March 3, 2009

March 3, 2010

Fast food is not only recession-proof, it’s recession-enabled. From an AP news story last year, during the heart of the downturn:

But no matter what your financial situation, you might want to think twice (or thrice) before you use fast food as a way to stretch your budget. Why? Well take, for instance, Nonna’s Happy Meal Blog, from Baby Bites, an ezine for parents of picky eaters. Nonna purchased a Happy Meal in 2009 to “see if the claim that (it) will last for years is true.” Selected entries from this year-long relationship below:

March 3, 2009

My newly purchased Happy Meal smells yummy and it’s very colorful. I receive a PetShop virtual pet dog in a yellow plastic doggie carry-case, along with my child-size hamburger, small fries, and a soft drink. On one side of the cardboard box the meal comes in are cutouts for a pet shop window and door. What little girl wouldn’t absolutely love it? The boy’s side of the box has a Spider-Man scene. The Spider-Man side states, “Meet the spectacular Spider-Man in McWorld at HappyMeal.com and go on your own superhero adventure!” WOW what fun. As colorful as my Happy Meal is, the food is mostly colorless. French fries are made from starchy white potatoes and a hockey puck-size brown hamburger is served on a mini-white-bread bun. There’s no lettuce, cheese, or otherwise healthful topping, just a dab of ketchup and a slice of pickle.

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From UN Dispatch, a site providing “commentary and coverage on the UN and UN-related issues.”

The Somali Pirates’ Business Model

by Mark Leon Goldberg

Last week, a group of investigators dispatched by the Security Council to Somalia released an exhaustive, 100 plus page report on arms trafficking, aid diversion, and other criminal activities in Somalia… I found this short explanation of the pirates’ business model, tucked away in the report’s annex, to be fascinating:

“A basic piracy operation requires a minimum eight to twelve militia prepared to stay at sea for extended periods of time, in the hopes of hijacking a passing vessel. Each team requires a minimum of two attack skiffs, weapons, equipment, provisions, fuel and preferably a supply boat. The costs of the operation are usually borne by investors, some of whom may also be pirates.

To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this ‘contribution’, he receives a ‘class A’ share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.

At least 12 other volunteers are recruited as militiamen to provide protection on land of a ship is hijacked, In addition, each member of the pirate team may bring a partner or relative to be part of this land-based force. Militiamen must possess their own weapon, and receive a ‘class B’ share — usually a fixed amount equivalent to approximately US$15,000.

If a ship is successfully hijacked and brought to anchor, the pirates and the militiamen require food, drink, qaad, fresh clothes, cell phones, air time, etc. The captured crew must also be cared for. In most cases, these services are provided by one or more suppliers, who advance the costs in anticipation of reimbursement, with a significant margin of profit, when ransom is eventually paid.

When ransom is received, fixed costs are the first to be paid out. These are typically:

• Reimbursement of supplier(s)

• Financier(s) and/or investor(s): 30% of the ransom

• Local elders: 5 to 10 %of the ransom (anchoring rights)

• Class B shares (approx. $15,000 each): militiamen, interpreters etc.

The remaining sum — the profit — is divided between class-A shareholders.”

Wonder if they teach that at Wharton?

Click on an image to see it full size.

More photos here

Here’s a very poignant description of being in dire financial straits later in life, written by Susan Kemp on her short-lived blog How To Be Poor In America. Kemp had “gone from being a teenage welfare mother to being appointed Assistant Welfare Commissioner for my state.” Due to her health and ‘bad business decisions,” she fell back on hard times.

The Newly Poor

The single hardest part of having more debt than money to pay those debts is negotiating with the people you owe money to. I believe it is an art, a skill that you will have to learn as you’re forced to do it more and more. We’ve all heard that you should call a creditor as soon as you realize you won’t be able to pay a debt on time but that action is considerably easier said than done. When you cannot pay a bill you owe you have no leverage, no tools with which you can negotiate. This leaves you open to anything from having someone speak to you condescendingly or speak to you with open rudeness. Since I started out my adult life poor I thought I knew the rules of the game. On my way “up” I accepted how I was being treated because I believed it would end one day. Never in my worst nightmares did I think I would find myself struggling in the same way financially, at 55 that I did at 25. These struggles have led to what I call the “begging and pleading” phone calls.

These painful phone calls involve my trying to explain why I cannot pay a bill on time or in full or both. The person on the other end of the phone falls into one of two categories Either they’ve been in my shoes or they cannot possibly imagine being in my shoes. Some were kind and willing to help me find a way to keep my lights on or my phone working. There was a wonderful woman who explained the “supervisor” system of approval and that she couldn’t make adjustments to my bill but I should call back and ask for her supervisor. She also explained that this was true for practically any organization that I might call. Her advice has helped me tremendously over these difficult months. Then there are the others-professional bill collectors, in particular. It feels as if they could not even imagine being where I am financially and are fairly sure I’m probably lying to get out of sending them the money I owe. I have been verbally abused and brought to tears. I’ve received over 15 “robocalls” starting at 7:30AM on a Sunday and not ending until well after 8PM that night. I’ve come to feel that I’m being held hostage by my telephone.

I recently found myself in my cellar with a flashlight checking on how much heating oil I had left. Although my oil delivery company had done their best they just couldn’t extend themselves any further. I owed them $1000. It went down to 5 degrees here and we took turns monitoring the fuel oil level throughout the night while keeping the thermostat at 60 degrees. My daughter often says that we’re all just one relative away from being homeless and I’ve marveled at how right she is. We borrowed the $1000 from a relative of my husband and was able to get the fuel oil we needed.

There is something frightening about people who lose the very things that the rest are fighting to achieve – particularly if it’s a career or wealth or a home. If it can happen to me it can happen to you. If it can happen to you it can happen to your families or friends. I can’t tell you how often, in the face of failing health, I was asked “how I’d gotten sick.” As if there was some secret I’m withholding that would help others avoid having a stroke. I have gone from being a teenage welfare mother to being appointed assistant welfare commissioner of my State, from going with my children to a soup kitchen to a six figure salary and back to getting food from the local food bank. My most recent mantra has been “oh how the mighty have fallen.”

University of Michigan economist and American Enterprise Institute visiting scholar Mark J. Perry writes on his blog “Carpe Diem” that things really aren’t so bad.

Median priced existing single-family home in the Midwest (January 2010): $127,200

Monthly payment with 20% down payment and 5.1% mortgage: $553

Qualifying annual income required to buy a $127,200 home: $26,544

Median annual family income in Midwest: $59,961

Midwest Housing Affordability Index: 225.9%

I’m not sure if that’s a record high for Midwest home affordability, but it seems pretty amazing that: a) the typical Midwest family has more than twice the income necessary to purchase a median priced home, b) the median priced home in the Midwest is so low ($127,200), and c) it’s possible to purchase a median-priced Midwest home with less than $27,000 of household income (assuming a 20% down payment of $25,440).

That would mean that a married couple both working at Wal-Mart full-time (34 hours per week), at an average hourly wage of $9.68, would have household income of about $33,000, almost $6,000 more income than the $27,000 required to buy a median-priced house in the Midwest. Of course, the Wal-Mart couple very likely wouldn’t have the $25,000 down payment, but they wouldn’t necessarily have to buy the median priced home and they wouldn’t necessarily have to put 20% down.

With all of the talk about stagnant or declining wages, increasing income inequality, the disappearing middle class, etc. the fact that the typical household in the Midwest has more than twice the income necessary to buy a typical house suggests that it really can’t be all that bad. As I reported recently, clothing is cheaper than ever before in history (less than 3% of disposable income in 2009), and food is cheaper than ever before (9.6% of disposable income in 2008). With home prices and mortgage rates so low, it’s also likely that housing costs as a share of disposable income are also at historical lows (update to follow).

Happy April Fools!

Created at The Newspaper Clipping Image Generator.

Respect for money — physical currency, that is — just isn’t what it used to be. For examples, check here, here, and here. And now this Flickr set called Refacing Government Tender.

Click here to see the full set of over a hundred photos.

Focus, a business research company, has created a big chart of what it says are the best jobs in America. These were selected based on ratings from 35,000 workers. The top 50 were ranked based on current employment; long-term growth, pay and security; projected openings; and quality of life factors. A preview:

• Best job overall – Systems Engineer
• Highest median salary – Anesthesiologist
• Most flexibility – Sales director
• Most satisfaction – General practice physician
• Highest job growth – Telecommunications network engineer
• Lowest stress – Education/Training consultant
• Most security – Emergency room physician

Click here to see full rankings.

And now we bring you The Brokers With Hands on Their Faces Blog, no explanatory text necessary I think.

Click here for more photos of brokers with hands on their faces.

From Pink Slips are the New Black, “the blog for unemployed people by unemployed people,” comes this post about a strange job-hunting experience that ended in an ugly case of astrological employment discrimination.

A Job Interview that Made Me Go Hmmm…

I went through the most bizarre experience this week. I applied for a job Monday night and got an e-mail from the employer at 4 a.m. the next day asking me to call her in the morning. Unfortunately I had to work from 8:30 a.m. until 1 p.m. and I had a meeting at 1:30, which meant I wouldn’t be free until around 3 p.m. I wrote an e-mail telling her that, and she responded by telling me that she wanted to speak to me that day, and that she was busy at 3. I replied and told her I would try to call her.

I called her and left a message, she called back, but I wasn’t around to pick up the phone. Then she called again around noon and I pick up. Immediately she started interviewing. “I’m sorry,” I interrupted. “But this isn’t a good time.”

“Fine, call me back,” she answered, and abruptly ended the conversation.

I called her several times after, left messages asking to schedule a time, and nada.

Finally, when I tried calling her Friday morning, she picked up the phone.

Again, she immediately started interviewing me off the bat. The interview was pretty standard until she asked me, “What’s your astrological sign?”

“Gemini,” I replied.

As soon as she heard my answer I could tell she immediately lost interest in me, ended the interview and politely said goodbye. Is there such a thing as star sign discrimination? Is it me, or is absolutely weird that she even asked me my astrological sign?

Also, last time I checked, people scheduled interviews. I may not work full-time, but I have obligations, I can’t always drop everything without notice, so it’s more convenient to schedule a meeting time. I know it’s an employer’s market, but that was strange. Did she really expect me to drop everything?