A Maria Antoinette moment

[timelets]

Wilbur Ross, a billionaire and the current Commerce Secretary, doesn't understand why federal workers who don't get paid can't get a loan from a bank.

"Wilbur Ross 'Doesn't Understand' Why Furloughed Workers Need Food Banks | Hallie Jackson | MSNBC" (Watch on YouTube)

Comments

[gomberg]

Well, imagine that you had an income of 35,000 dollars a year (pretty common among the low-level employees of agencies such as TSA) and a near iron-clad guarantee against being fired, plus a decent insurance and a pension. Would you save, and, if yes, what for? Their precautionary behavior was taking such a job: it pays a bit less under normal circumstances, but is, pretty much, the safest job you could get in the US (other than a tenured professorship). If anything, ex ante, their behavior was much more risk-averse than yours, and showed above-average level of foresight. True, they had a trust in the US government, which was fairly well-justified on historic grounds (this is the first time even in a shutdown that more than one paycheck is missed). This trust, BTW, has allowed that government to pay its employees less (and, consequently, tax you less). And, actually, if not for some residual trust, these guys would not be showing up for work now (meaning that next time you would want to fly to Europe you would, possibly, need to drive to Tijuana to take the plane).

As for "relying on somebody else" - we all do. Do you have right now in your house sufficient cash and food to survive for 2 months? Are you relying on the bank to give you your money when you need it? If that is the case, you are relying, effectively, on a guarantee from that same government that has failed to pay those guys. If that government goes just a bit more nuts than it has done already, there may be a run on the bank, and, then, who knows.... If I were you, I would consider stocking up.

[juan_gandhi]

Well, probably... but regarding our paranoia, yes, we are kind of prepared to various things. Back in the USSR I was prepared to the following:
- no water
- no electricity
- no heating in winter
- food being hard to get

All of this is kind of easier here. Yes, my grandmother was saving, my mother was saving, I was saving. I am more prone to risk, but well, being a male, it's natural.

But again, I have my experience. These people have their experience, and it's very different. And immigrants are better survivors.

[(Anonymous)]

Well, I do have, probably, enough food in my pantry for the family to live for a month, but I am low on paper cash - wouldn't survive even a week with my cards/accounts cut off. And I would not have enough drinking water (may be, 30 liters, plus some mineral water, but would not get us through even a week). At least, heating is not a problem here :) I am not even talking about a possibility of an earthquake, in which all that pantry is left in rubble. And I live in the city where there was a gas shortage just last week (I actually went out an bought some canned food). I have considered taking out more cash (should do it, really) - but I have been robbed so many times in my life, I am scared to have much.

(Successful) immigrants are better survivors for the threats they personally have faced and only for those (I am stressing the word successful, as you are, certainly, dealing not so much with training than with selection bias - the worse survivors do not get to tell stories about their migration). In any case, the fact is, suppose tomorrow your president announces that he is planning to "renegotiate" the treasuries (something he mentioned in the past, but nobody took him seriously) and the banking system/trade consequently lock up. Would your precautions be sufficient? For how long?

[gomberg]

Well, I do have, probably, enough food in my pantry for the family to live for a month, but I am low on paper cash - wouldn't survive even a week with my cards/accounts cut off. And I would not have enough drinking water (may be, 30 liters, plus some mineral water, but would not get us through even a week). At least, heating is not a problem here :) I am not even talking about a possibility of an earthquake, in which all that pantry is left in rubble. And I live in the city where there was a gas shortage just last week (I actually went out an bought some canned food). I have considered taking out more cash (should do it, really) - but I have been robbed so many times in my life, I am scared to have much.

(Successful) immigrants are better survivors for the threats they personally have faced and only for those (I am stressing the word successful, as you are, certainly, dealing not so much with training as with selection bias - the worse survivors do not get to tell stories about their migration). In any case, the fact is, suppose tomorrow your president announces that he is planning to "renegotiate" the treasuries (something he mentioned in the past, but nobody took him seriously) and the banking system/trade consequently lock up. Would your precautions be sufficient? For how long?

[gomberg]

And, BTW, though, of course, your mother and grandmother may have been saving all their lives, if anything, their experience should have taught them that savings are not a smart strategy. How many times during the 20th century did people in Russia loose all their savings?

A relative of mine, who survived a ghetto during the German occupation, had a perfect solution: postage stamps. Money, gold - that all goes in the first search. A few old envelopes would only interest a philatelist (the rest would think these to be mere personal heirlooms, of no real value to anybody else). It is unlikely that the guy searching you is a philatelist, but it is quite likely that there will be a philatelist reasonably nearby with access to an extra bread ration (or, may be, even to a coat without a yellow star).

Hopefully, I will start you on a new adventure in stamp collecting!

[juan_gandhi]

Thanks for the hint... I collect petrified wood, it looks even dumber (and heavier).

[gomberg]

My relative in question did, in fact, spend most of the post-war period collecting stamps. He sold his collection when Latvia (where he lived) joined the EU.

Well, I do not even, really, collect. I satisfy my hunter-gatherer instincts by hoarding used books (mostly history and art). I pretend, these have pure use value for me (I am no bibliophile - I just like books). And it is, indeed pretty damn heavy.

[lm644]

With $35-45K annual gross, the question is not whether you would save anything - it’s whether you could. The cost of living in major metropolitan areas is such that with mandatory retirement savings (not accessible in emergencies) and medical insurance deductions, you can barely cover your basic expenses. Saving is a luxury for most people of modest incomes.