Parents Gone Wild

Well Papa go to bed now, it's getting late
Nothing we can say can change anything now
Because there's just different people coming down here now and they see things in different ways
And soon everything we've known will just be swept away

So say goodbye it's Independence Day
Papa now I know the things you wanted that you could not say
But won't you just say goodbye it's Independence Day
I swear I never meant to take those things away                                                  

                                  Bruce Springsteen 1980

“Hey, how's it going?  Haven't seen you in a while.  How are you guys doing?  Great, we’ll have to get together soon. You know, I'm glad that I ran into you.  I've been meaning to talk to you.  We've been friends for a while now, you mind if I talk about something personal?  Good.  It's your son.  I've watched him play sports a few times.  He's absolutely amazing.  He is so far advanced beyond the other kids it's not even funny.  His hand eye coordination is exquisite.  He’s quick as a cat.  He's bigger, stronger, more aggressive, and simply better than the other kids.  He sure looks like a prodigy to me.

So let me be the first to tell you… your son has absolutely no chance of becoming a professional athlete.  Zero.  Nada.  Ain’t gonna happen.  In fact, neither your son or any friend he ever makes in his lifetime will ever make a dollar playing sports. 

The odds of anyone becoming a professional athlete are about one in 25,000. And that's defining a professional athlete broadly, including minor leagues, smaller sports, etc.; in other words, sports that don't pay well.  If you’re talking about making the big bucks in sports like football, basketball, or baseball, the odds are simply off the charts low. First, you are no longer just competing with people from the United States, with a population of over 300 million.  All the major American sports are seeing increased numbers of foreigners, so that you are now competing with the global population of over 6 billion.

Also, have you looked at yourself? What are you, about 5’10”? And what’s your wife, about 5’4”?  Take a look at the rosters of some pro sports teams.  Just about everyone is way over 6 feet tall, even sports that you wouldn't think that you need a lot of height, like baseball.  Since you were an athlete back in the day, you know that if you take two athletes equally skilled the bigger one always comes out on top.

What? You want your kid to earn an athletic scholarship? Well, the odds of that are pretty low too, and be careful what you wish for.  The school offering the scholarship may not be you or your son's first choice.  Also, when you play a college sport, they own you.  Most practice hours a day, in addition to their academic requirements.  I've talked to a few people who played college sports, and some wished they would've had more time to have fun like normal college kids.  Also, what if your son gets into an Ivy League school?  They don’t even give out athletic scholarships.

What did you say? You want your kid to be an Olympic athlete? Okay, now you're just trying to make me angry, right?  If you want to wake your kid up at 5 A.M. every morning and practice hours and hours before school, and have him resent you forever for not having a normal childhood, then I think it's a great idea.  Also, in the miniscule chance that your son becomes an Olympic athlete, who cares? Except for Michael Phelps, can you name any Olympic athlete in either the summer or winter games?  We all watch for two weeks and then we move on.  Seriously, it's okay.

Look, I'm not saying don’t expose your son to sports.  I'm no expert in raising children; in fact, anyone who considers themselves an expert in raising children is suspect in my book.  All I can tell you is that I liked how my parents raised me.  They told me that my one job was to do well in school, and how I spent my free time was up to me.  Expose your kids to everything, force them into nothing.  The funny thing is, I was that kid that just wanted to play sports all day.  And my parents let me.  I wanted to play in leagues and they let me.  They gave me piano lessons but I didn't like them, so they didn't force me to continue.  Nothing was rammed down my throat.  I love them for that.

So old friend, relax.  I don't mean to get you down.  I saved the best news for last.  From what I've seen, your boy is a really smart kid.  I'm guessing he's going to make some serious coin in his life, far more than is made from a pro athlete’s six year average shelflife.  His potential is unlimited, and I’m sure you will provide the framework to unlock it.  Anyway, great talking to you, but I gotta run.  I Tivo’d the Lakers game.”

Have a good night everyone.

                                                                   JR

Debt Catastrophe II

This is the end
Beautiful friend
This is the end
My only friend, the end

Of our elaborate plans, the end
Of everything that stands, the end
No safety or surprise, the end
I'll never look into your eyes...again

                                       The Doors 1967 

After my blog about how the government's debt situation was going to financially cripple us, my brother Jack reminded me that I promised a follow-up explaining what the options were.  Although I wrote at the time there were two options, there are actually three possibilities:

We  default on our debt.  The odds of this happening are slim and none, and slim just left town.  Doing this would of course have some negative consequences.  Just like an individual that can't pay back their debt, their credit rating collapses and borrowing any money is either impossible or has to be done at an exorbitant rate.  Similarly, if the United States government defaulted, nobody would be willing to lend us money at the sweetheart rate we’re getting.  As I discussed here, if the interest rate goes up our cost to pay back our debt eventually makes doing so impossible.  Individual interest rates on our purchases, like for a home or car, would also spike.  Further, we would lose credibility as a financially sound country that always lives up to its obligations.

However, there would be some positives.  We would wipe out a lot of debt.  We would bring sanity back to the free market system that says lending money is inherently risky.  Free markets are not an insurance system; risk can only be adequately measured when it actually exists.  If individual interest rates rise, it's true we couldn’t borrow money as cheaply, but we could actually earn real money on CD’s.  This would lead to less speculative investing and less bubbles.

But it's never going to happen. Why? As the former Fed chair Alan Greenspan infamously stated a few months ago on one of the Sunday morning TV shows, we won't default because we have a printing press.  In other words, he was saying we can just print money out of thin air and pay back our creditors with that.  This is one of the most asinine comments ever made, at any time, by anyone.  Of course we have a printing press.  So does every other country.  Anyone can come up with a machine, some ink, and paper.  Printing money blindly ultimately leads to a serious case of inflation, as discussed here.  I'm not arguing that we  are going to have hyperinflation, like in pre-World War II Germany or in Zimbabwe (in the latter, children would rummage through dumpsters looking for food , ignoring the worthless currency that had been thrown away).  But it is this dovish way of thinking that has led us to the position we’re in now.

We get our financial house in order and massively reduce our expenditures.  I will tackle in another blog whether we should raise taxes, but even the liberals agree we have a major spending problem.  The odds of Congress doing this are slim and none, and they're hanging slim at high noon.  For starters, what do you cut? As discussed here (really wearing out the hyperlink today, I’m like a kid with a new toy), approximately 85% of our spending comes from the military, Medicare/Medicaid, and Social Security.  Nobody is going to seriously cut Social Security, either by paying out less or increasing the eligible age, because nobody wants to make senior citizens angry.  They vote at a higher rate than any other demographic, and the quickest way to an early retirement from a cushy political life is to have the seniors against you.

As to the military, any Congressman who mentions any cuts to the military is accused of being liberal and not adequately protecting our security.  Never mind the fact that we spend more on our military than every single country in the world combined.  Any discussion of reduced military spending is met with stiff resistance.  No politician wants to be thought of as weak on the military, just like no politician wants to be thought of as weak on crime.  Toughness is a virtue.

As to health insurance, this is a bit of a wildcard.  The trend now, at least with Obama as our President, is to greatly expand the reach of healthcare.  Although this could change if the Republicans take the presidency and both houses of Congress, don't hold your breath.  Medicare and Medicaid continue to grow regardless of which party is in control.

We print more money.  This will be one of the causes of the upcoming depression, but this is what I think is going to happen.  I rate the odds of more money printing at 95% to 100%.  Here's how I think it will play out: 

Without free government stimulus (money printing), the stock market will slowly drop.  Home prices will continue to go down and the jobless rate will start rising from the current 9.1%. Our Fed Chairman, Ben Bernanke, will panic.  He will feel like he has to do something.  He will do the one thing that he's good at and that he intellectually believes in; printing money.  He is a true Keynesian who is considered a depression expert, with his thesis being that lack of government stimulation is what caused the Great Depression.  The brilliant Bernanke won't ever let the United States make the same mistake again.  Also, he has an incestuous relationship with Obama.  The Federal Reserve is supposed to be independent of the Presidency.  Under these two geniuses it's been the opposite. Obama will put pressure on him to do something.  As he's already lowered interest rates to practically zero, Bernanke will shoot the only bullet that he has left; a third round of stimulus.

My next blog about money will actually have something useful in it, how to make a fortune off the coming depression.  Have a good night everyone.

                                                JR

Generational Jealousy

I was dreaming of the past,
And my heart was beating fast,
I'm just a jealous guy.

John Lennon 1971

I'm jealous of my kids.  Not in the traditional sense, that I want to take something from them and make it my own.  Like most parents, I want my kids to have everything and far, far surpass me in every way possible.  But over the course of the last few years I have recognized one undeniable fact; it's much better to be a kid now then when I was growing up more than 30 years ago.  It's not even close.  Everything is better now.

Take school (My 3 in school are 7, 5, and 3).  I remember school being basically boring.  You sat down, you stared at a blackboard, you got good at rote memorization.  You looked obsessively at the clock waiting for recess.  That was pretty much it.  Today? As one of my sons’ teachers put it, to them everything is play, they just don't know it's really learning.  In other words, the schools have learned techniques and have technology to more efficiently teach children, while at the same time doing it in a fun filled, interactive environment.  Chalkboards have been replaced.  In their place are smartboards with addictive video and color, like a videogame.  Computers are everywhere, filled with learning software that is also a game.  Instead of having to stare endlessly straight ahead, rooms are divided into stations where different subjects are taught.  (By the way, although the particular school my kids go to is GHA in Atlanta, I will hopefully assume other schools throughout the country use similar methods).

I went to a Jewish day school from grades 1-8, and learning Hebrew was taught like any other course.  Neither myself or any of my friends were remotely close to fluent when we graduated.  I probably knew less than 100 words.  Today the school immerses the children in Hebrew.  Even simple instructions like “class, turn to page 10” are spoken in Hebrew.  Yeah, I’d say my kids will know more than 100 words when they graduate.

How about birthday parties?  When I was growing up it seemed like for every birthday party there were two choices; eat cake at the birthday boy’s house, or eat cake at the roller skating rink.  Now? I can't even accurately describe some of the things I've seen.  A massive gymnasium for kids where they do things like drop 10 feet into foam balls.  A place devoted to science experiments where they throw the slimiest goop you can imagine on each other, and it magically comes off without a trace.  Live wild animals (OK, quasi-wild).  Massive, inflatable trampoline like devices where the kids jump for hours, often on each other unfortunately, until it's time to go home.

And how about TV?  As a typical 2011 overly protective couple, my wife and I monitor our children’s viewing like hawks.  And I can tell you, Netflix and Youtube are like manna from the heavens for that.  When I was a kid there was no cable, no powerful computers, no Disney-Pixar.  I remember looking forward to going to Herbie the Love Bug movies.  Yes, it's as pathetic as it sounds.  Now?  My children can basically watch any cartoon or animated movie ever created, and most of the time it’s immediate.  Let's just say that Toy Story 3 was slightly better than Herbie the Love Bug.

So if I could have gone forward in time, I would have.  I wonder if my kids will feel the same way when they’re my age.  Have a good night everyone.

JR