Friday, February 5, 2016

The Long Con

The Oscars are coming up at the end of February. Every year, I get caught up in the buzz of the Oscar nominated films. And every year, I promise myself that I will see at least a few of them. By the time Oscar night rolls around, I am woefully unfamiliar with most of the pictures. Inevitably, I end up making my predictions based on the actors I like the best, or the films I read the most about in Entertainment Weekly.

This year, I am lucky to be dating a film enthusiast. He even watches movies with subtitles - something I have yet to do, but have promised to try. So last weekend Mark Johnson and I left the comfort of my little couch in Dearborn and went to the movies. We were on the fence between Brooklyn (a love story set in the 1950's), the Big Short (based on the real life story of the financial collapse of 2008) and Spotlight (starring my favorite actor, Mark Ruffalo. It's about the sexual abuse scandal in the Catholic church.)

We ended up seeing the Big Short. We had watched the previews for the movie, and we actually lived through the financial collapse of 2008, so we had a pretty good idea of what to expect. Or so we thought. Anyone who reads my blog knows that I've always had a healthy distrust of government, financial institutions and large corporations. But this movie portrayed the depths of greed, power and fraud that I could never have imagined. 

I really tried to pay attention during the actual financial crisis in 2008. I know that the financial institutions sold mortgage bonds on a bunch of bad mortgages. And they kept packaging and re-packaging them until everyone was invested in them to some degree. So when all of the people started missing payments and getting their houses foreclosed, the entire economy started to fall apart. 

But that isn't even half the story. It took a Hollywood film to simplify what happened in a way that I could actually understand. I think everyone should see this movie. But here's a quick summary of what I learned that I did not already know. 

It's true that they started packaging up bad mortgages into these mortgage funds and sold them to all of us, but what I never understood was how so many bad mortgages could have been given out in the first place. As it turns out, the banks were making a lot of money on the fees for writing mortgages and selling them to be bundled into these investments. So there was a huge incentive to create more mortgages so they could sell them back to us. 

As a result, they started giving mortgages to anyone. Literally anyone. They didn't need a credit check or credit history. Many of the new home owners barely spoke English. These brokers targeted people who had no reliable source of income and put them into mortgages with variable interest rates. They promised that when the rates went up, the people could just re-finance, which meant more closing fees for the banks and possibly a second mortgage to add into the bundles they were selling back to us as investments. 

The reason we were all willing to invest in mortgages is because they were considered a stable investment. But by giving them out to anyone, the banks and the mortgage brokers turned something stable into something unstable. In essence, they created the housing bubble that eventually burst. Meanwhile, we had no idea what they were doing. And they were making huge profits for every bad mortgage they sold.

The film doesn't really explain what the government knew. So we are left to believe one of two things. Either they knew something was wrong but they didn't have the courage to address it, or the regulators were completely oblivious to what the industry was doing. I tend to believe that they knew something was wrong, but they were under pressure from the big banks to look the other way. Plus, they could also take credit at election time for the record levels of home ownership among the lower and middle class.

The worst part about the 2008 financial crisis is that there were no consequences. We all know how the story ended. The taxpayers bailed out the financial institutions and for the most part, they went back to doing exactly what they have always done. 

After seeing the movie, I started thinking a lot about my investment portfolio. I have been diligently putting away money for my retirement since I was about 25 years old. And I always knew I was handing my savings over to people with some questionable ethical practices. But considering my very limited knowledge of financial investments, I thought it was best to leave it to the experts.

Today I look at things a little differently. First, I question whether the people working on Wall Street are really experts. They may have finance degrees and some experience, but it doesn't mean they actually understand what they are doing. In the 2008 financial crisis, it seems like many of them just blindly followed what everyone else was doing, rather than thinking for themselves. Also, I am not sure what they are doing is actually that hard. They want us to believe that it is really complicated so we let them manage our money instead of attempting to do it ourselves.

At this point, I am seriously considering pulling all of my money out of the market and hiding it in my mattress. I logged in to my retirement account to check my balances. There was an alert on my account that directed me to a retirement planning simulator. Based on their calculations, I have a huge gap between what I will need in retirement and what I am saving today.

At least that's one version of the story. There are two simulators you can use. The first one assumes an under performing market. The other assumes an average market. When I switched over to the average market simulator, it predicted that I would actually have a surplus of a few hundred dollars a month by the time I retire.

Of course, the retirement people are urging me to invest more money now so I can close this potential gap that may occur in 20 years. The more I think about it, especially in the context of that movie, the more ridiculous it seems. It is all a game to them. They want me to feel scared and uncertain about the future so they can manipulate me into giving them more of my money. And they are using the same tactics with everyone else too.

The future is uncertain. It always will be. And putting more of my money into an inherently risky market does not provide any greater level of security for my future. The banks and investment brokers are not waiting another 20 years to make their profits. They are using our collective retirement money to make their profits today. It's like a giant pyramid scheme.

For years, I avoided digging deeper into these issues because I thought it would only make me angry and I didn't want to waste precious moments of my life focused on injustices that I have no power to change. Seeing this movie reminded me that knowledge is power.

I may not be able to change the system, but I can choose whether or not I want to participate. 

Tuesday, December 29, 2015

A Fresh Start

One of my students from the yoga studio is moving to Mexico. I have been practicing and teaching Yin yoga with her for over a year, so I have gotten to know her pretty well, but this news definitely took me by surprise. Her story is pretty interesting.  She works as a freelance writer and she has also been studying Spanish for years. At this point, she feels ready to immerse herself in the language and culture so she can take the next step and become a translator or an interpreter.

It sounds like a pretty cool plan. And to top it off, she is leaving on New Year's Day because it was the cheapest ticket she could find. I can't think of a more significant way to change your life than to pack your bags and move to another country on the first day of a new year.

Of course, we all don't go through such drastic changes, but I think most of us take time around the holidays to re-assess our priorities, clear away some clutter and make plans for our future. When the ball drops at midnight on New Year's Eve, we are all hoping for a fresh start.

Last year, I received my acceptance to yoga school on New Year's Day. I remember feeling so excited and ready to make that change in my life. And it turned out to be one of the best decisions I have made in a long time. Yoga teacher training set me on the path that has brought me to where I am today. And I will always be grateful for that experience.

This year, I find myself in a much different place. I am no longer at the beginning of this journey. It feels like I am sitting at the rest stop looking at a map and trying to figure out which road to take next. I have so much to look forward to in 2016. I just don't know exactly what it is yet.

I am starting to form a pretty clear vision of the life I would like to have in the future. I can picture myself living with Mark Johnson in a place that combines our two worlds into something new that represents both of us. And I can envision myself making enough money to pay the bills doing some sort of job that does not crush my soul on a daily basis. And I can see myself practicing yoga, cooking healthy meals, reading, writing, meditating and creating things.

All of this sounds wonderful. I just have no idea of where, when or how I am going to get there. In the past, that would have really bothered me. But I have become accustomed to living with uncertainty and not having all of the answers. And I know that everything will unfold according to whatever the universe has planned for me. The challenge for me this year is to clear some space and be open to making changes when the opportunity arises.

After I got sick, I spent two years trying to understand why and how I had arrived at that place in my life. During the healing process, I focused a lot of my energy on analyzing my past experiences, my motivations and the choices I made. It was very beneficial at the time, but it is also emotionally exhausting. While I can't magically erase my story (nor would I want to) I think I am finally ready to move on.

Whether you are relocating to another country, or just rearranging the furniture where you live, it is impossible to completely start over because you always bring yourself with you. As long as I keep re-living the anger, frustration, resentment, fear and sadness from my past experiences, I will never truly be free.

Getting closure has always been important to me. And today, I took my first step. This one involves my ex-boyfriend. Even though we broke up over the summer, he still texts me once in awhile. Sometimes just to say hello. Sometimes to say goodnight. Sometimes to try and engage in a dialogue that could lead to a reconciliation.

Every time I get a text from him, it feels like such an intrusion into my life. Yet, I also feel this sense of obligation to respond to him. Part of me feels like I would be a bad person if I didn't respond. And there is another part of me that doesn't want to hurt his feelings by telling him that I have met someone else. Which makes no sense given how he treated me, but for some reason I still feel like I want to be kind to him.

Today, I decided it had to stop. I texted him and told him that it will soon be a New Year, and I asked him to please leave our relationship in the past. I hope that he will respect my wishes and stop contacting me, but if he doesn't, then I am going to finally stop responding. Though it may not seem like a lot, those interactions with him use up precious energy. Energy that could be directed toward something much more productive.

We all want to start the new year with a clean slate. But a clean slate is more than just throwing out the expired food from the pantry - although I also did that today. The real work of starting over comes from the inside out. Recognizing what may be holding us back and trying, in some small way, to begin to let it go.