David Shafer at Uncommon Financial Wisdom is smarter than the average bear, as Yogi used to say. We met online, though I don’t remember exactly how. Over time you discover he’s the real deal. After half a dozen conversations with him you’re not surprised to learn he’s also earned a Ph.D. What kind of mind gets a degree in finance and a doctorate in social science? How about a person who can understand the numbers in the relatively black and white world of business/finance while simultaneously being able to think.
Don’t engage mouth before putting brain in gear when dealing with David. Frankly, I think he’s a natural as a contributor here. But that’s a different post for another day.
Today he wrote a guest post on my blog. I was gonna add my 2¢ here before linking you to it, but wasn’t in the mood to embarrass myself. Read, and notice how quickly he lays out some fairly complex ideas. He points out problems and then brings solutions to the table.
So go find out What Happened To The Middle Class then head over to David’s blog. You won’t regret it.
David Shafer says:
Thanks Bawldguy! Getting much attention to the current post on Uncommon Financial Wisdom too titled “Taking On the Herd.” Hope you all enjoy the posts and please comment on them, I love discussions!
July 15, 2008 — 1:34 pm
Mike Farmer says:
I like David — he has a sharp, active mind.
July 15, 2008 — 2:44 pm
Smithers says:
debt = leverage. Works great until the margin call.
July 16, 2008 — 7:04 pm
Bawldguy Talking says:
Smithers — Really? I guess by that I should conclude all leverage is equal?
July 16, 2008 — 7:10 pm
Smithers says:
Perhaps I should have said “debt is leverage”. I think we are all well aware of what happens when the “herd” takes on “debt” thinking they will get wealthy as a result.
Can smart, disciplined people use debt (leverage) to their financial advantage? Absolutely. Happens everyday. But, what percentage of your fellow U.S. citizens are smart, disciplined people when it comes to using debt as leverage?
July 16, 2008 — 7:22 pm
Bawldguy Talking says:
Given the fact that only 2% of borrowers are having problems, I’d say right around 98%.
July 16, 2008 — 7:32 pm
Smithers says:
Geeze, I had no idea. So, all this stuff about Fannie and Freddie being underwater is just BS? Did those 2% all bank at IndyMac (ok, maybe a few at WAMU and Downey …)?
July 16, 2008 — 7:40 pm
Bawldguy Talking says:
Are you challenging 2%? Yes or no?
July 16, 2008 — 7:48 pm
Smithers says:
I have no idea. I do believe that the reported non performing assets by many publicaly traded banks (e.g., Indy, WAMU and Downey) appears to far exceed 2%. Bear Stearns by itself was probably more than 2% of investment banking. Are Fannie and Freddie so leveraged that only 2% can take them down???
I also believe the mean sales price of San Diego real estate has dropped something like 30% over the last couple of years. With a 10% down payment, that is a 300% loss, probably 400% after all of the costs. Of course, with zero percent down, even better ….
I will admit, I am tired of observing goading and taunting (however subtle the pitch) as a means of generating business.
July 16, 2008 — 8:09 pm
Bawldguy Talking says:
I will admit, I am tired of observing goading and taunting (however subtle the pitch) as a means of generating business
Speak plainly.
July 16, 2008 — 8:13 pm
Smithers says:
I have been speaking plainly.
IndyMac belly up speaks plainly. Freddie and Fannie insolvent speaks (speak?) plainly.
July 16, 2008 — 8:34 pm
Bawldguy Talking says:
I didn’t get the ‘goading and taunting’ as a means of generating business.
Who has been doing that?
July 16, 2008 — 8:37 pm
David Shafer says:
Wow, I leave my computer for a few hours and this is what happens!
For those who are interested in changes of the middle class as well as perceptions here is an great report. Should be required reading for investors:
http://pewsocialtrends.org/pubs/706/middle-class-poll
July 17, 2008 — 5:30 am
David Shafer says:
If by goading and taunting this person means holding up a mirror to one’s financial situation, then s/he is right. We can all use a little “reality training,” and it is the only thing that gets folks to “do something!”
I hold up that financial mirror every day to myself and to as many folks as possible!
July 17, 2008 — 5:33 am
James Boyer says:
The Republicans have been doing a good job for a long time now of converting the middle class into the lower middle class or the poor. Will not be long now and any job that pays anything will be over in China, India, or Europe.
July 17, 2008 — 2:44 pm
Robert Kerr says:
(applause to David Shafer)
Yes, the middle class is disappearing and has been since 2001 when a healthy economy was turned inside out. Consumption replaced production, credit replaced income and otherwise intelligent people began to think about their leveraged debt and paper equity as their own real wealth.
Since 2001, tax and monetary policy have favored the wealthy. The lower class, people with nothing saved, nothing owned, nothing to lose, lost nothing. The middle class lost the most.
There’s a lot of blame to go around …
Greenspan and Bernanke for just horrible (I would say “reckless”) monetary policy decisions. Favoring short-term feel-good quarterly reports over the long-term consequences. Dropping the fed funds rates below 2% for three years to avoid a recession? Didn’t anyone at the Fed study the lessons of Japan in the 1990s?
Bush and the 107th through 109th Congresses for tax cutting and spending us into a $400B deficit in 2008 from a $400B surplus in 2001 and an unbelievably, maybe insurmountably, large debt liability.
Sorry for rambling, but this is one of my pet peeves. Anyone who’s studied the macroeconomics of the 1970s saw this mess coming years ago as it was unfolding, as the Fed made the very same mistakes a scant three decades later.
I’ll get down off my soapbox now.
July 20, 2008 — 8:54 pm