The Macs, and I don't mean Bernie and Apple

Back on the couch after a lovely road trip. All right, not lovely, but bearable. And now it's time to contemplate dysfunction in the world and in my life. I am SO pissed about Freddie Mac and Fannie Mae and their ugly stepchild, IndyMac. I could do a whole Old Lady Rant just on that topic and on my irritation with the notion that probably NO ONE WILL PAY FOR THIS. People all along the way built this house of cards that we call a real estate/mortgage/securities market, and most got fat salaries and bonuses out the ying yang. But not people like me who have no debt and who are honorable investors and who now don't know what to do with their assets, WHICH I might add, are losing value with every key stroke.

Because I have been paying attention for a long time, I'm not surprised. After I saw the first quarter earnings for 2007, I made some moves, but even so, I feel at risk, and I know I'm in a lot better shape than a bunch of retirees. Keep in mind that retirees will not be earning their way back to prosperity. That's what the concept of "fixed income" is about. So lots of us have followed the advice of supposedly much smarter people to invest and diversify and rebalance and go for safe instruments and yadda yadda yadda. What I am most grateful for is my frugality. I don't have to have the latest and the best, and it's true that I haven't contributed much on the consumption side of the economy, but damn I'm glad for my paid-for car and my paid-for house and my old countertops and, oh yeah, my health.

For the last little bit I've been throwing a little money around, trying to help the workers who I know are hurting. I've been eating out more and tipping more and donating more and in general trying to do my part without buying more clutter. I know that a lot of middle class workers got suckered into the shop, shop, shop mode that has propped up the US economy for too long. I'm not mad at them. I'm mad at the high-rollers, the livin' large show-offs, who by the way ought to consider the wisdom of a very good book, The Millionaire Next Door, by Thomas J. Stanley and William D. Danko.

According to Wikipedia, the main points of the book are:

**Spend Less Than You Earn
If you are always spending up to or above what you earn, you will never increase your net worth no matter how much you make. The author discusses being prugal: prudent and frugal.

**Avoid Buying Status Objects or Leading a Status Lifestyle
Buying expensive imported vehicles is poor value and you will constantly need to buy the newest model. Buying status objects such as branded consumer goods is a never-ending cycle of depreciating assets. Living in a status neighbourhood is not only poor value, but you will feel the need to keep buying status objects to keep up with your neighbours, who are mostly Under Accumulators of Wealth (UAWs).

**Prodigious Accumulaors of Wealth (PAWs)Are Willing to Take Financial Risk if it is Worth the Reward
PAWs are not misers who put every penny under their mattress. They invest their money for good returns, and will consider riskier investments if they're worth the reward. Many put money not in the stock market, but invest in private businesses and venture capital. They do not gamble or speculate on long-odds stocks.

**Economic Outpatient Care
The authors also make the interesting observation that PAWs tend to have children who require an influx of their parents' money in order to afford the lifestyle that they expect for themselves, and that they are less likely to have been taught about money, budgeting and investing by their parents.

See, it's that last part that I see all around me especially in Gated Community World. It reminds me of the very wise comment of a wealthy woman I once knew. She said, "I have done untold damage to the people I've helped." Yes, it feels good to indulge the ones we love, but doing that teaches dependence on someone else's efforts and assets and in the end it isn't really a kindness. Sorry, kids.