You are creating a false dichotomy here by assuming that the only way to buy a car is to buy new. Today, any used car that was built 4 years ago that has a clean crash history and under 50,000 miles is a better car that could have been purchased for the same inflation adjusted price in 1974. There are many reasons for this, improve quality, higher safety standards, ect.
Since the original discussion was about the durability of new cars, it seemed reasonable to focus on the price of new cars. But yes, used cars are available, too, however, there is no real data on the reliability for used cars or why, if fully functional their owners got rid of them. It might make a good research project though.
The reason new cars cost comparably more than 1974 cars is that cars have become so reliable that it is no longer profitable to sell cars at that price point.
That is not true. The reason new cars cost comparably more than 1974 is because we have added lots of stuff to new cars compared to 1974. Some of it safety related, some of it comfort related, some of it just cool. People don't price a product based on how long it will last. A Honda Civic today doesn't last significantly longer than a Honda Civic 20 years ago. While it is true that today's cars last longer, that isn't what is driving up the cost faster than the general inflation rate (and since new auto purchases are included in CPI, it is a circular reference).
If I buy a used 2012 car that has 50k miles on it that costs less per mile in maintenance than 1974 car with 0 miles on it and the 2012 car will reasonably go at least 180K I come out ahead as a consumer vs the 1974 car at the same price point.
While this part of your argument is supporting the error above about durability driving up the cost. It is a valid point in that the true way to look at this is TCOM (total cost of ownership per Mile). Regardless of the year produced, given the mpg, purchase price, insurance, expected maintenance, etc. the car with the lower TCOM is the better consumer purchase. A $30,000 vehicle (including all costs in the TCO) that one will drive 100,000 miles is a better purchase than a $20,000 TCO vehicle that one will drive for 60,000 miles. But neither is as good as a $5,600 TCO crappy car that you will drive for 20,000 miles. The $30,000 vehicle has a TCOM of.30, the $20,000 has one of.33 and the POS $5,600 has a TCOM of.28.
BTW, with regards to TCOM, new cars only make sense if you are going to keep them a long time (mileage wise).
The argument was exaggerated to make a point. If one is arguing, as the OP, that higher car prices today are worth it because cars last longer, then one has to take into consideration as to whether or not cost (price) pushes it out of the realm of the average buyer (basic supply and demand). If it does, then it doesn't matter how long it lasts. To purchase a vehicle, whether outright or borrowing, one has to have the income to cover it. For instance, a half-off Lexus, even though it is a great deal, isn't for somebody making minimum wage.
Houses are a good example. They aren't priced based on longevity. A new $150,000 home in the midwest will last basically as long as a new $750,000 out west. The price difference is because of features (size, materials, land, etc.). That is a fine comparison, but people don't use it for cars (although it is applicable). Instead of saying that cars today provide so much more than before, they say the last longer, which while true, isn't the reason they cost so much more. I think they do this because people know intuitively that while today's cars have more features, more horsepower, etc., that those features don't necessarily drive the true value of the vehicle (only the perceived value). For instance, today's cars and tires can easily go 120mph+. Yet, since you can't legally drive that fast in the US, there isn't an extra value there over, say a lower horsepower car or lower speed tire.
And even if a car would last for an exceptionally long time, nobody will give a correspondingly long loan. They do with houses, because real estate usually appreciates. Cars on the other hand do not. So the collateral for the loan isn't any good. We saw this in the housing market when the bubble burst and people just walked away from their mortgages and let the house be repossessed.
I bought a BMW for $15,000 (top end of your range) with 50,000 miles on it and drove it until it had 250,000 miles at which point it died. Got $1800 for it as a parts/repair car too. So in 1974 the average POS for sale back then was about DONE at 50,000 miles and 250,000 miles was a miracle car.
Well, I was referring to new cars, not used ones, but even still, I'm pretty sure a 1975 BMW or Mercedes would last longer than 50,000. I currently drive a 1972 VW Beetle, with over 300,000 miles on it. Using that random piece of information is no more germane than your BMW. There is no doubt that cars last longer today, but a car that last three times as long and costs three times as much isn't a savings.
Car loans used to regularly reach the double digit interest percentages as well. Sure, you may get a 6 year loan now, but if you are literally paying less interest than the inflation rate (I got 1.9% financing last year), you are being paid to take a loan.
I had enough cash to purchase the vehicle outright (though it would have put a hurt on my savings), or I could have paid about 1/2 to 1/3rd comfortably, but when I saw the breakdown of how much I would be paying in interest I chose to finance the whole thing. I then took a good chunk of that savings I had expected to put on the car and knocked several years off of my home mortgage.
Yes, car loans used to have a higher interest rate, but that interest was also tax deductible, so the net rate wasn't much different. The only reason you are paying 1.9% today is because the Federal Reserve is holding down interest rates. When they finish with their stimulating the economy, rates will go back up.
Those boundaries (a minimum wage job vs a professional job) have changed a lot so its a lot more meaningful to look at median household or median individual income. In those numbers, in 1970 it was $6,670 and in 2004 it was $30,513 Average car price in 1970 was $3,900.00 and today it's just over $20,000. Thats a move from 58% of annual income (another misnomer because required expenses from that income have changed so much in the past 30-40 years, food, housing, taxes, etc have all shifted) to 66% of annual income, not a huge move.
Even if you took those numbers at face value and said "cars are definitely more expensive now" you have to also look at average car age rates, which reflect how much *per year* each person is spending on having a new car (or a used car if you prefer). That number has gone up from 5.7 years in 1970 to 9.0 in 2000 and its well over 10 as of 2011. So, each car purchased is basically lasting twice as long (taking into account just the time the cars are kept, not how reliable they are) as they were "back then". Even if the cars are 10% to 25% more expensive in real dollars or income fractions or whatever, we are definitely coming out ahead thanks to improvements in reliability, serviceability and quality.
I'm not sure that is right. There is no doubt that people are holding on to cars longer, but the question is whether or not it is because they want to or can't afford to get a new one. Most likely, this is an artifact of longer financing terms. In the 1970s car loans were two years, sometimes three. Today they are five to six years. If you go to sell the car before the loan, you will be upside down (owe more on the loan than you can get for the car). As such, people hold on to the car longer.
It is true that the useful life of a vehicle is twice as long today as in the 1970s (say 200,000 miles vs 100,000), but that doesn't mean the original owner is driving it for those extra miles. One of the things that was an unintended (hopefully) consequences of the cash for clunkers is it wiped out the used car market. It isn't a coincidence that without late model used cars to hold down prices, new car prices escalated. What really happened was that the lower supply of good quality late model used cars caused those prices to rise (supply and demand) and that allowed the difference between new and used car prices to rise, too.
They could make a car for $1M that had a useful live of 1M miles. Even if it is the only car you would need to ever buy, if it cost more than you could afford, it doesn't matter how long it lasts.
Top that with the degradation of quality in what use to be considered durable goods
I'm not buying that model. Cars, which are the second most expensive purchase after a house, are lasting longer than ever. Sure, some durable goods are lasting less time then previously, but they also cost significantly fewer hours of labor to purchase so their hours of labor to useful life ratio is probably in the same ballpark.
In 1974 you could buy a decent car for $2,500. A minimum wage job at the time got you $4,160 and a professional job $10,000. Back then a good car cost 1/2 of what a minimum wage worker made and 1/4 of a professional job. Compared to today, where minimum wage gets you $15,080 and a profession job $50,000, a price of a car should be $7,500 to $12,500.
There is no doubt that cars are more "durable" than before, but it's only because, compared to wages, we are paying 2 to 3 times as much for the same product.
Planned obsolescence and subscription services that didn't exist for most people 30 years ago are helping to keep things afloat. The consumer market is probably larger than ever before as far as income to consumer spending ratio.
We may not be growing as far as new consumers or new markets at a rate we were use to for a while but we are paying for services on a monthly basis that no generation before the baby boomers did and even the baby boomers are late arrivals to this party. Top that with the degradation of quality in what use to be considered durable goods and you'll see that the market is indeed growing.
The expansion of the consumer market has occurred through debt financing. That is fine in the short term, but is not sustainable in the long run. People regularly finance automobiles for six years while just a generation or two ago, a three years was the norm. People are carrying far more credit card debt than ever before and the purchases tend to not be for extravagance.
The only way for the consumer market to really grow is for the purchasing power of the individual to grow. Depressed wages and high unemployment are keeping that from happening. It is only an illusion that the market is growing. It's like saying the federal budget is balanced because they have included borrowing in it to cover the shortfall.
Even AAA+ corporate, munis and treasuries will get you around 4% today and are considered safe.
But they aren't safe. Munis are good because you can get them tax free sometimes, but they are not safe.
Depends on the muni, but technically, you are correct. All investments involve some risk, even US Treasuries. Then again, if the US government went belly up, most other investments would probably be worthless, too.
I'll resist the temptation to carry on with the bad puns and innuendo, but....
u-tube plonked in water in an elevated bucket, one end outside the bucket.
1) You suck on the dry end. Water moves up to the apex of the tube.
It's atmospheric pressure pushing the water up the tube as your sucking reduces the pressure in the tube.
2) Water keeps moving around the bend, past the apex.
It's a combination of your sucking and momentum that keeps the water moving.
3) The water reaches a point lower than the surface of the water in the bucket. You stop sucking.
It's the gravity (or the water seeking a lower energy state in a gravitational field) that keeps the water moving through the tube.
So all things are having an effect, which makes sense. Atmospheric pressure doesn't magically stop happening just because gravity is having a stronger effect.
Instead of sucking on the tube, totally submerge it so it is filled with water. Now, cap both ends as you place it in position from the higher container to the lower. Remove caps and water is siphoned out. It isn't atmospheric pressure pushing the water out, it is gravity pulling the column of water out.
It's atmospheric pressure that brings that column up to the apex in a pump/suck start. It's atmospheric pressure that keeps the column together - in a vacuum only the water already past the apex would flow down. You need atmospheric pressure to continually lift water up to the apex.
What you propose is sucking on a straw, removing the straw from your mouth, and then having your entire drink spray of of the straw.
I didn't propose sucking on a straw, but inserting the whole straw in the water, capping the ends and then removing the caps after the siphon is in place. No sucking involved.
Think about it this way. What is atmospheric pressure, but the weight of the atmosphere on a surface. The more atmosphere, the greater the weight and the higher the pressure. As such, the lower container in the siphon is at a higher atmospheric pressure. The siphon works as long as the gravity pulling the water mass down exceeds the atmospheric pressure on the lower surface.
It has nothing to do with the atmospheric pressure on the upper surface pushing the water through the tube. It has everything to do with gravity pulling it out.
If you are retired with a million dollars in your retirement account, one would hope it isn't sitting in a money market. Even AAA+ corporate, munis and treasuries will get you around 4% today and are considered safe. In addition, you would keep some of your funds in the stock market, maybe 20%. 5% would probably be low.
And if the stock market takes even a temporary crash, what then? You are suddenly drawing down your capital, and now next year you've got that much less capital earning interest so even if the market recovers you're still short. If it takes 3 or 4 years to recover your down a couple hundred thousand from where you started.
Meanwhile you are fighting inflation at say 3%.
Because you are LIVING off the interest, you cannot weather temporary market setbacks like you can during the saving stages of your life. Even a short term drop a genuine concern.
Retirement planning scenarios have to be CONSERVATIVE. If you do better in retirement great -- enjoy your blackjack, hookers, and blow, but you have to plan for things not going particular well with the economy.
80% fixed income, 20% equity is conservative. As such, even a 20% decline in the stock market only equates to a 4% drop in your retirement fund. Also, if there is a 20% drop, then would be the time to shift some of the fixed into equity to ride recovery. You are free, however, to put your money in a money market earning 0.7% if you like, but then at the 3% inflation you are worried about, you will be loosing 2% of your value each year which will severely limit how much you can withdrawal and for how long.
Now officially, I am not suggesting that anybody rely on the above for investment advice. Your situation and results will obviously be different than anybody else and you need to rely on your own investment advisor. The only investment advice I offer is to buy low and sell high.
Uhmm... Atmospheric pressure is also due to gravity.
If a siphon worked due to atmospheric pressure diffs only, then it would work upwards, not downwards!
Not necessarily. It depends on the weight of the water column. Technically, the lower container will have a higher atmospheric pressure because the column of air above it is greater. This is true whether the distance separating the two containers is a foot or a mile. Either way, the siphon will work.
I'll resist the temptation to carry on with the bad puns and innuendo, but....
u-tube plonked in water in an elevated bucket, one end outside the bucket.
1) You suck on the dry end. Water moves up to the apex of the tube.
It's atmospheric pressure pushing the water up the tube as your sucking reduces the pressure in the tube.
2) Water keeps moving around the bend, past the apex.
It's a combination of your sucking and momentum that keeps the water moving.
3) The water reaches a point lower than the surface of the water in the bucket. You stop sucking.
It's the gravity (or the water seeking a lower energy state in a gravitational field) that keeps the water moving through the tube.
So all things are having an effect, which makes sense. Atmospheric pressure doesn't magically stop happening just because gravity is having a stronger effect.
Instead of sucking on the tube, totally submerge it so it is filled with water. Now, cap both ends as you place it in position from the higher container to the lower. Remove caps and water is siphoned out. It isn't atmospheric pressure pushing the water out, it is gravity pulling the column of water out.
Also, the established players have been colluding in the environment you're describing for over a decade now. If comcast can't survive "the onslaught that is high speed internet at affordable prices" then they're terrible at business.
For TV, you always can go satellite or an attenna. For internet, there is always DSL, tethering, your own t3, or even satellite. For phones, you, likewise, have multiple options. Providers just want you to think you have no other option than the crap they give you. In reality, there are numerous options.
Where they hell are you getting 5%API right now in a retirement disbursing account? At retirement you are looking at money markets for most of your assets and you'll be lucky to get 2%. A million isn't enough to retire on for most people anymore. Millionaires aren't the 1%, they are the majority of the middle class.
If you are retired with a million dollars in your retirement account, one would hope it isn't sitting in a money market. Even AAA+ corporate, munis and treasuries will get you around 4% today and are considered safe. In addition, you would keep some of your funds in the stock market, maybe 20%. 5% would probably be low.
I'm sure you wouldn't mind if the government decided to start a business that used taxpayer money to directly compete against what ever business it is that you do.
They aren't starting a business. They are providing infrastructure. The REA benefited individuals and business alike. So did the expansion of telephone, airports and highways. So do public hospitals, schools, fire and police departments. All of those were private at one time or another and the government competed or funded endeavors to create the infrastructure we have today.
It would be better if the government put its energy into getting decent internet (wifi or otherwise) in non-urban areas. There are enough subscribers in urban areas to make it worthwhile for somebody to do this, but not so in much of the country. This is basically how electricity and power was rolled out to the entire country. If it is deemed that being connected is as important in the 21st century as these were in the 20th century, then it should be handled similarly.
So all those 'free' connections (well, 300 bucks for life wasn't it?) with their wireless routers provided. They flip that 'on' switch, bathe the entire area with open wifi signals, let Google Voice be used as VOIP, and tell the telcos/wireless carriers to do rude things to themselves in the dirt.
You left out the part where once they have eliminated the competition, they jack up the price on everything. Sure, they have the 300 bucks for life, but they only provide new services on their premium connection. Basically, this is the Walmart model combined with the cable model - first enter a market and flood it with cheap product until the competition is forced out, then raise prices (Walmart). Then only provide new services with new plans like the cable company. Basically, you have basic coverage and pay whopping premiums for extras, or you cancel your old plan and get the new stuff bundled in, but no price guarantees.
At least when wireless and telcos mistreat customers, the customer can switch to a different provider.
Not sure you've been keeping up with the cost of living, but you pretty much have to have a million dollars in the bank to even think about retiring these days. ($1M divided by 20 - a common rule of thumb for maintaining a nest egg in retirement - is just $50K/yr.)
Actually, because that million is earning interest while you are drawing down on it, even at 5%API, you should be able to draw around $80K/yr for 20 years.
I've heard this kind of thing before. It seems to recur every 8 to 10 years or so. The thing about the skilled trades is that in order to earn mini-banker-like compensation you need to be highly skilled in the very high end of the trades because they're the people who can afford welders good enough for nuclear power plant requirements and things like that. Residential and commercial (i.e.: office and retail) trades aren't going to need the high end skills. It takes years to get there.
As for myself, my backup plan if I couldn't hack college were the electrical and plumbing trades. That was during the Reagan Recession, and as it happened I never had to seriously pursue that. But having been unemployed during the depths of the Great Recession, perhaps I ought to pursue getting an Electrician's license.
That's not true. Just like not every welder will start at $150,000/yr, neither will every business major be working on Wall Street. The fact is that most skilled labor jobs are held by aging baby boomers and as they leave, there aren't people to take the places. Heavy machinery mechanics start at $50,000/yr plus benefits and they can't hire them quick enough (granted, it is hard work), supply and demand drives the wages up. Put differently, with so many college grads, most white collar jobs have been held in check.
Skilled labor jobs may not get you a top paying job, but it will more than likely get you a decent paying job.
That's basically what Mike Rowe (Dirty Jobs) has been saying. He started a foundation to to provide funding for high school graduates to go to various skilled labor trade schools instead of college. Most skilled labor jobs are currently held by aging baby boomers and when they retire, there won't be enough people to fill the need. College isn't the answer for these jobs.
You can't count the full cost of your Internet service unless you ONLY use your Internet service for Netflix. A normal Netflix household will use their Internet connection for a few things including Netflix. So the true cost of Netflix is $7.99 a month plus some fraction of your monthly Internet service fees (the latter of which will vary from house to house).
Still a better deal than cable TV.
That is that new math you are talking about, isn't it. The cost to have internet in a household is the $7.99 plus the cost of the ISP. The fact that the internet service can be used for other purposes does not change that. Look at it this way, a new subdivision is built with two houses. House A wants cable and House B wants netflix. How much does the owner of House B need to pay to get netflix - $7.99+internet service. If the owner of House B adds other internet content then, yes, the cost of the ISP is spread over multiple uses, but, it doesn't change the cost to get netflix is $7.99+internet service. Put differently, if you fail to pay your ISP and they cut you off, you can continue to pay netflix $7.99 all you want, but you won't get to watch it. To watch netflix, you need to pay their fee plus the ISP.
Hybrids don't pay for themselves in increased efficiency unless you drive them something like 300,000 miles. That's by figuring in the premium they cost. They get on average 15%-20% better mileage than a gas powered vehicle assuming one drives a standard mix of highway and city. A car with a TDI diesel has a lower TCI than a hybrid and gets equivalent mileage. Pollution control is a valid point, though.
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You are creating a false dichotomy here by assuming that the only way to buy a car is to buy new. Today, any used car that was built 4 years ago that has a clean crash history and under 50,000 miles is a better car that could have been purchased for the same inflation adjusted price in 1974. There are many reasons for this, improve quality, higher safety standards, ect.
Since the original discussion was about the durability of new cars, it seemed reasonable to focus on the price of new cars. But yes, used cars are available, too, however, there is no real data on the reliability for used cars or why, if fully functional their owners got rid of them. It might make a good research project though.
The reason new cars cost comparably more than 1974 cars is that cars have become so reliable that it is no longer profitable to sell cars at that price point.
That is not true. The reason new cars cost comparably more than 1974 is because we have added lots of stuff to new cars compared to 1974. Some of it safety related, some of it comfort related, some of it just cool. People don't price a product based on how long it will last. A Honda Civic today doesn't last significantly longer than a Honda Civic 20 years ago. While it is true that today's cars last longer, that isn't what is driving up the cost faster than the general inflation rate (and since new auto purchases are included in CPI, it is a circular reference).
If I buy a used 2012 car that has 50k miles on it that costs less per mile in maintenance than 1974 car with 0 miles on it and the 2012 car will reasonably go at least 180K I come out ahead as a consumer vs the 1974 car at the same price point.
While this part of your argument is supporting the error above about durability driving up the cost. It is a valid point in that the true way to look at this is TCOM (total cost of ownership per Mile). Regardless of the year produced, given the mpg, purchase price, insurance, expected maintenance, etc. the car with the lower TCOM is the better consumer purchase. A $30,000 vehicle (including all costs in the TCO) that one will drive 100,000 miles is a better purchase than a $20,000 TCO vehicle that one will drive for 60,000 miles. But neither is as good as a $5,600 TCO crappy car that you will drive for 20,000 miles. The $30,000 vehicle has a TCOM of .30, the $20,000 has one of .33 and the POS $5,600 has a TCOM of .28.
BTW, with regards to TCOM, new cars only make sense if you are going to keep them a long time (mileage wise).
The economy will be in a much better shape when rates go back up.
I would phrase it as "The economy will be in a much better shape when rates are allowed to fluctuate based on what the market will bear."
The argument was exaggerated to make a point. If one is arguing, as the OP, that higher car prices today are worth it because cars last longer, then one has to take into consideration as to whether or not cost (price) pushes it out of the realm of the average buyer (basic supply and demand). If it does, then it doesn't matter how long it lasts. To purchase a vehicle, whether outright or borrowing, one has to have the income to cover it. For instance, a half-off Lexus, even though it is a great deal, isn't for somebody making minimum wage.
Houses are a good example. They aren't priced based on longevity. A new $150,000 home in the midwest will last basically as long as a new $750,000 out west. The price difference is because of features (size, materials, land, etc.). That is a fine comparison, but people don't use it for cars (although it is applicable). Instead of saying that cars today provide so much more than before, they say the last longer, which while true, isn't the reason they cost so much more. I think they do this because people know intuitively that while today's cars have more features, more horsepower, etc., that those features don't necessarily drive the true value of the vehicle (only the perceived value). For instance, today's cars and tires can easily go 120mph+. Yet, since you can't legally drive that fast in the US, there isn't an extra value there over, say a lower horsepower car or lower speed tire.
And even if a car would last for an exceptionally long time, nobody will give a correspondingly long loan. They do with houses, because real estate usually appreciates. Cars on the other hand do not. So the collateral for the loan isn't any good. We saw this in the housing market when the bubble burst and people just walked away from their mortgages and let the house be repossessed.
I bought a BMW for $15,000 (top end of your range) with 50,000 miles on it and drove it until it had 250,000 miles at which point it died. Got $1800 for it as a parts/repair car too. So in 1974 the average POS for sale back then was about DONE at 50,000 miles and 250,000 miles was a miracle car.
Well, I was referring to new cars, not used ones, but even still, I'm pretty sure a 1975 BMW or Mercedes would last longer than 50,000. I currently drive a 1972 VW Beetle, with over 300,000 miles on it. Using that random piece of information is no more germane than your BMW. There is no doubt that cars last longer today, but a car that last three times as long and costs three times as much isn't a savings.
Car loans used to regularly reach the double digit interest percentages as well. Sure, you may get a 6 year loan now, but if you are literally paying less interest than the inflation rate (I got 1.9% financing last year), you are being paid to take a loan.
I had enough cash to purchase the vehicle outright (though it would have put a hurt on my savings), or I could have paid about 1/2 to 1/3rd comfortably, but when I saw the breakdown of how much I would be paying in interest I chose to finance the whole thing. I then took a good chunk of that savings I had expected to put on the car and knocked several years off of my home mortgage.
Yes, car loans used to have a higher interest rate, but that interest was also tax deductible, so the net rate wasn't much different. The only reason you are paying 1.9% today is because the Federal Reserve is holding down interest rates. When they finish with their stimulating the economy, rates will go back up.
Those boundaries (a minimum wage job vs a professional job) have changed a lot so its a lot more meaningful to look at median household or median individual income. In those numbers, in 1970 it was $6,670 and in 2004 it was $30,513 Average car price in 1970 was $3,900.00 and today it's just over $20,000. Thats a move from 58% of annual income (another misnomer because required expenses from that income have changed so much in the past 30-40 years, food, housing, taxes, etc have all shifted) to 66% of annual income, not a huge move.
Even if you took those numbers at face value and said "cars are definitely more expensive now" you have to also look at average car age rates, which reflect how much *per year* each person is spending on having a new car (or a used car if you prefer). That number has gone up from 5.7 years in 1970 to 9.0 in 2000 and its well over 10 as of 2011. So, each car purchased is basically lasting twice as long (taking into account just the time the cars are kept, not how reliable they are) as they were "back then". Even if the cars are 10% to 25% more expensive in real dollars or income fractions or whatever, we are definitely coming out ahead thanks to improvements in reliability, serviceability and quality.
I'm not sure that is right. There is no doubt that people are holding on to cars longer, but the question is whether or not it is because they want to or can't afford to get a new one. Most likely, this is an artifact of longer financing terms. In the 1970s car loans were two years, sometimes three. Today they are five to six years. If you go to sell the car before the loan, you will be upside down (owe more on the loan than you can get for the car). As such, people hold on to the car longer.
It is true that the useful life of a vehicle is twice as long today as in the 1970s (say 200,000 miles vs 100,000), but that doesn't mean the original owner is driving it for those extra miles. One of the things that was an unintended (hopefully) consequences of the cash for clunkers is it wiped out the used car market. It isn't a coincidence that without late model used cars to hold down prices, new car prices escalated. What really happened was that the lower supply of good quality late model used cars caused those prices to rise (supply and demand) and that allowed the difference between new and used car prices to rise, too.
They could make a car for $1M that had a useful live of 1M miles. Even if it is the only car you would need to ever buy, if it cost more than you could afford, it doesn't matter how long it lasts.
Top that with the degradation of quality in what use to be considered durable goods
I'm not buying that model. Cars, which are the second most expensive purchase after a house, are lasting longer than ever. Sure, some durable goods are lasting less time then previously, but they also cost significantly fewer hours of labor to purchase so their hours of labor to useful life ratio is probably in the same ballpark.
In 1974 you could buy a decent car for $2,500. A minimum wage job at the time got you $4,160 and a professional job $10,000. Back then a good car cost 1/2 of what a minimum wage worker made and 1/4 of a professional job. Compared to today, where minimum wage gets you $15,080 and a profession job $50,000, a price of a car should be $7,500 to $12,500.
There is no doubt that cars are more "durable" than before, but it's only because, compared to wages, we are paying 2 to 3 times as much for the same product.
Planned obsolescence and subscription services that didn't exist for most people 30 years ago are helping to keep things afloat. The consumer market is probably larger than ever before as far as income to consumer spending ratio.
We may not be growing as far as new consumers or new markets at a rate we were use to for a while but we are paying for services on a monthly basis that no generation before the baby boomers did and even the baby boomers are late arrivals to this party. Top that with the degradation of quality in what use to be considered durable goods and you'll see that the market is indeed growing.
The expansion of the consumer market has occurred through debt financing. That is fine in the short term, but is not sustainable in the long run. People regularly finance automobiles for six years while just a generation or two ago, a three years was the norm. People are carrying far more credit card debt than ever before and the purchases tend to not be for extravagance.
The only way for the consumer market to really grow is for the purchasing power of the individual to grow. Depressed wages and high unemployment are keeping that from happening. It is only an illusion that the market is growing. It's like saying the federal budget is balanced because they have included borrowing in it to cover the shortfall.
Even AAA+ corporate, munis and treasuries will get you around 4% today and are considered safe.
But they aren't safe. Munis are good because you can get them tax free sometimes, but they are not safe.
Depends on the muni, but technically, you are correct. All investments involve some risk, even US Treasuries. Then again, if the US government went belly up, most other investments would probably be worthless, too.
I'll resist the temptation to carry on with the bad puns and innuendo, but....
u-tube plonked in water in an elevated bucket, one end outside the bucket.
1) You suck on the dry end. Water moves up to the apex of the tube.
It's atmospheric pressure pushing the water up the tube as your sucking reduces the pressure in the tube.
2) Water keeps moving around the bend, past the apex.
It's a combination of your sucking and momentum that keeps the water moving.
3) The water reaches a point lower than the surface of the water in the bucket. You stop sucking.
It's the gravity (or the water seeking a lower energy state in a gravitational field) that keeps the water moving through the tube.
So all things are having an effect, which makes sense. Atmospheric pressure doesn't magically stop happening just because gravity is having a stronger effect.
Instead of sucking on the tube, totally submerge it so it is filled with water. Now, cap both ends as you place it in position from the higher container to the lower. Remove caps and water is siphoned out. It isn't atmospheric pressure pushing the water out, it is gravity pulling the column of water out.
It's atmospheric pressure that brings that column up to the apex in a pump/suck start.
It's atmospheric pressure that keeps the column together - in a vacuum only the water already past the apex would flow down.
You need atmospheric pressure to continually lift water up to the apex.
What you propose is sucking on a straw, removing the straw from your mouth, and then having your entire drink spray of of the straw.
I didn't propose sucking on a straw, but inserting the whole straw in the water, capping the ends and then removing the caps after the siphon is in place. No sucking involved.
Think about it this way. What is atmospheric pressure, but the weight of the atmosphere on a surface. The more atmosphere, the greater the weight and the higher the pressure. As such, the lower container in the siphon is at a higher atmospheric pressure. The siphon works as long as the gravity pulling the water mass down exceeds the atmospheric pressure on the lower surface.
It has nothing to do with the atmospheric pressure on the upper surface pushing the water through the tube. It has everything to do with gravity pulling it out.
If you are retired with a million dollars in your retirement account, one would hope it isn't sitting in a money market. Even AAA+ corporate, munis and treasuries will get you around 4% today and are considered safe. In addition, you would keep some of your funds in the stock market, maybe 20%. 5% would probably be low.
And if the stock market takes even a temporary crash, what then? You are suddenly drawing down your capital, and now next year you've got that much less capital earning interest so even if the market recovers you're still short. If it takes 3 or 4 years to recover your down a couple hundred thousand from where you started.
Meanwhile you are fighting inflation at say 3%.
Because you are LIVING off the interest, you cannot weather temporary market setbacks like you can during the saving stages of your life. Even a short term drop a genuine concern.
Retirement planning scenarios have to be CONSERVATIVE. If you do better in retirement great -- enjoy your blackjack, hookers, and blow, but you have to plan for things not going particular well with the economy.
80% fixed income, 20% equity is conservative. As such, even a 20% decline in the stock market only equates to a 4% drop in your retirement fund. Also, if there is a 20% drop, then would be the time to shift some of the fixed into equity to ride recovery. You are free, however, to put your money in a money market earning 0.7% if you like, but then at the 3% inflation you are worried about, you will be loosing 2% of your value each year which will severely limit how much you can withdrawal and for how long.
Now officially, I am not suggesting that anybody rely on the above for investment advice. Your situation and results will obviously be different than anybody else and you need to rely on your own investment advisor. The only investment advice I offer is to buy low and sell high.
Uhmm... Atmospheric pressure is also due to gravity.
If a siphon worked due to atmospheric pressure diffs only, then it would work upwards, not downwards!
Not necessarily. It depends on the weight of the water column. Technically, the lower container will have a higher atmospheric pressure because the column of air above it is greater. This is true whether the distance separating the two containers is a foot or a mile. Either way, the siphon will work.
I'll resist the temptation to carry on with the bad puns and innuendo, but....
u-tube plonked in water in an elevated bucket, one end outside the bucket.
1) You suck on the dry end. Water moves up to the apex of the tube.
It's atmospheric pressure pushing the water up the tube as your sucking reduces the pressure in the tube.
2) Water keeps moving around the bend, past the apex.
It's a combination of your sucking and momentum that keeps the water moving.
3) The water reaches a point lower than the surface of the water in the bucket. You stop sucking.
It's the gravity (or the water seeking a lower energy state in a gravitational field) that keeps the water moving through the tube.
So all things are having an effect, which makes sense. Atmospheric pressure doesn't magically stop happening just because gravity is having a stronger effect.
Instead of sucking on the tube, totally submerge it so it is filled with water. Now, cap both ends as you place it in position from the higher container to the lower. Remove caps and water is siphoned out. It isn't atmospheric pressure pushing the water out, it is gravity pulling the column of water out.
Hospitals and doctors are just an awful symptom of our horrible health care system.
How would you like to sit in an ER all day?
Versus?
Switch to a different provider? Not where I live.
Also, the established players have been colluding in the environment you're describing for over a decade now. If comcast can't survive "the onslaught that is high speed internet at affordable prices" then they're terrible at business.
For TV, you always can go satellite or an attenna. For internet, there is always DSL, tethering, your own t3, or even satellite. For phones, you, likewise, have multiple options. Providers just want you to think you have no other option than the crap they give you. In reality, there are numerous options.
Where they hell are you getting 5%API right now in a retirement disbursing account? At retirement you are looking at money markets for most of your assets and you'll be lucky to get 2%. A million isn't enough to retire on for most people anymore. Millionaires aren't the 1%, they are the majority of the middle class.
If you are retired with a million dollars in your retirement account, one would hope it isn't sitting in a money market. Even AAA+ corporate, munis and treasuries will get you around 4% today and are considered safe. In addition, you would keep some of your funds in the stock market, maybe 20%. 5% would probably be low.
I'm sure you wouldn't mind if the government decided to start a business that used taxpayer money to directly compete against what ever business it is that you do.
They aren't starting a business. They are providing infrastructure. The REA benefited individuals and business alike. So did the expansion of telephone, airports and highways. So do public hospitals, schools, fire and police departments. All of those were private at one time or another and the government competed or funded endeavors to create the infrastructure we have today.
It would be better if the government put its energy into getting decent internet (wifi or otherwise) in non-urban areas. There are enough subscribers in urban areas to make it worthwhile for somebody to do this, but not so in much of the country. This is basically how electricity and power was rolled out to the entire country. If it is deemed that being connected is as important in the 21st century as these were in the 20th century, then it should be handled similarly.
So all those 'free' connections (well, 300 bucks for life wasn't it?) with their wireless routers provided. They flip that 'on' switch, bathe the entire area with open wifi signals, let Google Voice be used as VOIP, and tell the telcos/wireless carriers to do rude things to themselves in the dirt.
You left out the part where once they have eliminated the competition, they jack up the price on everything. Sure, they have the 300 bucks for life, but they only provide new services on their premium connection. Basically, this is the Walmart model combined with the cable model - first enter a market and flood it with cheap product until the competition is forced out, then raise prices (Walmart). Then only provide new services with new plans like the cable company. Basically, you have basic coverage and pay whopping premiums for extras, or you cancel your old plan and get the new stuff bundled in, but no price guarantees.
At least when wireless and telcos mistreat customers, the customer can switch to a different provider.
>> Millionaires will live forever
Not sure you've been keeping up with the cost of living, but you pretty much have to have a million dollars in the bank to even think about retiring these days. ($1M divided by 20 - a common rule of thumb for maintaining a nest egg in retirement - is just $50K/yr.)
Actually, because that million is earning interest while you are drawing down on it, even at 5%API, you should be able to draw around $80K/yr for 20 years.
I've heard this kind of thing before. It seems to recur every 8 to 10 years or so. The thing about the skilled trades is that in order to earn mini-banker-like compensation you need to be highly skilled in the very high end of the trades because they're the people who can afford welders good enough for nuclear power plant requirements and things like that. Residential and commercial (i.e.: office and retail) trades aren't going to need the high end skills. It takes years to get there.
As for myself, my backup plan if I couldn't hack college were the electrical and plumbing trades. That was during the Reagan Recession, and as it happened I never had to seriously pursue that. But having been unemployed during the depths of the Great Recession, perhaps I ought to pursue getting an Electrician's license.
That's not true. Just like not every welder will start at $150,000/yr, neither will every business major be working on Wall Street. The fact is that most skilled labor jobs are held by aging baby boomers and as they leave, there aren't people to take the places. Heavy machinery mechanics start at $50,000/yr plus benefits and they can't hire them quick enough (granted, it is hard work), supply and demand drives the wages up. Put differently, with so many college grads, most white collar jobs have been held in check.
Skilled labor jobs may not get you a top paying job, but it will more than likely get you a decent paying job.
That's basically what Mike Rowe (Dirty Jobs) has been saying. He started a foundation to to provide funding for high school graduates to go to various skilled labor trade schools instead of college. Most skilled labor jobs are currently held by aging baby boomers and when they retire, there won't be enough people to fill the need. College isn't the answer for these jobs.
You can't count the full cost of your Internet service unless you ONLY use your Internet service for Netflix. A normal Netflix household will use their Internet connection for a few things including Netflix. So the true cost of Netflix is $7.99 a month plus some fraction of your monthly Internet service fees (the latter of which will vary from house to house).
Still a better deal than cable TV.
That is that new math you are talking about, isn't it. The cost to have internet in a household is the $7.99 plus the cost of the ISP. The fact that the internet service can be used for other purposes does not change that. Look at it this way, a new subdivision is built with two houses. House A wants cable and House B wants netflix. How much does the owner of House B need to pay to get netflix - $7.99+internet service. If the owner of House B adds other internet content then, yes, the cost of the ISP is spread over multiple uses, but, it doesn't change the cost to get netflix is $7.99+internet service. Put differently, if you fail to pay your ISP and they cut you off, you can continue to pay netflix $7.99 all you want, but you won't get to watch it. To watch netflix, you need to pay their fee plus the ISP.
That should have been TCO instead of TCI!
Hybrids don't pay for themselves in increased efficiency unless you drive them something like 300,000 miles. That's by figuring in the premium they cost. They get on average 15%-20% better mileage than a gas powered vehicle assuming one drives a standard mix of highway and city. A car with a TDI diesel has a lower TCI than a hybrid and gets equivalent mileage. Pollution control is a valid point, though.