On Suelo’s website he makes a point that money is imaginary, and that the power of money only becomes real if both the creditor and the debtor both believe in it.  The example he uses is that if you give a bushman in the jungle some German marks then it is nothing but colored paper to the bushman.  That money has no meaning to the bushman.  This is definitely true when you think about it.  Why is the United States able to literally summon trillions of dollars out of thin air?  It is because the United States’ creditors have faith in the word of the U.S. government.  Why did California have to cut spending?  It is because creditors no longer believed in California.   Money is only real because people believe in the system and participate in it.  If you bestow an account with a trillion dollars to an extraterrestrial who places no value in it then it is meaningless to that alien.

Another point on Suelo’s site is that in reality goods and services can be exchanged without money.  One example he had was of a German woman named Heidemarie Schwermer who has lived without money for about 12 years.  She does this by bartering within exchange circles and she is the subject of an upcoming documentary appropriately titled  Living Without Money.  This is not a new idea since people have been exchanging goods and services for thousands of years.  Money just became a global system of accounting that made these exchanges less personal.  It is certainly more efficient to swipe a credit card to buy a sack of rice rather than trading a bag of almonds or something else.  However, for those without money it may make more sense to barter.

Finally, another thing that made Suelo swear off money is the recurring theme of “mo’ money, mo’ problems”.  The example he gave was that when he worked with Ecuadorean tribespeople he saw how money made them buy useless things.  The tribespeople also became less healthy as they spent more because they started to buy things like soda, MSG, and refined sugar.   Suelo said that he charted their development and “it looked like money was impoverishing them”.  I have certainly seen how money could impoverish people.  Some people forget the real things in their lives such as family and friends and pursue money relentlessly because they never feel like they have enough.  The fact is that if they never feel like they have enough then it does not matter how much money they earn, because they will never be satisfied.

Anyway, I think that these people demonstrate that it is definitely possible to live without money, but the hard part is to unplug yourself from what is considered normal.  I am definitely not cut out to live in a cave, but I have to admit that I am a little envious of those living abundantly without money.  For now I am very thankful for the lot I have been given, and I will just have to do my best in this world that is controlled by this “imaginary” system.   I have to admit that this whole financial meltdown made me less fearful of losing money, because life can and will go on without it.

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One of the authors of the study says that the $75 billion Obama mortgage plan would have been more effective  if the money was given to borrowers rather than lenders.   That is probably true.  The Obama mortgage plan touted that they would help 3 to 4 million borrowers who are delinquent through modifications.  If you spread  $75 billion out to   3 million borrowers each person would get $25,000.  In some areas that money could probably pay off someone’s entire mortgage debt.  Of course this would be too obvious of a government handout and probably would be even less popular than the current ill conceived plan.  Who would not be pissed off if their financially delinquent neighbors just got a check for $25,000 for the sake of being delinquent?

The current plan gives incentives to servicers and lenders to modify loans, but that incentive is relatively small compared to an interest cut or principal cut on a big loan.   Also, if servicers really wanted to ramp up on loan modifications they would need to hire a lot more staff, and it is not profitable to do so.  Additionally, if a borrower is still paying their debt then there is really no incentive for a lender to change the rates voluntarily.  This new study also echos past data that a large percentage of those who get modification redefault very quickly.     As I have said before, this whole mortgage bailout  is simply prolonging the mess because it sort of give banks a lifeline to delay the processing of bad loans, and borrowers who have no capacity to pay back their loans simply delay their ability to repair their credit.  I am glad that now there is fairly concrete evidence that supports my conclusion.

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So the gist of the article is that a Harvard study said that  my generation is entering  a stage of peak home consumption and will shore up the housing market.   The problem with this conclusion is that they did not account for how many people in the “echo boom” generation already own homes, and how many already lost homes to foreclosure and cannot recover for seven years.  However, the study did acknowledge that the real income of my generation is much lower than the prior generation so the affordability of homes is much lower.  Additionally, younger workers are suffering more in the midst of high unemployment, so buying a home is even more out of reach due to the lack of jobs.

However, I agree that eventually our generation will be the ones that soak up the excess housing inventory on the market now, but that is almost the same as saying “the sun rises in the east”.    It will take time for homes to be affordable enough for my generation to buy en masse.  Some of my friends have an attitude of, “I am not going to be stupid like my parents and rush into home buying”, and even those who have parents with huge capital gains on their homes believe that it is still too expensive to buy a home at the current valuations.  Also I have seen a trend of frugality as being the “in” thing to do now so many are seeking a deal or just staying put.  Some are just saving money by living with their parents.

Anyway, I wouldn’t say that we as a generation is  a lifeline for the current horrible housing situation, but I think it is a good thing that this crisis is happening now while we are still young. We still have time to figure stuff out,  learn from our parents’ mistakes, and build up our assets.  Unfortunately,  many baby boomers who were most affected by this economic disaster may be running out of time to rebuild.

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First of all, being frugal is all about being fiscally conservative with your own finances.   So if you are pinching pennies by using coupons and sales, then why would you want your government to spend your tax dollars without any concern to the pricetag of things?  I imagine that most frugal people want a frugal government that looks for the best price in every purchase.  Unfortunately, this is not happening at all under the current regime, and that is disconcerting.

Second, being frugal is about being responsible for what you have been given in terms of income.  Nearly every personal finance blog I have read do not support the housing bailout and other bailouts that have been happening lately because these bloggers including myself think of the bailouts as rewarding the irresponsible.  So logically, these frugal bloggers would have voted with the Republicans against the new stimulus bills and bailouts and be labeled as “conservatives”.

Next, a lot of frugal bloggers write about getting rid of debt.  This is once again another fiscally conservative ideal.  Right now the United States is in $11 trillion dollars of debt, and the new administration wants to increase it by 27%.  Granted, the 8 years of Bush was not very conservative, either, and many people believe that George Bush is not a true conservative.   For the most part I think most frugal people want the government to get rid of its mounting debt, and again, being frugal is the same as being conservative.

I think it is sad that people think of conservatism as a bad word, but I guess just a few years ago frugality was not very popular, either.   Hopefully as frugality and fiscal responsibility becomes more accepted Americans will realize that they cannot afford to have big spenders in their government.  After all, more taxes means less savings, and letting the government take more of your own ability to be financially independent is equivalent to giving up your life, liberty, and the pursuit of happiness.

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I left work last night and realized that I left my purse at my cube.  So I drove back to retrieve it.  I usually don’t park in the underground garage because it is always full, but at that time many people already left work so I figured I would park there since it is the closest parking lot to my building. It has one of those arm gates that raises up after you swipe a keycard.  Then after the arm gate there is another metal sliding gate.

I have always had a problem with these gates because my arms are very short and oftentimes I have to stretch out pretty far to activate the keycard.  Yesterday this happened again and stretched out just a bit too far and my foot went off the brake for a second.  Unfortunately, the lane to the gate is on a downward incline so gravity took my car straight into the gate arm and made contact with the metal gate and then stopped.  The distance from the keycard station to the gate is less than ten feet so it wasn’t a huge impact, but the car still managed to break off the wooden gate arm and made a dent in the metal gate.

Amazingly enough the car just had a few scratches in the front bumper and was not damaged at all, but the metal gate to the garage stopped opening.  So I called building security and a pretty nice old security guard came out and took my information.  Today the property management called me and said that they have repair people out there and if the damages are not extensive I don’t have to file a claim.  They were actually quite nice about it and thanked me for informing security quickly and giving my information.  They also said they will keep me updated on the repair costs and possible claim.

In case you work in the former Siebel buildings in San Mateo and you were inconvenienced by the south garage gate closing today, I’m really sorry!  I felt pretty dumb after the incident so I went home and Googled garage arm gate accidents, and what do you know, other people have the short arm problem too.  Here is an example.

After watching these videos I actually felt a bit better.  Then I started sorting a bag of mail I got from my parents’ house this weekend, and I found a check for $200.13 from a class action settlement.  Apparently a law student named Kashmiri sued the Regents of California for increasing student fees in the 2002-2003 school year and after five years of legal battles the students won and the Regents paid out a $33.8 million settlement.  It is kind of sad because I completely understand why the Universities of California had to raise fees at that time.  The economy was in the ruts, and the fees were really quite cheap.  I entered Berkeley in 2001 and I think I paid less than $2000 for tuition for each semester, and then the next year they increased the fees dramatically for international students, but the resident tuition did not change all that much.  Here are the webpages from 2001 to 2002 and 2002 to 2003.   The real fee hikes actually started from the 2003 to 2004 school year where the fees went from $2100 to $2900.  Now it costs over $4400 for resident tuition. I actually feel bad for receiving this money because I don’t feel cheated by my Berkeley education. I’ve already earned my all four years of my tuition money back in less than a year after college.  I also found out that the University of California barely raised its fees from the late 80’s until 2002 after I met an alumni that graduated in 1988.  He told me that he paid around $1500 a semester in 1988.  Basically, it is a public school system that tried to keep its fees down for many years but just couldn’t do it any longer and it is understandable.  I am  just going to donate this $200 back to UC Berkeley’s engineering program and I encourage other UC grads who are comfortably employed to do the same because our alma maters probably need the money more than we do now.  I really want the UC system to remain the best public universities in the world for generations to come.

So that’s the entire story of my stupid accident, and the $200 of found money.  Hopefully my car insurance will not be adjusted and the owners of the building will fix the gate.  In the future, I will always park my car in front of those keycard swipers first so there is no chance of sliding down into a gate.

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