And, no, the [Social Security Trust Fund] could not have been invested elsewhere. First, it would have overwhelmed the private investment markets. (Scott Burns, The “Truth” about Social Security)

What he’s talking about: The Social Security Trust Fund was a hoax even when Alan Greenspan started it. It represents money the government “borrowed” from itself and then spent.

It’s like spending from my retirement account and then putting IOUs in my wallet. Those IOUs are worthless; they are not an asset. The Social Security Trust Fund is the same thing; it has no value.

But you say, “The government could have saved the money…” Um, yeah, holding $2,300,000,000,000 ($2.3 trillion) means deflation. Then spending it down would be inflationary.

Or it could have invested $2,300,000,000,000–meaning the government owns $2,300,000,000,000 of the “private” economy. That’s called a state-controlled economy, run by the same geniuses who brought us drivers’ license offices.

Even a 50%/50% compromise is terrible: $1,150,000,000,000 in withheld cash and $1,150,000,000,000 of government-owned economy.

Social Security is, by necessity, a “pay as you go” system. There is no way to save for the future. If Social Security costs too much, then we’ve over-promised.

Belief in the Social Security Trust Fund hoax isn’t left vs. right, regressive vs. progressive, Republican vs. Democrat. This is truth vs. lying.

…it’s certainly a deterrent for me to walk down one side of the street when I see twenty yards in front of me a gang of menacing-looking thugs approaching from the opposite direction.  I’m most likely to cross the street and avoid the possible confrontation.  … However, if I were told as I walked down that sidewalk (with no thugs in sight) that some number of years after I have walked down the sidewalk, a group of thugs might be called together (after much legal wrangling and automatic appeals, etc.) and might possible menace me for having had the audacity to walk down that sidewalk on their side of the street — I probably wouldn’t be deterred.

This argument applies to any punishment far removed from the crime, including Texas’s silly “Driver Responsibility” fees. They have no deterrent effect, and they are not paying for a service.

This is simply a way that liberals and too many Republicans hide new taxes.

Mint.com’s philosophy, and biggest failure, is low effort. They want a low effort user experience, but they have a low effort technical staff: instead of finding simplified ways of doing complex tasks, they just leave them out!

For example, recurring transactions. Microsoft Money has a “bills” feature that tracks and auto-enters my recurring transactions–paychecks, investments, mortgage payment, church donation, utility bills, etc.

Sure, this is “complicated” because I must manually schedule these transactions. But it removes complexity because they are pre-entered before my monthly bill-paying session.

Mint.com doesn’t have a hint of this. It even lacks logic to suggest recurring transactions–that could have allowed them to simplify an otherwise complex feature.

Another is manual transactions. Mint.com is reactive: it only has what it downloads from financial service providers. You can’t enter transactions.

This works fine for my credit cards because I am never near my limits. But it’s a disaster for my checking account. I have no record of a check until it’s deposited!

How do you track outstanding checks, including ones that have sat undeposited for months or weeks? How do you know your true available balance? Currently, it must be some other log that you must constantly monitor and update. No way, that’s terribly error-prone!

Thanks to Microsoft Money, I have minimal checking account padding and don’t bounce checks!

Mint.com, on the other hand, requires a gigantic cash pad, loins girded for overdraft fees, or tricky accounting using other programs.

Mint.com is a fail. Its slick user interface redeems it from epic fail. But behind the user interface is a painfully simplistic system. I can appreciate the complexity of the infrastructure needed to support this system, but I cringe at how little it really does for its users.

Above, I wrote I am using Microsoft Money “for now.” I don’t know where I’m going. Quicken suffers from a kludgy user interface and Intuit’s anti-consumer business practices. Plus it can’t convert my Money data yet.

Rumor has it that Quicken 2010 will have better Microsoft Money import capabilities. I’m still with Microsoft Money for a few more months.

Time to find a new product. Argh.

Bankruptcy professor Adam Levitan justified it because new terms are cheaper to banks than foreclosure.

Um, if that’s true, why aren’t the banks doing it already? Sorry, it’s well-established that banks will do whatever they can to make money. I think they already know the most profitable decision.

Oh, and if this really becomes law, responsible borrowers will enjoy higher rates and higher down payments.

Thanks, Big Brother!

Yes, union bailout. Unions are mostly behind the domestic auto industry’s failure. They literally killed the “goose that laid the golden egg” by forcing salaries almost 60% more than PhD college professors!

$160K total compensation for repetitive, assembly line work.

This bailout is–literally–leftist Congressmen buying votes from their leftist union friends. A few supposed conservatives jumped on for flaky reasons, including “my district needs a bailout, too”; paranoia of economic apocalypse; and because they fear unionized constituents.

Generations of automaker management have failed to convert their supposed vision into quality products. That’s partly why domestics have made crap cars for decades.

But if vision is currency, unions are the eyeball gougers. When unions guzzle so much revenue, what’s left but scraps? What funds innovation? Management’s #1 fault is playing nice with unions.

Did the Senate kill the union bailout? Perhaps, but, again, the unions caused the failure: they stubbornly refused meaningful compensation concessions. Senate Republicans demanded they drop wages to PhD college professor-levels instead of medical doctor levels. Either way, union members would still be overpaid for turning a screwdriver all day.

I hope this debate causes a colossal shift in union legitimacy.

Unions have their place. I support them when they rise against bona fide workplace abuses.

But when become institutionalized, when their purpose is a monopoly on labor, when they violate our Constitutional right to free association (“closed shop”), unions are a strategic blunder. They shift broad economic focus from what makes the United States special–innovation–and instead try make us like every other gray, socialist or communist country–artificial wage inflation. That’s why domestic automakers are failing–unions converted them from innovators into a socialist jobs program.

It’s time for the auto unions to go. If the foreign automakers’ non-union employees are so highly paid, then domestics can pull it off, too.

One last note: Nancy Pelosi claims we’re playing “Russian roulette” by not bailing out her union buddies. In fact, any Russian roulette is when the bailout debt causes future inflationary pressure.

The Office of Thrift Supervision, part of the Department of the Treasury, closed down Washington Mutual (WAMU) and sold it off to Chase Bank. As of 10:58 PM CDT, the Washington Mutual home page gives no hint:

An old curse is “may you live in interesting times.”

I am cursed.

Microsoft Money Plus Deluxe

Last Wednesday, Microsoft announced the end of Microsoft Money’s annual release cycle.

I think Microsoft actually killed it. Here’s why:

1. The announcement was routed through a fanboy, not an employee. Bob Peel is a “MVP,” which really means he is not an employee and donates a lot of time to Microsoft. (As much as I like Microsoft products, I think it’s absurd to donate time to a for profit corporation.)
2. “Customer feedback” apparently convinced Microsoft that yearly upgrades weren’t helpful. I have no idea why they suddenly realized this. The microsoft.public.money news group has lambasted the annual upgrades’ minimal net value for years.
3. The current version, released in mid 2007, is Money Plus. Normally it would be named Money 2008. By removing the date, the current product’s name won’t expire.
4. Microsoft discontinued retail sales. Why would you abdicate retail sales channels to Quicken? Because your product is dead. All future sales will be over download channels.

I suspect Money was unprofitable. The frequency of and poor added value of upgrades suggests that Microsoft’s true goal was milking the revenue out of a dead product. Money Plus is so long in the tooth–it’s slow, its database is terribly inefficient, and it doesn’t work well with other products–that it needs a huge rewrite.

What’s in store for Microsoft Money? Probably nothing, at least not anything I can install on my computer. If it has any future, Money will probably morph into a web site. But knowing how poorly Microsoft does web products, don’t hold your breath.

My recommendation? The desktop version is dead, and Microsoft sucks at online services, so explore alternatives.

Quicken is more primitive than Money, but Intuit promised major enhancements for the upcoming Quicken 2009. Barring that, there’s online services like wesabe.com and mint.com.

1. DECEPTION: It’s not $15 as advertised. It’s $15 each way. That’s a whopping $30 tax for the vast majority of passengers.
2. DISHONEST: It’s not upfront. All costs incurred by the vast majority of passengers should be upfront and non-hidden. Otherwise, it’s much more difficult to do an apples-to-apples comparison of competitors. Orbitz and Travelocity won’t be able to tell you that American Airlines will cost $30 more than listed. (This is a big reason why service industry loves tips: lets them create an illusion of lower prices.)

In a lengthy missive, AA’s PR chief Tim Wagner claims this is necessary to recoup costs. Sorry, Tim, nothing justifies dishonesty and deception.

My wife and I may both fly this summer. Even though we will be reimbursed, we are doing whatever we can to avoid American Airlines.

Think about it: the late ’90s was the stock bubble, the early to mid-2000s were the residential real estate bubble, and now the late ’00s is a commodities bubble.

Remember the “goldilocks economy”, where everything was “just right” for growth? When that bubble popped, investors turned to the perceived safety of real estate, which in fact had been appreciating well for a few years. I remember representatives of the National Association of Realtors analysts ridiculously explaining away the bubble by exaggerating long term demand.

The popping of the real estate bubble was perceived to be so economically influential that investors ran for traditional “bad times” commodity hedges. Now we have oil, food, and metal prices that are likely far above prices justified by market fundamentals.

Seriously, is there enough sudden new demand across so many commodity categories as to drive up their prices so sharply in the past few months? I can’t see any. For once, I believe OPEC: world oil markets are sufficiently supplied. And sure, the number of mouths to feed and per-capita food consumption are increasing, but enough to suddenly cause a global food crisis?

If I had money to speculate, I would short sell commodities with a two year time horizon. I just don’t see this commodity bubble lasting, especially as the dollar appreciates and investors become interested in less speculative investments.

That being said, some long-term trends are undeniable. Oil has nowhere to go but up over the decades. But in the immediate term, I don’t see how current prices are justified.