What U.S. Economic Recovery? Five Destructive Myths

[WhoWee]

Doesn't seem unreasonable, does it to you ? As long as the rents that go with it drop too. The Democrats will scream bloody murder though, that is a given.

Rhody...

I'd like to see the entire program re-evaluated - that's another very long discussion.

My point is focused on the real estate market - it hasn't hit bottom yet and any attempts to support prices from correcting can slow overall recovery.

As discussed up-thread, in some areas of the country banks are donating foreclosed houses to land banks or otherwise demolishing them to eliminate inventory and avoid paying taxes and insurance. In other areas, there is a feeding frenzy among bargain shoppers - many looking for properties to use in participation of Section 8 programs - where they are guaranteed significant long term returns.

Here's an over-simplified summary of the problem. The value of the rent voucher is based on the income of the beneficiaries - not the property market value or actual cost. The rent charged must be reasonable in that it's comparable to similar units or unassisted housing units. If comparable houses are renting for an average $600 per month and you purchase a foreclosure for $10,000 in the area then invest $10,000 (maybe pick up a green credit?) to bring it to standards - you'll realize a $7,200 per year cash flow from a $20,000 investment - assume $2,200 for taxes, insurance, and maintenance - pre-tax (all or part of the $10,000 might be considered a current year maintenance expense) cash flow +$5,000 or 25%.

http://www.bankforeclosuressale.com/list/oh/county035/cleveland.html

 

[gravenewworld]

Exactly, WHAT economic recovery? This recession isn't like the recessions of past, it is more than just due to down consumer consumption. This recession represents the culmination of years and years of terrible financial policies and a paradigm shift in world history. We are watching the end of American dominance. The US is going the way of England post 1900. The US will never fully recover. As a person in STEM myself, after I graduate from grad school, I'm definitely going to look globally for a job and look to a country where they are heavily investing in research and development. According to the CIA world factbook, the US economy is already a majority service economy. What's the point of staying here then as a future engineer? After the dust settles the only jobs outside of health care will probably be in retail, food preparation/restaurants, or related to tourism. We're toast .

 

[mheslep]

... As a person in STEM myself, after I graduate from grad school, I'm definitely going to look globally for a job and look to a country where they are heavily investing in research and development. ...

Which country is it that you suspect spends more on R & D?
http://en.wikipedia.org/wiki/List_of_countries_by_research_and_development_spending

 

[gravenewworld]

Which country is it that you suspect spends more on R & D?
http://en.wikipedia.org/wiki/List_of_countries_by_research_and_development_spending

Those stats say nothing about the future or changes in R and D spending either. They are only a snapshot of the a static moment in time. National rates of savings are intrinsically linked to investment expenditures over the long run. After Asian economies went under in 1997 and were subsequently bailed out by the IMF, they were forced to adopt strict fiscal measures. After Brazil melted down in the 1990s during its hyperinflation crisis they too adopted strict financial measures. It's the reason why both of those regions have been shielded from much of the current global economic meltdown and also why banks as well as the governments in those regions have hordes of cash and have more conservative investments. Meanwhile, here in the US, our entire economy has melted down after we deregulated huge financial institutions which failed after gambling on mortgage derivatives. It has plunged the US economy into a severe recession that has also led to a huge loss of government tax receipts. It's only a matter of time before the US is forced to adopt severe fiscal contraints which will add another blow to R and D expenditure, not to mention also the national rate of savings in the US has been atrocious for a long time.

Brazil and countries in Asia have vast reserves of cash in savings and are now using it to invest. Sure, the US may remain on top for now, but by the time I get out and need to look for a long term job that can last for more than 5 years, it will very likely be a different story.

 

[mheslep]

Those stats say nothing about the future or changes in R and D spending either. They are only a snapshot of the a static moment in time. National rates of savings are intrinsically linked to investment expenditures over the long run. ...

Brazil and countries in Asia have vast reserves of cash in savings and using it to invest. Sure, the US may remain on top for now, but by the time I get out and need to look for a long term job that can last for more than 5 years, it will very likely be a different story.

Well I'd reserve the term "vast" for only the cash reserves of US companies. But ok, what do you imagine is going on with the personal savings rate in the US? Going up or down in the last few years? Furthermore, do you think the best way to avoid another recession (official) is encourage more spending or more saving?

 

[John Creighto]

Well I'd reserve the term "vast" for only the cash reserves of US companies. But ok, what do you imagine is going on with the personal savings rate in the US? Going up or down in the last few years? Furthermore, do you think the best way to avoid another recession (official) is encourage more spending or more saving?

The amount of saving should be matched by the investment in industry. The growth in industrial capacity should match the growth in demand. Otherwise there will be imbalances and these imbalances will need to be corrected.

 

[JonDE]

Exactly, WHAT economic recovery? This recession isn't like the recessions of past, it is more than just due to down consumer consumption. This recession represents the culmination of years and years of terrible financial policies and a paradigm shift in world history. We are watching the end of American dominance. The US is going the way of England post 1900. The US will never fully recover. As a person in STEM myself, after I graduate from grad school, I'm definitely going to look globally for a job and look to a country where they are heavily investing in research and development. According to the CIA world factbook, the US economy is already a majority service economy. What's the point of staying here then as a future engineer? After the dust settles the only jobs outside of health care will probably be in retail, food preparation/restaurants, or related to tourism. We're toast .

First you need to realize that there is nothing wrong with America being largely a service based economy. This is more due to our technology and investment in it. I'll give you an example.
In 2007 China produced 2.8B tons of coal first in the world, America was 2nd with 1.1B tons, both were net exports and make up over half of all coal mined in the world. China, produced roughly 2.5X as much as the US does, but look deeper at the number. China employs 5,000,000 people in their coal industry, the US, less then 200,000, less then 100k of those are actually miners. So they produce 2.5X as much but employ about 25X as many people, so American coal miners are 10X more efficient then there Chinese counterparts. In America we still produce a ton of stuff, it just requires less and less people to do it ever year.

 

[John Creighto]

China employs 5,000,000 people in their coal industry, the US, less then 200,000, less then 100k of those are actually miners. So they produce 2.5X as much but employ about 25X as many people, so American coal miners are 10X more efficient then there Chinese counterparts. In America we still produce a ton of stuff, it just requires less and less people to do it ever year.

So if things can be produced so cheaply why is it that goods are so expensive for so many? If so much more value is being created who is enjoying the bounty of all this production?

The graph supporting your claim is striking
[URL]http://static.seekingalpha.com/uploads/2009/8/23/saupload_mfg2.jpg[/URL]
http://seekingalpha.com/article/157767-manufacturing-output-per-worker-hits-a-record-high
http://www.freerepublic.com/focus/f-chat/2695456/posts
Is the graph deceiving us? Has the value of what is produced not increased as much as shown for the worker worker. I think I'll give this more thought and address it in another thread.

 

[John Creighto]

It's going to take me a while to figure out how the statistics are calculated and what flaws may exist. The following link suggests significant flaws may exist.

But new evidence suggests that shifting production overseas has inflicted worse damage on the U.S. economy than the numbers show. BusinessWeek has learned of a gaping flaw in the way statistics treat offshoring, with serious economic and political implications. Top government statisticians now acknowledge that the problem exists, and say it could prove to be significant.

The short explanation is that the growth of domestic manufacturing has been substantially overstated in recent years.
...
"In some sectors, productivity growth may be an indicator not of how competitive American workers are in international markets," says Houseman, "but rather of how cost-uncompetitive they are." For example, furniture manufacturing has been transformed by offshoring in recent years. Imports have surged from $17.2 billion in 2000 to $30.3 billion in 2006, with virtually all of that increase coming from low-cost China. And the industry has lost 21% of its jobs during the same period.

Yet Washington's official statistics show that productivity per hour in the furniture industry went up by 23% and output by 3% between 2000 and 2005. Those numbers baffle longtime industry consultant Arthur Raymond of Raleigh, N.C., who has watched factory after factory close. "And we haven't pumped any money into the remaining plants," says Raymond. "How anybody can say that domestic production has stayed level is beyond me."

http://www.businessweek.com/magazine/content/07_25/b4039001.htm

Phantom GDP
The portion of real GDP, or of an increase real GDP, that occurs when domestic producers switch to lower cost imported inputs. Although it represents a valid gain from trade, it does not represent real output produced within the domestic economy, but may be treated as such in statistics.
Found on http://www-personal.umich.edu/~alandear/

http://www.encyclo.co.uk/define/phantom gdp

 

[JonDE]

It's going to take me a while to figure out how the statistics are calculated and what flaws may exist. The following link suggests significant flaws may exist.



http://www.businessweek.com/magazine/content/07_25/b4039001.htm


http://www.encyclo.co.uk/define/phantom gdp

Well its hard to take one mans opinion of an entire market, you can always find two different men who see things in entirely different ways. There is also the possibility that new technology isn't all that expensive, my mind is still blown by a commercial I saw a few weeks ago (I think by AT&T, but could have been google, apple or someone else) where they were showing a system that ran all the forklifts by computer, no dirvers needed. If that system is only a few 100 k that savings would be massive and would still be considered a relatively small investment.

 

[JonDE]

Also if you want to get rid of that phantom GDP part, you can look at GNI, which is basically GDP + whatever money is transferred back and forth between the two countries. Although it is not frequnetly used because it looks bad to countries that have high debt. It gives a slightly more clear picture of what is actually going on then GDP.

 

[WhoWee]

First you need to realize that there is nothing wrong with America being largely a service based economy. This is more due to our technology and investment in it. I'll give you an example.
In 2007 China produced 2.8B tons of coal first in the world, America was 2nd with 1.1B tons, both were net exports and make up over half of all coal mined in the world. China, produced roughly 2.5X as much as the US does, but look deeper at the number. China employs 5,000,000 people in their coal industry, the US, less then 200,000, less then 100k of those are actually miners. So they produce 2.5X as much but employ about 25X as many people, so American coal miners are 10X more efficient then there Chinese counterparts. In America we still produce a ton of stuff, it just requires less and less people to do it ever year.

I'm surprised the solution to the high unemployment rate in the US isn't obvious to the Obama Administration - find a way to decrease productivity and hire more people to replace the machines.

 

[John Creighto]

Also if you want to get rid of that phantom GDP part, you can look at GNI, which is basically GDP + whatever money is transferred back and forth between the two countries. Although it is not frequnetly used because it looks bad to countries that have high debt. It gives a slightly more clear picture of what is actually going on then GDP.

I don't think that GNI numbers are not that different then GDP numbers. You also missed the point. Phantom GDP doesn't have to do with ownership.

Consider the extreme case where a company manufactures most of a good over seas, ships it to an American plant and sticks a label on the product like Nike or something. If it costs almost nothing to produce it over seas then subtracting the over seas cost from the total coast of production makes it look like the American factors are adding significant value to the product per worker when in fact the bulk of the work is done over seas. Measuring productive output is very difficult and trying to use the net production costs of a product does not give any relevant apples to apples comparison.

 

[rhody]

http://www.fool.com/investing/general/2011/10/21/50-amazing-numbers-about-the-economy-.aspx"

23. Without mortgage equity withdrawal -- people using their homes as ATMs -- the U.S. economy would have been in recession for most of the 2001-2006 period.

and

26. In 2000, interest payments on the national debt totaled $222 billion. By 2009, the debt had more than doubled, but interest payments were $186 billion. Lower interest rates have saved taxpayers trillions of dollars.

I picked item's #23 and #26 as a test cases, feel free to pick and agree with or dispute as you wish. Any comments on these two items ? I would love to see multiple sources agree with or dispute this data...

Rhody...

 

[WhoWee]

http://www.fool.com/investing/general/2011/10/21/50-amazing-numbers-about-the-economy-.aspx"

I picked item's #23 and #26 as a test cases, feel free to pick and agree with or dispute as you wish. Any comments on these two items ? I would love to see multiple sources agree with or dispute this data...

Rhody...

The home equity line of credit originally fueled home improvement and eventually became the tool of the predatory lender among older populations.

The banks figured out a secured line of credit was a safer bet than an unsecured credit card - and the brokers figured out the houses (some otherwise un-saleable in places like Cleveland) were made of gold -IMO- a bad combination.

 

[mheslep]

http://www.fool.com/investing/general/2011/10/21/50-amazing-numbers-about-the-economy-.aspx"

I picked item's #23 and #26 as a test cases, feel free to pick and agree with or dispute as you wish. Any comments on these two items ? I would love to see multiple sources agree with or dispute this data...

Rhody...

The last point in particular shows how a large government debt provides a large conflict of interest for the government spending class to work against the best interest of the country:
should inflation ramp up requiring an increase in interest rates to stem inflation, then the government interest on the debt explodes. Thus the government has a motivation to allow inflation which eats away personal savings.

 

[rhody]

America is still by far the largest economy in the world, nearly three times the size of China's or Japan's economy, and nearly five times the size of Germany's. We have the best schools, the deepest financial system, the most advanced innovation, and the brightest entrepreneurs.

Sigh... This gives me a good feeling from the list I posted above if true, which I hope it is.

Rhody...

 

[mheslep]

Sigh... This gives me a good feeling from the list I posted above if true, which I hope it is.

Rhody...

What is the source of that quote? There's no chance that US primary education is the world's best as it says there. Edit: I see now, its from a reader on your Motley Fool link. The Fool must be referring to US universities. While they may be the best in an absolute since, I doubt it they're the best for the dollar. - a consideration given the thread context.

 

[rhody]

What is the source of that quote? There's no chance that US primary education is the world's best as it says there. Edit: I see now, its from a reader on your Motley Fool link. The Fool must be referring to US universities. While they may be the best in an absolute since, I doubt it they're the best for the dollar. - a consideration given the thread context.

Agree, mheslep,

The larger issue is how credible and accurate is Motley Fool to begin with ? That's why I said multiple sources that corroborate or refute each claim that is made. For those who know, please jump in here. There are still plenty of points to discuss. Some with figures so they are generally easier to check.

Rhody...

 

[JonDE]

I don't think that GNI numbers are not that different then GDP numbers. You also missed the point. Phantom GDP doesn't have to do with ownership.

Consider the extreme case where a company manufactures most of a good over seas, ships it to an American plant and sticks a label on the product like Nike or something. If it costs almost nothing to produce it over seas then subtracting the over seas cost from the total coast of production makes it look like the American factors are adding significant value to the product per worker when in fact the bulk of the work is done over seas. Measuring productive output is very difficult and trying to use the net production costs of a product does not give any relevant apples to apples comparison.

Sorry I kinda forgot about this thread. But you are thinking about it wrong. Consider this example.
An American corporation runs a factory in China that produces a product for $1. It then spends $1 to ship it to Europe where it then sells for $10. What value did it add to the American economy? Well the company ends up with $8 per product sold nothing was taken from the economy, so the total addition to the economy is $8 (assuming a non-american shipper).
Now assume that same company sells it in America. $10 is taken out of the economy but $8 of it is kept in the country. This is what GNI does, it adds our foreign sales in and subtracts what we spend outside. GDP does the same thing, when you account for the trade deficit/surplus.
Another way to think of it is this, the factory is China IS producing $10 of stuff, The American Corporation is just paid to "steal" it from them at a fraction of the cost. There is still a net gain for the American economy in that situation. While the American corporation is not adding value, it is stealing value.

 

[WhoWee]

Sorry I kinda forgot about this thread. But you are thinking about it wrong. Consider this example.
An American corporation runs a factory in China that produces a product for $1. It then spends $1 to ship it to Europe where it then sells for $10. What value did it add to the American economy? Well the company ends up with $8 per product sold nothing was taken from the economy, so the total addition to the economy is $8 (assuming a non-american shipper).
Now assume that same company sells it in America. $10 is taken out of the economy but $8 of it is kept in the country. This is what GNI does, it adds our foreign sales in and subtracts what we spend outside. GDP does the same thing, when you account for the trade deficit/surplus.
Another way to think of it is this, the factory is China IS producing $10 of stuff, The American Corporation is just paid to "steal" it from them at a fraction of the cost. There is still a net gain for the American economy in that situation. While the American corporation is not adding value, it is stealing value.

No, the Chinese factory is producing $1 of stuff. If they could sell it for more - they would.

The shipper is contributing $1 of value. Next the wholesale company, marketing company, and retailer are adding (producing) $8 of value to ultimately sell the product for $10 - it could just as easily sell for $1 - $2 again if the value isn't produced.

Label this IMO - I have a shed full of product samples with $0 retail value in excess of production + shipping cost. I can give them away - but need to spend money on marketing to sell them for more than I would pay.

 

[Astronuc]

I found this an interesting talk - Dr. Jeffrey Sachs @ The Commonwealth Club
Mon, Oct 10 2011 - 7:00pm

Dr. Jeffrey Sachs, Director, Earth Institute, Columbia University, Special UN Advisor; Author, The Price of Civilization

... Michael Moritz, Managing Member, Sequoia Capital - Moderator

Sachs gives a startling account of the inadequacies of US-style capitalism. He offers a bold plan of reforms relating to sustainable infrastructure, taxes, job training, etc., that he says must be taken to avoid further damage. One of the most influential international economic advisors, Sachs was the director of the UN Millennium Project and is the president and co-founder of Millennium Promise Alliance.

Location: Schultz Cultural Hall, Oshman Family JCC, 3921 Fabian Way, Palo Alto

Also know: In association with Oshman Family JCC

http://www.commonwealthclub.org/events/2011-10-10/dr-jeffrey-sachs


I think Sachs, or perhaps it was a reporter on Marketplace, that most of today's wealthy did not inherit money, but worked for it.

I should point out that Sachs is rather critical of Ayn Rand and folks like Alan Greenspan.

 

[John Creighto]

Sorry I kinda forgot about this thread. But you are thinking about it wrong. Consider this example.

An American corporation runs a factory in China that produces a product for $1. It then spends $1 to ship it to Europe where it then sells for $10. What value did it add to the American economy? Well the company ends up with $8 per product sold nothing was taken from the economy, so the total addition to the economy is $8 (assuming a non-american shipper).

I'm not sure we should assume that $8 of value is added to the American economy. If they were doing this in an efficient and low cost way then sure I could agree. If they are making huge margins and incurring all sorts of unnecessary cost like a large amount of marketing and administration then I think that much of the supposed value creation is due to inherent inefficiencies.


That said even if the $8 was due to reasonably efficient and competitive business practices it says nothing about gains in American manufacturing efficiency. Well manufacturing output statistics may be account for if the product was shipped directly to a store, the statistics often show phantom gains when the final stage of production is done in America.

Moreover, much of the gains achieved this way are achieved through keeping the Chinese currency artificial low through dollar PEGs. That is we are not paying fair value to Chinese workers for the products we buy. Is this analogous to slavery or is it simply a forced savings by the Chinese to develop their industrial capacity. Additionally if it is a form of forced savings should it come at the expense of American industry.

Now assume that same company sells it in America. $10 is taken out of the economy but $8 of it is kept in the country. This is what GNI does, it adds our foreign sales in and subtracts what we spend outside. GDP does the same thing, when you account for the trade deficit/surplus.

So you are effectively saying GNI and GDP are pretty simmillar measures.

No, the Chinese factory is producing $1 of stuff. If they could sell it for more - they would.

The shipper is contributing $1 of value. Next the wholesale company, marketing company, and retailer are adding (producing) $8 of value to ultimately sell the product for $10 - it could just as easily sell for $1 - $2 again if the value isn't produced.

Label this IMO - I have a shed full of product samples with $0 retail value in excess of production + shipping cost. I can give them away - but need to spend money on marketing to sell them for more than I would pay.

What is a reasonable amount to spend on marketing?

 

[JonDE]

No, the Chinese factory is producing $1 of stuff. If they could sell it for more - they would.

The shipper is contributing $1 of value. Next the wholesale company, marketing company, and retailer are adding (producing) $8 of value to ultimately sell the product for $10 - it could just as easily sell for $1 - $2 again if the value isn't produced.

Label this IMO - I have a shed full of product samples with $0 retail value in excess of production + shipping cost. I can give them away - but need to spend money on marketing to sell them for more than I would pay.

I think we are kind of arguing the same thing. My point was to Johnny who said that the marketing company and retailer aren't adding value. Your view and mine are just different ways of thinking about the same thing.

 

[WhoWee]

What is a reasonable amount to spend on marketing?

That's going to depend upon several factors including where the product is in it's lifecycle.

1.) Is this a product that is known to consumers - offering a price advantage - such as a flashlight? This will require Point of Sale marketing materials in high traffic locations - very low budget.

2.) Is this an improvement to an existing product type - such as a new kind of portable electric saw? This will require some consumer education focused on competitive advantages and value, point of sale materials and placement on shelves. Depending upon cost might be a candidate for infomercials. A definite plus if used on cable TV remodeling shows. Depending upon the scope of the distribution - perhaps $50k for a regional rollout

3.) Is this a "new-fangled" item that is new to consumers - such as a hand held gyro ball that simulates the effect of ben-wan balls (a real product). This is the most expensive and complicated product launch. It requires a complete marketing plan that includes product, price, place, and promotion. The product must first be sold to distributors. If they don't believe it will sell - it's a big challenge. Next, you need to create a market by educating the consumers. They don't know what is is, how to use it, or why they'd want to use it (or be seen with it). If possible, it's a good idea to show the fun/cool/social aspects to kids. This might include social media, print, point of sale - anything and everything visual - along with in-store instruction and trial. This product would eventually need TV exposure. The $.50 cost of the item (a 2" item in container quantities) might increase to $15 to $20 per item and the first (only) container (might ultimately be) sold only on the counter of health food stores or medical equipment locations. (Label IMO on this product and note it's based on a true story)

 

[mheslep]

I have lost any use for Sachs as everything he writes or speaks lately seems wholly absent argument and is instead loaded with sermons propped up by hubris.

Sach's has a new book out, The Price of Civilization, that has been reviewed, interestingly, by US Representative Paul Ryan, WI.

America's Enduring Ideal
Jeffrey Sachs is only the latest in a long line of thinkers to reject the values of our commercial republic.
By PAUL RYAN

http://online.wsj.com/article/SB10001424053111903703604576589090204327736.html

Quote from Sach's book:

Yes, the federal government is incompetent and corrupt—but we need more, not less, of it.

 

[rhody]

Some good news on oil boomtown jobs in North Dakota, but it has potential for a downside as well:

http://money.cnn.com/2011/11/01/pf/America_boomtown_education/"

Jim Stout, an English professor at Williston State College in Williston N.D., started losing some of his best students to the oil fields last year.

It was too hard to compete: The students could either spend thousands of dollars on a college education or earn $100,000 a year working on the rigs, performing maintenance on oil wells or driving trucks.

"At some point they decide, 'Well, college will always be here ... but the oil boom won't,'" he said.

and

And as the classes grow more crowded there's another challenge that's popping up: The oil fields are taking some of the college's professors and staffers, too.

Since spring of 2010, Williston State has had a 25% employee turnover rate. Recently, two diesel technology instructors were among a handful of teachers who quit to take higher-paying oilfield-related jobs, said Stout.

Hiring new teachers -- or any other school employees -- is extremely difficult, because of the housing crisis.

Looks like some can't resist the good money without a full college degree, in many cases that stay just long enough to get a background in a needed skill, welding for example, and then they quit to work for the oil industry. It will be interesting to see if the "boom" lasts. If not, will the students who gave up the education for the easy money regret it later.

Rhody...

 

[JonDE]

Some good news on oil boomtown jobs in North Dakota, but it has potential for a downside as well:

http://money.cnn.com/2011/11/01/pf/America_boomtown_education/"


Looks like some can't resist the good money without a full college degree, in many cases that stay just long enough to get a background in a needed skill, welding for example, and then they quit to work for the oil industry. It will be interesting to see if the "boom" lasts. If not, will the students who gave up the education for the easy money regret it later.

Rhody...

Hopefully they are smart enough to save some of that money. If they can save 5-10k a year they could eventually go back to college and pay for it and not leave college loaded with debt, although I have a feeling that most won't do this.

 

[rhody]

Hopefully they are smart enough to save some of that money. If they can save 5-10k a year they could eventually go back to college and pay for it and not leave college loaded with debt, although I have a feeling that most won't do this.

JonDE,

Great idea. If young people can have the foresight to do this in their early 20's, their sense of fiscal restraint and ability to save will serve them well later in life. We still manage our daughter's finances, early 20's, only allowing her to withdraw so much from her bank account, so that she always has a reserve in case of emergencies. She is paying off a student loan too. I just checked, her gov't loan is at 6.55 %.

Rhody...

 

[WhoWee]

JonDE,

Great idea. If young people can have the foresight to do this in their early 20's, their sense of fiscal restraint and ability to save will serve them well later in life. We still manage our daughter's finances, early 20's, only allowing her to withdraw so much from her bank account, so that she always has a reserve in case of emergencies. She is paying off a student loan too. I just checked, her gov't loan is at 6.55 %.

Rhody...

I have a friend that spent 10 years as a Merchant Marine - saved about $150k. Another friend (SEAL) was injured in Desert Storm and retired. After 2 years of recovery and additional college, he rode a few lobster boats to accumulate cash - enough to start a business and buy a house.