Ten Things to Ponder About the Current Recession

1. Anyone who does not want to risk his money should not put his money in the stock market. Yes, yes, I know all the statistics about how the market performs over a fifty year period. But let me tell you about a woman I know who is long past retirement age. About a year ago she got a final settlement of $100,000 from her ex-husband and she was complaining that it was now only worth $56,000. How is that possible, I asked her ....

I had assumed she put this money in a bank. She told me she had put the money in a money market fund and that it had gone way down and she was going to take the money out. I gather she didn’t know, or her broker neglected to tell her that the instrument into which she put her money was, as the name implies, in the market. Some instruments of this type available at your bank are insured by the FDIC. Hers was not. In these uninsured funds your NAV (Net Asset Value) is not guaranteed. You could blame this mistake on a clueless old lady, but I heard someone as intelligent as journalist Bill O’Reilly say recently that his market investments of the past seven years have been wiped out in the last two months this should not be allowed. Unfortunately it is his tough luck. Market fluctuations are not against the law.

2. Want to be sure the Net Asset Value of your cash does not go down? Put it where your assets are insured. Risk/reward ratios mean that when there is a higher reward, there is a higher risk. Lower risk, lower reward. Among the least risky things you can do with your money is to put it in a bank. The reward will thus be lower. But unlike my friend, you will not look at your statement one day and see that your savings has dropped in value by fifty percent.

3. What if the bank fails? If a bank fails your savings are insured by the federal government up to $250,000.

4. What if the federal government goes broke? If the government fails, then we’re all up a creek.

5. If your company has a 401k program and they will match some of your contributions with stock, there is risk in counting on this as your only retirement plan. Yes you get a tax break for participating. But you might put some pre-tax money into a program like this and use some post tax money to invest elsewhere. Yes, you will pay taxes on any interest you garner, or any profits you make. But which is worse: paying taxes on a capital gain, or having nothing to retire on?

6. Beyond the ignorance that has surrounded the stock market: there are a lot of crooks to blame for the current mortgage and credit meltdown. President-elect Obama should promise to put the culprits in jail. The bad guys in this deal are in the American establishment, and they make Martha Stewart’s crimes—for which she went to jail—look like a taffy pull. If President-elect Obama doesn’t make these people pay for their crimes, he will not serve a second term.

7. Those guys who win Nobel Prizes in economics don’t know any more about solving the problems of the recent world-wide economic challenges than you do. If they did, one of them, prize in hand would have knocked on the White House door, handed in his Einstein-like equation, and presto change-o all would be put right. There is no quick fix. Anyone who says there is, is someone you should definitely avoid voting for.

8. Want to help America cut the trade deficit? Stop buying goods from countries that dirty the earth’s air and water. I’m reminded of a drive I took from the airport to the center of Sao Paulo, Brazil. I think about it now because Brazil is being held up as some kind of paragon for running its cars on the ethanol it produces itself. Yes, that’s great. But take a look at the “river” beside that Sao Paulo highway one day: it is a cesspool. It is filled with sludge and refrigerators. Imagine that times about 100 in the far-more-populous country of China. Until the developing countries can show us that they have an investment plan to clean up their environments, we cannot call any trade with them “free.”

9. This is a really big recession but it is not the end of the world. Keep a clear head, tighten your belt, and forge ahead. Our parents and grandparents lived through some very bad times, from the Great Depression to World War II. They managed and so can we. What? We’re going to weep for ourselves because we can’t buy the latest flat screen television (built in China, most likely). Come on, get real. Stop thinking of money as something magical that other people know more about than you do. Stop investing it with con men and wasting it on things “everybody” has to have. We could all cut back on fast food and walk a little more. And maybe we could help out someone less fortunate while we are at it.

10. If things get really tight in your family, run for office. Members of the U.S. Congress have the best retirement and health plans in the known world. Heck, I just read today that the President (salary $400,000) and his family don’t have to pay anything for their prescription drugs. America is supposed to be a citizens’ government. Build yourself a Web Site, start raising money and go for it. Consider it your own federal relief plan.

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My Father’s Wisdom: Laughing Through the Tears

When you have a beloved parent with a disease like Alzheimer’s there are plenty of moments for tears, so you have to enjoy the laughter when it comes. My sister is out in California taking her turn at watching the old folks and her reports on her adventures always leave me laughing. She writes:

“I believe in using things up and being conservative, but a rubber band around the finger of a rubber glove? Yikes! Then there was the best dinner ever made—two pieces of toast: one with peanut butter and jam and the other spread with cold chicken soup. (We each could have two pieces of toast. It wasn’t two pieces for the four of us.)” At the age of 87, my mother is still very determined not to get fat, so she organizes these "light" dinners after they’ve all gone out to a big lunch. And about the rubber gloves? Her obsessive thrift means she isn’t contributing much to those landfills everybody is worried about.

Because my father is incapacitated now, my sister and I have had to play Sherlock Holmes and Watson to try and sort out our parents’ finances. My father was a wonderful planner for my parents’ future and he diversified his portfolio exceptionally well. He reckoned without my mother’s total lack of interest in finance. Their income is good and she’s still able to write the checks for the electric bill and other expenses, but she has no idea where Dad stashed the reserve funds nor how to get at them when she needs to, nor why she should care! So, as Sherlock Holmes, I sit and play my violin and think up ways for us to follow the treasure map and then I assign my Watson (my sister, the best snoop sister around) to sneak a look into a certain set of files in a certain room I designate back at the old homestead and off she goes, revolver in hand. Her first report from Baskerville Hall, I mean from 911 Echo Drive, was thus: “Mom is her Energizer Bunny self—I don’t know how much snooping I can do.”

In the end, tucked inside the cardboard lining of a blue binder, she did find the list Dad made, before he became ill, of his assets totaling his net worth. The assets are scattered throughout the San Francisco Bay Area (and the nation for that matter) in banks and insurance companies and investment firms—some of which have changed hands several times since he made his list in 2001. He was so smart: he also bought rental property, which will continue to support them even if his other investments tank along with the recent economic downturn. One insurance policy he bought turned into an annuity after a certain number of years transpired without his death. My Mom told my sister with some surprise that an insurance check had appeared all of a sudden in the mailbox this month and it turns out that his policy is the source. Now that we have the list of assets, Sherlock and Watson will have to spend some time going down the list, investment by investment, to find out what the money has been doing for the last seven years. At least we have a place to start.

Dad has changed a lot since the onset of his Alzheimer’s but one thing about him hasn’t changed: he hates to sit around. On my last visit I would take him on drives because I know he likes to get out and I myself love traveling the back roads of the Santa Clara Valley. One day we headed up Moody Road to Skyline Boulevard at the top of the Coast Range. For some reason, my Dad had it in his mind that we were going to the library, though I had told him several times we were just going for a drive. As we headed up into the hills he said, “This is a funny way to the library.” And later, “Oh, we must be going to the library at Foothill College. I didn’t know we had a library card to Foothill College Library.” And finally; “Well this is the darnedest way to the library I’ve ever seen!” He’s completely deaf, so I couldn’t write down where we were going until I could find a place to pull over, not an easy thing to do on a windy road in the foothills of the Coast Range. When I was able to stop and write to him he was pleased we were off on an adventure and began to complement me on my driving. It is something he was still doing a month later during my sister’s visit, though he couldn’t, at that moment, remember my name:

“Of course he spoke of that girl who drove so wonderfully in the mountains—turning smoothly, stopping gently on that dime and never getting lost—so impressive a driver that the policemen were impressed by her prowess behind the wheel. Wow!”

Dad also described to my sister something he called the Brown Chevrolet Brigade that guides drivers to their correct freeway exits. We’re not sure where this comes from, except that Dad and I and his caregiver drove the I-280 freeway to San Jose Airport on my last visit to return a rental car I had. We drove in tandem so I could have a ride back and from this his mind may have invented his Brown Chevrolet Brigade Roadside Assistance Program.

It can leave you in tears if you don’t laugh about it occasionally. Here is a man who all his life lived for others, who was intellectually curious, who was fit, who was principled, who went to church and tithed, who did his duty, who loved his family and his country and who now, at the end of his life is rewarded with this disease that steals away his mind. I would cry. But when I was small and found myself in tears, my father would pick me up and say, “Don’t cry Robin. Don’t you know that tears turn to water vapor?” And it is ever thus. We are all just here for a moment and then are gone. We are all just vapors in the midst of transmutation. My father knew it long ago.

I'm Going to Need More Than a Dime