Kids and the Economic Future

A significant part of my job as a father is to help prepare my children for life in the great, wide world.  It’s challenging enough with the constant societal change and the impact of their peers, but how do I help raise them for the future if that future is fundamentally different from the past and present with which I have experience?  This is the situation faced by millions of American parents who grew up in a world-class economic powerhouse and are now suddenly experiencing the tectonic shifts that are afflicting and winnowing the middle class. 

This was noted in a Bloomberg article chronicling the economic stresses faced by Wall Streeters who’ve lost the significant bonuses that helped them maintain a certain lifestyle.  The money quote is from Andrew Schiff, a fund spokesman who comments I wouldn’t want to whine.  All I want is the stuff that I always thought, growing up, that successful parents had.  Mr. Schiff is bringing home around $200k annually but to be fair, is stuck living in New York City, an exceptionally high cost of living area; note that his 1200 square foot abode is about $1.5 Million and that’s close to eight times the cost of something equivalent in my area.  Leaving aside the political and economic angst about fairness and the 1%, there are some points to be made here.

The first point is the simple mismatch of expectations with economic reality.  Thirty years ago, almost two-thirds of American workers could depend upon defined benefit pension plans to aid them in their retirement.  Less than one fifth of American workers can factor that into their planning today.  My late father was one who was assured of a pension and my mother still receives a monthly pension check from his employer.  If you think that kids don’t pay attention to what fathers say, I can recall mine telling me – when I was in my teens – that I probably wouldn’t be assured of having a pension and once the 401k plans were introduced, I was certain that the old man was right again.  You can’t teach your kids about the world if you aren’t paying attention to what’s happening around you and evaluating – and re-evaluating – it.  With college upcoming, we explained to our kids that the college options were limited by the absence of a pension and our need to help assure that we don’t wind up living in their basement.

The second point is the consumerist mentality of many Boomers and Gen-Xers.  Starting in the post-World War 2 period, American Business – and Government – ramped up the consumer spending mantra as an offset to government and business investment spending; it was to serve as an economic driver in lieu of those and clearly, that paid off as now our personal savings rate is minimal and everyone looks to the US consumer to carry the global economy.  That a teenager looked at the material niceties of other parents thirty years ago and evaluated that as worthy isn’t surprising – it’s a testament to the effectiveness of advertising and manipulation.  But we’re now at the logical endpoint of consumerism, in which we must now make conscious decisions about what’s affordable under our income and what isn’t because we no longer have the income to satisfy the desires ginned up by the advertising machine.

This leads to the third point, which is to evaluate how the parents of our generation – those that Schiff watched – did in their own financial planning.  Remember that thirty years ago, about two-thirds of American workers were set up in a pension plan and the understanding was that while it wouldn’t be Easy Street, the basic income was covered.  Fast forward to today – actually 2008, for which data is available – and the following is known about our parents’ financial health.

  • The non-pension median income from saved assets amounted to $1542 annually, or about $128.50 each month.
  • Now only 40% of Americans over aged 65 have a pension plan.
  • Fully 55% of older Americans rely on Social Security for more than half of their retirement income.

We – Schiff, all of us – watched the great and powerful Oz and didn’t pay attention to the man behind the curtain as he pushed a consumerist mentality.  What we saw was existing in an intellectual vacuum with no other information to provide an adequate context for understanding.

This leads to the fourth point, that kids – mine included – like the niceties and can be budding little curmudgeons when they don’t get what they want.  But pay attention to kids who’ve seen their families wrecked financially and the wish is that they had their family life again, where there was less parental stress and discord caused by financial issues.  The kids want a home, not a house when push comes to shove.

What stays with me more than anything else from Mr. Schiff’s embarrassment – and the guy’s become a poster-child for the Occupy Wall Street crowd – is that it’s my responsibility to teach my children about the world.  The schools will take care of the reading and math, with some help and buttkicking from my wife and I, but parents have to take the time to teach them about the world; if we don’t, then those in the corporate world and media will and it won’t be to the ultimate benefit of our children.

Teaching Kids Everywhere

Today was one of those days when a radio PSA actually had an impact as it spurred memories of hauling toddlers everywhere and having them constantly underfoot.  The PSA in question is for Born Learning, a public education/advocacy campaign sponsored by the Ad Council and the United Way which promotes the everyday, omnipresent opportunities to teach even the smallest children.  The underlying message is that children, from infants onwards, are eminently capable of learning if we’re willing to put it in front of them; the presentation doesn’t have to happen at a table with a book or in any formal setting.

The aired PSA featured a father – guys, teaching about the world is at the heart of fatherhood – chatting with his toddler while driving.  He points out a red car – VROOM VROOM! – and talks about color, the fact that the car can go and praises his son when he grasps the concepts.  The underlying adult humor is the introduction of the blue police car which will soon give the red car’s driver a pink ticket.  It drives the point home that our children are eager to be engaged and the opportunities to teach are literally endless, provided we put forward the thought to notice them and effort to pursue them.

What are some of the things that you can do?

  • When you carry your baby up the stairs, quietly count them as you go.
  • When you pick something up, simply state what it is and perhaps sound out the first letter (A is for Apple).
  • If you see a bright color, state what that color is and see if your child can repeat or sound out the word.
  • An example from the website is having your child hand you a specified number of something when you request (Please hand me three eggs…)

Consider this if you don’t think that what you do is really having an impact.  The starter on my wife’s car died this weekend and through the course of a teen-directed scenario, it was ultimately replaced by a 20 year-old friend of Eldest’s.  As he dismantled the air intake and removed the air filter to even reach the starter, we chatted and I found that this young man had been under cars with his own father from the time that he was less than two years old.  His story was confirmed by someone else there and while I don’t recommend taking Junior the toddler under the chassis, it goes to the heart of the fatherhood experience.  Your job is to teach and along with the mundanities outlined, you can include your kids in your own favorite activities and use that to bring them along.

Your infant’s mind is akin to a blank canvas sitting in a studio.  By pure dint of living, that canvas will be filled with all manner of media, figures and images.  Your job as a father is not to paint that canvas, but to help direct and guide the child as she fills the canvas, providing suitable imagery for the work – do you really want your kid channeling Chris Rock? – and helping to establish a context so that everything becomes coherent, enabling the child to gain a full appreciation for her world.  The unfortunate reality is that if you aren’t going to do it, there are plenty of others out there who will happily take on the project, but the materials won’t be satisfactory and it won’t be in the child’s best interest.

Get started, she’s waiting.






PracticalDance Moms:  Kids, Parents and Coaches

With only one cable-connected television in the house and not much interest, I generally let the choice of programming to others in the family.  But my one gotta-see-this show is Lifetime’s Dance Moms, a "reality" show that sends up the thoroughly over-the-top behavior of hovering stage moms who’ve invested everything in helping their pre-teen daughters achieve their dreams of becoming dancers.  It’s the latest installment in television’s Women-Behaving-Badly programming genre and is yet another shot at mothers who’ve opted to stay out of the workforce.  However, it’s insanely entertaining and in it’s way, does raise questions about parental expectations, behaviors and how we should handle ourselves with kids and coaches.

As a full disclosure, let me state that two of our three kids have been on stage and one is now starting to toy with the notion of the theatre as a career.  We’ve taken kids to auditions and the one child has had two years of dance classes, so my wife and I have seen examples of parents with their ears to the closed audition doors.  When my wife took Middle to a theatre audition and saw the behavior of some of the parents there, she quietly told him that she’d stay in her seat and be cool and he thanked her.  There’s no reason that our child’s reaction is any different from any other child, who’s typically embarrassed simply by the fact that their father is breathing so loudly. 

Going to games and performances isn’t being a stage-parent  

A friend’s daughter has a good role in the middle school play, which has only two performances in one weekend.  She contacted me last week and asked – since she referred to me as an "experienced stage-dad" – whether we went to only one performance or more than one.  My thought was that she appeared to be concerned about being perceived as a stage-mother; my response was that if was only two shows, see them both since she wasn’t likely to see her in that role again.  Frankly, seeing your kid in a public event – game, concert, play, whatever – is something that parents should be doing and isn’t even close to being a helicopter parent.

There are excellent reasons to not go to something, such as work or competing kids’ events.  If the child is in a theatre production with several weeks of performances, even reduced-rate tickets are cost-prohibitive.  But the great majority of kids want their parents and family there, so long as they behave and that is the issue with the stage-parent.  Being a responsible, caring parent means that you should support the kid as she explores new interests; it lets you see how she’s developing and frankly, it’s fun.

Consider the level of the activity and the coach’s qualifications

The great majority of kids will roll in and out of any number of different activities and with such a wide variety offered, the lion’s share of the work will fall to volunteer parents.  There are always coaches at the various levels who’ve never played the game and if these folks weren’t interested, then the activities simply wouldn’t happen.  They’re managing things on the run with their own families and work and they simply don’t deserve the crap that they’re something dished.  If your kid is playing baseball at the 8 year old level, then you’d better be ready to step up and consider coaching yourself if you don’t like the way that a coach is handling things. 

That changes however, as the kids advance and really take to a particular activity.  In the Lifetime show, the dance instructor is a professional who requires a contract from each family and is charging them thousands of dollars annually for the highest level of instruction.  It’s at this point that the parent, as the employer of the independent contractor, does have some claim upon how things are being done.  This isn’t the same thing as my hiring a guy to do some construction work; he might have the expertise that I don’t have, but he’ll work solely for me and any issues that we have will be solely between us.  A coach of any kind is in a more difficult position since that person is not only responsible for one client, but multiple clients simultaneously and in the same venue.  The rancid icing at the top of this cake is that the parents who are paying for this level of attention and expertise are focused heavily on their own child’s development and the potential for personality and interest clash is huge.  Potential scholarships, parental aspirations and dreams of the big time make for a potently combustible blend of ambition on the sidelines. 

Managing the parental behavior

If you’re at this level of investment, the reality is that you do have a vested interest in the outcome and some word in how things happen.  You’re hiring the coach for expertise and from that standpoint, you’re best served by just shutting up and letting it happen.  But there are other factors in play as well – personality,perceived or real favoritism and parental objectivity.  Some folks simply think that every scribble drawn by Junior is someday bound for Sothebys.  The issue then becomes how you manage potential conflict; we embarrass our kids simply by breathing the same air as their peers and they’ll  probably also possess some loyalty to that coach.  After all, if you were so damned smart, you’d be doing this instead of the coach.  

One of the repeated behaviors seen on Dance Moms is the interruption of the practice by one or another mother who’s torqued about something with her child.  The mother enters the practice studio as cameras roll and proceeds to question something and the coach responds.  The kids are left there to stew in embarrassment and a burning desire to smack mom with a tire iron.  While this is reality television, which means that everything is played to the hilt, there are situations in which a parent interrupts a practice or event to publicly register their complaints with the coach; when Youngest signs up for Little League baseball, we parents are obligated to sign an agreement outlining our behavior at practices and games.  Just to show that the parental behavior also flows in the other direction, to the child, our local pool decided to make all parents and guardians watch the swimming lessons from beyond the fences several years ago when a mother – angry at her recalcitrant daughter – walked over to the child and threw her bodily into the pool. 

While we’re protective of our kids, it’s incumbent upon us to be even more in control of ourselves in these situations.  The angry parent will not only offend the person who’s taking on the obligation of working with his child, but will likely also offend other parents as well as embarrass the child in question.  Hold off until afterwards and handle things privately and if there’s no progress with whatever situation, then decide if you need to elevate it to the next level, such as the local league or governing body.  If the coach is paid, as the dance instructor, then you simply have to decide if the child really is being served best there and if not, go elsewhere.  The last thing that you need is the reputation of a dance mom diva.



The Missus

The Big Bang Theory is loaded with subplots as the characters grow and one of the funnier ones is Howard’s developing relationship with Bernadette.  Howard – the only one of the four nerds without a doctorate – has met, fallen in love with, and become engaged to Bernadette.  In the present story-line, she’s now going to receive her own doctorate and is being lucratively headhunted by a major pharmaceutical firm.  It reflects the gender-bending of our reality as women are now able to earn more than men and men are considering their own role with the family; some of the humor is also derived from the reactions and commentary of the peers to this development.  This is based upon reality as people do have to come to terms with the concept that the man is filling the role of the Missus – the one who stays home to keep things in order and run the household. 

As a "stay-at-home-dad" – and I really dislike the term – I’ve had multiple encounters through the years with society’s efforts to work through the gender-bending implications.

  • My wife is a physician and we’ve received mail addressed to Dr. and Mrs. with her name following. 
  • I’ve been introduced as the wife on more than one occasion, once in front of a group of more than 20 people. 
  • When the kids were very small, playdates were sometimes a problem as many mothers were uncomfortable with the concept of having a father in a traditionally maternal domain.
  • A medical spouse group – which existed to support one another and perform charity work for selected projects – invited me to join them with the hookline if nothing else, you’ll get to meet some very attractive middle aged women.  For the record, I didn’t attend.
  • There have been multiple jokes in the distant past from other guys about knitting and crocheting, but the last one was about two years ago and even that last remark came from a man who worked as a nurse.

The needs and dynamics of the family have changed dramatically over the past several decades and for several reasons.  The first is because of the social change wrought by women who were looking for greater opportunities and freedom than what had been offered to their mothers and the chance to define themselves as more than just a mother.  The second is the change in the institution of marriage; the acceptability and ease of obtaining a divorce while more choose to live together outside of marriage.  The third is economic as families find that incomes aren’t keeping up and traditionally male-dominated industries – construction and manufacturing – suffered disproportionately because of the most recent recession and globalization.  Instead of by choice, necessity is now forcing mothers to step up to the economic plate.

But society’s views haven’t kept pace with the parental and family changes and it’s this discrepancy that provides fodder for The Big Bang Theory.  As men take a larger role in child-rearing and the family’s life, the laughs will become harder to mine.  Viewers will watch a particular scenario play out and find it less humorous because they can actually identify with something that’s purportedly novel and question why it’s supposedly funny enough to be filling airtime.  Reality is forcing us to adapt in ways that weren’t considered by our grandparents and society’s labels are slower to change to those adaptations.  I don’t see that terms such as father, mother, husband and wife will ever change.  But the truth is that as men take over greater household and family responsibilities, we’ll render the Missus obsolete. 

PracticalDad:  Critiquing the FAFSA

If there’s anything that drives fear into the heart of a parent – apart from orthodontists – it’s the dreaded FAFSA.  This instrument, the Free Application for Federal Student Aid, garners the financial information used by colleges to ascertain the size and composition of financial aid packages for students that have applied to college.  Listen to enough parents and the sense you get is that it’s an unpleasant, painful necessity, akin to having to complete the last inning of a baseball game when you’re down by more than two dozen runs.  C’mon guys, we can do it!  We can pull this one out!  We can…aw, to hell with it.  But is it the creature it’s made out to be and what’s it really like to complete it?

The FAFSA has especially taken on greater meaning in the past two decades as college costs have spiraled upwards, disproportionate to the actual cost of living for everything else.  We’ve been told that education is the key to the future in a knowledge-based economy and the income data is clear that kids with college degrees earn more over a lifetime than those with just high school diplomas; parents consequently want to assure that the kids get the education they need to survive, let alone succeed.  This instrument is the key tool used by colleges and universities to allocate the available funds amongst the mass of kids and families desiring that key to the future.

FAFSA Basics

  • The form for each upcoming school year is available on January 1st of that year; so the 2012 – 13 school year allocations are based upon the FAFSA instrument available on January 1, 2012.  Most institutions want the completed data by March 1, so there’s a two month window in which to gather the data and complete the FAFSA.  Curiously, this two month window coincides with the peak drinking season of middle-aged men.
  • Much of the data collected pertains to demographic and family information.  How many other siblings are there and more importantly, are any of them in college?  Is the child in question an emancipated minor (did you kick his lazy butt out and have him legally declared an adult at age 11)? 
  • The actual financial data collected depends heavily upon the family income and non-retirement assets of the family, so you ideally need to have completed the federal taxes when you sit down with the FAFSA.  You can complete the instrument with estimates as to your adjusted gross income and colleges will make provisional decisions, but these are subject to revision when the 1040 is submitted.  Guess wrong in February and you’re liable to receive an unpleasant surprise in May.  If you’re like most and the bulk of your assets are tied up in retirement funds, then the financial information required is much less onerous than if you own rental properties and have payments from the installments of land sales.  Of course, if you have rental properties and payments from land sale installments, you might want to seriously consider bagging the entire process unless you enjoy a good laugh.

Completing the Form

  • The form can be completed online and in our case, took less than an hour to complete.  Much of the effort on my part came from actually completing and submitting the returns earlier than I normally would.
  • The FAFSA now has an electronic download linkage with the IRS so that your relevant tax data can be simply downloaded from the IRS.  That said, there is about a two week IRS processing lag so if you’re filing the FAFSA immediately after your taxes, just use a hard copy of the return for reference purposes.  The relevant questions will point you to exactly what lines on the forms are required for the actual answers, so it’s not difficult.
  • The instrument is actually well laid out.  In some sections with a significant number of questions, the system only asks you one question at a time and after you’ve answered and clicked Next, will come up with the next question.  That way,  it’s assured that all of the questions are answered and you’re assured that your mind isn’t going to be blown by the number of questions (more than 80).
  • Because it’s capturing data for a large mass of families, think of a Bell Curve.  While there are a lot of questions asked, the large majority of families are within about 80% of the curve and many of the questions are designed to capture information for those at the outlying ends of the curve.  Again, it took us less than an hour to complete the form.
  • The only paper document that we required was the recently completed tax return.  Otherwise, we handled it on two laptops as my wife did the form while I used mine to obtain asset values from the bank and 529 websites.
  • The completed instrument will only be submitted to those institutions that you specify.  While each has its own unique code identifier, there is a search function that allows you to search for, and load, the identifier instead of having to cuss your way through a stack of college correspondence. 
  • When completing the assets section, there is clarification for the various assets.  This is especially helpful if you have a 529 plan and have to allocate it as a student asset or a parental asset.  Parsing these definitions were the most complicated part of the entire process.
  • The response to the completed paperwork is called the Expected Family Contribution and ours was available shortly afterwards.  The EFC is not the final answer for what your child will receive, but it’s a figure that’s used by the college financial aid staff as they calculate what the kid’s offered and what one offers might be very different from another.

FAFSA Comments

Let’s start with the EFC since that provided the greatest laugh of the night.  Multiple factors compose the EFC calculation, including the number of kids in the family, assets and income; what struck me was, in a sense, comparability to sitting down with a mortgage broker to discuss what size loan you can afford.  In the mortgage case, I’ve had brokers state that we can afford a certain amount while the reality is very different.  Likewise, our EFC – and no, I’m not going to share – was such that it would be theoretically affordable if we ignored everything except for the most basic of necessities and frankly, I’m not certain how we’d make it with that.  The EFC is a starting point, but not one necessarily grounded in reality.

The instrument itself was straightforward and I’ve had greater issues preparing my state income taxes.  The site is well-designed and after finishing it, it was apparent that there’s considerably greater emotional overlay to the FAFSA than actual pain.  As we parsed the questions and completed the form, what stayed with me was the question of whether we’d done enough through the years.  Could we have saved more?  What if I’d invested this way instead of another?  How will we manage it when Middle and Youngest are up the plate?  And above all, the hard realization that Eldest really is going to be leaving for college in six months.  Dear God, she’s leaving…where did the time go?

My father sometimes commented that things were generally much easier if your ducks were lined up in a row first.  Take your time, line up your ducks and the FAFSA isn’t going to be a major issue.  It’s helpful though, to check your emotions at the door.



Friend Time vs. Family Time

Although there are still younger ones in the house, Eldest is now officially in the last semester of her senior year in high school.  In the moment of raising kids, it didn’t seem as though it would end but in retrospect, it’s gone quickly.  And it’s now that I fully understand what other friends have said through the years:  I think that he’s gonna stay home tonight since he’s leaving in only a few months.  The difference is an intellectual understanding versus the visceral comprehension that you feel in your gut.  With the knowledge that your child wants to spend time with the friends but is still leaving the roost soon, how do you balance out the competing interests so that the kid gets to do what she wants while you still get to spend some meaningful time before that final departure?

Most teens are at the height of egocentrism.  While they can participate in all manner of group activities and volunteer heavily, their world still revolves around themselves and there’s an understanding that when they leave high school, that world is going to change dramatically.  These bonds and friendships that have formed over the socially intense teen years will forever change as they go off to college, join the armed forces or – hopefully – get a job.  Couple that with their passion and sense of invulnerability and the world’s their oyster.  Until this passage into the birth of legal adulthood, they will want to play.  

Friend time versus family time is a question with which we wrestle here.  Different parents will have different takes and levels of acceptance and my own varies as well.  But when your high school senior comes to ask whether she can spend half of the day tomorrow with some buddies, what might you consider?

  • Are there actually any family activities planned?   She is still a member of the family and there are still others living within it, others who appreciate her presence at concerts, shows or games.  While she might look upon it as a journey into Dante’s Purgatory, spending time can help remind her that there are others who still enjoy her presence.  Likewise, these can help reinforce that there are certain family values that are likely not going to be emulated amongst her peers.
  • What else is going on within the schedule?  Many teens are still getting a handle on time management and if they’re not used to keeping a calendar, then they’re liable to be missing something; even if I don’t know exactly what her schedule is, I can still ask her what’s happening with things like school subjects, work, status of chores and tasks to prompt her memory. 
  • How often has she been around recently?  If she’s not been to a family meal in a period of time, then it’s reasonable to expect her presence to check in on things with her parents and siblings. 
  • If there are younger siblings, do they seem to miss her? 
  • Likewise, what standards do you think are being set for the younger siblings as they age?  If they perceive that the elder sibling is constantly gone, they’re going to expect the same treatment.  The problem with the younger one is that they’ll expect it at a younger age since they don’t have a great grasp on time.  Senior sibling is going to a local concert and not home until 11 PM?  They’ll remember the concert and curfew time, but they won’t recall that she was a senior at that time.
  • Naturally, what are the details – who, what, when, where, how – and what’s the track record?  She’s still a minor and if something goes wrong, you’ll get the phone call, so you can certainly put the kabosh on something even if it’s going to be unpleasant in the household for awhile.
  • It’s not selfish to say no if there’s something that you’d like to do with her.  If she’s simply going to be stuck in the house while you do whatever you do with no attention paid to her, then you might as well let her go.  But if there’s something that you’d like to do, then you’ve got a right to your time with her

There are no simple answers and what one father finds acceptable might be another’s anathema.  Parenting teens is sometimes an inexact science, but it’s helpful to have a sense of what some of the considerations are when she’s standing next to your chair with phone in hand and a question on her lips.

PracticalDad’s College Financing:  Taking a bite out of the elephant

How do you eat an elephant?  One bite at a time.

          – Friends with a child who’s a HS senior

Senior year is supposed to be the piece de resistance for high school students.  In January, the principal at Eldest’s high school actually had a class meeting with the seniors to warn them that they still had obligations and shouldn’t fall prey to senioritis.  For parents with kids facing higher education, there’s a definite pressure as the post high school search ensues and plans have to be made for what happens afterwards.

In our household, the pressure is off slightly as Eldest has finally come to a decision on college.  There’s no more questioning and waiting, tapping both literal and figurative toes as her internal gears grind to a conclusion.  But that relief lasted only a short time as the reality of the financing comes into play.  The captioned quote was made by a friend that I encountered as I passed through a coffee shop; she and her husband were sitting and commiserating after finishing their taxes.  The next step for them, as for us, is the completion and submission of the dreaded FAFSA.  Even though I haven’t looked at it yet – that occurs this weekend – the form’s notoriety is such that it inspires a palpable dread and desire for a stiff two-finger shot.  Once that’s done, then comes the response from the college with the details of what’s offered. 

The institution’s response to the financial data is also something that should be interesting.  One of President Obama’s higher education reform policies pertains to an effort to simplify and standardize the college financing letters as well as somehow establish a lid on college costs.  The rip on the institutions, particularly the for-profits such as Phoenix, is that their information is convoluted enough that the average student and parent finds it difficult to decipher accurately.  While I don’t expect an issue from this particular college, the first gander should be an interesting one.

So my friends and I will have similar days.  We’ll bedeck ourselves with ink-proof bibs and like a diner facing an elephantine dish, start eating it just one bite at a time.  I guarantee that I’ll have indigestion afterwards, too.

The Take-away on Greece

Regardless of what happens with Greece, whether they come to an agreement with the Troika or not, here are some things that I’ve taken away from watching it.

This is what society will look like when the bills finally come due and money that’s needed goes instead to the lender. 

There’s only so much wealth circulating in a society and when critical mass is reached, that wealth will have to go to pay off the lender.  Crucial services will be unmet and the social net will suffer as that wealth is diverted to repayment.  As it stands in Greece, pharmacists are having difficulty getting medications filled for people since the government ministry doesn’t have the money to pay suppliers.  People on pensions are looking at cutbacks of more than a third.  Families with no income are beginning to consider giving children up for adoption or simply leaving them with the village churches. With almost one half of all Americans living in a household receiving some form of government aid, any cutbacks in domestic assistance are going to have outsize effects upon our families. 

Family will matter greatly, moreso than is the American case now.

One of the conversations that we had was with a driver who was taking us from Athens International to our hotel.  About half of the Greek population lives in the vicinity of Athens, which grew tremendously in the past three decades.  What he’s witnessing however, is that more and more are leaving Athens and returning to the villages in which their families reside.  There, they’ll find support from their families and weather what’s about to come with the hope that eventually, they’ll be able to return to a semblance of prosperity afterwards.  The point is, they have family with which they can shelter the hardship; the geographically extended and transient nature of the American family today makes that possibility dicier than would occur in a stationary, family-centric society like Greece.  If things really go to hell, do you have family upon whom you can fall back?  Likewise, how far does your own net extend?

He who pays the piper, calls the tune.

Some members of the German government are openly stating that Greece’s intransigence/incompetence/stalling requires that the European government take over the Greek government’s budgeting and spending authority.  This is frankly a financial coup d’etat and brings home the point that whoever controls the finances ultimately drives the process.  In a recent post on Greece, I equated this threat to a situation in which we’d see the Chinese, who hold large amounts of our bonds, come in and demand control of our spending process in return for their capital.  However, this wouldn’t be a realistic alternative since the Chinese are neither the principal buyers nor holders of our bonds anymore; last year, the Federal Reserve System of the United States became the top non-governmental holder of the federal public debt in the world, at $1.65 Trillion.  So a private banking entity – which is what the Federal Reserve actually is – is now the top holder of US debt with 46% more holdings than the second place Chinese and with the Chinese cutting back, it will only grow further.

Understand first that the Federal Reserve System in not part of the Federal government, but instead is a private entity owned by the various member banks; as part of the charter granted by the federal government in 1913, it is owned by the member banks but the leadership is confirmed by government, hence the periodic news that one person or another has been confirmed as Fed chairman by Congress after nomination by the President.  Otherwise, it is a private entity.  That scenario worked for decades, but with the repeal of Glass-Steagal and the unregulated growth of derivatives, it’s become apparent that the Federal Reserve now serves the interests of the banking system first and foremost.  Now that you understand this, consider the banker/financier excesses of the past years and ask yourself if the holders of the debt are going to be willing to sacrifice for the common good or if they’ll look to their own interests first.

He who pays the piper, calls the tune.   


Two of the better recent chickflicks of the past several years – Sisterhood of the Traveling Pants and Mamma Mia – occur in Greece.  After viewing the former with her girlfriends one evening several years ago, Eldest came into the kitchen and announced that she would love to go to Greece.  My wife, loving travel herself and envisioning the Holy Grail of family vacations, mentally went Boo-Yah! and plans were laid.  The trip coincided with the summer of Eldest’s upcoming senior year; after college started, all bets would be off as to future availability for a trip with the entire family.  After more than two years of saving, we hit the road to Greece and Italy

The trip was instructive in a real world sense, as well.  Along with the Acropolis and other historic sites, the kids got to experience (peaceful) political protests, riot-damaged buildings and the presence of riot police, armed with automatic weapons; it wasn’t what I envisioned originally, but hey, it’s educational nonetheless.  Consequently, what happens in Greece has a more-than-intellectual interest to our family.  As we’ve talked about it periodically, including today’s conversation about the impact of any potential return to the Drachma, it’s been important to keep the players and events straight.  So where do we stand at the moment?

As of today, the Greek government is having to decide whether to accept the demands of the "Troika" for continued and additional austerity measures, including the abolition a paid national holiday and reduction in pensions to the tune of about 35%.  If they don’t, then the Troika – the European Central Bank, the International Monetary Fund and the European Commission (the governing body of the European Union) – will refuse to release the 130 Billion Euros to the Greek government that it needs to survive.  And what happens if they don’t get the money, among other things?  At stake is the next installment of 14.5 billion Euros that the Greeks owe on their outstanding debt; they don’t pay it – and without that money, they can’t – and they’re officially in default.  Let’s have some perspective here since we’re used to dealing in dollars.  As of 2010, the Greek GDP was about $304 Billion; at the June 2010 exchange rate of .819 Euros to the Dollar, this means that the Greek GDP was about 249 Billion Euros.  This 130 Billion Euro payment that the Greeks need to survive amounts to 52% of their 2010 GDP and if this were occurring here in the US, a proportional amount that we’d need would be in the order of $7.3 Trillion (yes, that’s trillion).

Why are the Greeks balking?  First, their government is chronically incapable of collecting taxes since tax evasion is as big a national sport as soccer with a resulting chronic shortfall in revenue.  Second, the Greeks are unwilling to part with their social welfare/retirement benefits, which are amongst the most generous in the world.  This particularly galls the thrifty Germans, who have a retirement age about a decade later than the average Greek and who see their best and brightest go into Manufacturing, while the best and brightest of the Greeks become tax accountants.  Third, some Greeks believe that something is owed to them by the Germans, who’ve never actually apologized – ummm, yeah, about that 1940 invasion and famine…sorry, ok?  Now pay up, you sheepherding deadbeats – let alone reimbursed them for all of the damage caused during the Second World War.  Fourth – and probably the most important point – is that there’s an amount of gamesmanship occurring.  The old saying is that if you owe the bank $100 and can’t pay, you have a problem but if you owe them $1 Million and can’t pay, then the bank has a problem and that’s the issue here.  Greek bonds are held by European banks to a large extent and any default or significant "haircut" of the bond values will leave them insolvent and these banks are already suffering from too little capital.  Greeks believe that if they stall long enough, they can drive a hard enough bargain to minimize the damage that they know is going to occur.

The final reason that the balk has become almost concrete is that the Germans – who as one of the few financially AAA rated countries in Europe – are the real backstop behind the European bailout.  They’ve seen this continue for more than a year and are at the point that some of their Ministers are demanding that if the Greeks really want the money, then they’d have to give up control of their public budget and spending functions to non-Greek Europeans; the Greeks would essentially be giving up their sovereignty.  Consider the backlash here if we were so in hock that the Chinese demanded control of our fiscal autonomy in return for funds.

The situation is simply so impossible that if it were presented to Solomon, he’d sit down with a fifth of Jack Daniels and call it a night.

So if things are that screwed up, why are they worried about Greece?  Again, it comes down to the banks.  The European banks are badly undercapitalized and any truly significant hit on their Greek bonds could be devastating to them, let alone to their ability to continue making sufficient loans to actually healthy businesses that need money.  These banks are tied up amongst one another in a web effect and the great fear is of a financial lock-up that would make the 2008 Lehman collapse look like a cakewalk.  The web effect even carries over to domestic American banks and there’s fear of difficulty here, even if not to the extent of Europe.  And once Greece goes, next up is Portugal with its own issues and then Spain and finally, Italy. 

The final point is that after actually being there, and talking to the merchants and history guides, the fishing captains and average folks – and yeah, even the riot police were pleasant – this is not simply an intellectual exercise.  It’s a devastating occurrence with real-world consequences that are tragic and instructive if you’re willing to pay attention. 

So, which do you choose?  Painful austerity and loss of sovereignty, or economic collapse and your nation?

PracticalDad Price Index:  February Retail Grocery Basket Cost Declines

PracticalDad’s 47 item retail grocery basket actually declined in cost when priced for February, from an average of $189.91 in January, 2012 to $187.14; the index (November 2010 = 100) now sits at 104.90 and is down from January’s 106.46.  The three month moving average is likewise down from it’s January peak of 106.17 to 105.95.

There are some comments that go along with this data.

  • There is a bias in dealing with a small survey (47 items priced in three stores) in that issues with particular items within particular stores can skew the results.  In this case, two separate grocers have had outsized price increases in two separate items (one per each store) over the past several months and since January, these two items have dropped in cost.  The result is that there’s a disproportionate change to the downside as well.  It’s possible that these two items might be indicative of a larger issue within the grocery supply chain, but it’s impossible to know.
  • Despite these two items, February is the first month since the November 2010 index inception in which there are more items dropping in price than increasing (12 decreases versus 10 increases).
  • One of the items (spaghetti sauce) dropped in price as one grocer decreased both the item size and the cost, even adjusting upwards back to the original size of 26 ounces.  This however, does give greater latitude with potential price increases for that item moving forward.
PracticalDad Price Index – Cumulative thru February 2012
Month Price Index 3 Month Mov Avg
Nov 2010 178.39 100  
Dec 2010 180.30 101.07  
Jan 2011 179.51 100.63 100.56
Feb 2011 179.51 100.63 100.78
Mar 2011 180.51 101.08 100.78
Apr 2011 181.91 101.97 101.56
May 2011 182.10 102.08 101.71
Jun 2011 184.07 103.18 102.38
Jul 2011 185.00 103.71 102.99
Aug 2011 187.05 104.85 104.06
Sep 2011 188.57 105.71 104.76
Oct 2011 188.34 105.58 105.38
Nov 2011 188.31 105.56 105.61
Dec 2011 189.97 106.49 105.88
Jan 2011 189.91 106.46 106.17
Feb 2011 187.14 104.90 105.95




















PracticalDad Price Index – February 2012 Results
Item Size Category 12/11 1/12 2/12
hot dog rolls (ct) 8 bread 1.20 1.20 1.20
loaf, wht bread, store brand (oz) 20 bread 1.26 1.26 1.26
spaghetti, store brand (oz) 16 bread 1.25 1.25 1.27
child cereal, sugar flakes, store brand (oz) 17 cereal 3.12 3.06 3.06
cereal, rice chex, store brand (oz) 12.8 cereal 2.84 2.84 2.84
oatmeal, one minute, store brand (oz) 42 cereal 3.36 3.36 3.36
milk, 2% (gallon) 1 dairy 3.80 3.95 3.76
butter, unsalted, store brand (lb) 1 dairy 3.49 3.59 3.56
vanilla ice cream, store brand (qt) 1 dairy 2.01 2.01 2.20
grated parmesan cheese, store brand (oz) 8 dairy 3.08 3.14 3.14
American cheese, deli (lb) 1 dairy 5.59 5.59 5.59
peanut butter, store brand (oz) 28 grocery 3.76 3.74 3.74
grape jelly, store brand (oz) 32 grocery 2.01 2.01 2.01
kidney beans, dark, store brand (oz) 15.5 grocery .95 .95 .92
can green peas, store brand (oz) 15 grocery .96 .99 .99
can diced tomatoes, store brand (oz) 14.5 grocery 1.06 1.09 1.09
can cut green beans, store brand (oz) 14.5 grocery .99 .99 .99
can corn, store brand (oz) 15.25 grocery .99 .99 .99
spaghetti sauce, store brand (oz) 26.5 grocery 1.21 1.21 1.13
cola, store brand (L) 1 grocery .94 .94 .94
caffeinated coffee, store brand (oz) 13 grocery 4.41 4.39 4.63
diapers, store brand (ct) 100 hlth/bty 17.70 17.70 17.70
formula, Enfamil Premium (oz) 23.4 hlth/bty 23.84 23.84 23.84
child ibuprofen, store brand, OS (oz) 4 hlth/bty 4.89 4.89 4.77
adult ibuprofen, store brand, caplet (ct) 100 hlth/bty 8.31 8.31 6.82
shampoo, Suave (oz) 22.5 hlth/bty 1.86 1.86 1.91
pads, long/medium, Poise (ct) 42 hlth/bty 15.82 15.49 14.84
bath soap, Dial (ct) 8 hlth/bty 6.17 6.18 5.87
aluminum foil, store brand (sq ft) 75 hshld 3.09 3.09 3.09
kitchen trash bags, handletop, store brand (ct) 26 hshld 4.31 4.31 4.48
paper towels, 2 ply, store brand (ct) 8 hshld 7.26 7.26 7.26
hot dogs, meat franks, store brand (oz) 16 meat 2.69 2.23 2.26
ground beef, 80% lean (oz) 16 meat 3.52 3.49 3.74
eggs, large (doz) 1 meat 1.91 2.11 2.01
lunchmeat, deli ham (lb) 1 meat 4.03 3.93 4.16
chicken, roaster (lb) 1 meat 1.59 1.59 1.62
fish sticks, Gortons (ct) 44 meat 8.24 8.24 7.51
tuna, chunk light, water packed, store brand (oz) 5 meat .84 .84 .94
bananas (lb) 1 produce .59 .59 .59
apples, Red Delicious, bag (lb) 3 produce 3.76 3.76 3.76
carrots, bag (lb) 2 produce 2.36 2.36 2.36
OJ, non-concentrate, store brand (oz) 64 produce 2.79 2.79 2.79
potatoes, Russet (lb) 5 produce 4.32 4.66 4.32
sugar, store brand (lb) 5 staple 3.33 3.30 3.30
flour, store brand (lb) 5 staple 2.30 2.34 2.34
canola oil, store brand (oz) 48 staple 4.39 4.39 4.39
rice, white, long-grain, store brand (lb) 2 staple 1.81 1.84 1.80
                               Total     189.97 189.91 187.14