I have been looking into buying an electric car and this has got me thinking a lot about the future. While most people are concerned about the economy or worrying about paying their mortgage, the world is changing rapidly and no one seems to notice. A couple of years ago there were a handful of electric cars. Now there are thousands being sold every month. Soon there will be millions on the road. Cell phones are now as powerful as the last generation of computers. Companies are taking reservations for flights into space. We are entering a brave new world and it will create many new opportunities for those who are looking to profit.
Electric Vehicles (EVs)
Image by Terren in Virginia
I have been following the evolution of electric cars for at least 20 years. Until recently the technology just wasn’t available to produce EVs that rivaled the range or performance of gas cars. A company called Tesla has changed all of that. What started out as glorified golf carts can now do 0-60 in less than 4 seconds. EVs can cruise at freeway speed for up to 300 miles on a single charge. They can be rapid-charged in 30 minutes. Electric cars are still more expensive and less practical than combustion cars, but that is changing. It will change much faster than most people expect. New battery technologies already being tested will make long range EVs affordable to the masses in just a couple of years.
Self-Driving Cars
What if your car could drive your kids to school and soccer practice for you? What if you could read the newspaper or answer emails on your commute to and from work? What if you were elderly, blind or handicapped and your car could drive you around? What if you wanted to have a couple of drinks and not get arrested? What if thousands of lives could be saved and hundreds of thousands of injuries could be prevented every year?
All of these things are possible with self-driving cars and they have been around for years. Google has a small fleet of self-driving Priuses that have driven millions of accident-free miles. Tesla is working with Google to bring this technology to their next-generation of electric cars. Self-driving cars will soon be available and affordable. The choice to drive or ride will be up to you.
Alternative Energy
One of my favorite places to ride dirt bikes is now covered in windmills. There is still plenty of room to ride, but the desert landscape has changed. In addition to blazing through miles of cactus and sand washes, you ride under towering white turbines that spin in a mesmerizing fashion. The owner of the land is furious with the new windmills blotting out his view of pristine desert. But, I have to admit that I think they look kind of cool. In either case, alternative energy is only going to expand. It’s not going away. The age of digging up carbon and burning it for energy will come to an end, just like the whale oil and kerosene lamps of the past. Combustion is primitive, expensive, inefficient and harmful to the environment. Companies and governments are making a fortune selling dirty energy. Soon, technology will free the people from energy monopolists.
Super-fast Internet
For years, Google has been quietly rolling out a gigabit fiber optic network. The goal is to provide super-fast Internet for streaming media and other high-bandwidth uses. The exploding popularity of Netflix is only the beginning of this revolution. YouTube is launching premium channels and other providers will soon jump on board. Consumers have grown to expect instant choice for their viewing entertainment. They don’t want to wait for their show or movie to start. They want it to start when they are ready to watch it. They want interactive choices as they watch, such as choosing their own endings or camera angles. They want to be able to multi-task on the Internet as they watch their favorite shows. The old passive entertainment model is being replaced by a new viewer-centric reality.
The Dow and S&P are in record territory and most patient investors have recovered their losses from the Great Recession. Smart investors, who kept putting money in throughout the dip, have been rewarded handsomely. People who panicked and pulled their money out of the market, recorded huge losses and then missed the recovery. This is what separates investors from amateurs.
Invest Before Spending
Image by StockMonkeys.com
Most rational people realize they need to save and invest part of their income, but very few do it on a regular basis. There are lots of reasons why people spend all of their money, but the result is always the same. People who fail to save will always live paycheck to paycheck. It’s important to dedicate at least 10% of your net income to your future. Invest before you spend any money or pay your bills. Otherwise, your paycheck will disappear and you will have earned nothing for yourself.
Invest with Confidence
I have been investing for 27 years. I have seen Black Monday, the Asian Currency Crisis, the Dot-com Bust, the Flash Crash and a couple of recessions. I am still confused, confounded and misled by the market, just like everyone else. The difference is that I stay focused and invested, instead of panicking. I would have loved to have been out of the market during these downturns, but I wasn’t. So, the only logical thing to do was to keep investing and profit from the rebound. Maybe, I will predict the next big downturn and move my investments to a safer location. But, I won’t be doing it in a panic, after the market has crashed.
Invest with Patience
One of the hardest things for me to learn as an investor was how to have patience. The markets and investments never seem to do what they are supposed to, especially in the short term. There are years at a time when the market is overvalued and people are buying overpriced stocks in a frenzy. There are times when good companies and industries have fallen out of favor. There are times when people are too scared to invest, while stocks are a bargain. Most important, there are companies with good earnings and a low stock price. Over the long haul, the ups and downs average out and the stocks of good companies will go up.
A financial catastrophe happened in the world today and most people hardly noticed. As part of a European bailout agreement, the country of Cyprus froze depositor’s bank accounts and will seize part of their assets. This is the first seizure of private assets since the financial crisis began. I doubt it will be the last.
Here is How it Happened
Image by Ugg Boy
Many of the banks in Cyprus are insolvent. When they requested a bailout from the European Central Bank to stay afloat, the bankers insisted depositors should pay for it. So, the banks in Cyprus shut off the ATMs and wire transfers out of the country on Friday night. The banks remained closed on a “bank holiday” today and they may remain closed until Thursday. They imposed a levy on depositor’s assets in the following amounts:
6.75% on deposits < €100,000
9.9% on deposits > €100,000
Most important, the bondholders (aka bankers) didn’t lose any money on the deal. They kept all of their assets while depositors lost part of theirs. Legally, the bondholders should have to write down the value of their bad debt and depositors should be protected. Instead, the government of Cyprus essentially confiscated part of their deposits.
Why it Matters to You
What happened in Cyprus today sets two undeniable precedents:
Private wealth may now be seized in order to pay public debts
Central bankers wield more power than sovereign governments
Anyone who thinks this is an isolated incident in an insignificant country is clearly naive or delusional. This is just the first attempt at extorting the private wealth from debtor nations. If the central bankers in Europe are successful, they will be emboldened to use this technique all around the globe. Cyprus was likely chosen because it was small and relatively powerless. It was also a tax haven and there were lots of foreign deposits. Soon, other debtor nations may be in the cross-hairs of their bondholders, including America.
For anyone who thinks that’s impossible, think again. Five years ago, no one in America thought our government would provide an $800 billion bailout to failed U.S. banks and lend trillions of dollars to foreign banks around the world. But, it did happen and there was no way for the citizens to stop it. We still owe much of the debt for that bailout, as the bankers profited and our government claims the money was paid back. If the banks in Europe or America freeze depositor’s funds, we will be just as powerless as they were in Cyprus today.
Update 3/30/13
After the parliament of Cyprus rejected the initial bailout plan, the European Central Bank played hard-ball. Depositors with over €100,000 will receive shares in the banks worth only 37.5% of their original deposits. So they stand to lose over 60% of their money and that’s if the banks do well, after the bailout.
Banks reopened Thursday for the first time since March 16. Customers lined up at ATMs, but withdrawals were limited to €300 per day. The ECU will review all commercial transactions over €5,000. Deposits over €100,000 are currently frozen. No one is allowed to take more than €1,000 off the island. Local businesses have no money for payroll and customers have little money for purchases.
The thing that disturbs me the most about this disaster is the way central bankers have blamed depositors for the mishandling of the money by the banks. Depositors aren’t the ones who chose to invest in Greek sovreign debt, bankers were. Yet, the depositors were repeatedly singled out as contributors to the crisis.
“Together in the Eurogroup we decided to have the owners and creditors take part in the costs of the rescue – in other words those who helped cause the crisis.”
Wolfgang Schaeuble – German Finance Minister
The Bottom Line
The bottom line is that politicians around the world are simply the corrupt puppets of the moneyed interests. The further they lead us into debt, the worse conditions become for our citizens, our economy and our sovereignty.
“And to preserve their independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.”
Thomas Jefferson – 3rd President of the United States
Chrysler has come up with an entirely new twist on a generations old problem, begging parents for a car. A car is practically a rite of passage for teenagers and no self-respecting parent would risk damage their child’s self-esteem by depriving them of mobility. But, what if the parents can’t afford a brand new car or they refuse to buy it? Never fear; people can now register a car online and beg all their friends and relatives to pitch in together to buy it. Here is how it works.
The Old Way
The New Way
Get a Job
Save a Down Payment
Buy the car
Make the Payments
Configure your Car
Register it Online
People Sponsor Parts
Your Car Gets Funded
Thank Everyone
Result = Hassle
Result = Awesome
Road Tripping
Kids these days have to be proactive to ensure they receive a car worthy of their style and stature. It’s not enough to just hit up their parents and hope for the best. Otherwise, they could wind up like my poor daughter. She got a green 1996 econo box, with a cassette player and peeling paint. Had she registered for a new car online, she could have at least dreamt of having Sync and Wi-Fi. It’s pretty sweet to configure your brand new car, especially when other people pay for it.
Payments are Lame
In all seriousness, I bought a shiny red sports car when I turned 21 and it was the biggest financial mistake of my entire life. It cost me four years of brutal payments, expensive registration and high-risk insurance. I got a bunch of tickets and lost my drivers license. I had to make the payments while it was parked and gathering dust. It wound up costing me way more than I had ever expected. I can still hear the salesman telling me, “It’s only $10 per day.” Don’t you believe it.
The Bottom Line
The bottom line is that marketers will go to any length to sell products to people who can’t afford them, even if it means mooching on their behalf. Consumers have come to expect things they can’t afford, even if it means years of debt or shameless begging. A new car is not a right, an entitlement or even the best option.
“You cannot help people permanently by doing for them, what they could and should do for themselves.”
Abraham Lincoln – 16th President of the United States
The birth rate in the United States is now the lowest since the 1920s, when they began keeping this statistic. Experts are worried about the dire consequences of negative population growth, which is already occurring in parts of Europe and Asia. In many rural areas of America, it is causing schools to close, depressing real estate prices and affecting public services. Some municipalities are even giving away free land in order to attract young couples to the area. One obvious reason couples are having fewer children or skipping it entirely is because of the high cost. It is now estimated to cost $235,000 to raise a child to age 18.
How Times have Changed
Image by Jenny Downing
Whenever I wanted something expensive as a child, I was quickly told, “We can’t afford it.” This wasn’t something that I could argue with, because it was an honest and accurate answer. There was no whining, begging or tantrums. We accepted the reality of a family of seven, living on a single income. It was more important for us to eat and have a roof over our heads, than to get a new baseball glove. Now days, parents are too ashamed and embarrassed to admit when they can’t afford something. And, they feel guilty about depriving their children of the smallest item or experience. So, they often go into debt in order to provide the things their income won’t allow. When I was a kid, parents didn’t feel obligated to entertain us or to buy us things they couldn’t afford. My allowance barely bought a couple of candy bars and my clothes came out of Sears catalog. We washed cars, mowed lawns or got paper routes to earn our own money.
Children are a Choice
When we started our own family, we chose to stop at two children. Mrs. Prosper and I are both younger children from very large families and we both wanted to give more time, attention and resources to fewer children. Having a son and a daughter made the decision easy. Little did we know or care that it takes 2.1 children per couple in order to sustain the population. Two kids was enough and three would have been one too many.
Extending Childhood
For most parents, the cost of raising a child doesn’t end when they turn 18. Children are staying at home longer and expecting more support as young adults. It’s very common for parents to be paying most of the expenses for their kids well into their twenties, whether they are working or not. Parents who help their children attend college are facing huge tuition costs. Others are helping to raise their grandchildren. It never seems to end.
