The Post Office is Broke

The headline is actually “Post Office Might Miss Retirees’ Payment” but the click-on-me teaser at the WSJ reads Post Office Nears Its First Default. The use of the word “first” not very subtly implies that there will be more. And there will be.

USPS StampIndeed, saying that the USPS “might” miss the $5.5B payment due in ten days is a bit too polite. They do not have the money and Congress has made it clear they will not act before the August recess. And there is a second $5.5B payment due at the end of September.

Which is not to say that missing these payments will cause much in the way of visible effect. They are, essentially, to make up an underfunding in the Postal Service’s pension plan. Skipping them may have serious long-term consequences, but for now the USPS can still buy diesel for its trucks and make payroll. For now.

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How Not to Invest in Real Estate

It has been nearly two weeks since I allowed myself the pleasure of writing about SmartMoney. That is certainly a streak to be proud of, but it cannot goTwo-story_single-family_home on forever. I am only human.

The problem is that there are just so many things at SmartMoney that I would enjoy discussing. How to pick only one?

There is Taming the Cost of Traffic Tickets, currently the most popular post on the site. It lists five things you can do to reduce your expenditures on traffic tickets, none of which is to avoid getting traffic tickets.

And yesterday brought Recession’s Surprise Impact on Credit Scores. Apparently, the average FICO score fell during the recession, bottomed out in 2009, and now, three years into the recovery, is back to where it was in 2007. Which is a surprise. Also, the article had the insightful warning “increasing a FICO score could be harder than lowering it.” Good to know.

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How the Visa/MC Settlement Affects You

Credit-cards Lotus Head On Friday, there was a massive settlement in a seven year-old lawsuit between Visa, MasterCard, the banks that do business through them, and retailers. The retailers will get $7.25B in compensation for what was, essentially, a complex price fixing scheme.

But it is not the epic sums due to change hands that is causing the buzz. As part of the settlement, Visa and MC will for the first time allow merchants to add a surcharge to the bill for credit card use. This is a big deal, apparently. The Consumerist led with that facet of the deal. Reuters and AP mentioned it at the top. A clever report at Forbes was entitled $6 Billion Visa Settlement Frees Consumers To Pay More.

The president of the American Bankers Association (a.k.a. the head lobbyist for the banks that are paying serious money to the retailers) was quoted in the Times “Let’s be clear — retailers, not consumers, benefit from today’s resolution.”

I disagree.

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Health Warnings

Friday the 13th. Time to consider all the things that are killing you.

For example, are you reading this while sitting down? Well, stop it. (I mean the sitting down part. Obviously, you should keep reading.) According to a recent study, as reported by The Wall Street Journal, “Sitting down for more than three hours a day can shave a person’s life expectancy by two years….”

(The WSJ article was entitled “Sitting for Park Bench CropMore Than Three Hours a Day Cuts Life Expectancy.”  MSNBC’s item on the same report was Sit fewer than 3  hours a day, add 2 years to your life, study says. The glass is always half full on TV.)

The thing is, three hours is not a lot. Sitting down to eat three times a day and driving to and from work (heaven forbid you should be riding instead of driving) probably uses up most of your daily quota. If you then absent-mindedly get absorbed in a waiting-room magazine you are a goner.

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Target Date Funds Misunderstood

Traders Crop Time to revisit target date funds. I wrote about them three years ago. Come to think of it, I did it twice.

I have a lot of issues with target date funds. These are asset allocation mutual funds that contain a mix of stocks and bonds, and sometimes more exotic things, formulated to meet the investing needs of a person intending to retire in a given year.

To begin with, I object to the basic premise, that a manager can select a risk-return tradeoff for an investor based only on his expected retirement date. Partly, this is because I am not a believer in the conventional view that a person should take a lot of investment risk when young and less as they age. But I concede that I belong to the radical fringe on that particular subject.

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