Why did the boss man pick him to go to the town's meeting? There wasn't anything special about him. Maybe the boss man thought he was better than the other shepherds at understanding English? Maybe he was - if he wasn't half drunk?
It was the mid sixties in Idaho. The group of sheep herders rarely got opportunity to go to town. When they did, the liked to let loose and party a little bit.
Our hero was a little tipsy when he was told the boss wanted him to attend a town's meeting. He didn't understand exactly why, but he'd hoped that maybe he'd figure it out while he was there?
The proceedings of the meeting went too fast for him to follow. Things were appearing to be wrapping up and he caught a word that got his attention. It was familiar. Maybe it was what the boss man sent him there for? Quickly, he raised his hand.
It was a day or two after that before somebody explained things to him. He'd inadvertantly volunteered to provide solid waste service for the town. Hauling garbage? What?!
The thought must have occured to him to get out of that commitment. He was drunk, he didn't understand English, he didn't even know why he was at the town meeting to begin with. But he came from a very rigid and demanding culture.
Suffering was to be endured without complaint. Hard work - no matter how demeaning was revered! Every man aspired to be a noble man. Giving your word was a big deal. It had to be honored. So he proceeded with a little bit of reluctance.
The first thing he did was to go to every sheep herder in camp to ask for a loan. He had to get enough money to buy an old pickup truck to haul garbage. Every shepherd contributed to his plight and that was the beginnings of his business.
That smallish Idaho town would thrive in the coming years. Hollywood movie stars would discover the area and buy properties. Tourism took hold and the area flourished. Our hero became a multi-millionaire providing a service that nobody elso wanted anything to do with. He was the right person in the right place at the right time.
Wednesday, February 21, 2018
Tuesday, January 16, 2018
Our Democrat Cat
It's not at all uncommon for people to abandon cats in the country side. I wasn't surprised to find three kittens abandoned about half a mile from the farm house. As they grew and displayed their personalities, it was uncanny how well they represented our three main political parties.
I couldn't know for sure if the momma cat was dumped with the kittens. I observed them for awhile from a distance, but it wasn't very long before they found their way to the farm house. I could tell from their condition that they had not been fed; I took pity on them with milk and food.
Often times, cats dumped in the country go wild. These were obviously domestic and very friendly, well - except for Scratchy. There were two females and one male. They appeared to be siblings. The male was all grey, one female was white with grey stripes and the other female was orange and white tabby.
We named the grey male "Lost Juevos" after he was neutered. The white female with grey spots would be Nina, and the orange tabby got a name that didn't stick. She quickly earned her real name - Scratchy. We had them all fixed.
Scratchy was very independent, cautious, and unforgiving. She earned her name by refusing anybody trying to pick her up in dedicated violent fashion. It tooks years for me to gain her trust to be the only exception to the holding rule. But still, I had better not press my luck by holding her longer than her alotted time. She would cover vast distances just to accompany me working alone in the field. And sometime, she got in the way of progress.
I once had an order to deliver four tons of hay for twenty miles in the cold beginning of winter. When I began unloading the hay, I discovered that Scratchy had made the journey on the trailer. She was covered in frost, cold, and scared. I cuddled her up and put her in the cab of the pickup.
When we returned, the other farm animals could not believe her tales of the journey to the far away land. No doubt her adventurous spirit contributed to her demise. She was the first to disappear. We suspect she was kidnapped by a bold coyote judging the recent signs in the region of her regular domain.
Nina was not as independent as Scratchy; she was balanced. She was rarely late for feeding time, but there were times that she was too busy off hunting. She was lovable to a certain point. She would never lash out or scratch. She would merely keep a safe distance from suspect or overly affectionate humans. She was the smartest cat and the best hunter during her time. She paid the most taxes since she often brought her catch to the yard; it was often stolen. She disappeared a couple of years after Scratchy under similar circumstances.
Lost Juevos has been through a lot. He took the incidince of neutering like water off of a duck's back. He was always the most affectionate. Our daughter used to carry him upside down and he loved every second. He wasn't choosy who or where he got affection from, it was all good. He never met his cuddle quota. He would take it all in, purring loudly with drool running out of the corners of his mouth.
For the earlier years of his life, he was a card carrying democrat. He never did any more work than he had to. He was a fixture on the back porch, waiting for a handout, feeding time, or the chance to be pet.
He didn't go hunting very often, but one fateful day, on a rare hunting trip, he suffered a severe injury. Somehow, he'd broken a bone in his right front leg. I felt the break and considered trying to splint it, but it was straight and he was a good patient. He layed around a lot anyway and he would just lay around more than usual as he was healing.
He eventually made a full recovery. The experience had surpising lasting effect on him. He started going off hunting more! I would have expected the opposite, but his hunting career really took off after his injury. His specialty has become catching gophers. I have seen him consuming the better parts of gophers three days in a row.
We can still count on him at regular feeding time. And he still spends a lot of time on the back porch, mostly looking for affection. But he has progressed to pulling more than his own weight on the farm. Go figure?
I couldn't know for sure if the momma cat was dumped with the kittens. I observed them for awhile from a distance, but it wasn't very long before they found their way to the farm house. I could tell from their condition that they had not been fed; I took pity on them with milk and food.
Often times, cats dumped in the country go wild. These were obviously domestic and very friendly, well - except for Scratchy. There were two females and one male. They appeared to be siblings. The male was all grey, one female was white with grey stripes and the other female was orange and white tabby.
We named the grey male "Lost Juevos" after he was neutered. The white female with grey spots would be Nina, and the orange tabby got a name that didn't stick. She quickly earned her real name - Scratchy. We had them all fixed.
Scratchy was very independent, cautious, and unforgiving. She earned her name by refusing anybody trying to pick her up in dedicated violent fashion. It tooks years for me to gain her trust to be the only exception to the holding rule. But still, I had better not press my luck by holding her longer than her alotted time. She would cover vast distances just to accompany me working alone in the field. And sometime, she got in the way of progress.
I once had an order to deliver four tons of hay for twenty miles in the cold beginning of winter. When I began unloading the hay, I discovered that Scratchy had made the journey on the trailer. She was covered in frost, cold, and scared. I cuddled her up and put her in the cab of the pickup.
When we returned, the other farm animals could not believe her tales of the journey to the far away land. No doubt her adventurous spirit contributed to her demise. She was the first to disappear. We suspect she was kidnapped by a bold coyote judging the recent signs in the region of her regular domain.
Nina was not as independent as Scratchy; she was balanced. She was rarely late for feeding time, but there were times that she was too busy off hunting. She was lovable to a certain point. She would never lash out or scratch. She would merely keep a safe distance from suspect or overly affectionate humans. She was the smartest cat and the best hunter during her time. She paid the most taxes since she often brought her catch to the yard; it was often stolen. She disappeared a couple of years after Scratchy under similar circumstances.
Lost Juevos has been through a lot. He took the incidince of neutering like water off of a duck's back. He was always the most affectionate. Our daughter used to carry him upside down and he loved every second. He wasn't choosy who or where he got affection from, it was all good. He never met his cuddle quota. He would take it all in, purring loudly with drool running out of the corners of his mouth.
For the earlier years of his life, he was a card carrying democrat. He never did any more work than he had to. He was a fixture on the back porch, waiting for a handout, feeding time, or the chance to be pet.
He didn't go hunting very often, but one fateful day, on a rare hunting trip, he suffered a severe injury. Somehow, he'd broken a bone in his right front leg. I felt the break and considered trying to splint it, but it was straight and he was a good patient. He layed around a lot anyway and he would just lay around more than usual as he was healing.
He eventually made a full recovery. The experience had surpising lasting effect on him. He started going off hunting more! I would have expected the opposite, but his hunting career really took off after his injury. His specialty has become catching gophers. I have seen him consuming the better parts of gophers three days in a row.
We can still count on him at regular feeding time. And he still spends a lot of time on the back porch, mostly looking for affection. But he has progressed to pulling more than his own weight on the farm. Go figure?
Thursday, January 11, 2018
Some ABC's for U and I
A is for Ability.
"Ability is a poor man's wealth." Matthew Wren
B is for Business.
"Always tell yourself: The difference between running a business and ruining a business is i." Frank Tyger
C is for Chance.
"There are no chances so unlucky from which clever people are not able to reap some advantage; and none so lucky that the foolish are not able to turn them to their own disadvantage." Francois De La Rochefoucauld
D is for Desire.
"We should aim rather at leveling down our desires than leveling up our means." Aristotle
E is for Effort.
"Whatever your work is, dignify it with your best thought and effort." Esther Baldwin York
F is for Freedom.
"The basic test of freedom is perhaps less in what we are free to do than in what we are free not to do." Eric Hoffer
G is for Giving.
"No one would remember the Good Samaritan if he'd only had good intentions; he had money too." Margaret Thatcher
H is for Health.
"Health is the vital principle of bliss." James Thomson
I is for Industry.
"The way to wealth is as plain as the way to market. It depends chiefly on two words: industry and frugality; that is, waste neither time nor money, but make the best use of both." Benjamin Franklin
J is for Joy.
"Real happiness is cheap enough, yet how dearly we pay for its counterfeit." Hosea Ballou
K is for Kindness.
"In nature there's no blemish but the mind; none can be called deformed but the unkind." William Shakespeare
L is for Living.
"To live is not to learn, but to apply." Legouve'
M is for Money.
"The safest way to double your money is to fold it over and put it in your pocket." Kin Hubbard
N is for Nature.
"In nature there are neither rewards nor punishments; there are consequences." Robert G. Ingersoll
O is for Opportunity.
"An optimist sees an opportunity in every calamity; a pessimist sees a calamity in every opportunity." Winston Churchill
P is for Prosperity.
"That some should be rich shows that others may become rich and, hence, is just encouragement to industry and enterprise." Abraham Lincoln
Q is for Quality.
"People forget how fast you did a job - but they remember how well you did it." Howard W. Newton
R is for Respect.
"Reverence for life demands for all that they should sacrifice a portion of their own lives for others." Albert Schweitzer
S is for Spirit.
"I am only one, but I am still one. I cannot do everything, but still I can do something. I will not refuse to do the something I can do." Helen Keller
T is for Talent.
"Shun no toil to make yourself remarkable by some one talent." Seneca
U is for Usefulness.
"The function of man is not to attain an object, but to fulfill a purpose; not to accomplish, but to be accomplished." S.E. Stanton
V is for Virtue.
"Sincerity and truth are the basis of every virtue." Confucius
W is for Wealth.
"Wealth, like happiness, is never attained when sought after directly. It comes as a by-product of providing a useful service." Henry Ford
X is for eXample.
"Few things are harder to put up with than the annoyance of a good example." Mark Twain
Y is for Yahoos.
"It is the peculiar quality of a fool to percieve the faults of others and to forget his own." Cicero
Z is for Zingers.
"In laughter there is always a kind of joyousness that is incompatible with contempt or indignation." Voltaire
"Ability is a poor man's wealth." Matthew Wren
B is for Business.
"Always tell yourself: The difference between running a business and ruining a business is i." Frank Tyger
C is for Chance.
"There are no chances so unlucky from which clever people are not able to reap some advantage; and none so lucky that the foolish are not able to turn them to their own disadvantage." Francois De La Rochefoucauld
D is for Desire.
"We should aim rather at leveling down our desires than leveling up our means." Aristotle
E is for Effort.
"Whatever your work is, dignify it with your best thought and effort." Esther Baldwin York
F is for Freedom.
"The basic test of freedom is perhaps less in what we are free to do than in what we are free not to do." Eric Hoffer
G is for Giving.
"No one would remember the Good Samaritan if he'd only had good intentions; he had money too." Margaret Thatcher
H is for Health.
"Health is the vital principle of bliss." James Thomson
I is for Industry.
"The way to wealth is as plain as the way to market. It depends chiefly on two words: industry and frugality; that is, waste neither time nor money, but make the best use of both." Benjamin Franklin
J is for Joy.
"Real happiness is cheap enough, yet how dearly we pay for its counterfeit." Hosea Ballou
K is for Kindness.
"In nature there's no blemish but the mind; none can be called deformed but the unkind." William Shakespeare
L is for Living.
"To live is not to learn, but to apply." Legouve'
M is for Money.
"The safest way to double your money is to fold it over and put it in your pocket." Kin Hubbard
N is for Nature.
"In nature there are neither rewards nor punishments; there are consequences." Robert G. Ingersoll
O is for Opportunity.
"An optimist sees an opportunity in every calamity; a pessimist sees a calamity in every opportunity." Winston Churchill
P is for Prosperity.
"That some should be rich shows that others may become rich and, hence, is just encouragement to industry and enterprise." Abraham Lincoln
Q is for Quality.
"People forget how fast you did a job - but they remember how well you did it." Howard W. Newton
R is for Respect.
"Reverence for life demands for all that they should sacrifice a portion of their own lives for others." Albert Schweitzer
S is for Spirit.
"I am only one, but I am still one. I cannot do everything, but still I can do something. I will not refuse to do the something I can do." Helen Keller
T is for Talent.
"Shun no toil to make yourself remarkable by some one talent." Seneca
U is for Usefulness.
"The function of man is not to attain an object, but to fulfill a purpose; not to accomplish, but to be accomplished." S.E. Stanton
V is for Virtue.
"Sincerity and truth are the basis of every virtue." Confucius
W is for Wealth.
"Wealth, like happiness, is never attained when sought after directly. It comes as a by-product of providing a useful service." Henry Ford
X is for eXample.
"Few things are harder to put up with than the annoyance of a good example." Mark Twain
Y is for Yahoos.
"It is the peculiar quality of a fool to percieve the faults of others and to forget his own." Cicero
Z is for Zingers.
"In laughter there is always a kind of joyousness that is incompatible with contempt or indignation." Voltaire
Monday, January 1, 2018
A Competitive Edge
Boy, does it take a lot of effort to best the competition? Talent and hard work get pushed to extremes, just to get a small step up. The typical difference between the best and the runner up is only ten percent.
How do you capitalize on a ten percent advantage? That takes salemanship. It's a difficult balancing act. If you overstate your ten percent advantage, there can be misunderstanding. Your honesty can come into question and you could be branded a bragger. Understating your edge will not get you noticed. You will fall into the crowd of the also ran, despite all your extra effort to achieve a higher position.
The more competitive the enviroment, the more things can get stretched to capture attention. Authors have to be edgy, speakers have to say something controversial, entertainers must display pizazz! The audience has a short attention span. People are busy and don't like to waste time with the trivial ordinary. It takes something abnormal to catch their attention.
It's got to be a red hot spark to ignite the fuel in a high compression environment. If you can get their engine started, they will spend another five seconds looking closer. You have to risk being edgy in order to publicize your edge.
There are few experts in the world. Most of us have a broad knowledge of several subjects. Not many run very deep on any particular thing. Generalists are going to have trouble differentiating ten percent in most subject matter. To the casual observer, there is no apparent difference. What incentive do they have to choose the better option, if they can't tell the difference?
I love Amazon for this reason. They have found a way to make it so easy to compare products. I feel like an informed consumer for nearly every purchase I make. They have a quick visual rating system for the busy bodies, and you can read reviews for more detailed information. I am mostly ignorant of the variety of goods that I want to purchase. They found ways to make learning easy and quick.
When learning is not so easy and quick, it takes a commitment of time to the subject. Sometimes salesmanship is best directed at that objective: getting the customer interested in learning more. If you have the superior product and your customer arrives at that conclusion on their own, it is far more impactful than giving them the raw data up front.
Salesmanship is educational. How can you help your subjects to learn? Many people are resistant to learning. They are too busy and have higher priorities. When I detect that situation, I suggest that they make the simple comparison on price.
Price is a relatively easy comparison to make. Establish an even quantifiable measure and compare how much you get for the same dollar. It could be mass, weight, or pieces that you get in return. All other factors deemed equal, why not try to stretch your dollar? We all want the most for the money.
In the case of matching prices, we have a dilemna. We have to compare the next value contributing factor: Quality. This is often a little more difficult. Sometimes it takes a little expert knowledge to discern a ten percent difference in quality.
Most people don't have the capacity to become experts in every subject that they shop. Educational salesmanship takes a lot of added effort. Is it worth it?
It took extraordinary effort, sometimes extreme effort to achieve a competitive edge. Why not make the extra effort it takes to commmunicate that?
How do you capitalize on a ten percent advantage? That takes salemanship. It's a difficult balancing act. If you overstate your ten percent advantage, there can be misunderstanding. Your honesty can come into question and you could be branded a bragger. Understating your edge will not get you noticed. You will fall into the crowd of the also ran, despite all your extra effort to achieve a higher position.
The more competitive the enviroment, the more things can get stretched to capture attention. Authors have to be edgy, speakers have to say something controversial, entertainers must display pizazz! The audience has a short attention span. People are busy and don't like to waste time with the trivial ordinary. It takes something abnormal to catch their attention.
It's got to be a red hot spark to ignite the fuel in a high compression environment. If you can get their engine started, they will spend another five seconds looking closer. You have to risk being edgy in order to publicize your edge.
There are few experts in the world. Most of us have a broad knowledge of several subjects. Not many run very deep on any particular thing. Generalists are going to have trouble differentiating ten percent in most subject matter. To the casual observer, there is no apparent difference. What incentive do they have to choose the better option, if they can't tell the difference?
I love Amazon for this reason. They have found a way to make it so easy to compare products. I feel like an informed consumer for nearly every purchase I make. They have a quick visual rating system for the busy bodies, and you can read reviews for more detailed information. I am mostly ignorant of the variety of goods that I want to purchase. They found ways to make learning easy and quick.
When learning is not so easy and quick, it takes a commitment of time to the subject. Sometimes salesmanship is best directed at that objective: getting the customer interested in learning more. If you have the superior product and your customer arrives at that conclusion on their own, it is far more impactful than giving them the raw data up front.
Salesmanship is educational. How can you help your subjects to learn? Many people are resistant to learning. They are too busy and have higher priorities. When I detect that situation, I suggest that they make the simple comparison on price.
Price is a relatively easy comparison to make. Establish an even quantifiable measure and compare how much you get for the same dollar. It could be mass, weight, or pieces that you get in return. All other factors deemed equal, why not try to stretch your dollar? We all want the most for the money.
In the case of matching prices, we have a dilemna. We have to compare the next value contributing factor: Quality. This is often a little more difficult. Sometimes it takes a little expert knowledge to discern a ten percent difference in quality.
Most people don't have the capacity to become experts in every subject that they shop. Educational salesmanship takes a lot of added effort. Is it worth it?
It took extraordinary effort, sometimes extreme effort to achieve a competitive edge. Why not make the extra effort it takes to commmunicate that?
Saturday, December 9, 2017
How much Hay to feed?
"The more, the better!" My enthusiastic, capitalist spirit immediately responds. "I'll make more of it!"
But, seriously, in the small bales business, you meet a lot of new people. A few of those people are green and learning. How much hay to feed is a very common concern.
The first consideration is the quality of hay. It stands to reason that the better the Relative Feed Value and the higher the percentage of Total Digestive Nutrients, the lesser the quantity is needed. Hay quality can vary widely from farmers to farmers, field to field, and cutting to cutting. There are scientific methods for measuring quality, but most people are just looking for general guidelines. I have over a decade worth of experience feeding cattle, horses, and sheeps.
Horse nutrition is the most complex and intimidating. There are volumes of books on the subject. Mistakes are expensive. I will only share the most basic observations of horse feeding and recommend further study on the subject.
I have more confidence with sharing tips on feeding cows, sheeps, and goats. The starting point that I recommend is 5% of bodyweight. It's easy math and gets you in the ballpark. Take a 100# ewe for example. 10% is 10#, just move the decimal then split it in half. So, 5# would be my daily ration to start with.
I recommend feeding twice a day, so you would feed half of the daily ration in the morning and the other half in the evening. The reduction of waste over feeding once a day is significant enough to warrant the extra effort.
When herbivores are fed a large quantity, they pick through it to get their full of the sweetest stuff. When they come back later to eat again, a lot of the good feed left is soiled and they will not eat it. In those instances, their fiber intake suffers and you have to feed more to make up for the waste.
I stress 5% as a good start, because of all the other variables. The weather, the animal health, alternative food stuff, supplements, and hay quality are all factors. The good news is that you can observe your animals' behaviors as indicators to offer more hay or taper back.
What is the interest at feeding time? Are they overly enthusiastic? Are their feeders empty? Do they stay in one feeding spot or hunt around? All of those observations can tell you about how much you are feeding. Horses, however, are unique in this aspect.
A horse's favorite pastime is eating. They will eat all day, every day out of boredom. Left alone in a sufficient pasture, they will eventually turn it into a nuclear waste land. 1) Don't mistake a horse's enthusiasm as hunger. 2) Don't judge their clean feeder as insufficient. 3) Volume by body weight and body conditioning are probably your best indicators.
Cows, sheeps, and goats won't eat all day long. They stop when they are satiated and will lay down, chew cud, and meditate. It typically takes about four hours out of the day for them to get their full. If you are feeding twice a day, you should see them losing interest after a couple of hours each time. If they are taking longer, that should be considered with other indicators that you may not be feeding enough.
But, seriously, in the small bales business, you meet a lot of new people. A few of those people are green and learning. How much hay to feed is a very common concern.
The first consideration is the quality of hay. It stands to reason that the better the Relative Feed Value and the higher the percentage of Total Digestive Nutrients, the lesser the quantity is needed. Hay quality can vary widely from farmers to farmers, field to field, and cutting to cutting. There are scientific methods for measuring quality, but most people are just looking for general guidelines. I have over a decade worth of experience feeding cattle, horses, and sheeps.
Horse nutrition is the most complex and intimidating. There are volumes of books on the subject. Mistakes are expensive. I will only share the most basic observations of horse feeding and recommend further study on the subject.
I have more confidence with sharing tips on feeding cows, sheeps, and goats. The starting point that I recommend is 5% of bodyweight. It's easy math and gets you in the ballpark. Take a 100# ewe for example. 10% is 10#, just move the decimal then split it in half. So, 5# would be my daily ration to start with.
I recommend feeding twice a day, so you would feed half of the daily ration in the morning and the other half in the evening. The reduction of waste over feeding once a day is significant enough to warrant the extra effort.
When herbivores are fed a large quantity, they pick through it to get their full of the sweetest stuff. When they come back later to eat again, a lot of the good feed left is soiled and they will not eat it. In those instances, their fiber intake suffers and you have to feed more to make up for the waste.
I stress 5% as a good start, because of all the other variables. The weather, the animal health, alternative food stuff, supplements, and hay quality are all factors. The good news is that you can observe your animals' behaviors as indicators to offer more hay or taper back.
What is the interest at feeding time? Are they overly enthusiastic? Are their feeders empty? Do they stay in one feeding spot or hunt around? All of those observations can tell you about how much you are feeding. Horses, however, are unique in this aspect.
A horse's favorite pastime is eating. They will eat all day, every day out of boredom. Left alone in a sufficient pasture, they will eventually turn it into a nuclear waste land. 1) Don't mistake a horse's enthusiasm as hunger. 2) Don't judge their clean feeder as insufficient. 3) Volume by body weight and body conditioning are probably your best indicators.
Cows, sheeps, and goats won't eat all day long. They stop when they are satiated and will lay down, chew cud, and meditate. It typically takes about four hours out of the day for them to get their full. If you are feeding twice a day, you should see them losing interest after a couple of hours each time. If they are taking longer, that should be considered with other indicators that you may not be feeding enough.
Monday, May 1, 2017
How Debt creates a Bubble
There are plenty of big spenders out there that are dependent on creditors to live beyond their means. Non-discetionary spending leads to enormous amounts of debt. That behavior and all the hot air used to justify it creates abnormal financial bubbles. Bubbles burst, eventually. What have we learned from our past?
Remember the big real estate bubble only ten years ago? When the big spenders were flying high there was a lot of hot air justifying the irresponsible spending and touting a "new" normal. For a lot of political reasons, money was being lent at greater amounts and to more people than ever before. The political correctness called them "sub-prime" loans. The lenders found out that they could make money off of loans that they didn't expect paid back. They could profitably lend money to folks without the will or the ability to pay it back, so long as it didn't get out of control.
The typical bubble formation starts innocent enough. A responsible buyer finds an interesting property and performs diligence in preparing a reasonable offer. They weigh all the negatives against the positives and come up with a number. But even before they can submit their offer, another buyer quickly appears without concern for the value. With a pocket full of loaned money, they don't hesitate to make a full price offer.
The neighbors across the street take notice of how fast and how much the property sold for. They decide to list their property with comparable amenities for ten percent higher. It sells immediately. The escalation continues and the bubble is formed. Extra money in loose hands perverts the natural worth of everything.
Eventually, the loose money runs out. The early careless buyers use all of their available credit and get to the point where they need to sell their house to continue their lavish lifestyle or avoid bankruptcy. They are shocked and dismayed when they realize that nobody wants to buy it for what they paid for it. Nevertheless, it becomes increasingly important to sell, so they drop the price. When their neighbors get in the same boat, they lower their price too. Almost as quickly as the bubble was formed, it begins to break.
Before everybody realizes what is happening, their property values have dropped significantly. They don't want to continue paying on a property worth so much less than what they are paying! Daunted, they just stop making payments and the foreclosure process begins. The foreclosure system is designed so that the lenders still come out ahead, but only for a normal amount of defaults. When the rate of defaults exceeds the designed system, the lenders find themselves in financial trouble!
The business investors are among the first to see the significance. They don't want their money invested in firms that will not be able to earn a profit in the fore-seeable future. The mass hysteria from the total collapse of one sector, bleeds off into another sector. The whole "house of cards" comes crashing down.
That was all ten years ago; so what? History doesn't repeat itself, exactly. We have a lot of smart people whom instituted changes and laws so that can't happen again. Perhaps the most significant of those are contained in the Dodd-Frank bill? Aren't they currently in the process of dismantling that bill?
What is a bubble anyway? How can we recognize it? A bubble occurs whenever loose money and the hot-air accompanying it increase the value of property.
So what are some property values at today? In many of our prospering cities, the median property value is at 16 times the average local wage. If the average wage earner had the ability to pay half of their income on a mortgage, it would take about 32 years to pay it off. The average wage earner can not do that due to interest, taxes, cost of living and OTHER debts! The top three OTHER debts are classified as student loans, consumer debt and automobile debt.
Student loan debt can not be defaulted under current law. However, legislation can be created by swaying public opinion and that has been in motion for over a decade. I expect we will see some form of "foregiveness" at tax payers' expense in the next four years.
Consumer debt and credit card spending is volatile. It is currently very high and that is never a good thing. Often times, the higher levels of credit are anchored by home ownership. That indirect relationship creates a covert property value bubble.
Automobile debt has grown to second place in the typical American household. Not only is it high, but it has exceeded record levels. This is alarming in itself, but the hot air from the "experts" are quelling concern because "things are different".
Loose money for auto loans has created an obvious bubble in vehicle valuations. Consumers are borrowing more than ever for the vehicle they commute in to their underpaid jobs from their overpriced homes!
Things are different. How are these things related to the crash of ten years ago? The warning signs are more covert. The loose money is from other sources than the government subsidized sub-prime mortgages, yet the real estate bubble is still forming. The loose money is perverting valuation and that is very similar to the circumstances that led to the last financial collapse.
Wednesday, April 26, 2017
Thinking like an Immigrant
What makes America so appealing that would encourage an individual to pull up roots, leave their home country, friends, and most of their family? They are putting so much at risk: their livelihood, their relationships, and ultimately their lives.
Free Enterprise.
For most of the immigrants that I know the best personally, the chances offered by free enterprise are the highest motivation. Most of us home grown Americans take free enterprise for granted. There's a whole lot of other places in the world that inhibit opportunity with laws, culture, and corruption.
Just being born in the USA is like winning the lottery of life. You are born into millions of opportunities for a better life. Many immigrants arrive looking for employment, but are destined for self employment. Free enterprise offers the best chance of success towards that goal.
Why do so many immigrants realize so much success in the USA? Despite so many barriers - not the least of which being the language, they are able to surpass many homegrown Americans toward economic prosperity. My observation is cliche', but it is because they work harder and smarter.
Work ethic is a requisite. Nothing moves without being pushed or pulled. I don't know of a single successful immigrant that is not a hard worker.
Duty is held in high regards. Duty of 365 days a year. Duty doesn't take a holiday off, it doesn't call in sick, it doesn't offer excuses. It is a complete dedicated effort. No sandbagging allowed!
So many homegrown Americans are lacking that motivation. Many are complacent underachievers. Some are self defeating pessimists and others are malcontents. A few spoiled children that never grow up and a few are overly ego-tistical.
A had a friend who was a talented bike racer. He would train very hard for a race only to go out the night before and get drunk? Some people have such big egos that they sabotage their own efforts so they have a ready excuse for failure. They never have to look close and serious at themselves because of the obvious reason for failure that they provide.
There is no sandbagging among successful immigrants. They don't play that way. They were held back in their homelands. Remove the reasons of failure that were beyond their control and LOOK OUT!
Although, hard work is essential, we all know that it is not the only ingredient. You can work very hard on a treadmill without getting anywhere. Successful immigrants don't confuse action with progress. They are adept at working smarter.
They see hidden opportunities, they establish a goal, and then they go after it. They are inherintly risk takers and don't fear failure. But they do not expect immediate gratification. They are measured optimistic and certainly not self defeating.
Many of them suffered defeat in their homeland. Usually the fault was none of their own. They were working hard and smart, but somebody changed the rules! That kind of thing can happen in America too, but it is far less common.
Americans hate corruption. We also hate anything less than fair play. But we LOVE a figher and a winner! Just ask General Patton. A fighter, a winner, a smart, hard worker thrives in the free enterprise of the USA.
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