC run out of money?

It has been estimated that this Indy Mac thing will cost the FDIC up to 8 billion dollars. In just one day… more than 15% of their insurance fund is gone. And rumor has it that there are more banks slated for closure. At this rate, I don’t see how $50 billion, now $42 billion, will carry them very far.

The FDIC is infamous for bragging about how in 75 years no one has every lost a dime that was FDIC insured. Well I say they oughta stop bragging. With only $42 billion left in their stash and banks collapsing all around us, the end of their winning streak may be near.

So what will happen if the FDIC has no money to back up its promises?

Luckily for me this is not something I have to worry about, I don’t have any money. But for those PFA’ers who are fortunate enough to have money in the bank… keep a eye out to make sure your bank ain’t next.

So I know a little about McCain’s health plan, now I mine through Obama’s…

What’s the plan?

The plan is to make affordable, quality health care accessible to everyone.

Why Sen. Obama chose this position?

The cost of both health insurance and health care has risen almost exponentially. Because of the rising cost many poor and working class Americans aren’t able to purchase health insurance. Making health care affordable will reduce the number of uninsured and underinsured.

How Sen. Obama proposed to carry out the plan?

The heart of Sen. Obama’s proposal revolves around the creation of a national health care plan. Under this national plan, every American will be eligible for health insurance, regardless of health or income. Premiums will be less expensive than present day rates. And for those who cannot afford the premiums, subsides will be given. Participation in this system will be required for children and optional for adults.

A system of electronic medical records will also be instituted. The database will make a patient’s medical history readily available to professionals, anywhere. This will reduce medical errors by allowing doctor’s to make better informed decisions regarding a patient’s condition and treatment.

The quality of care will be improved through the research, design and implementation of procedures to eliminate medical errors and resolve inconsistency in services.

Finally, the plan involves the formation of a patient advocacy group… or the National Health Insurance Exchange. The aim of this group will be to make sure that the Obama’s plan is coming together as envisioned. The group will battle private insurance and big drug companies to ensure fairness for the insured.

So… what does all this really mean?

The Democratic candidates have been strong proponents for national health care, which is sometimes referred to as universal health care. There are many countries that have a universal health care system. In traditional universal health care, participation is mandatory, everyone pays the same premium regardless of the health and there are mechanisms to help cover the cost of the premium for the poor (in most cases, this means a subsidy). Premiums are usually prepaid through payroll or some other kind of taxes.

In a perfect world, under a universal health care system everyone gets the same quality of treatment despite their financial means. Poor people have the same access as the wealthy. On the flipside, the wealthy are not able to buy their way to better health.

Though Obama’s plan is often likened to a universal health insurance, there remains one big distinction. Unlike tradition universal health insurance, participation is optional… (well, except for children) and private insurance will still be readily available.

This can be both a good and a bad thing.

Here’s how I see it…

The plan is open to anyone, rich, poor, terminally ill or perfectly healthy - Ok, this is can make for a serious issue. I cannot remember the exact term I learned in a public economics course, but basically this will cause selection bias. If participation is optional, people will only sign up when they need it… i.e. they are so sick that they can’t be insured anywhere else or so poor that they cannot afford private insurance. I see the program as being as a hybrid of a puffed out Medicaid program and government funded hospice.

The participation base will be largely comprised of people who are too sick to be insured anywhere else. Therefore the cost of this program will be enormous because there will be proportionally fewer healthy people to balance it out. I mean, really, why get it if you don’t need… and if you do need it, no need to fret… it will be there, open to you at anytime. What insurance company can keep afloat this way?

Also, people who are able to afford private insurance are likely to remain privately insured. One of the biggest complaints about universal health insurance is that the waiting list for treatments can be very long. But those with private insurance won’t have to worry about this. They can buy their way to the front of the line… to sorta speak.

I think his plan is too hopeful. It’s good for those who participate. But I do not see how making a program that is basically geared to the sick or poor will aid in reducing medical costs. I think it will only help to increase costs.

But I do give him props, the man is sexy!

For the past year, I have been bombarded with all kinds of presidential election issues… which candidate lied about what, whose pastor said this, which delegate voted how, whose wife dresses the snazziest. I voted in the primary election, but my vote was based on who sweet talked me the best that day. I hadn’t given much thought to either candidates’ political platform. So as November nears, I think it is time for me to understand where the candidates stand.

Today I’ll look at Senator McCain’s health policy.

What’s the plan?

The plan is to control escalating health care cost.

Why Sen. McCain chose this position?

Controlling cost would unburden the Medicare and Medicaid systems making the sustainability of the programs viable for future generations. At the current pace, the systems would be an insurmountable financial stress by 2019. Also by controlling costs, the health insurance becomes more affordable for families.

Individuals should be in control of their own fates. This plan will give people more options in their selection of health insurance and medical service providers.

Medical providers would be conscientious in the quality of care because more patient options will stir competition.

How will Sen. McCain carry out the plan?

Insurance portability - when individuals change jobs or move across state line, their insurance plan can follow them.

Restructuring tax credit - rids credit for employer sponsored plan and shifts credit to individual household. Provides refundable tax credit of $2500 for individuals and $5000 for families.

Reduce prescription drug cost - increase competition by promoting the use of generic drugs.

Insurance accessibility - insurance would be available for purchase through various civic and professional organizations

Less expensive and more accessible medical care - encourages the delivery of medical service through retail health care clinics which use nurse practitioners as the primary care provider.

Rosy eyed optimism or real solution?

Political and policy analysts often compare McCain’s plan to Senator Obama’s plan. At some point, I will need to compare to compare the two. But first I want to look at McCain’s plan on its own merit (independent of how it stands up to Obama’s plan).

Offering individual tax credits to buy health insurance sounds good in theory. However every family will receive this credit… whether they use it to buy insurance or not is ignored. I do not think this will help decrease the number of uninsured. Most people are uninsured because they can’t afford the insurance premium. If financially strapped families are given $5000, the money is more likely to be used to satisfy immediate needs (such are food, utilities, housing, transportation) and less likely to spent buying protection for the what-ifs. And besides, health insurance costs a lot more than $5000.

Also offering this credit to every family in essence gives a subsidy to people who don’t need it. Most upper middle class and wealthy families don’t need a tax credit to buy health insurance.

By eliminating tax credit for employer sponsor plan, there would be no incentive for employees to purchase health insurance through their employers. This will result in decreased participation and prompt employers to drop these benefits. If employers drop benefits individuals will not only lose the advantage of sharing the cost of insurance with their employers, but they’ll also be forced to find coverage on their own.

Offering medical services through retail health care clinics sounds good on the surface. But there are no MDs at most of these clinics and the level of care is less comprehensive than that given at a regular doctor’s office. Also, most of these clinics are nested inside retail locations that also house pharmacies. Patients will be urged to fill prescriptions at those pharmacies. Though this may be the most convenient decision, it may not necessarily be the most economical.

While the principle behind the plan seems honorable, I’ll have to give its implications more thought before I cast my vote in November.

Between Thursday and Friday of this past week the Dow Jones Industrial Average dropped 450 points, officially taking it into what stockbrokers call ‘Bear Territory’; that is, a drop of 20% or more in a single year.

Do I care?

Not much. Even though the last time I looked, my 401K was losing about 8% annually, I’ve decided that a better way to spend my energy is to focus on things that cheer me up. I spent Friday afternoon making strawberry jam. In an apron. A 1940s collectible full bib apron, a la Ma Kettle.

Yes, it’s true. I am a Domestic Goddess.

So even though I could write a post about how Ford Motor Company stock is at its lowest point since 1955, or how Citigroup is in big trouble again, or how NY writer Tom Wolfe thinks we are witnessing “…the end of Capitalism as we know it,” (this from a guy who dresses like Colonel Sanders and wrote one of the awfullest books ever, made into one of the awfullest movies ever, The Bonfire of the Vanities), or how Chrysler is denying publicly that they are considering bankruptcy (meaning that they almost certainly are considering bankruptcy)–even though I could write that post, I’m not going to do it.

Instead, here are ten much more pleasant things you can do while the American Way of Life collapses around your ears. Then, once the dust settles, we can all talk.

1) Make Jam. I spent $25 on a flat of strawberries, $5 on four boxes of fruit pectin, and $2 on a five pound bag of sugar. I put up 13 two-cup containers of freezer jam, two quart bags of whole strawberries, and made shortcakes to eat with the leftover berries. We’re having them again tonight. I figure I saved between $10 and $15 doing this all myself, which isn’t all that impressive savings-wise, but you haven’t tasted that jam. Yum.

2) Read a Big Book. My partner, the world’s smartest truck driver, is currently reading Truman by David McCullough, a book that is as big as my head and twice as heavy. The book is about Harry Truman, former US President, not Truman Capote or The Truman Show. Harry Truman was so broke when he was a US senator that he had to hire his wife Bess to be his secretary just so they would make enough to cover their basic living expenses, then he spent the rest of his political career worrying that this necessary and pragmatic action would ruin his political integrity. Wow, have times changed or what? (Can anyone spell Oink?)

3) See Pixar’s Latest Flick Wall-E. Pixar is used to effusive praise, but the positive ratings on this one are off the chart. Wall-E is a sad-eyed trash-compacting computer left alone on earth after all human life has disappeared. His only friend is a cockroach. Don’t worry though, Al Gore isn’t in it, and at the end we find out that the human race has survived, just on another planet. The thing is, if you must see an apocalyptic movie this year, shouldn’t it be adorable?

4) Rent ‘Fight Club’. What, you say you were just laid off your cushy broker job at Citigroup and the only cute robot you want to see right now is one you pump so full of lead it ends up looking like an antique sieve run over by an SUV? Fine, I get it, put that now-totally-legal weapon away, will you please? Go directly to the closest video store and rent the film version of Chuck Pahlaniuk’s dark novel about the end of the world as we know it, courtesy of fed-up cubicle slaves. Trust me, it will cheer you up, especially the final scene. Girls: I have two additional recommendations for you regarding this film which make it worth watching all by themselves; Brad Pitt and Edward Norton.

5) Write a Cheap Food Cookbook. Mark my words, with the recent midwest floods destroying corn and soybean crops and a world food crisis already fully under way, in about eight months, somebody in the US is going to make a fortune off a clever book on how to make a tasty casserole for a family of four out of lint. Why shouldn’t that person be you? If you work in the auto or financial industries, you’re going to need the money, so get crackin’! Times a-wastin’.

6) Start Your Own University. College has become unaffordable for most kids and their parents, but there aren’t many jobs for graduates anyway. Instead of whining and crying about this, why not take the bull by the horns and start your own university? You must know how to do something. A degree from a state college currently costs about $50K, so charge 10K a head and then teach kids something useful, like how to covert SUVs into affordable housing. You’ll be doing a community service and you only need 10 students and you’re in six-figure income territory!

7) Help Build SUV-Henge. We know that with big cities strapped for tax income (due to all the foreclosures and all the industries pulling out and moving to China) public parks are hurting. Why not take the current glut of undrive-able SUVs and stack them on end to build a monument to the Sun that can be used at the Summer Solstice to appease whatever Gods are mad at us? (Probably all of them right now.) A majestic Public Works project is usually just the ticket to cheer people up during hard times, and the raw material and free labor is all around you.

8 ) Take a Stay-cation. ‘Staycation’ is a new buzzword for something wonderful I’ve always loved more than anything else in the world: Stay home and do nothing. Right now, I am so behind on doing nothing that even if I do nothing for the rest of my entire life I probably will never catch up. So if you are lucky enough to be too broke to do anything, count your blessings. Look at it this way: at least you don’t have to go to Disneyworld. Those folks are insane. The giant mouse, the dancing princesses, it’s a horror show.

9) Walk Around, Take Photos. Can’t afford to drive? Recently laid off? Take that digital camera and walk around chronicling the end of civilization. Someone really should be doing this, and I am so busy constantly grubbing for money I don’t have time right now. Plus, it’s good for you, all that walking. And dumpster diving is the the new chic way to go, so anything good you see lying by the side of the road, take it home and brag to your friends!

10) Hoard Rice. Come on, I know you want to do it. Sometimes, just being told you aren’t allowed to do something is enough to make that thing the only thing in the world you ever wanted to do. Buy your four 100 pound bag limit at one Sam’s Club, drive to another and buy four more, then back to the one you started at and buy four more, and don’t stop until your entire house is so full of burlap bags of rice you think you are on a Red Cross ship bound for Myanmar.

There. That ought to keep you busy for the next two hundred days or so until Barack Obama is finally President. I don’t know how much he’ll be able to fix by the time the inaugural ball is finally over, but at least the madmen will have gone back to Texas.

Anyone want some jam?

Dear Exxon,

Last year you made $40.6 billion in profit. I made $24,600. (Mine wasn’t all profit though.) Clearly, we move in different circles. Your ways are not my ways. Your kung fu is greater than my kung fu. Your gross receipts for 2007 alone topped out at over $404 billion, which is bigger than the gross domestic product of no fewer than 120 nations.

Wow.

My writing profits for 2007 totaled about $78, (which is what the US is currently shooting for in terms of gross domestic product. We’ll get there, I’ve no doubt.)

I have a question to ask you, if you have just a minute.

I am doing much better this year, and I see that so are you, with over $10 billion in profits in the first 2008 quarter alone, and the price of gasoline now pushing $4.50 or higher in lots of parts of the US, and diesel even higher, so high, truck drivers in Spain are acting up. Good for you. That’s what capitalism is all about, right? Profit, profit, profit. And you are leading the pack, holding the torch as it were (don’t hold it too close to all that oil though…you know what happened at that BP refinery). I commend you for your initiative and success.

Here’s my question:

Why did you find it necessary to fight the $2.5 billion in punitive damages for the 1989 Exxon Valdez spill, a spill that released 10.8 million gallons of crude oil into Alaska’s Prudhoe Bay and covered 11,000 square miles of ocean, a spill you admit was your fault and no one else’s. I mean, you have the money, right? We’re talking 1989 here. Since 1989, you’ve made so much profit that all the zeros won’t even fit into this blog, so let’s not even go there.

Perhaps you have forgotten that the Exxon Valdez oil spill instantly killed somewhere between 250 and 500 thousand sea birds, 250 bald eagles (an American icon which at that time I believe was actually an endangered species to boot), and 22 Orca whales, not to mention sea creatures of all kinds too numerous to list much less count.

Thousands of volunteers saved you most of the painful and hopeless work of trying to save these rare, suffering animals so you could instead take way too long finding a subcontractor to spray deadly chemical dispersants, surfactants, and solvents (which, damn the bad luck, didn’t work very well) all over the already poisoned Bay. So it’s not like you didn’t try at all, and to be perfectly fair, cleaning up oily messes is not really your thing. You are in the business of finding and selling oily messes.

Still, what did it cost you to fight this thing legally for 19 years running?

Corporate lawyers don’t work cheap. Even the ambulance chasers around here get $100 an hour, so I know you had to spend far more than the penalty just arguing the penalty in court after court after court.

What’s up with that?

Were you afraid that if you were held to some basic, minimal standard of corporate responsibility it would end up cutting into your impressive profits? If so, I wish you’d have called me first. You don’t have sic a squad of corporate attorneys on people and birds and fish already drenched in oil to preserve your right to be irresponsible. All you really have to do is get one of your pals elected President (oh, I forgot, you did that already), and then hire a big, glossy advertising firm to make beautiful commercials with lots of politically correct ‘green’ imagery and multinational persons wandering around on sand dunes and seashores and stuff like that, all to show how sensitive and environmental you are. That’s what BP and Dow Chemical do, and it works great.

People will believe anything if it’s on TV.

I know you won’t answer my letter. I know you are busy. It’s just that, for the life of me, I can’t understand why you would spend more than the original $2.5 billion, just to get it reduced to $500 million 19 years later. Maybe you aren’t aware of this, but right now, people in this country don’t like you very much. People think you are greedy and uncaring and tyrannical. People think you are gouging them and doing whatever you please and damn the consequences. When you don’t bother to even respond to those kinds of feelings, we start to feel like you don’t really care about us very much.

At the beginning of 2007 NOAA determined that you still have 26,000 gallons of crude oil poisoning the sandy soil of Pruhoe Bay Alaska. I just want to ask you this one favor:

Please don’t charge them for that oil.

Thanks for listening. Your little capitalist fan,

Pam, PFA

Right now, the kind of mortgage that is right for you is one you can get, which is to say, maybe no kind of mortgage. Credit is so tight right now you couldn’t get a needle past it with a sledgehammer.

In fact, I was just reading today on MSNBC that things are so bad right now, realtors are getting up at the crack of dawn just to call the mortgage companies before their answering machines fill up for the day. Mortgage companies are laying employees off so fast that often no one is available to answer their phones in person, and by the time normal business hours start, the machines are completely full.

Happy house hunting! Rots-a-ruck!

However, let’s assume that eventually (and we hope sooner not later) things do get back to something resembling normal in the world of home finance. Once that happens, you will find that home mortgages tend to fall into one of a few basic categories:

Fixed Rate Mortgages

Fixed rate mortgages are just what they sound like they are: mortgages in which the interest rate stays the same for the life of the loan. In general, the longer the mortgage term, the higher the interest rate. The standard term for a fixed rate mortgage is 30 years, but 15 year mortgages are also very popular, especially for homeowners looking to refinance. Five and ten years terms are also available, and many lenders now offer 45-year fixed rate loans, which is generally an expensive way to go, but if you need to get your payment down a 45-year term can be one way to get into a home you can afford without a lot of tricky special conditions and hidden clauses.

Variable Rate Mortgages

Variable rate mortgages come in many different forms, but the general idea is that the initial interest rate is fixed for a short period (typically two to five years) after which the interest rate can go up or down with fluctuations in the prime lending rate.

Variable rate mortgages are often sold to young people who want to get the most house they can with the money they have right now, and who can count on their incomes rising over time. Sometimes this is a good idea; sometimes it is a disaster. When considering a variable rate mortgage, it is important to understand how often the interest rate can be reset (at what intervals?–six months? two years? five years?) and whether a cap is placed on how much the interest can increase at each interval, and how much it can increase over the life of the loan. You should be confident you can handle both best and worst case scenarios.

Another feature to watch out for on a variable rate mortgage is a balloon payment clause. If, after a certain amount of time, the entire amount of the mortgage is due in full, that’s a balloon payment clause. Many people who are losing their homes today took out variable rate mortgages with balloon payment clauses at the peak of the housing bubble, because they were told the value of their homes would only increase, and interest rates would only continue to fall, making refinancing to a 30-year fixed rate before the balloon payment came due an easy task. We all know how that worked out: Not so well.

Just because your lender says something will happen in the future doesn’t mean it will unless it’s in the contract. They’re lenders, not fortunetellers. They are there to sell you a mortgage; you are there to look out for yourself and make sure you understand what you are signing.

Interest Only Mortgages

Believe it or not, you can get a mortgage in which you never pay on the principle for five years, sometimes longer. These kinds of mortgages were popular in hot housing markets where, to get into the market at all, you had to buy way beyond your means and do it fast. The likelihood that anyone will write one of these mortgages for you now is not good, the credit crunch being what it is.

In general, this kind of mortgage is an awful idea anyway. You are betting that your home will only increase in value and also that you will be able to afford the actual payments when you start owing on the principle. Don’t bet with your house, bet in Vegas. Buy a house you can actually afford, and if you can’t afford a house, save your money until you can.

How to Choose?

I’m going to be very opinionated and frank here: Choose the shortest-term fixed-rate mortgage you can get, if you can get one at all. If it has to be a 30-year fixed rate mortgage, get the best rate you can and pay extra each month on the principal, even if its only $20 extra. This will build equity in your home and give you peace of mind. Don’t even consider a variable rate loan until the housing market gets done having the biggest nervous breakdown in its recorded history. That may take some time.

If you have to wait, because you can’t get a conventional loan, save.

Some people can qualify for special loan programs under the Veteran’s Administration, the Department of Housing and Urban Development, or the Federal Housing Administration. We’ll go over those options next Tuesday.

In the meantime, don’t give up! Be smart, be hopeful, be ready to grab that dream house when it appears; but on your terms, good ones.

Yesterday I went to the supermarket for the first time in two weeks, and let me tell you, I just about fell over from sticker shock. Meat was especially expensive, showing significant increases in only a couple of week’s time. The cheapest package of chicken breasts cost $3.99 per pound, and that was the kind I’ve come to call ‘nuclear chicken’ because it’s grown at a corporate farm and irradiated, shot full of god knows what, and sent to market before it even had half a chance to know it even was a chicken.

Normally I don’t buy nuclear chicken. I don’t want to eat a chicken that I know has been raised in a pen the size of a tennis ball can and pumped up with enough hormones to give it three beaks. I can’t feel good about myself if I eat something like that, plus, it scares me.

I’ve known since the 1970s that meat production is wasteful and expensive. Consider the following nugget from the British group VegFarm: A ten-acre farm can support 60 people growing soybeans, 24 people growing wheat, ten people growing corn, and only two people producing cattle. 90% of the grain consumption of a person who eats meat goes into the meat itself, that is, it is feed for the animal. Harvard nutritionist Jean Mayer estimates that if the US alone reduced meat consumption by only 10%, it would free up enough grain to feed 60 million people.

And consider this all of you Southwestern Americans: According to authors Anne and Paul Erlich, a pound of wheat takes 60 pounds of water to bring to market. A pound of meat takes between 2,500 and 6,000 pounds of water. So quit eyeing Lake Michigan and order a salad.

I’ve known meat is resource intensive and bad for the environment (more than a third of all fossil fuels used in America are used for meat production, making that cheeseburger you crave more polluting than the Hummer you drove to MacDonald’s to get it) for many years, but I’ve kept buying it and eating it because, well, I like it. Lots of people like it. Lots of people would eat meat if they could get their hands on it. But standing there in the supermarket holding a $7.62 package of nuclear chicken that I normally would not have purchased at one quarter of that price, I had a mini-epiphany.

Or maybe I just got a little nauseous. Epiphanies, nausea, it’s so hard to tell them apart.

Does it matter? The bald fact is that meat is going to get more expensive. A LOT more expensive. With corn and soybeans suffering badly already due to the severe flooding in the Iowa and other parts of the Midwest, look for meat prices to steadily increase, and then spike right off the chart in anywhere from six months to a year. I’m thinking, that would not be such a bad thing. Bill and I went to breakfast yesterday and he ordered a side of bacon. It was about the size of a couple of postage stamps. We laughed, but it isn’t really funny. And yes, it is changing our outlook.

Over the past couple of years, we have cut our meat consumption dramatically, not out of any sense of virtue or spiritual evolution or even environmental concern but simply because 1) we can’t afford it anymore, and 2) it’s disgusting. One of the many alarming practices in the selling of meat right now (and there are so, so many) involves pumping carbon dioxide into the plastic packages to keep the meat eternally bright red, even after it has spoiled. Turns out people are less likely to purchase spoiled meat.

Go figure. Picky ass people.

At present, about half of the weekly meals in this household contain no meat, and that is likely to increase dramatically as the cost of grain to feed the meat and diesel fuel to transport the meat rises. This is not a bad thing. As Americans we know that we eat way too much meat, much of it consumed at fast food restaurants that we drive to in cars that waste lots of gas. We know that it is very bad for us. We know that it is making us fat and sick. We know that it is hurting the rest of the world.

Reducing meat consumption is not that hard, and you don’t have to run out and buy a Yurt and start wearing hemp sandals or anything like that unless you want to; all you really have to do is stop eating meat everyday. It definitely will save you money.

Here are some meals we eat regularly that even most kids like, and contain no meat: baked macaroni and cheese (I make it from scratch), spaghetti with marinara or pesto and cheese, cheese pizza, refried beans (I buy the no-fat variety) and rice, sauteed mushrooms over jasmine rice (you can sautee any veggie you happen to like and put it over rice, and it makes a light, satisfying meal), stuffed baked potatoes, winter squash with baked apples and greens, cheese quesadillas, and bread pudding with raisins.

Socialist author Upton Sinclair wrote the The Jungle in 1906. The Jungle is an expose of the horrifying practices at meat-packing plants across the US at the turn of the 20th century. Sinclair wrote it not so much to encourage people to stop eating meat, as to show the need for labor unions and humane workplace conditions. One hundred years later, as if it were Groundhog’s Day, we are right back to the same place, same dangerous exploitive workplace conditions, same filth and squalor and poor oversight. Those poison tomatoes? Almost certainly a result of run-off fecal matter from meat-packing plants.

So, do vegetarians save more money? Well, yeah. And so much more.

Lately I’ve been allowing myself to dream about life in a post-corporate world.

What would such a life be like?

I do remember, early in my own life, a time when most businesses were owned by local people, even the big ones. All the major retail shops like clothing stores, department stores, shoe stores, jewelry stores, and so forth were downtown, and everyone rode the bus to go downtown because there was no parking there except for very limited on-street metered parking.

Women dressed up to go shopping and men who worked downtown wore suits and still rode the bus. As late as the mid-1960s, there was no shame in riding the bus to town, and everyone dressed up to do it. I remember our local TV weatherman lived about six blocks from me and so, often, on my way to town to waste time window shopping and goofing off with my friends, he would be sitting on the same bus. Later the same day, I’d see him on TV on the local news, talking about the weather.

In those days, working in a department store was a real career, and the women and men who worked there were dressed up and deadly serious. Some department store clerks were so serious, they’d shoo adolescents like me and my best friend right out of the store. One department store, ‘The Frances Shop’, was frequented only by the most well off people in town. I never saw the inside of that department store, ever. I recall feeling both awe and shame when girls at my school showed up in Bobbie Brooks skirts and sweaters their mothers had purchased for them at back-to-school days at the Frances Shop.

Obviously, it wasn’t all good, those old days, but it was very different, and what strikes me today is how much more variety there was, even though stores were locally owned, smaller, and more class conscious. Today, anyone can go into Kohl’s or Penney’s or Macy’s and buy the same cheap crap available anywhere else in the country. Even big box stores like Meijer and Target and WalMart; same, same, same.

What we have today is the illusion of variety and the illusion of culture. We can go buy ourselves whatever persona we want up to what our wallets and credit cards will bear, but we will have to wait in line for our UPCs to be scanned by minimum wage employees whether we are buying Versace or Daisy Fuentes or mystery-wear from Taiwan, doesn’t matter, same, same, same. Ask a clerk a question (if you are able to make eye contact—no easy feat) and you will not get an answer. No one knows anything. Next week it will be all new crap, that is somehow nearly identical to the crap in the store right now.

The old way was painful and discriminatory. People knew and cared whose dad worked at a factory and whose dad worked in a suit, whose mom was in the PTA and whose mom belonged to a country club, who was black and who might as well be black by virtue of living too close to the projects or the wrong neighborhood. At the largest downtown department store in the northern city where I grew up, black women were not allowed to try on hats until well after Martin Luther King marched on Atlanta.

Now we can all get in our cars and drive to the mall and drop hundreds of dollars on clothes made by third world people paid pennies a day, and we can spend this money regardless of our race or our class, but how good does it make any of us feel? Not that good. And now, with the economy tanking, we don’t have the money for even this kind of empty, if equal, retail therapy.

So I’ve been letting myself imagine a post-corporate retail world populated by small shops run by blacks, and Latinos, and Mexicans, and aging hippies, and evangelical green living kids, and pagans, and Indians, and every kind of person who has a special skill, or a craft, or makes good cheese, or knows how to knit or sew. Shops run once more by real individual people, but without the societal division and hurt.

In some parts of the country, such retail communities are already forming and doing well. How wonderful would it be to know the man who made your shoes, or the woman who makes your tamales, and know them personally and say hi when you stop and buy? What if you could do what you do best and sell your goods or services to others and be fairly compensated and valued for your special talents and gifts?

Wouldn’t that be awesome?

It’s Summer Solstice today, the day when the sun pauses directly above us for the briefest moment, and the day is as long as it will ever be in the cycle of the year. Today is a very long day. And afterwards, after today, the days will grow shorter, the nights longer, it will get colder and colder by and by, until before we know what hit us winter is back and the only thing anyone is dreaming about is the sun. Where’d it go?

But today, Sunday June 22, Summer Solstice, I’m dreaming about nicer places to shop.

Once we get done falling apart completely, of course.