Housing Bust = Higher Rent

As the housing market fizzles, rents are on the rise.

According to a recent Business Week article, Cautious Buyers Squeeze Rental Markets, during the past three months rents are up across the country. The highest spike is 3% in San Francisco for an average rent of $1757. It's not not much brighter here. In NYC it rose 2% so far this year, for an average rent of $2657.

Of course, if renters are really paying attention to the housing market, they might want to look at what's happening in their own recently gentrified neighborhood- because if prices fall the competition for that 2BR rental is going to be fierce.

Credit Crisis: A Who's Who Guide

The San Francisco Chronicle recently listed A Rogues' Gallery of Credit Crisis, for those of us confused as to who, exactly, is burning down the house of cards.

My personal favorite;

Wall Street's Nero: Bear Sterns' gruff ex-CEO James Cayne made a big bet on the mortgage market and then fiddled around at bridge tournaments while his company burned through billions of shareholder value. JPMorgan Chase & Co. steals the company once worth $169 a share for $2 a share after it helps with the government bailout.

It mentions Greenspan as the "Ultimate Fall Guy", but I'm not so sure about that. I need to finish reading his book, and maybe brush up on some economic theory (who said life is without its small pleasures) before I get off the fence on that debate.

Saner Savings

Forbes has a recent article, Seven Steps to Saner Savings, that lays out the different ways an individual can save for retirement.

There's little question as to if one wants to save, it's a matter of in what account?

"Most investors ignore the asset-location issue. They fail to recognize the significant impact of placing the right assets in the right buckets," says John Nersesian of Nuveen Investments' Wealth Management Services. General advice: Use taxable accounts to hold individual stocks (these present better opportunities for loss harvesting) and index funds or exchange-traded index funds that don't throw off much taxable income. Put your assets with the highest growth potential in a Roth. Taxable bonds and REITs belong in a pretax 401(k) or IRA; the income they generate is taxed at ordinary rates anyway, and this way the tax is deferred. Also good for your pretax 401(k) or IRA are assets that generate short-term gains, which are taxed at ordinary income rates--stocks you trade a lot and actively managed small-company or international funds.

Phew! The article breaks down each vehicle, from a 401k, to a Roth, to a taxable account (ie brokerage account such as Sharebuilder). It's one of the shortest guides I've seen, and pretty easy to digest.

Warren Buffett's FICO Score

I can't find a link, but the latest issue of Fortune has a blurb on Warren Buffett's FICO score. The moneymaker billionaire extraordinaire has a score of 718.

If that seems a little low, it's because it is. In fact, it's lower than mine (!), and a hair below the US median score. Apparently, there's some false info on his report; 23 missed payments on a $295 loan. Okay, first of all, who takes out a $295 loan? Oh wait, it's from an HSBC branch in Las Vegas. But that still leaves us with another big WTF.

This is a man who recently ousted Gates from the number one spot as the richest person in the world, with a net worth of 62 billion. I'm sure that when it's all said and done, he pays his bills on time. He certainly pays his shareholders on time. And yet the missed 23 payments A) don't get flagged and B) somehow bypass his borrowing power (presumably one of the purposes of a FICO score to begin with), the likes of which could buy and sell Fair Isaac & Co. on a morning caffeinated whim.

A FICO score just might not be the litmus test for financial risk. If a mistake is hurting Buffett's score, I can only imagine what it's doing to ours...

Spending $100 million

I've been missing in blogging action this week, so my apologies. I've been too busy spending $100 million in fantasy baseball. Yes, you read that right, I love playing fantasy baseball. Some people knit leg warmers, others make those glass bottles have wee wooden ships. I, however, act out my fantasy of owning the New York Yankees, apparently by overspending. Let me tell you, I give props to those small market teams because this is hard, and clearly overtakes my life. I think I even lost weight, now there's a minor miracle.

Now that you have read absolutely nothing relevant to finances, know that I'll be back next week ( I'm off to Boston for the weekend). For those who celebrate it- Happy Easter. And for everyone dying for the heels of summer to kick us in the pants, Happy Spring!

... Oh, wait, I do have relevant information! The piss poor economy is stunting overdevelpment, in particular the Atlantic Yards in Brooklyn. See, not all bad news is, well, bad.

SNL - Suze Orman Show (2nd attempt...)

SNL - Suze Orman Show
Uploaded by stephen2417

Shop 'til you Drop- A Lesson in Math

Barbara Ehrenreich's article at The Nation, The Fall of the American Consumer, is a requiem for the world's number one economic piston.

While Americans search for interview outfits in consignment stores and switch from Whole Foods to Wal-Mart for sustenance, the world watches tremulously. The Australian Courier-Mail, for example, warns of an economic "pandemic" if Americans cut back any further, since we are responsible for $9 trillion a year in spending, compared to a puny $1 trillion for the one billion-strong Chinese. Yes, we have been the world's designated shoppers, and, if we fall down on the job, we take the global economy with us.

Wow, nine trillion dollars. Let's hazard a guess and say there are approximately 217 million Americans 19 and older. That's an average of $41,475 in spending per year per adult; that's a lot of spending. Of course, it's not an accurate illustration for obvious reasons (adjust the number for age and class), but nine trillion is too hard a number to comprehend. Our consumer spending is about 70% of our GDP, a standard measure of the size of an economy.

GDP = consumption + gross investment + government spending + (exports − imports), or,
GDP = C + I + G + (X-M)

Don't say I never told you nothin'!

Well, patriot that I am, I'm going to an outlet mall with a friend on Tuesday :)

The American Euro

Clive Cook has an article over at The Atlantic, The End of the American Exception, that takes a look at how America (the US, sorry Mexico and Canada) is becoming more and more like Europe.

He concentrates first on universal health care, something that seems to have been standard in Europe since Madame LaFarge stopped knitting.

"Europe" is a gross simplification, so think about Britain—which continental Europe regards as a mid-Atlantic offshoot of the United States—and, say, the Netherlands. U.S. taxes are 27 percent of national income, British taxes are 37 percent, and the Netherlands' are 39 percent. Recall that America spends fully 10 percentage points of national income more than Britain on health care, public and private combined. Suppose the bulk of the existing costs of U.S. health care eventually migrated to the public sector, and nothing else changed, American taxes would have to approach or exceed British and Dutch levels.

It's a short article, but he goes on to compare unions (noting that one just shut down Hollywood and the television industry for months, something that a European union wouldn't have the power to do) and regulation (noting that Sarbanes Oxley is the most stringent in the world).

As both Europe and the US approach the center, he calls an end to the idea of "American economic exception"-- something I think is a little premature. American capitalism will always be the nexus of nationwide social policy; basically, if it doesn't effect big business, it has a chance, but if it does- prepare for a long fight and maybe even death. However, like our democracy, I think the whole point of America is to move to the center. But maybe I'm being naive. I still think it's apples and oranges. America just has a long historical march towards its ideals, and its institutions are slow to follow.

I will say this, the dollar has certainly plummeted into a reversal of US-European roles!

cool map courtesy of Bill Rankin at Radical Cartography

Keeping Credit Cards Active (by giving away money)

A few months ago HSBC sent me a letter and informed me that they were closing my account due to inactivity. I was shocked. In the end, it wasn't a big deal because I had too many cards and was in the middle of closing a few. HSBC was on my hit list. However, it did make me worry about my other cards closing my accounts.

Since I only use one card and pay it off in full each month, I forget that my Citibank has been unused for months. After a little googling around I learned that HSBC, Chase, and Bank of America have been known to close accounts due to inactivity. Sometimes an inactive card might be your oldest, and therefore a jackpot number in your credit score. Credit card companies closing accounts willy nilly can have some serious consequences.

So last month I did some research at Charity Navigator, along with a few charities I already support, and put my previously inactive credit cards on automatic monthly contributions. I'm not sure if charging ten bucks a month will prevent them from closing the accounts, but it's not exactly like they're handing out credit cards like they used to, and I've grown fond of my credit score.

Eliot Spitzer's Moral Hazard

I cannot believe New York Governor Eliot Spitzer!!! (before you read further, just know that this post contains alot of foul language, but I'm pissed) The NYT first broke the story this afternoon, Spitzer Is Linked to Prostitution Ring.

Are you kidding me?! Seriously. Your wife wasn't enough for four years? Is that too much to ask? Ohhhh, noooo. You win a landslide victory on a platform of bringing ethics back (as if it came and left) to Albany. You scored major victories for the little guy against Wall St. when you were NY State Attorney General (when the news hit the New York Stock Exchange this afternoon, the floor erupted into cheers). And like a sucker I believed in you. Just like a sucker I believed in Bill Clinton. Clearly, I must have "sucker" imprinted on my voter registration card.

And I cannot even imagine what Silda Spitzer is going through. It's 2008 and we get to watch an incredibly smart woman stand by her man, from sacrifice to humiliation, yet again.

This is what I don't get, all politicians know that to sleep with a prostitute, an intern, a man in a bathroom stall, a staffer, basically anyone but your wife-- is to commit political suicide. You're a big important man (always a man), President of the United States, a US Senator, a Governor of a big state with a big city, and in all likelihood you're Ivy League educated and filthy f*cking rich. So what the hell? Is it that everyone does it and only a few get caught? Or does political power and privilege, I'm talking the upper echelon of it, create a moral hazard simply because it is what it is-- powerful?

According to Wikipedia, "Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk" For example, many people believe that to bailout subprime would create a moral hazard; that the industry would take on more risk simply because there was precedent of having been rescued from its own royal f*ck up. Not a grammatically taut sentence, but you get the picture.

I'm obviously not a politically powerful person, so I don't know. But the thing I keep on coming back to is what was he thinking??? He did more than f*ck a prostitute, he f*cked over New York. New York state had a real chance to come out of the dark ages, from the prison population to the SUNY population to the waterfront in Buffalo to the first Democratic majority in the NY State Senate in 30 years, Spitzer had the power to make real change, the kind of change this lifelong New Yorker could only dream about. And he threw it the f*ck away.

photo by aboutmattlaw via flickr

Tori Spelling's Credit Card Problem

Never thought I'd have a blog title like that... But last night I was channel surfing and paused on 20/20's interview with Tori Spelling. I have no idea why, I kind of can't stand her, in the obtuse sort of way a person can be with a celebrity (as opposed to my mail lady who crunches up my netflixes in my mailbox, that dislike aint obtuse), and I never watched Beverly Hills 90210. Ok, I watched it occasionally, but not on the regular. But there I was, glued to the interview.

Why? Well, because I couldn't turn away from her money problems. Yes, Tori Spelling has/had a credit card problem. When asked why she almost filed for bankruptcy, she replied with a contained smile, I had a bad shopping problem. Like hundreds of thousands of dollars on credit cards kind of shopping problem. Her dad cut her off financially (minus the almost million dollar inheritance she poo-poohs), so after she left 90210 she had to go out and earn more money to pay off this several hundred thousand dollar credit card debt.

You know what? Well boo-hoo for you. I would love to just go on the Home Shopping Network and hawk wee chopping machines with 85 attachable blades in order to pay off my student loan. But noooo, I slung drinks in the East Village for too long. Sigh. And yet, it is an effort not to feel sorry for her...

photo by NYCArthur via flickr

Economy Sheds Employment Numbers

For the very few left in the back seat saying Are we there yet? regarding a recession, this morning the government released a bleak jobs report. In the Times' report, Economy lost 63,000 Jobs in February, an economist said, "I haven't seen a job report this recessionary since the last recession."

The private sector lost 101,000 jobs last month, the biggest drop-off in five years. Retail, construction and factory jobs were hit hardest.

...Wages grew more slowly, further depressing the outlook for consumer spending over the next few months. Among rank-and-file workers — more than 80 percent of the work force — average pay grew just 0.3 percent to $17.20 an hour. Wages are effectively running flat when adjusted for inflation.

News travels fast. The dollar has already dropped against the Euro even more, creeping to $1.5459 per euro.

For people in the restaurant biz, it's a mixed bag. I was at Gotham Bar & Grill for lunch the other day (business meeting, not on my weakened dime), and it was dead. I'm sure, however, they are busy for dinner. The Chinatown hand pulled noodle shop under the Manhattan Bridge, however, was packed for lunch yesterday. Uniqlo, the Japanese clothing retaliler on Broadway, was dead. The streets of Lower Manhattan? Filled with European tourists. I'd be interested to see how this will pan out in the city. The true test will be how long the wait is tonight at Lombardi's. I'll keep you posted.

February Net Worth

Egads. $26,566. Sigh. At least I'm buying low...

There were some health related expenses, so a bite came out of the ING. On a positive note, I picked up some extra freelance work, so that should replenish the savings account a bit next month.

It's been a pretty frugal month. I definitely feel like all the bad economic news has prevented me from doing stuff I used to do-- like go to the movies. Every week I would walk to downtown Brooklyn's big movie theater and see a matinee ($7.50!) and get free popcorn on Tuesday. Instead, I've overworked our Netflix queue and have marched M to the mailbox after midnight to make next morning's pickup. I've done my freelance writing in the Brooklyn Public Library instead of the local coffeehouse. I dropped $40/month off the phone bill and lowered the cell phone by $10/month. And I've tried not to eat out so much. Maybe once a week, at most. Then there's the iTunes Dependency Syndrome, the pièce de résistance of my mind's disorderly buffet. (clearing throat), excuse me, now, while I go download the soundtrack from "Into the Wild"...

Carnival of Money Stories: Edition #49

It’s that time of the week, Carnival of Money Stories! PiggyBankBlues is proud to be doing this for the first time, and it was a lot of fun to read some great bloggers. Thanks to everyone who contributed!

MONEY and RELATIONSHIPS
How I Save Money brings up important reasons why married couples still need separate accounts. In the meantime, I’ve Paid Twice For This Already has a great post about The Epiphany- that lightbulb moment in relationships concerning money, when the glare hurts your eyes but you finally see the picture, also shared by Iowahippiechick. Over at Being Frugal, she writes about The Evolution of My Budget, part of a series of posts on what she’s learned from her budgeting mistakes.

TRAVEL
Me, My Kid and Life has a great post on seeing one of my favorite cities, Barcelona, on the cheap. Another favorite city, Venice, is given the frugal budget breakdown over at Less Than A Shoestring.

FRUGALITY
Stop the Ride! has The Story of Two Kitchens, breaking down when to invest in a remodel or a makeover. Speaking of kitchens, FIRE Finance shares Top 5 Ways to Trim Our Grocery Bills. Save even more money with Money Blue Book’s How to Get Free Stuff By Using Drug Store Rebates. And for those who live with truly four seasons, Free Money Finance posts on his struggle with snow The Economics of Snow Removal. As someone who grew up in Buffalo, NY pre-global warming, I can relate! College of Cash laments that Sometimes I Hate Shopping, while Make it Better makes the case to Free Yourself from American Consumerism altogether. My Family’s Money shares a personal story on why Foreclosures Are Not Cheap.

INVESTING
DebtFREE-Revolution has words of wisdom after making a Common Newbie Investing Mistake Meanwhile, The Financial Engineer asks a friend What would you do with $100,000?, and is stunned by the answer. The Digerati Life has an excellent post on Learning to Invest: The Education of a Long Term Investor, a ballast of information during a time of rocky economic forecasts. Living Almost Large asks Can You Be Content?, and looks at just where lifestyle and financial freedom intersect. Over at The Great Money Challenge, a case is made for Why My House Is An Asset.

CREDIT CARDS
But WHY Doesn’t It Grow On Trees (great blog name, btw!) got a nice present in the mail from a credit card company- Credit Magnets! Meanwhile, Diary of England points out that Britain Credit Capital of Europe, with twice as many credit cards as their European neighbors, yikes! Over at KCLau’s Money Tips, thoughts on Credit Cards: From Foes to Friends.

THE ECONOMY
Head over to Fire Dog Lake for a great post on Why Financial Crises Will Keep Happening. Meanwhile, The Personal Financier asks the hard questions, like How Does It Feel Like to Lose Over $50B?

WORKPLACE
Before you knock on your Boss’ door and ask for more money, you might want to check out My Dollar Plan’s post on Negotiating a Raise. Over at Funny about Money, a blogger reveals My Bartleby: Stress as Loan Interest.

And last but not least, I leave you with a bit of poetry, The Loan Poem by Mad Kane’s Humor Blog

Lot's of great stuff, hope you enjoy :)