Caught with Her Hand in the Cookie Jar

Hilary Clinton is getting a lot of flak for making a speech were she claimed that on a trip to Bosnia, her plane landed under sniper fire, and she had to make a run for the motorcade. Unfortunately, television coverage of the event shows nothing of the kind. Hilary and Chelsea wave frm the plane, saunter down the ramp, and go through a welcoming session right there on the tarmac, complete with little girl handing over a bouquet of flowers. About the only attack taking place is possibly an allergy attack from the pollen.

Today HRC admitted that she "misspoke." To paraphrase, I guess that depends upon what the definition of "misspoke" is.

Okay, look. Yesterday my production manager and I had a disagreement about whether total employment at our company had peaked at 98 employees or 101 employees in 2007. After pulling payroll records, I had to agree that I was wrong when I claimed only 98, instead of the correct 101. That's misspeaking.

If I had claimed that the extra 3 employees didn't count, because they were actually extraterrestial aliens who had landed a flying suacer at the company picnic and applied for jobs, that would be a little more than misspeaking. That would be making up events out of whole cloth.

If Hilary had said that she came under sniper fire in Bosnia, but it was actually Dafur, that would be misspeaking. But other than the start of deer season in Arkansas, when is it even remotely possible that she was shot at? And if she hasn't been shot at, how could she have come up with the story that she had?

Also interesting is that in a later interview she claimed "Last week for the first time in twelve years or so, I misspoke." She actually knows that its her first mistake in 12 years. I can't even be sure what I had for dinner last Wednesday, but she's sure that she hasn't made a false claim in over a decade. It makes you wonder what she could have said that made such a strong impression.

"Don't worry, Bill. I forgive you."

Bad Law I, Starbucks 0

Here's a quiz for you: Next time you pop into Starbucks for an infusion of caffeine and ambience, take a fast look at the staff working the store. Now, quick: who's the boss? Is it the person running the expresso machine, the person running the register, or the person grinding coffee in the back? Thinking back on my recent visits to my favorite coffee emporium, I honestly couldn't tell you. Sometimes I've gone in and found only one person working the store. I guess that he's the one in charge on those occasions.

This matters because in California, there is a law that says that members of management cannot share in pooled tips. Last week a judge in San Diego ruled that Starbucks had violated this law because they had allowed shift supervisors to share in the tip pool. The judge slapped the company with a fine of...$100 MILLION dollars (when I say that I'm tempted to touch my pinkie to the corner of my mouth, ala Dr. Evil).

I think this decision is wrong for a couple of reasons. First of all, it perpetuates the us versus them view of the workplace that runs contrary to the way a lot of top performing organizations function these days. Think back to your experience of Starbucks. If you cannot tell who the boss is, it's because everyone is working. There's no foreman there behind the counter. Think of a football team. The quarterback may run the plays, and he may get paid better than the linebackers. But no one ever gets confused that the quarterback isn't playing the game as a member of the team.

I don't know many specifics about how Starbucks runs their stores, but I suspect that the shift supervisors are not really what I would consider management anyway. Managers have hire and fire authority. Managers schedule the associate's work shifts, and formally review the other team member's work performance. If the Starbucks shift supervisor does not do these things, it is hard to consider that person as a manager.

Finally, this judge's decision irritates me because it takes away my ability to make up my own mind. When I'm standing there with a latte in one hand and my change in the other, thinking about whether to put the change in the tip jar or back in my pocket, just who am I tipping? More often than not, I'm rewarding the worker who jumped in where needed to keep the line moving, or the worker who showed the newbie how to run the coffee grinder. Before last week, I didn't even know that Starbucks had shift supervisors, but I'll bet there the ones who set the tone for the whole experience.

And this judge just ruled that I shouldn't be allowed to tip them.

Let's hope Starbucks wins on appeal.

Bear Stearns: RIP, Part II

In my last post I talked about the collapse of Bear Stearns in terms of liquidity. What happened was an old fashioned run on the bank. But the other half of the story was leverage.

Leverage is a measure of the ratio of debt to equity, equity being the cash money that investors put in to a company. The use of debt allows you to "lever up" the rate of return on equity. Let's work through an example to illustrate how this works.

Suppose you buy a slightly run down house in a decent neighborhood for $110,000. You put another $10,000 into fixing the house up over six months, then list the house for sale. Six months after that you sell the house for $135,000. So your profit is $15,000 (you put in $120,000 total, and got out $135,000). The rate of return on equity is profit/equity, or in this example, .125 or 12 1/2%. Which is okay, but not spectacular. Don't quit your day job.

Now let's see what leverage can do for you.

Work the same example, but assume we buy the house with $10,000 down and an interest only loan of $100,000 at 7%. Same $10,000 to fix the house, same $135,000 sale at the end of the year. The first thing you do is pay off your loan, so reduce the sales price by $107,000. Your profit is lower, because you got $28,000 less the $20,000 you put into the house. So your total profit is only $8000, versus $15,000 in our first example. But look at rate of return on equity. In this case, return is 8/20, or 40%. Houchee mama! By using 5 to 1 leverage, we've increased our rate of return by a factor of three. Why wouldn't you want to use leverage? Let's play this game again!

Well, the problem is that leverage can work against you as well as for you. Remember, the guy who holds the debt always gets paid back first. Let's run our second example again, only this time we'll assume that the real estate market is tanking, so instead of selling the house for 12.5% more than we put in, we sell for $107,000, or about 11% less than what we put in. We pay back our loan for $107,000, leaving us with...zip, nada, bubkus. Your equity of $20,000 got wiped out. Game over.

That's with 5 to 1 leverage. Bear Stearns had $11.5 billion worth of stockholder's equity. They had leveraged that to control $395 billion worth of assets on their balance sheet. When you are leveraged at 34 to 1, it only takes a three percent drop in value to wipe out your equity. Game over.

Bear Stearns: RIP

The big business news this Monday is the acquisition of Bear Stearns by J P Morgan Chase over the weekend. At the close of the market last Friday, Bear Stearns was valued at $30/ share. When the deal was announced on Sunday, Morgan was only paying $2 per share. In addition, the Federal Reserve agreed to loan Morgan $30 billion dollars, taking as collateral mortgage backed bonds in Bear's portfolio. Basically, the Fed (by which I mean the taxpayers) took the bonds most likely to go into default off JP Morgan's hands.

This looks like a steal for JP Morgan. They're paying $2 a share for a company with a book value of $80 a share. Even if it is written down by half, the assets would still be worth 20 times what Morgan is paying for them. The real estate held by Bear Stearns alone is worth about four times the purchase price.

Bear Stearns was one of the five largest US investment banks. The employees owned 30% of the stock. Their stake is now valued at less than $5500 per person. The Chairman of Bear Stearns, John Cayce, was one of the richest Wall Street executives, with holding in BS stock worth oven $1 billion less than a year ago. What could have convinced the management of Bear Stearns to take a deal that essentially wiped them out?

In a word: liquidity.

Liquidity is a measure of how easy it is to convert assets into cash. Cash is always the most liquid asset of all. Normally, stocks are almost as liquid as cash. Call your broker, tell him to sell, and you can have cash within a couple of hours. If you have a store that has inventory, you will usually liquidate the inventory every couple of months. Anyone who has ever tried to sell a house in a down market knows that real estate can be one of the most illiquid forms of asset.

Bear Stearns ran their financial trading operations using a lot of borrowed money. Some of the money was given to the firm by it's clients. Some by other banks. What happened last week was that these parties started to pull their loans from Bear Stearns. In order to keep operations going, Bear Stearns would have had to sell assets from their portfolio. The problem is that right now, no one is buying mortgage backed assets. That market will probably come back in a few months, but Bear Stearns needed money right now.

Basically, the brightest minds in finance became part of a panic driven run on a bank. And a Wall Street titan that survived the Great Depression is no more.

Weak dollar, strong exports?

The dollar continues to show weakness against other currencies, falling to new lows against the euro today. Interestingly, most of the media coverage I have read talks about this development in terms of the inflationary effect. "Look at how expensive imports have gotten."

I have seen very little news coverage about how a weaker dollar boosts exports. My guess is that this is partly due to the fact that increases in export sales lag the drop in currency, while currency driven increases in import prices are immediate. When Mercedes imports cars into the US, they're paid in euros, so the price goes up in dollars almost instantly as the exchange rate shifts. On the other hand, if Cadillac wants to start selling cars in Europe to take advantage of a weak currency, it takes time to ship cars over, plan an advertising campaign, and start getting sales.

In the area of industrial components, the sales cycle can take a really long time. For engineered components, it can easily be eightteen months from first sales call to first production shipment. So for the kind of product that my company makes, it could be a long time before we pick up any sales increase due to a weak dollar.

In the meantime, prices for basic commodities (in my case, brass and steel) have jumped, because commodities are priced on global markets. This is true even though domestic demand is down. As a purchaser of those commodities, my costs have increased at the same time my sales volume has decreased. My company makes subassemblies for the major appliance industry, which is tied in to housing starts.

So far, the weak dollar has not helped at all.

Balancing Act

In my formative years, back when dinosaurs ruled the earth, the common metaphor for retirement planning was "a three-legged stool." The idea was that your company pension was one leg of the stool, helping to support your retirement. Social Security was the second leg of the stool. Balancing out the stool was the third leg: private savings. Whenever I heard this metaphor used, it was always combined with an exhortation to increase private savings. Relying on pension and Social Security wasn't enough for a secure, comfortable retirement.

In the years since I first encountered this metaphor, the importance of private saving has grown by leaps and bounds. I passed up on my chance to acquire a traditional defined benefit pension when I left the Army in 1985. For the last 20 years I have worked for companies that do not offer a pension benefit. So that leg of the stool has been sawed out from under me.

Let's consider the second leg of the stool: Social Security. The Social Security trust fund goes into deficit mode in 2018, only 10 years from now. As the number of retired baby boomers increases, the ratio of employed workers paying into the system to retirees pulling out of the system is projected to shrink. Since the federal government currently needs Social Security taxes to help fund the deficit, I don't see where the money is going to come from to pay promised benefits to all the people scheduled to retire in the next ten years. My retirement planning assumptions don't include any Social Security. If the politicians can figure out a plan to pay all the benefits promised, great. But I'm not making that assumption as part of my personal retirement planning.

Now we've sawn off two of the three legs of that stool. The private savings leg is going to have to take up all of the slack of carrying me in retirement. That going to be quite a balancing act.

NAFTA: Scourge of Ohio?

In their shameless pandering for primary votes, both Barack Obama and Hilary Clinton have attacked NAFTA. The North American Free Trade Agreement is the treaty that largely eliminated tariffs and trade barriers between Canada, the US, and Mexico. Obama's/Clinton's attacks on NAFTA were particularly strong in Ohio, which has suffered serious job losses in the manufacturing sector.

I can understand why Ohioans would be interested in increasing jobs in manufacturing. Those jobs tend to pay more and have better benefits. Also, manufacturing has higher multiplier effects on a community's economy. That is to say, that to produce a dollar of sales, a manufacturing company will have to buy more from their suppliers, who in turn will have to buy from their suppliers, and so on. Manufacturing job are good.

The only problem is that repealing NAFTA will not do anything to help Ohio.

The real threat to American manufacturing is product imported from China, NOT Mexico. Through October of last year, the trade deficit with Mexico reached $4.8 billion. Not good, but largely driven by rising oil prices. Meanwhile, the trade deficit with China was $20 billion. For October alone. For the first ten months of 2007, our trade deficit with China was over $200 billion.

In my previous job, I worked for a job shop company. We made components that other companies used in their assemblies; parts for everything from cars to cosmetics. Over the years several of our customers set up operations south of the border. In every case the purchasing decisions were still made in the US, and we continued to hold those contracts. We shipped components to Mexico for assembly, and then the products were shipped back across the border for sale.

Starting in the late '90's a different trend emerged. Product started coming in from China. Sometimes we would make one or two shipments of parts across the ocean before being told "thank you, we have local sources now, we will not be buying any more parts from you." More often we were just told that our customer was closing his doors.

To an American manufacturer, China is a threat, Mexico is an opportunity.

But let's say repealing NAFTA would bring jobs back to the US. That still wouldn't help Ohio. Why not? Because if companies move operations back to the States, they will move them back to Tennessee, Alabama, or Missisippi, which is where the foreign automotive plants and their suppliers are setting up shop. Ohio has a high tax, union friendly business environment, unlike the more probusiness states of the Southeast.

Maybe Ohioans should look at themselves, before buying the line that their problems lie south of the border.

In Praise of Lattes

In the area of personal finance, I am an atypical blogger. I have always had an emergency fund and I have never had any student debt (I went to college on an ROTC scholarship). I have also always paid off my credit cards in full every month. I've read enough PF blogs to know that makes me a little unusual. I also suspect I'm longer in the tooth the the average blogger.

I 'fess up about these things because I'm about to go against the grain of most PF bloggers.

I love going to Starbucks. I'll go in, check out the newest CD's, order a tall latte. Sometimes I banter a bit with the staff, who usually seem to be in a pretty good mood. When my coffee comes, I sit in the padded chairs and lounge around sipping while I listen to jazz and read the New York Times. It's a wonderful experience. For half an hour I feel like a hip, upper-class urbanite.

The prevailing wisdom is that buying expensive coffee is a waste of money. David Bach of "The Automatic Millionare" fame calls it the Latte Factor: stop buying lattes and use the money you spend to fund your 401K. I understand the need to get out of debt and prepare for retirement, really I do. But you should not put off living until retirement.

The beauty of the near luxury experience is that for a few dollars you can feel like a million bucks, even if you don't have a million bucks. The key is to strike that balance between preparing for an uncertain future and enjoying the present.

Doing the Taxes

I'm currently working on my 2007 tax return. This will be a fairly complicated year for me. I have two W-2's, capital gains, dividend, and interest income like usual. This year I also have to include a Schedule C business (for the store my wife started up last year). and the income from her 401K withdrawal (capital for the aforementioned store). I had a pretty good chunk of capital gains this year, so I need the losses from starting up the store to offset them if I want to avoid a hefty tax bill. We itemized our deductions, and unless our AGI is too great, I get a tax credit for the tuition from my MBA program.

In past years I have used TurboTax, but this year's release is only compatible with Mac OS 10.4 and above. I have Mac OS 10.3.9. I was going to purchase the on-line version of TurboTax, but a friend who works for H&R Block got me a copy of thier Tax Cut software.

The first pleasant surprise was that Tax Cut was able to extract all of my personal information from last year's tax return, saving me from having to enter in the data by hand. I had assumed that Tax Cut would not be able to open the file created by TurboTax, but apparently both programs use the same file format.

Tax Cut walks you through the process in a fashion similar to TurboTax, so I would rate them as about the same in ease of use. TurboTax has a big edge over Tax Cut in on way, however. TurboTax has the ability to go on line and directly download banking and brokerage account information. This really speeds up the process of entering passive income like capital gains and dividends. I'm not done with the process yet, but so far I'd rate TurboTax ahead of Tax Cut.

Bells on bobtail ring...

The subprime mortgage meltdown mess and the collapse of the housing bubble have created a new phenomenon. Basically, people who can no longer afford their mortgages, and who know that they cannot sell their house, have decided to spare the mortgage holder the need to have them evicted. They simply put the keys in an envelope and send the keys to the bank.

It's called "Jingle Mail."

There was a story on "60 Minutes" last week about foreclosures, and as part of the story, Steven Kroft interviewed a couple who are going to walk away from their house becuase it has turned into a bad investment. They are willing to take the hit to their credit rating. What made this couple interesting is that they could continue to afford the mortgage. They just felt it was a money losing deal, so they wanted out.

On the one hand, you can make a case for walking away as a rational business decision. On the other hand...

Ultimately, modern societies run on a scarce commodity: trust. We trust that our paycheck won't bounce when we deposit it. We trust that the bank won't go belly up and lose our money. We trust that when we pay our insurance premiums, our car will be repaired if we're in an accident.

At the same time, businesses trust us. They trust us to return rented videos. They trust us pay for the dry cleaning, and not shoplift. And yes, they trust us to pay our credit cards and our mortgages.

All of the business regulation, insurance, and contract law that we have does not and cannot replace what is at the heart of every deal, from a used car sale to the biggest mergers: people keeping their promise to do what they say they are going to do.

So when we say it is okay for people to walk away from their mortgage, we're actually sapping the foundation of a civil society.

Trouble Brewing

Last week in USA Today I read two different articles about entitlement spending by the Federal government. Taken together they painted a frightening scenario.

In the first article, it was disclosed that the average senior citizen received $27,289 in benefits from the Federal government in 2007. That is the combination of medical costs and Social Security combined. For the first time, medical spending outpaced Social Security. From 2000 to 2007, benefits increased 24%.

The second article was a short piece on Kathleen Casey-Kirschling. She is officially the vey first baby boomer, having been born one second after midnight on January 1, 1946. Having just turned 62, she has activated her Social Security, and has just received her first check.

So we have a combination of rapidly increasing costs per person for entitlement spending, and the start of a demographic bulge in the number eligible recepients. Put the two trends together and you have what I call "train whistles in stereo."

What do I mean by that expression, you may ask. Imagine you are standing in front of a railroad track. In your left ear you hear the whistle of an approaching train. In your right ear you also hear the whistle of an approaching train. Two approaching trains, one track. "Go fetch a cooler of cold drinks and set up the folding chairs, ma, there's gonna be a show. Um, mebbe you shouldn't set the chairs so close to the track."

The best part of one of the articles was the following quote: "We have a health care crisis. We don't have an entitlement crisis," says David Certner, legislative policy director of the AARP.

My reaction to that statement: "Where do they teach you to say things like that? Some Panama City 'hey sailor, want a hump-hump' bar? Go sell crazy somewhere else. We're all stocked up here." (Jack Nicholson, "As Good As It Gets")

Seriously, the AARP is a major lobbying group in Washington, and their public reaction to the predictable and wholly unsustainable rise in entitlement costs coming in the next few years is to stick their heads in the sand. Well, they've stuck their heads somewhere. Maybe not in the sand.

Stimulus Package IV

Well, the stimulus package legislation has passed Congress. President Bush is expected to sign it this week. According to one poll I read about, 74% of respondents indicated that they would either put their rebate into savings or use it to pay off debt. This would be the wisest way to use this windfall, although if enough people did so it would really obviate the point of the government borrowing this money to hand out to the citizenry.

Somehow I don't think that will be the way it goes down, however.

I owe the following precept to Lorelei Stepp, a former collegue of mine. Lorelei's Law of Expected Income: The longer the time period between notifying someone of a coming windfall and the actual arrival of the money, the more ways that person will find to spend the money.

It's February now, and the check won't be in the mail until May or June. You can discover a whole bunch of uses for $1200 in three months.

Spenders, start your imaginations!

Stimulus Package, Part III

Last week I caught an episode of Larry King Live on CNN. Larry had on a panel that included Dave Ramsey and Robert Kiyosaki (of Rich Dad, Poor Dad fame) to discuss the stimulus package proposed by Congress. One of the first questions was something along the line of "Do you think the stimulus package is a good idea?" None of the panelists thought that mailing out a bunch of tax rebates would actually pull the economy out of recession. But all of them agreed that "Congress had to do something."

I have two objections to the "They have to do something" line of reasoning.

First, I question the whole assumption that Congress has to do anything at all. As a fiscal conservative, I believe that the government should tread lightly in interfering with the economy. Smoothing out every vagery in the unemployment rate is not what the Founding Fathers had in mind when they established the Constitution to "promote the general welfare." Making the budget deficit worse than it already is strikes me as trading short term gain for long term pain.

But let's say we accept that Congress has to "do something." They're only our elected representatives, after all. No one expects them to display enough moral courage to stand in the way of buying off the voters in an election year. However, shouldn't they at least do something that was going to work? I have yet to read or hear one commentator that approves of the proposed stimulus package. No one thinks that the current plan will have the desired effect of pulling the U.S. out of recession. So why are we doing it?

Stimulus Package, Part II

In my last post I argued that the proposed stimulus package approved by the US House would be ineffective. First, it would do nothing to solve the structural problem in the housing and financial services industries. That problem is that falling house prices have put a large number of subprime borrowers underwater on their loans, just as those loans start to reset from their original teaser rates up to higher market rates. Lowering interest rates, as the Fed has done recently, may aleviate some of the pressure on home owners, but handing out checks to households will only delay the inevitable by one or two months. If you can't afford your mortgage, getting a short term infusion of cash defers going into default, but does not make the mortgage more affordable in the long run.

I also argued that a Keynesian stimulus would not be effective when the government was already running a massive deficit. So just what is a Keynesian stimulus, and when would it be appropriate?

John Maynard Keynes was a British economist of the early 20th century. His most influential work was published in the 1920's and 1930's. From a policy perspective, his biggest contributions were in the realm of increasing total economic demand by increasing goverment spending. The idea is that during times of reduced demand, unemployment increases. Government can start deficit spending, which will increase demand. To meet increased demand, businesses will have to hire workers, who will then have money to spend, causing other businesses to hire more workers to meet that demand. This all leads to a virtuous circle of increasing economic activity.

The metaphor most commonly used to describe this process is "priming the pump." Businesses will only borrow money when they need to expand. But governments can borrow in order to smooth our the down part of the business cycle. The goal is to keep employment levels high (after all, employees are voters as well).

But right now, we are already running a massive Federal budget deficit. Also, unemplyment is still low. So if you are already providing a hyper-Keynesian stimulus, and yet economic acitivty is still dropping, you have to look somewhere else for the solution to the problem.

So in my next post I provide some of my own modest ideas of how to get the economy out of the doldrums.

Stimulus Package, Part I

There has been a great deal of coverage of the proposed economic stimulus package in the news for the last week or so. Today's news is that the bill that passed the House will not pass quickly through the Senate, largely because the esteemed Senators do not think there is enough being done. From my admittedly superficial research, it looks like the Senate wants to load on a whole bunch more giveaways onto the plan. This is because handing out $150 billion is not enough to satisfy the Solons of the Beltway.

If you're going to give a bunch of politicians a chance to hand out other people's money, you better be prepared to jump back quick to avoid getting trampled. Now, I don't want to seem as if I object to getting handed envelopes full of money. I love a windfall as much as the next guy, and my household's share of the swag would be about $1200. But frankly, I don't think this stimulus is going to work. To paraphrase Tennessee Ernie Ford: "You load $150 billion, and what do you get? Another day older and deeper in dept...I owe my soul to the Chinese government." After all, where do you think the money is going to come from?

The stimulus plan won't work for two reasons:
1. The current ecomomic malaise is being caused by structural problems in the financial services and banking industries, which in turn were triggered by the collapse of the housing bubble. Six hundrred dollars per person ain't going to reinflate the housing market. It is only enough to cover the increased mortgage payment on a subprime loan that resets this year. For a month. The next month, that home owner (sorry, that mortgagee; it's actually the bank that owns the home--poor bastards) will be unable to make the higher payment and then he starts to slide into default.

2. The other problem with the proposed stimulus is that since the US is already running a massive government deficit, another deficit piled on top of that will have little to no effect. For a Keynesian stimulus to work, the assumption is that government spending is in balance with revenue. The burst of deficit spending in a stimulus package jumpstarts economic activity, leading to a virtuous circle of economic growth. I'm going to say a little more about Keynesian theory in my next post.

How is a Ski Vacation Like Valhalla?

In the old Viking religion, the highest honor was to die in battle. For those warriors "fortunate" enough to meet their end this way, they were rewarded by getting to spend the afterlife in Valhalla, which was the residence of Odin, chief of the Norse gods.

In Valhalla, every morning the warriors would wake up, don their armor and weapons, and march out into the snow covered fields surrounding Odin's hall. Then they would do battle against each other all day long. At the end of the day, Odin would come forth and miraculously heal all of the wounds suffered during the day of combat. Then all of the warriors would march back into Valhalla, and spend the evening drinking and feasting before falling asleep. The next morning they would awaken to begin the process over again.

The modern ski vacation is something like that. In the morning you get up and put on your gear for the day. Then you go out, get on the ski lift, and spend the day doing battle against the slopes of the mountain in the cold and the snow. At the end of the day, through the power of modern analgesics, you are healed of your aches and pains. Then you go out for dinner at a three star restaurant. And the next morning you do it all over again.

Tax Preparation for Fun and Profit

So tonight I went to a meeting of the local APICS chapter (American Production and Inventory Control Society). The speaker was the head of the local H&R Block office. What does tax preparation have to do with production and inventory control, you may ask? Nothing, but like many professional associations that have regular meetings, they need to find speakers for the meetings, and the H&R Block people offered to talk about taxes for free. Usually there is a sales pitch associated with the talk, but the good speakers will give out about 80% useful information, 20% sales pitch.

I've been using TurboTax for about 7 years now, and the program walks you through your taxes pretty thoroughly, so I wasn't interested in hiring a tax prep service. The presenter did have some interesting war stories, however.

Anyway, after the presentation, I sat down with the presenter, who was the manager of the local H&R Block office, and inquired about becoming a paid tax preparer. To get hired on, you have to take their tax prep course, follow that with follow on training in December and agree to work a minimum of 12 hours per week from late December to April 16. The class only costs about $200, but the classes require 100 hours of classroom time, and you have to pass tests at the completion of each class. You pass the tests, they'll put you to work.

The compensation plan works as a draw against commission. The first year you don't have many clients, so you'll probably be stuck with the draw. According to the office manager, that works out to be about $7.50/hour. On the downside, that is not much money for a pretty big investment on training time. On the upside, they market heavily and bring the clients to you. Over time you can build a base of clients, and with experience you learn to handle progressively more complicated tax returns that are more highly compensated. Also, although the money is not good, it beats putting on a hairnet and practising "You want fries with that?"

Most personal finance blogs focus on cutting costs, reducing expenses. This would be a way of playing offense, increasing my income. Not an availible option for this year, however.

And so it begins...

For a couple of years now, one of my New Year's resolutions has been to start my own blog. At one point I was going to name it "Everybody deserves my opinion," but even I have some small reserve of modesty. Seriously, I do think that sometimes I come up with stuff that is worth writing down and sharing, and a blog is the perfect way of doing that.

Although I expect this on-line journal to evolve over time, I'm going to start out with a focus on business issues and finance. I make my living as a manager at a samll manufacturing firm, and I have always been fascinated with business stories and the interaction of business and the wider world in which we live.

I have been reading a number of other finance blogs recently, just to see what is out there. I think I'll have a different spin on things than most of them. I was a little surprised at how much focus there is on frugality and saving. I was absolutely astonished to see how many members of the finance blogging community are carrying negative net worth. I've never had a negative net worth.

Not only do I have positive net worth, but my emergency fund has six months worth of cash, I invest regularly in my retirement funds, and I pay off my credit cards in full every month. (God, I sound full of myself, don't I? I can hear you now, dear reader: "What's this SOB want, a medal?")

My personal finance issues are more in the vein of how do I accelerate the process of increasing my net worth. Instead of reducing my spending (playing defense), I intend to struggle with the problem of increasing income (playing offense). But I also want to write about my reactions to the bigger business issues in the news these days.

So I intend to do a drunkard's walk of topics at first. After awhile, we'll see if a sharper focus arises out of my random musings.