Two friends of mine work at Lehman Brothers. They graduated from top schools with degrees in economics, and off into the world of finance they went. They're both good guys--one was very clear to me that he just wanted to stay a few years, put away as much money as he could, then go out on his own to start a graphic design firm before he turns 30. I hope he ended up putting that money away after all. The other was always great at math--he's affable, kind, and not that ambitious, and I think to him, a stable job he'd be good at that would pay him enough to live with his sweet girlfriend in Manhattan and take her to all the nice restaurants in town sounded like an awesome deal. I know so many people who went into finance right after college--they're consultants, and analysts, and personal wealth managers--they handled other people's money by the bucketful. They started when the profits of the subprime mortgage bonds were already flowing into the top financial firms, and the hedge funds, like an unstoppable river, like a force that always has been and always will be. Finance feels like a stable, sensible choice--until something like this happens. I imagine right now my two friends at Lehman are very anxious for their jobs and their futures. I'm sympathetic to their anxiety, even though they've had it really good the past couple of years and probably have solid and lucrative careers ahead of them regardless of this downturn. Still, I hope they come out of this okay.
Friday, September 12, 2008
Monday, March 17, 2008
Safety Nets for Corporations
I sucked NPR into my head during my last moments of sleep today and had a weird dream about Bear Stearns crashing--except, in my dream, there was a bear. The roaring, mauling kind.
And on waking up and hearing the whole story, I find that I agree with Paul Krugman's op-ed in today's Times: let it correct--let it go. Let Bear Stears deal with the consequences. (It also makes me vaguely insane to listen to the "free market! regulation is repression!" mantra turn into government-funded bailouts. I thought you didn't want the government all up in your business!)
Monday, February 04, 2008
New York Magazine Chews Over the Recession
I generally disdain New York magazine exactly because it's such a craven sop to the hedge-fund trust-fund New York, but, perhaps because as an institution it is so obsessed with money, it treats money and class quite thoughtfully when it sets out to treat them explicitly instead of just laying out pages and pages of $400 v-neck sweaters.
This article is a particularly nice one, about the economic boom's effect on the character of the city. The thought is that perhaps the recession might bring back a bit of the New York we used to know.
This article comes at essentially the same subject in a more macro fashion--an economic & political analysis of what has happened in New York as the lid has blown off the top of the stock market, and then again what may happen as it corrects.
Both are worth reading (certainly for New Yorkers).
Friday, January 25, 2008
Stimulating!
So, you've probably heard about the economic stimulus bill that's going to be the cause of some tax rebate checks in the mail for those of us under a certain income cap. (I am under almost any income cap.) I can't say I'm thrilled with the idea of flinging money we don't have at everyone in the hopes that everyone will fling it back at the retail sector, but that doesn't mean I'm going to turn down a $300-$600 check. No sir.
Initially I'd thought it would just go right into my savings account, but actually I'm thinking I should stash it for medical expenses. Then I won't have to scramble around like I'm currently doing, for a little while, at least.
Tuesday, January 22, 2008
Waiting for the Other Shoe...
I woke up to the news of the Fed's three-quarter-point rate cut. NPR informed me that this is the biggest single rate cut since 1984. Now I'm just waiting for the ING interest rate to follow it down the number line. So far, it hasn't happened, but I'm not willing to bet that it won't.
And I'm definitely not going to check my retirement accounts this week.
Tuesday, January 15, 2008
The Economy, Stupid: Or, Further Thoughts on the House of Cards
I got a couple of comments on my previous post reacting to what they saw as a knee-jerk anti-corporatism. The term "hegemon," I think, triggered some of this; honestly, look it up. I consider myself sort of an agnostic on this issue, a four on the one-to-ten scale of "Visceral Response to Corporations," where 1 is "They are the fat-cat horsemen of the apocalypse spreading disease over lands far and wide out of malice and spite!" and 10 is "They are at the vanguard of the march of progress to liberate us from our cave-dwellings out of the goodness of their hearts!"
I do think there is something unhuman (not inhuman, quite) about corporations. They take on an identity apart from the people whose aggregated labor they represent (hence our legal treatment of corporations--limited liability, corporate "rights," &c.--they are both de facto and de jure entities unto themselves). I think also that given the scale and scope at which they currently function, we treat them less like human forces and more like implacable forces of nature, like hurricanes or governments. The lack of transparency disturbs me. The something else disturbs me, the part of them that is not people and seems more self-propagating than beholden to human interests. We do not need Coca-Cola; how is it that Coca-Cola convinces us that we do? And why?
Truly, though, people need jobs and corporations provide them. People want soft drinks and toothbrushes and arcane financial advice and corporations provide them.
But as Moom, an honest-to-God economics professor, so helpfully explained, there really is this question of "how far can this go?" Others have mention that population growth fuels economic growth. But population growth, too, is limited by the intersection of natural resources and human technology (i.e., how much we have in the way of natural resources and how far we can stretch it), and it looks, some days, like we are beginning to approach that endpoint. Now, we're resourceful creatures, and so I wouldn't be super-surprised if indeed we now set ourselves to the business of stretching our stretched natural resources further than ever they have stretched before, but doesn't it seem logical that at some point, there is terminus? At some point, population growth must, for everyone's sake, flatline? And as Meg said, just imagine what would happen if we all scaled back, immediately, synchronically, and drastically. Imagine if everyone suddenly decided (realized?) that Coca-Cola is full of vile high-fructose corn syrup, tastes like cough syrup, and rots your teeth. Imagine if everyone suddenly decided that their old sheets are good enough, that their old car is good enough, that the store brand is basically the same, that Gucci is tainted with Tom Ford's disgustingness, that they don't really want any more DVDs after all. Imagine what would happen if no one bought things they didn't need, either because they'd decided that they couldn't afford to or because they'd decided they no longer wanted to. Imagine what would happen. I can't even imagine it, quite. We rely on all those people spending all that money. We need them. So how can it be that we both depend, desperately, on their continuing to spend every penny to which they have access and chastise them for their profligacy? All of the guilt and shame and finger-wagging--why and wherefore? We need those people.
I know that I sound more and more like a crazy person as I struggle to explain this, and please do believe that I know that I don't really know what I'm talking about, that I am not waving my arms in the air for the head of Ben Bernanke or putting on a stocking cap to raise my tiny fists like antennas to heaven against the WTO. I lack a certain vocabulary here, and I would like to find some relevant information. I am not necessarily even saying I am right. I am saying I have a hunch here, that I wonder about the way it all works, the power it has to shape our lives.
Monday, January 14, 2008
House of Cards
I have this amorphic, nascent idea about the stock market--about how maybe it's not a perpetual-motion growth-machine, about what might happen if we all did choose to live our lives differently, about how maybe it has a terminal velocity, about how maybe the whole idea that the stock market doesn't have anywhere to go but up so we have to invest lest we be left behind is spin, that maybe the whole thing is a house of cards that dupes us into funding the dominance of corporate interests over human ones.
But that's probably dumb. It probably makes me an apocalypse conspiracy theorist, one of those infomercial guys going, "Buy gold!" Truthfully, as long as you're doing what most other people are doing, you'll never be worse off than most people, so I'm not too worried on a day-to-day basis.
I do worry, but I don't have the right vocabulary to express exactly what it is that I'm worried about. I worry that maybe it's unethical to fund these companies that are the new hegemons and maybe there's nothing I can do about that, or maybe I only think there's nothing I can do about it and that's what keeps me forking over money into shares of companies whose names I don't even know. You used to buy stock in a company because you believed in that company--you liked the way they did business, you thought their products were good. Now we buy stock in companies because someone says other people think they're good.
I heard a theory that we all follow the lives of celebrities to simulate the effect of a smaller community where everyone knows the same people--so we still know the same people, it's just that we don't actually know them. It feels connected.
I never took an economics class, and now I kind of regret that.
Tuesday, December 04, 2007
White Girl Shops For Groceries in Spanish Harlem
Two men are standing in front of the eggs in my local supermarket. They are talking about how expensive the eggs are. The eggs are, indeed, expensive. I always have this dilemma in front of the eggs in this supermarket: do I buy the cage-free ones, which cost a gazillion dollars, or do I buy the cage-full ones, which in addition to the inhumane treatment of chickens are also guilty of styrofoam packaging? I usually choose the cruel & non-biodegradable eggs. They are nearly two dollars cheaper.
I have in my basket: tuna (on sale: $3.99 for four cans of Bumblebee; I'm stocking up), fresh cranberries (no price visible, but I have a sudden craving for warm, fresh cranberry sauce, and a bag of cranberries can't be more than $2), a box of teabags (Celestial Seasonings, $.20 cheaper than Bigelow) and four cups of yogurt (we are sticking scrupulously to our meal plan this week, and it calls for yogurt).
"If they're like this here," one of the men says, "imagine what it must be like on 86th Street!"
"I've seen it at 86th Street," says the other man, "Unbelievable. But, you know, white people."
"Yeah, white people. White people don't check prices. They're just like, 'I'll have one of those, one of these, yeah, I like this...'"
I look over at them. I'm not sure if they catch me looking. I go and check out.
Thursday, September 27, 2007
Where Do our Money Personalities Come From?
At times, it just seems like some people are savers and some are spenders. If this is true, I fall pretty squarely in the "saver" camp--at this point in my life. I used to be more freewheeling--like when I was in high school, wielding my dad's credit card with aplomb at bookstores and coffee shops from the Upper East Side to TriBeCa.
But as soon as I was really responsible for myself financially, my attitude changed dramatically. My junior and senior years of college, I lived in an off-campus apartment, and while my parents paid my living expenses, they did so by writing me one check at the beginning of the school year based on a reasonable budget that I'd proposed and we'd discussed. I managed that money for the rest of the school year. I guess if it had ever run out, I could have asked them for money, but I made sure it didn't. I had a job on campus, and I saved every penny I made (it wasn't that much).
My money management skillz were honed even sharper when I got my first job, last September, and began making my own way in the world for real. But there are plenty of people who get their first paycheck and go, "Whee!" and blow it at the nearest boutique. What makes the difference between my reaction and that reaction? I wonder if it's not some personality thing, rather than the oft-repeated platitudes about financial education, because I certainly didn't have much of a financial education. All that meant was that I had to go out and get one.
For me, my desire to manage money wisely is intimately connected to a sense of insecurity, a feeling that I'm on a highwire and I need a safety net, a nervousness about my own ability to succeed. It's also connected to a need to achieve: I get a kick out of setting goals and meeting them, and a thrill from being precociously good at things. There's also a certain cautiousness, a hedging-of-bets, that is not unrelated to the other two: it's a fear of failure.
I'm not saying that there are not very good reasons to save money. Obviously, there are. But are those good reasons my real reasons? I'm not sure they are. I'm not sure it's not all a little less rational than that.
Monday, July 16, 2007
Dodged a Bullet
I was contacted a few weeks ago to be interviewed for this article. The author wanted to use my real name but not mention the blog, so she wouldn't be "outing" me. I wasn't up for having information about my finances--especially about an issue that inspires as much intergenerational and class-related strife as this "getting money from your parents" thing does--tied to my name, searchable by employers and the rest of the world on the internet. Given how busy I've been, I lost track of the whole thing and fell out of touch with the author, but reading the article, I'm glad I didn't agree to be interviewed. With one exception, I think there's a sense that these kids just don't know how to sacrifice, that they're draining their parents' retirement accounts because they can't get it together.
This is not the case with the money I accept from my parents--it is a drop in the bucket to them, and an extremely substantial amount to me. Moreover, it's not money that goes to cover necessities for me--I live on what I make (in fact, I live on substantially less than I make), and the money I accept from my parents is used as extra savings, a way of ensuring that I can get the most out of the financial opportunities of youth.
I'm not saying I might not have been another exception in the article, but still, I think I made the right call.
Monday, May 14, 2007
This American Life: Getting and Spending
I spent some time over the weekend perusing the archives of This American Life, and stumbled on an old episode that focuses on money: "Getting and Spending". It's a free listen, and I recommend you check it out. A trader gets rich off the Chernobyl disaster, a suburban dad turns to robbing local stores to pay his son's medical bills, and John Hodgman "goes rogue" in the Mall of America.
Best of all, though, is the segment about "that guy" syndrome—the ways in which our purchases or conscious non-purchases group us. Is this exclusively a contemporary phenomenon? Sometimes it really does seem to have overrun the way we define ourselves.
Thursday, April 26, 2007
The Game of Life (or, Give Me Your Tired, Your Poor...)
The other day, I played a game of Life--you know, that oddly elaborate board game whose goal seems to be to retire to "Millionaire Estates," and which no one seems to really win?--with the girl I tutor. She's eleven. She struggles with English literacy, and both of her parents are Ecuadorean immigrants who support family in Ecuador. As we played, I tried to explain, in a scattershot fashion, a few basic financial concepts--that when you borrow money, you have to pay back more than you originally got; what insurance is and why people buy it; that people take out loans to pay for college.
I don't think it was very helpful. She didn't seem to understand why I was trying to explain these things to her. Part of the problem, I think, is when you're growing up in a household of illegal immigrants, your financial examples are necessarily different. My tutee's parents can't open bank accounts, let alone invest their money, so a lot of the concepts of institutionalized finance as I understand them are foreign and incomprehensible to her.
I've been thinking about it and can't come up with any answers. This kind of stuff is crucial to success in "mainstream" America: it's part of the lever by which people improve their children's lives so they can improve their children's lives, and so on. My father is the son of immigrants--albeit legal immigrants who came through Ellis Island--who worked and fought to get their kids out of the Brooklyn tenements by sending them to college. But college is more expensive now, and harder to get into, and when the financial opportunities for illegal immigrants are so restricted, how do they better their lives and their children's lives?
This made me, as we say in the theory-and-criticism biz, check my privilege. All this personal finance stuff, my ability to improve my situation, is contingent upon opportunities I've had (and have) and opportunities my parents have had, and opportunities my parents' parents have had, and so on. Now we as a country refuse to extend that opportunity to new Americans. Give me your tired, your poor, your huddled masses yearning to breathe free doesn't seem to apply anymore.
What do we do about this? I don't at all mean that it's ever easy for immigrant families, that success ever comes for them without years and years of hard work, but my father's parents were never hobbled by their status as immigrants in the way my tutee's parents are. My father's father was free to open a business, to hire employees and travel internationally as it grew, to save his money as he saw fit. He didn't have to live "off the grid." He didn't have to fear deportation. He could teach his children to work hard with confidence that their country would reward them for it. My tutee's parents can't do any of that.
It's just discouraging, you know? I believe so fervently, so passionately, in the old patriotic notion of America as Land of Opportunity, and now that notion is so dented and battered and tarnished.
It's pretty extraordinary, the extent to which money and personal finance participate in the broader picture. All this from a board game.
Wednesday, April 11, 2007
The Complexities of Anti-Consumerism
I picked up some groceries at (New York's only) Trader Joe's last night and took them home on the subway. I was sitting next to a pretty young woman, probably no older than I am, with a beautiful little daughter who was probably three or so. You know how you can tell that some kids are going to grow up to be stunning? You could tell with this girl.
The mother was well-dressed, in boots, a nice pair of jeans, and a blazer. Her bag was a so-so Vuitton knockoff--the material was shiny in that Canal-Street kind of way. Her hair was chemically processed--it looked to me like Japanese straightening, not corner-beauty-shop lye straightening. Her little girl was dressed well, too, and tastefully--not in that miniature-adult way that children, especially girls, sometimes are--in pink sneakers, jeans, and a quilted coat. The daughter was clearly very bright: she was engaged and articulate throughout the subway ride in a way that made me associate her with the kids who win the leadership scholarships from the foundation at which I tutor.
The mother was holding a little pink bag on her lap. The plastic that had held the tag was still attached to the zipper. She asked her daughter, "Do you like the new bookbag I got you?" The girl was looking at something and didn't respond. The mother asked again, nudging her, and the girl looked up, flashed a huge smile, and kissed her mother on the cheek. "Yes, Mommy!"
Consumerism issues, an observer might say. The mother is clearly trying to maintain an image of having more money than she does (i.e. the knockoff bag) and trying to win her daughter's affection with material objects.
But.
Consider that this is a young black single mother (she was telling her daughter, quietly, that they were going "to Daddy's house," and when she counted the stops for her daughter, it was clear that the destination was pretty deep in the Bronx). Consider the stereotypes with which she has to contend. Consider what she feels when people look at her and her beautiful, precocious child and glaze over in that "God, not another young black single mother" way that she has learned to recognize. It differentiates her, this image that costs money to project. The money that she spends on clothing and on her daughter's sneakers, on aspirational handbags, buys her some peace on the subway, buys her, maybe, freedom from the weight of each judgment levied by the glances of strangers, conscious or otherwise.
It seemed clear to me, sitting next to her, that this woman understood in an instinctive way the class-coding of consumer goods, that by sheer force of will and strategic spending she planned to change her social identity and her daughter's, that she was determined that no one would ever look at her or at her daughter and sneer. Her meticulousness in other ways--the carefully-packed snacks, the stop-counting--seemed to bear this out.
People do sneer. People really do look at other people and think, "Oh no, not another one," and imagine squalid apartments and corner drug deals and absent fathers. We all do it. I am doing it here, in some way. I'm not sure it matters whether the tone of our imaginings is compassionate or revolted. It is terrifying to know that other people can claim your life in this way, that they feel entitled to have opinions about you. The weight of these collective imaginings really does affect the people on whose shoulders it presses down. There are consequences, real ones.
I can imagine this woman's efforts paying off. I can imagine her spending everything she has to keep her daughter in nice clothes and green vegetables. I can imagine her daughter getting a scholarship to a good college, getting a lucrative job, paying for her mother's retirement. There is some way in which we fulfill the prophecies of our sneakers and mittens and freezers. Is it a coincidence that this determined, meticulous, anxious woman has a smart, beautiful daughter whose shining future visibly unfurls before her?
I don't think it can be. I think the bill of goods this woman has purchased includes not only the pink sneakers and bookbag but a set of behaviors that is rewarded. This is how class functions. You can give a child a different class identity than yours--I've seen it done, for many of the first-generation American kids with whom I went to high school. They went off to Yale and Amherst and Dartmouth and then into the Peace Corps and finance firms and law school, and they do take for granted what they've been given, in the way that we all do, the way in which it's what they've always known and had, and it is hard to understand on a visceral level what giving it meant to their parents. It is hard for me to understand what giving me Keds and riding lessons and an American Girl doll and dance classes and a private education and trips to Europe means to my father. There is a gulf there, much as, perhaps, there will be between the mother and daughter on the train when the daughter grows up and does not understand, really, what it is to be afraid of the way people look at her.
So I don't think we can really tell this woman, with authority, that she shouldn't be spending so much money on clothes, or toys, or her hair. I think we have to remember that things have meaning--real meaning, a meaning that changes people and lives and, ultimately, the world. At the very least, I think we need to recognize on a visceral level that it takes a strength of character that I cannot even comprehend to stare back at the staring strangers and know that you are still a person, your own, unclaimable, regardless of what they have thought about your hair and your clothes and your parenting--about you--that it is not weakness to want them to stop so much as it is unfathomable strength to bear everything they unknowingly communicate.
I think this deserves more consideration than the phrase "keeping up with the Joneses" can provide, much as the woman on the train deserves more consideration than the dismissiveness of a statistical, appraising glance.
Tuesday, April 03, 2007
Money in Context: Notes from a Dinner Party
1. There are three people under 30 and four people over 50 sitting around my parents' dinner table; it is Passover; we are a motley mix of Jews, half-Jews, half-Jews-half-Catholics, lapsed Catholics, practicing Catholics, and one lone nondenominational Protestant turned self-identified heretic, who has made the brisket and kugel and laid the seder table (my mother). We are talking about the pretty brownstones in Harlem. K mentions that if it were enough, he'd cash out his Roth for a down payment. M, a guest of the over-50 persuasion, says, "That's what I have, a Roth." M looks over at K and says, "You know, I don't mean to be condescending, but if you've got a Roth at your age, you're doing great."
K says, "I'm older than I look."
After guessing K's age correctly, M proceeds to explain that he never thought seriously about retirement until he was nearly forty.
C pipes up, "Well, we can't exactly count on Social Security, you know?"
This fact is universally acknowledged by all.
2. P and M had been together since I was a kid. P worked with my dad, and they were close. I've socialized, traveled, and in various other ways grown up with P and M--they've been a kind and loving presence in my life for nearly 15 years. In September, P, who was only 56, died suddenly of a heart attack. This loss hit a lot of people very hard--P had more friends than almost anyone I've ever met--but of course, it has been devastating to M, who held him as he died on the couch of their country home, waiting for the ambulance.
Here's where the money comes in: P and M are both men, which means that M has just been hit with an enormous tax bill upon inheriting, among other things, P's half of their beloved country home in Pennsylvania in which together they hosted parties, fixed up couples, offered acting coaching to their friends' children, and worked tirelessly on a particularly beautiful garden.
It's unconscionable, that right after this sudden and tragic loss, M has to contend with these exorbitant tax consequences in order to keep a home in which he's spent happy time with his partner for years. It makes me furious, and sad, and it underlines the need for recognition of gay partnerships.
