Tuesday, February 22, 2011

Cooking Hawaii Grass Fed Beef

Though we are enjoying the health benefits of eating Hawaii grass fed beef by increasing our intake of Omega-3 fatty acids and Conjugated Linoleic Acid (CLA), grass fed beef is notoriously tough compared to the buttery-texture of feed lot, corn-fed beef. After much experimentation and testing, we found a way to prepare and cook grass-fed beef so it retains its great flavor and makes it tender enough to cut with a fork.

We've learned that marinating beef in a refrigerator for 7 to 21 days, called wet-aging, has grown in popularity over dry aging by many meat processors. Wet-aging allows the meat to age in its own juices and natural tenderizers and to break down the beef’s tough connective tissues. So we decided to try that approach for tenderizing the low-cost cuts of grass-fed beef raised on our island that we buy from our KTA Grocery store.

Ginger is a great natural tenderizer so we created a mixture of our pickled Hawaiian ginger and its juice and sesame seed oil. We put the mixture in a zip-lock bag with a meal-size serving of grass-fed beef. We created another version of the mixture with pickled ginger and sun dried tomatoes and olive oil with great results.

We put the bags into the refrigerator and flip them a time or two each day to make sure the juices fully cover the beef.

After three days or so, the beef juices darken in the bag. We compared cutting the beef into thin slices with leaving it in thick steaks to determine if slicing it would make it more tender, but we found that it didn’t matter as much as the length of time that the beef was wet-aged. After 5 days a tough thick cut of beef becomes surprisingly tender, and after 7 days it is even better.

Our next challenge was cooking. We like our beef well-done, but after some research, we found out that part of the toughness was due to us cooking it too long. Grass-fed beef takes less time to cook and becomes tough if it is cooked too long. We cook on a stove, rather than a barbecue, so we minimized the amount of time the beef was cooking by pre-heating the pan. Some recipe books recommend patting the steak dry before cooking, but we found the beef to be much more juicy and flavorful when it is cooked with its marinade. We pour the marinade juices into the pan and wait for it to boil before adding the beef to the pan. Once the beef is browned on both sides, which doesn’t take much time, we turn off the stove (which remains hot awhile since we use electric) and let the beef continue to cook. If the cut of beef is thick, we verify that it is pink (not red) inside, by making a small cut on the side. Then we let it rest 10 to 15 minutes before serving, which lets the juices redistribute.

Marinading the beef for 7 days, cooking the  beef a shorter period of time, not poking the meat with a fork to turn it over (which drains the juices inside), and letting the beef rest before serving has made an wonderful difference in the juiciness and tenderness of our Hawaii grass-fed beef meals.

Tuesday, February 15, 2011

Calculating a Sustainable Lifestyle

Like many Boomers, we realize that there is no way that the assets we have accrued and our investment income will support the retirement lifestyle we desire. We have reduced our run-rate from our big income earning days by over 50% and yet we know that the cuts aren’t deep enough to deal with the rising cost of food, rent, utilities, gasoline, and medical insurance as well as our other expenses, like college. We can only cut back our yearly expenses so much, so we have been looking for a way to calculate the minimum income we need to support the lifestyle we desire. The retirement calculators we have found focus on how fast savings will drain or how many millions of dollars of principal are needed to retire based on various interest earning settings. None of them calculate the income required to support a measurable and well defined lifestyle.

We find the logic of Michael Masterson to be a compelling way to define the income needed to support a given lifestyle. Masterson realized in his twenties that it would be impossible for him to save enough to retire on a normal salary. So, he found ways to make enough money to pay cash for expensive houses and luxury cars and ultimately was able to retire early and dedicate his time to writing short stories. But after a few years, the overhead of his lifestyle because of taxes, utilities, insurance, maintenance, clothing, furniture, and the expenses of keeping up with his neighbors could not be sustained by the huge wealth he had accrued.

According to Masterson, the value of the home determines a family’s expenses because of the pressures of neighbors, expectations, and surrounding businesses ratcheting up costs based on your neighborhood. He claims that it will cost you 40% of the value of your home every year to support the lifestyle that goes with the home and neighborhood. His calculation makes a lot of sense to us and is the first tangible method we have found to calculate the income stream we need to support our lifestyle.

We created a lifestyle calculator using Masterson’s cost of living algorithm to estimate the amount of after-tax income needed to support a lifestyle based on the value of a home.

There are several ways to use the calculator:
  1. You can use the calculator to estimate the after-tax income you need to support the lifestyle based on your home value. You can determine the value of your home by checking zillow.com or the real estate section of your local paper for houses or condos similar to yours that have recently sold in your area. Enter your Current House Value and if you have any debt payments (mortgage, credit cards, etc.), enter your total Yearly Debt payments so that they can be subtracted from your available after tax income. Leave the Yearly Income value at $0 and press CALCULATE. The calculator will display the estimated annual after-tax Income Needed to support your current lifestyle.
  2. You can also use the calculator to estimate how much house you can afford. Enter your after tax Yearly Income and then enter your total Yearly Debt payments (mortgage, credit cards, etc.) if you have any. Leave the Current House Value at $0 and press CALCULATE. The calculator will display the approximate House Value you can afford based on your after tax income.
  3. If you are a renter, you can also use the calculator to estimate the income you need to support your rental home (assuming you rent a condo or house). First determine the current price for the property you are renting (as above #1) and enter that amount as your Current House Value. Next calculate your annual rent and subtract from it the estimated annual costs that rental owner has to cover (property taxes, property insurance, maintenance or home owner fees, etc.) and enter the remaining rent costs as Yearly Debt payments. If you have other debts, then add them to the remaining rent and put that figure in the Yearly Debt payments. Leave the Yearly Income value at $0 and press CALCULATE. The calculator will display the estimated annual after-tax Income Needed to support your current rental lifestyle.

Using Masterson's calculation, a debt-free $200,000 home will cost a couple $80,000 after taxes to pay for its associated lifestyle. Even earning 10% on savings, which is rare these days, would require a nest egg of $1.6 million (taxed at about 50%) to support the lifestyle. Assuming a $24,000 annual social security income, the maximum house affordable is $60,000 and this assumes the house is paid off and that the owners have no other debts. Of the 34,326,000 retired workers currently on social security, the average monthly payout is $1,171.60 or $14,059.20 annually. An after tax income of $14,000 will support the lifestyle associated with a fully paid off home valued at $35,000 assuming no other debt payments for cars or credit cards.

Although it may seem like a strange calculation, we have used the Lifestyle Calculator for various income and house value scenarios we have had in our life and it has held true to our experience of when our lifestyle was above our income and when it was below our income. Interestingly, the amount of income we need as renters right now is also accurate to the amount we are actually spending and it even takes into consideration the reduction in the value of the condo unit since it was last sold based on current listings.

It is clearer to us how our home’s value and the neighborhood in which we choose to live determines the income stream we need to sustain our lifestyle.

Tuesday, February 8, 2011

Pork shortage in Hawaii

In Hawaii, pork is a beloved food and the centerpiece of every Hawaiian feast (luau).  So it is with great pride that Senator Inouye proclaims himself “The King of Pork” and champion of earmark spending. In his position as Chairman of the Appropriations Committee, he has been feeding hundreds of millions of dollars into Hawaii ‘s economy each year from earmarks inserted into the budgets of almost every US Federal department. So, a two year moratorium on earmarks that Senator Inouye has been forced to support will have a major impact to Hawaii’s government, counties, schools, organizations, and companies depending on the money.

We were wondering where the biggest losses would be from the cancelation of the 141 earmarks representing over $320 million dollars to Hawaii. A few recipients have been called out in the news like Oceanit which was expecting $10 million and the Hawaii National Guard which was hoping to continue to fund their drug enforcement activities.  But we were surprised at how many State services, University of Hawaii programs, and County projects were also depending on earmarks for some or all of their funding.

Here is the list, ordered by amount (from, the “Center for Responsive Politics” and “Taxpayers for Common Sense”) of projects and organizations in Hawaii funded by Senator Inouye’s earmarks.  (M=million, K=thousand)

$30M Honolulu High Capacity Transit Corridor Project
$25M Pearl Harbor Service Support Facility
$23M Hawaii Federal Health Care Network
$19.5M Maui Apace Surveillance System Operations and Research (Boeing)
$17M Pacific Airborne Surveillance and Testing Kauai
$10M Hawaii Technology Development Venture Honolulu
$9.5M PanSTARRS Maui (UH)
$8M Center for Excellence for Research in Ocean Sciences
$6.67M Tropical and subtropical Research (Hawaii and Florida)
$6M Hawaii Energy Sustainability Project
$6M Applications of LIDAR to Vehicles Maui (Textron Systems)
$6M Applications of LIDAR to Vehicles Maui (Hnu Phototronics)
$6M Development of High Yield Feedstock and Biomass Conversion
$6M Hawaii Renewable Energy Development Venture
$5.5M US Pacific Command Education Program
$5M Optical Network for Space (Oceanit)
$5M National Domestic Preparation Training Center (UH)
$5M Hawaii Open Supercomputer Center Maui (UH)
$5M Pacific Basin Agricultural Research Center Hilo
$5M Strategic Materials Kauai (Trex)
$5M USS Missouri Memorial Association
$4.75M Low Earth Orbit Nano-Satellite Integrated Defense Autonomous Systems (UH)
$4.2M Pearl Harbor Navy Shipyard Equipment Modernization
$4M Army Conservation and Ecosystem Management
$4M Multiple Target Tracking Optical Sensor Array Technology (Oceanit)
$3.9M Intelligent Decision Exploration (Referentia Systems)
$3.9M Federal Lands Improvement Project
$3.5M Hawaii Micro-algae biofuel project (General Atomics)
$3.5M Real-time Optical Surveillance Applications Maui (Pacific Defense Solutions)
$3.4M Kapolei Interchange Complex
$3.4M Rural Bus Program for Hawaii
$3.3M Pacific Region Interoperability Test and Evaluation Capability (SAIC)
$3.15M Financial Education and Pre-home Ownership Counseling
$3M Hawaii Interline Activities
$3M Military Applications for Medical Grade Chitosan (Synedegen)
$3M Integrated Data and Environment Applications NOAA
$3M Hawaii National Guard Counter Drug Program
$3M Western and Central Pacific Fisheries Commission Big Eye Tuna Quotas (NOAA)
$2.8M Mobile Modular Command Center
$2.7M Marine Air-Ground Task Force Situational Awareness (Lockheed Martin)
$2.6M Agricultural Pest Facility (APHIS)
$2.5M Imiloa Astronomy Center Hilo (UH)
$2.5M Boys and Girls Club of Hawaii
$2.4M Hawaii Air National Guard Eagle Vision
$2.3M Remote Rural Job Training Project (UH)
$2.25M Hawaii Institute of Marine Biology Coral Research (UH)
$2.23M Hawaii Wildlife Service activities
$2.2M Captive Air Amphibious Transporter (Pacific Marine)
$2M Hawaii Criminal Justice Data Center
$2M Hawaii Advance Laboratory for Information Integration Maui (Akimeka)
$2M Community College Training & Education (UH)
$2M Hawaii Water Management
$2M FLASH Hyper-Dimensional imaging for Near Space Surveillance (HunuPhotonics)
$2M Upcounty Maui Watershed Project
$4M Remote Infrasonic Monitoring of Natural Hazard – Honolulu (U of Miss/UH)
$2M Undersea Special Warfare Engineering Support Office
$1.8M Primary Care Association of Hawaii for outreach
$1.8M Lower Hamakua Ditch Watershed Project
$1.75M Marine Education Program (NOAA)
$1.6 Pohakuloa Training Area Range Complex (Northrop Grumman)
$1.6M 4-D Data Fusion Visualization (Makai Ocean Engineering)
$1.5M Hawaii Seafood Safety and Sustainability (NOAA)
$1.5M International Pacific Research Center (UH)
$1.5M Hilo Clinical Pharmacy Training Program (UH)
$1.5M UH School of Law for a Center of Excellence in Native Hawaiian Law
$1.44M Tropical Aquaculture Feed – Hilo (Oceanic Institute)
$1.4M Agriculture Development and Resource Conservation
$1.28M Hawaii National Guard Integrated Information Command System (Raytheon)
$1.25M Joint Institute of Marine and Atmospheric research (UH)
$1.2M Virtual Onboard Analyst for multi-sensor Mine detection (BAE)
$1.2M Maritime Directed Energy Test and Evaluation Center Kauai (Envisioneering)
$1.2M Palmyra Atoll National Wildlife Refuge rat eradication
$1.2M Mobile Localization (21st Century Systems)
$1.2M Covert Sensing and Tagging System (Progeny Systems)
$1.12M Coastal Field Data Collection (Surge and Wave Island Modeling Studies)
$1M County of Kauai for the Waimea Wastewater Treatment Plant expansion
$1M Coral reef initiative (UH)
$1M Hawaii Marine Fund
$1M Maui County for infrastructure improvements at Kamole Water treatment plant
$1M Maui County for Kaa Force Main replacement
$1M Kilauea Point National Wildlife Refuge Lighthouse repair
$1M Hurricane Evacuation Studies
$1M Hawaii Invasive species management
$1M Magnuson-Stevens Marine Education and Training
$1M Lahaina Watershed NRCS
$1M State of Hawaii General Flood Plan Update
$910K Kona Short Auxiliary Airfield (Kona International Airport)
$897K Field Data Collection Pacific Island Land Ocean Typhoon Experiment
$876K Alien Species Action Plan Inspection Facility
$800K Maui Economic Development Board for engaging girls in science
$750K Molokai Ohana Health Center
$740K Hawaii County for the Kapulena drinking water source project
$700K Pacific Basin Agriculture Research Center Staffing Hilo
$700K Kauai Economic Development Board for science and math education
$500K Hawaii Community College Hilo for college support services and courses
$500K Native Hawaiian Culture and Arts Program
$500K Regional Sediment Management Demonstration Program
$500K Henry K Giugni Memorial Archives under Education for Native Hawaiian Program (UH)
$500K Water resources monitoring, investigating and research
$500K Watershed Planning Staff NRCS
$500K National Tropical Botanical Garden
$500K Regional Sediment Management Demonstration Program
$500K Western Pacific Integrated Ecosystem Assessment (NOAA)
$487K Self Help Housing Corp Hawaii for construction of 76 lot subdivision for low income families
$487K Maui Economic Concerns of the Community for improvement of Homeless resource center
$469K Varroa mite suppression
$450K Maui Economic Development Board Science and Math training
$400K Agriculture Development in the American Pacific (UH)
$400K UH School of Law health policy center
$400K Leeward Community College prep education for Filipinos
$400K Oceanic Institute Fisheries Development
$400K Hawaii Public Housing Authority for renovation of 24 housing units
$400K Hawaii Public Housing Authority for renovation of 25 units
$400K Waipa Foundation for State certified commercial kitchen
$400K UH Hilo Nurse training program
$300K for the Polynesian Voyaging Society educational programs
$300K for Council for Native Advancement Entrepreneurial Development
$300K Floriculture UH
$300K Maui Economic Development Board Rural computer training
$300K Lanakiia Rehabilitation Center Wahiawa Training Complex
$270K Hawaii Water Resource Management
$250K Iao Stream Flood Control Maui
$250K Community Links Hawaii for Oahu Tech and Innovation Park
$250K Wailuku-Alenaio Watershed Project
$250K Volcano research/monitoring partnership UH/HVO
$243K County of Kauai construction of 36 homes
$220K Hawaii County HOVE drinking water development project
$200K Waimanalo Health Center
$200K Termite Species in Hawaii (study in New Orleans, LA)
$200K UH School of Medicine expansion
$200K UH School of Nursing- Manoa equipment
$200K Community Health Centers Childhood Rural Asthma Project
$200K Bishop Museum educational programming
$200K Hamakua Health Center
$200K Lanai Community Health Center
$194K Mookini Luakini Foundation North Kohala, Hawaii County
$194K Institute for Human Services for job training center
$181K Maalaea Harbor, Maui
$157K Wailupe Stream Oahu
$153K UH Agriculture Diversification
$150K Kalihi Palama Health Center Honolulu
$150K Straub Hospital Burn Center Honolulu
$100K Maui Medical Center
$100K Maui Economic Development Board for Lanai’l Women’s initiative
$100K Kahuku, Hawaii
$100K Hawaii DOT GIS
$100K State of Hawaii Rainfall Analysis
$100K West Maui Watershed
$67K Waimanalo Wastewater Effluent Reuse Plan
$45K Waiakea Palai Streams Flood Damage Reduction Hawaii County
$40K Hawaii Technical Services
$12K Barbers Point Harbor Modifications Oahu

The majority of these funds look like they were used for payroll for studies, services and staffing in Hawaii.  The $320 million represents about 7000 jobs (based on an average salary of $50,000) that could be lost. Services and organizations in Hawaii may be forced to shut down unless they can find some other way to fund their operations and taxes will have to cover the infrastructure projects the Counties were planning to fund.

Friday, February 4, 2011

Quantitative Easing as a weapon in the Global Currency War

China and the US are in an escalating currency war.  China has been keeping their Chinese Yuan currency artificially low and hoarding trillions of US dollars to keep its value high. The US Federal Reserve is responding with “Quantitative Easing”,  a big name for creating money from nothing.  Since last November, the Federal Reserve has been “printing” (making it electronically) about $70 billion US dollars a month to buy back US bonds.

China has kept its currency undervalued for years to maintain their cheap labor costs, though every year their leaders promise to let it float. And rather than keeping their foreign reserves in a basket of currencies, it has recently been revealed that China has been holding on to almost 3 Trillion US dollars, keeping it out of circulation and driving up the dollar value. This revelation surprised many who thought that China had spread their foreign reserves equally among dollars, Euros and Yen.  It also explains one of the reasons China has been so obstinate about raising the value of their Yuan currency against the dollar since that would devalue their Trillion dollar holdings. The 40 to 60% Yuan currency increase being called for by the US and Europe would erase up to $1.5 Trillion of China’s foreign reserves overnight.

The idea behind quantitative easing is that it increases the money supply and stimulates the economy. The Japanese Central Bank tried it in 2000 in an attempt to stop their rising deflation. It didn’t stimulate Japan’s economy or end their deflation, but it lowered the value of their Yen currency for a while.

China is furious about the Fed’s quantitative easing and says the US has no right to “devalue”  the dollar.  They claim that the US dollar is a global currency for holding foreign reserves and not owned nor should it be managed by the US Federal reserve. Some fiscally conservative Americans object to the Fed’s actions because they think it will result in rampant inflation in the US.  But we continue to believe that the amount of currency lost to the US economy in the past couple of years, due to the collapse of housing and loss of jobs, dwarfs the amount the Fed is putting back into the economy each month.

The bigger risk is that China might quickly dump all their US dollars on the market while the dollar is still high. If this was done in the period of a month or two, it could flood global currency markets with dollars. The result would be a massive devaluation of US currency over night.  Though this might look like hyperinflation, it would likely be something we have never seen before. There is no evidence that China is converting their dollars to other currencies at this time, but what they are doing is buying businesses and properties across the US while prices are low and their dollars have value. We are watching the daily fluctuations in foreign currency and thinking about what the first signs of China making a move to sell their cache of dollars might be. And we are wondering what unique investment opportunities a massive exchange of dollars into other currencies or assets might create.

Tuesday, February 1, 2011

Hawaii County moved to Seattle

We were preparing to pay our Hawaii County property tax bill today and were shocked to find that, without us knowing, our County had been relocated to the mainland. The envelope enclosed for us to send in our tax money was addressed to the County of Hawaii located at a post office box in Seattle, Washington. Surely, there is some terrible mistake.

Highly perturbed, we called the County to find out if the return envelope was an accident or scam of some kind.  But the person that answered the phone assured us that it was not a typo on the envelope.  A firm on the mainland was hired to process the County taxes.

Apparently, the County hired a firm in Seattle to open the envelopes and deposit tax payments which means hundreds of millions of our County dollars are being sent to a company thousands of miles away. We missed the news last July that Automatic Funds Transfer Services was the low bidder, somehow able to open envelopes more cheaply than our own County employees or local banks, even with a 4% evaluation penalty for being out of State.

But even if an out of State firm did win, it is shocking to see the County of Hawaii moved to Seattle.  Shouldn’t the County require any contractor use a local address and local bank and keep our taxes on the island?