[8 March 2011] GENEVA- Today, the Special Rapporteur presented his new report “Agro-ecology and the right to food” before the UN Human Rights Council. Based on an extensive review of recent scientific literature, the report demonstrates that agroecology, if sufficiently supported, can double food production in entire regions within 10 years while mitigating climate change and alleviating rural poverty.
The report therefore calls States for a fundamental shift towards agro-ecology as a way for countries to feed themselves while addressing climate- and poverty challenges.
“Agroecolgy and the Right to Food”, Report presented at the 16th Session of the United Nations Human Rights Council [A/HRC/16/49], 8 March 2011 (also available in French, Spanish, Chinese and Russian).
Press release, "Eco-Farming Can Double Food Production in 10 Years, says UN Report", 8 March 2011.
Curious headline- "... double food production in 10 years..." What would be the effect of that? Undoubtedly more people. Some of whom may be less hungry than they would have been otherwise.
Ultimately, there are limits, finite amounts of raw materials that will be gone when they are used up. Modest populations living well below those limits can avoid the pain of natural selection.
Sustainability means using systems that minimize or reverse the rate of resource loss. More people doesn't help. Then again, I'm here and the unborn aren't. But a headline on this subject that would be very appealing to me might be something like "Eco-farming can feed you sustainably so you don't have to sell yourself to others."
The question each of us grapples with minute-by-minute is what do I do next? That answer will vary for each of us as our circumstances change. Our ability to adapt, prosper and survive in changing environments is the critical trait selected for by natural selection. Selection occurs at the level of the individual, survival occurs at the level of the species. As a permie, I first want to take care of my little corner of the world. I want to use the resources at my "disposal" wisely to optimize my community's happiness. Sometimes I make choices that are not "pure" but feel the benefits outweigh the costs. More green spaces funded by Scotts/Monsanto? The outcome is to be desired. Cute little systems for making school gardens? The outcome is to be desired. But both (and most) are tainted by a profit motive. I try to evaluate the tradeoffs. I want to be happy without money. In part because I have less money than at other times in my life. But also because I see a lot of harm that is done when money becomes the motive as it is for many businesses.
I look forward to getting to know you all better.
Fred
Thursday, March 10, 2011
Saturday, June 19, 2010
Home mortgages
New York Federal Reserve Bank economists calculate the fraction of families who actually have equity in the house they own. In San Diego, for instance, the home ownership rate had fallen to 55% last year from a peak of 63%. But by late last year, the fraction of households with equity in their homes was between 35% and 39%. In hard-hit Las Vegas, nearly 59% of households own their homes, but only 15% to 19% of households own a home in which they have any equity left.
As a small businessman my business lost money in 2008 and 2009. We have been renting since moving to Phoenix in 2006. Thankfully, we missed the crushing slide in the Phoenix residential real estate market. We've only been hit by the crushing slide in the Phoenix retail sector. However, now that we've weathered the recession and are seeing more light than tunnel, my wife and I have decided to buy a house. What is the value of a house? We've clearly learned in the last three years that it can be a lousy "investment." The value of a house is as shelter and safety and ultimately, to create a "home." We have rented a very nice middle-class home in a nice area in Scottsdale for the last three years. We have paid market rent for this home and our rent expense has dropped about 20% in the time we've been in the house as we've renegotiated with our landlord as the market has dropped. We're currently paying $1800/month.
We identified a real estate agent we wanted to work with and he recommended a mortgage broker to determine how much mortgage we could qualify for. He indicated we could get a mortgage up to the FHA limit in our area. We identified and made an offer on a house about $100,000 less than that maximum. The mortgage payment, PITI, would have been about $1600/month. Imagine our dismay when we were told less than a week before our scheduled close that we couldn't get a mortgage!
We wanted this house! We wanted roots, we wanted to be able to paint the walls and build a place for our grand-children to visit! We know we won't be retiring for a long time, thanks to the great recession, and feel we'll probably live in Phoenix for at least 15 years when my wife qualifies for her pension. But we couldn't get a mortgage! I did a quick tally of assets we could access and found we could pay cash if we liquidated much of our (useless, long-term, invested but losing) retirement savings. I had converted most of our retirement to Roth IRAs in which the contributed amount can be withdrawn at any time and even earnings withdrawn for a home purchase. But was this a good idea? My parents had never paid cash for a house although my father was very conservative and paid off his home much sooner than 30 years. I knew burning the note at the end of a mortgage term sounded fabulous, but not having a note? Mortgage interest rates are low. Mortgage interest is tax deductable. Wasn't I putting our capital into one basket and losing the advantage of leverage on this investment?
Of course I was, but I'd proven that our retirement investments could lose value rather than gain value and was leverage a good idea? What is my return on this house purchase? Interest expense reduced yields 5.5% per year- guaranteed. Certainly better than "secure" investments. No rent- $1800/month=$21,600 yearly reduction in expenses. Value of painting walls and rooting? To quote a credit card commercial- "priceless." I have plenty of tax deductions, so interest deductability is a marginal benefit.
Understand, this isn't a great house, the house of our dreams, a mcmansion. This is a mid-century ranch house- 3 br, 2 baths. Sufficient. And we can pay for it! Hopefully, over the next 15 years of our lives we'll enjoy living in this house and use the savings to rebuild our retirement assets and have some fun. But in the meantime, I don't have to worry about being upside down on a mortgage like so many people are struggling with right now. And I won't have to worry about making next months mortgage payment.
As a small businessman my business lost money in 2008 and 2009. We have been renting since moving to Phoenix in 2006. Thankfully, we missed the crushing slide in the Phoenix residential real estate market. We've only been hit by the crushing slide in the Phoenix retail sector. However, now that we've weathered the recession and are seeing more light than tunnel, my wife and I have decided to buy a house. What is the value of a house? We've clearly learned in the last three years that it can be a lousy "investment." The value of a house is as shelter and safety and ultimately, to create a "home." We have rented a very nice middle-class home in a nice area in Scottsdale for the last three years. We have paid market rent for this home and our rent expense has dropped about 20% in the time we've been in the house as we've renegotiated with our landlord as the market has dropped. We're currently paying $1800/month.
We identified a real estate agent we wanted to work with and he recommended a mortgage broker to determine how much mortgage we could qualify for. He indicated we could get a mortgage up to the FHA limit in our area. We identified and made an offer on a house about $100,000 less than that maximum. The mortgage payment, PITI, would have been about $1600/month. Imagine our dismay when we were told less than a week before our scheduled close that we couldn't get a mortgage!
We wanted this house! We wanted roots, we wanted to be able to paint the walls and build a place for our grand-children to visit! We know we won't be retiring for a long time, thanks to the great recession, and feel we'll probably live in Phoenix for at least 15 years when my wife qualifies for her pension. But we couldn't get a mortgage! I did a quick tally of assets we could access and found we could pay cash if we liquidated much of our (useless, long-term, invested but losing) retirement savings. I had converted most of our retirement to Roth IRAs in which the contributed amount can be withdrawn at any time and even earnings withdrawn for a home purchase. But was this a good idea? My parents had never paid cash for a house although my father was very conservative and paid off his home much sooner than 30 years. I knew burning the note at the end of a mortgage term sounded fabulous, but not having a note? Mortgage interest rates are low. Mortgage interest is tax deductable. Wasn't I putting our capital into one basket and losing the advantage of leverage on this investment?
Of course I was, but I'd proven that our retirement investments could lose value rather than gain value and was leverage a good idea? What is my return on this house purchase? Interest expense reduced yields 5.5% per year- guaranteed. Certainly better than "secure" investments. No rent- $1800/month=$21,600 yearly reduction in expenses. Value of painting walls and rooting? To quote a credit card commercial- "priceless." I have plenty of tax deductions, so interest deductability is a marginal benefit.
Understand, this isn't a great house, the house of our dreams, a mcmansion. This is a mid-century ranch house- 3 br, 2 baths. Sufficient. And we can pay for it! Hopefully, over the next 15 years of our lives we'll enjoy living in this house and use the savings to rebuild our retirement assets and have some fun. But in the meantime, I don't have to worry about being upside down on a mortgage like so many people are struggling with right now. And I won't have to worry about making next months mortgage payment.
Saturday, October 24, 2009
Health care numbers
Central to the argument for universal health care is that it would be cheaper than having a lot of uninsured people who get really sick and cost a lot to treat. One would anticipate that the health care costs of uninsured people would be higher than insured folk- after all emergency rooms are expensive, right?
A brief aside- my parents (children of the Depression) never took their children for preventative health care. We got a physical if we had to have one for athletics or summer camp but really only saw a doctor (or dentist) if there was a problem. They were middle-class well-educated people and trusted their judgment to determine if our coughs or aches elevated to the problem level. I don't know if they had health insurance or not, but I do know the cost of treatment was part of their decision-making process and I didn't see a doctor very often as a child. People who think about costs consume less.
Back to numbers- US News and World Report reports that uninsured people get less treatment and pay less, both out-of-pocket and total costs than insured folk. Out of pocket- $583 per year vs $681 (co-pays), total $1686 (paid and unpaid) vs. $3915. And they pay 35% of their total cost versus 17% of the total cost for insured people.
Wow. Let's assume various numbers bandied about are semi-accurate- 40 million uninsured, $2.5 trillion per year spent on US healthcare. One of the beef's with the current health care system is that we spend a large portion of our GDP on health care- about 13% versus about 6% for most of the rest of the first world. Assuming the newly insured (currently uninsured) folk consumed health care as the currently insured folk do universal coverage would cost the US economy an additional $1,000,000,000,000. That's a trillion, folks. Per Year. An increase of 40%- 13% of GDP to 18%.
Clearly, insuring everyone will cost way more than paying the load in the current system of the uninsured. But lets consider the other extreme- what if we abolished health insurance and everyone became uninsured. $3915 goes to $1686 per person per year and our total expenditure drops by 57%!! Suddenly US health care expenses are in line with world-wide numbers as a percent of GDP.
A brief aside- my parents (children of the Depression) never took their children for preventative health care. We got a physical if we had to have one for athletics or summer camp but really only saw a doctor (or dentist) if there was a problem. They were middle-class well-educated people and trusted their judgment to determine if our coughs or aches elevated to the problem level. I don't know if they had health insurance or not, but I do know the cost of treatment was part of their decision-making process and I didn't see a doctor very often as a child. People who think about costs consume less.
Back to numbers- US News and World Report reports that uninsured people get less treatment and pay less, both out-of-pocket and total costs than insured folk. Out of pocket- $583 per year vs $681 (co-pays), total $1686 (paid and unpaid) vs. $3915. And they pay 35% of their total cost versus 17% of the total cost for insured people.
Wow. Let's assume various numbers bandied about are semi-accurate- 40 million uninsured, $2.5 trillion per year spent on US healthcare. One of the beef's with the current health care system is that we spend a large portion of our GDP on health care- about 13% versus about 6% for most of the rest of the first world. Assuming the newly insured (currently uninsured) folk consumed health care as the currently insured folk do universal coverage would cost the US economy an additional $1,000,000,000,000. That's a trillion, folks. Per Year. An increase of 40%- 13% of GDP to 18%.
Clearly, insuring everyone will cost way more than paying the load in the current system of the uninsured. But lets consider the other extreme- what if we abolished health insurance and everyone became uninsured. $3915 goes to $1686 per person per year and our total expenditure drops by 57%!! Suddenly US health care expenses are in line with world-wide numbers as a percent of GDP.
Saturday, June 13, 2009
Average household income
Mean, median and mode. Basic statistical definitions that every numerically literate person knows. A little more esoteric is the difference between a normal distribution and a poisson distribution. A normal distribution is the symetrical classic bell curve while a poisson distribution is skewed by realities like zero and non-zero real things.
I've been adding up the losses the American public have suffered and based on my understanding of middle-class America had previously argued that middle-class net worth was basically wiped out by the recent economic downturn. I calculated losses of about 14 trillion dollars and my understanding of the number of American households at about 100,000,000. Doing the math led me to conclude the average American household had lost $140,000 in the last year and so had a "negative net worth."
Imagine my surprise when I read that household net worth in America- while dropping another 2 trillion or so in the first quarter was still $50.4 trillion! (caveat- numbers from the Federal Reserve) Now do that math- the average (mean) American household still has a net worth of $504,000! How does that number match with your reality?
The answer of course is our intuitive understanding of average is absurd in this case. I suspect that the mode is $0, the median is less, perhaps much less, than $100,000 but a mean of $504,000. The minimum net work of the 359 billionaires in the US is $0.4 trillion. Probably another 10,000 or so with net worth over $100,000,000 sucking up another 10 trillion. About 2,000,000 millionaires account for another $2 trillion. Reality is probably another 5-10-fold higher for these fortunate folk. Instead of minimum net worth numbers accounting for about $13 trillion, probably more like $60-100 trillion! Leaving the net worth for the rest of us at -$10 trillion to -$40 trillion! Those are big negative numbers folks! That's a mean household net worth for the non-millionaires in America of ($100,000)-($400,000). That also probably doesn't match your reality.
In fact, the vast majority of the stock/equity losses were suffered by the >$1,000,000 folk. Most of the non-millionaires still have jobs so their cash flow hasn't changed a great deal. The housing debacle hasn't really come home to roost as most folk haven't tried to sell their homes since they dropped half their value. Most of us have just re-ordered the next 20 years of our lives toward more austerity, longer work lives, and more servicing the people who own the means of production. We continue to willingly trade our work lives for current need fulfillment and some relief at the end when we're old and sick! Sounds like a tenuous system to me.
I've been adding up the losses the American public have suffered and based on my understanding of middle-class America had previously argued that middle-class net worth was basically wiped out by the recent economic downturn. I calculated losses of about 14 trillion dollars and my understanding of the number of American households at about 100,000,000. Doing the math led me to conclude the average American household had lost $140,000 in the last year and so had a "negative net worth."
Imagine my surprise when I read that household net worth in America- while dropping another 2 trillion or so in the first quarter was still $50.4 trillion! (caveat- numbers from the Federal Reserve) Now do that math- the average (mean) American household still has a net worth of $504,000! How does that number match with your reality?
The answer of course is our intuitive understanding of average is absurd in this case. I suspect that the mode is $0, the median is less, perhaps much less, than $100,000 but a mean of $504,000. The minimum net work of the 359 billionaires in the US is $0.4 trillion. Probably another 10,000 or so with net worth over $100,000,000 sucking up another 10 trillion. About 2,000,000 millionaires account for another $2 trillion. Reality is probably another 5-10-fold higher for these fortunate folk. Instead of minimum net worth numbers accounting for about $13 trillion, probably more like $60-100 trillion! Leaving the net worth for the rest of us at -$10 trillion to -$40 trillion! Those are big negative numbers folks! That's a mean household net worth for the non-millionaires in America of ($100,000)-($400,000). That also probably doesn't match your reality.
In fact, the vast majority of the stock/equity losses were suffered by the >$1,000,000 folk. Most of the non-millionaires still have jobs so their cash flow hasn't changed a great deal. The housing debacle hasn't really come home to roost as most folk haven't tried to sell their homes since they dropped half their value. Most of us have just re-ordered the next 20 years of our lives toward more austerity, longer work lives, and more servicing the people who own the means of production. We continue to willingly trade our work lives for current need fulfillment and some relief at the end when we're old and sick! Sounds like a tenuous system to me.
Saturday, March 7, 2009
Consumer confidence
The Conference Board publishes regular survey results that it commissions to measure "consumer confidence." 50 is neutral, 100 is where consumer confidence was in 1985, the index was started in 1967. The February survey registered its lowest reading ever, 25.0.
Notable past numbers and geo-political benchmarks- Nixon's resignation- 91; Berlin Wall came down 115.1; Lowest during the Iranian hostage crisis- 50.1 (May, 1980), 9/11- 85.3; the low of the mid-70s recession- 43.2. "Whip Inflation Now"
In my business I talk with a cross-section of America. Increasingly, there seems a broad consensus that "the fix is in." People are increasingly feeling that the playing field is rigged and that crooks have made a lot of money (arbitragers, bankers, oil and gas) and most of us are just fuel for their game. "Buy and Hold" is wiping out our net worth.
Did I mention the stock market was flat- no gain between 1966 and 1983.
The only hope I have is the old wisdom that the market doesn't turn until all the news is bad and all the optimism is wrung out. I think we're there. Turn, market, turn.
The last year on the Mayan calendar is 2012.
Notable past numbers and geo-political benchmarks- Nixon's resignation- 91; Berlin Wall came down 115.1; Lowest during the Iranian hostage crisis- 50.1 (May, 1980), 9/11- 85.3; the low of the mid-70s recession- 43.2. "Whip Inflation Now"
In my business I talk with a cross-section of America. Increasingly, there seems a broad consensus that "the fix is in." People are increasingly feeling that the playing field is rigged and that crooks have made a lot of money (arbitragers, bankers, oil and gas) and most of us are just fuel for their game. "Buy and Hold" is wiping out our net worth.
Did I mention the stock market was flat- no gain between 1966 and 1983.
The only hope I have is the old wisdom that the market doesn't turn until all the news is bad and all the optimism is wrung out. I think we're there. Turn, market, turn.
The last year on the Mayan calendar is 2012.
Monday, March 2, 2009
A Billion
A Billion is... the number of emails sent in 5.3 minutes!
Now big numbers- Trillions
The market capitalization of the US stock market in May 2007 was about $15.35 trillion (13, 400 on the Dow). Since then the drop in the stock market has wiped out 7.5 Trillion dollars in capital, the drop in home values to date has wiped out about 5 Trillion dollars, planned for (worst case scenario) in the housing recovery plan is another 2.8 Trillion dollars lost. We have lost the equivalent of 80% of the market capitalization of the US stock market in two years!
Now bring some of this home. It's been said that most Americans biggest asset was their house. If this was true at the beginning of the fall and we assume the average time in a house is 4.1 years, and we assume that most people had between 0 and 20% equity in a home they purchased in the last 5 years, just the lost in home values (28%) has wiped out the "average Americans" net worth. On top of that with the drop in the stock market the "average American" now has a net worth the negative of what their positive net worth was two years ago.
From 1964 to 1981 the US stock market was FLAT! Since I'm turning 50 this month and have lost almost all of my net worth I'm financially screwed. Compounding works way better when there's positive growth! Thankfully, I enjoyed a few great years in my 40s. I may never be retired again.
Our only wealth is the relationships that we enjoy with people we love. These are times that test those relationships, nurture them and smile!
Now big numbers- Trillions
The market capitalization of the US stock market in May 2007 was about $15.35 trillion (13, 400 on the Dow). Since then the drop in the stock market has wiped out 7.5 Trillion dollars in capital, the drop in home values to date has wiped out about 5 Trillion dollars, planned for (worst case scenario) in the housing recovery plan is another 2.8 Trillion dollars lost. We have lost the equivalent of 80% of the market capitalization of the US stock market in two years!
Now bring some of this home. It's been said that most Americans biggest asset was their house. If this was true at the beginning of the fall and we assume the average time in a house is 4.1 years, and we assume that most people had between 0 and 20% equity in a home they purchased in the last 5 years, just the lost in home values (28%) has wiped out the "average Americans" net worth. On top of that with the drop in the stock market the "average American" now has a net worth the negative of what their positive net worth was two years ago.
From 1964 to 1981 the US stock market was FLAT! Since I'm turning 50 this month and have lost almost all of my net worth I'm financially screwed. Compounding works way better when there's positive growth! Thankfully, I enjoyed a few great years in my 40s. I may never be retired again.
Our only wealth is the relationships that we enjoy with people we love. These are times that test those relationships, nurture them and smile!
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