Posts
The market has been showing some sign of strength this past week, with the DOW finally closing above 9000. Surely this is a green shoot.
Housing, a number near and dear to many around coastal NC, showed signs of stability. Empirical data suggests that there is some activity. I see homes under construction in neighborhoods where I live. The housing numbers nationally are showing stability although stability at a level 40% below the peak of 2005 in terms of unit sales. New housing sales have been another green shoot, up a lot on a month to month basis. Only a green shoot because they are still trailing last year by more than 25%.
At least one pundit has declared that the recession is over. Technically, maybe it is. Surviving the recovery will be challenging at best and overwhelming at worst.
Unemployment will stay high and go even higher during the second half of 2009 It will remain high through 2010. This recovery will be slow and arduous, especially for small businesses. Again, there is empirical evidence that the small business community, the engine of growth in the USA, is struggling. In my neighborhood and across Wilmington, NC I see more and more empty store fronts.
Credit remains an issue and may never return to where it was. The days of the no documentation loan is probably gone forever and low credit scores aren’t likely to qualify either. Fixing your bad credit rating will be more important than ever but difficult to do if you don’t have a job.
As we are seeing, people still need to buy housing. They may be a lot more hesitant to speculate on housing. After the Depression of the 1930’s, people were reluctant to invest in the stock market. Banks had failed (without FDIC insurance) so there must have been a lot of lumpy mattresses.
How well you fair in today’s economy will be determined by where you are in the food chain. As Peter Drucker, the famous management guru said more than 40 years ago, “The workers of the future will be knowledge workers”. He was right then and remains right today. The future of our way of life depends upon how knowledgeable we are. Education and innovation will be the future. If we provide quality education and encourage innovation (95% of radical new product ideas come from small businesses)we will be able to continue life as we would like it to be. Absent these, we will become a poor nation working for others. We will trade places with China and India.
If you have a profession or are a knowledge worker, you will be among the first to enjoy the coming recovery. If you are not a professional or knowledge worker and you don’t have a job (or even if you do) now is the time to get the education you need to qualify. Get those knowledge skills up to speed. Check out Community Colleges as a low cost source for your educational needs.
Monday, July 27, 2009
Monday, July 20, 2009
July 21, 2009
Give me a week of quiet to think and my brain overflows. Getting all this down on paper seems therapeutic.
Health care reform is again in jeopardy. The economy is in a very fragile early stage recovery. Anything that impacts income negatively could derail the recovery. Increases in taxes by local, state or federal governments are a real show stopper.
Foreign demand for US Bonds, a principle source of funding for spending not covered by taxes, is in a decided decline. Foreigners are afraid of an inflationary devaluation of the US Dollar. Do they have good reason to suspect that it will become our only option if we continue to spend on new programs?
Perhaps health care reform, real and meaningful reform, which I personally favor, may have to wait until we get the economy back on track. The glory days of the 1950’s and 1960’s were a function of pent up demand from the great depression and WWI & WWII. Europe and Japan were largely destroyed so global competition wasn’t a real factor. In the 1950’s “made in Japan” meant use it once and throw it away. Here at home we were implementing technologies that were developed in war time and productivity growth was enormous.
Today is a very different story. Japan, China and Europe are rebuilt providing modern production options with quality and reliability equal to or better than our own. Today there is no pent up demand around the world anxious to replace things destroyed by war or made unavailable by the war effort. Remember, no cars were produced in the United States in 1942 – 1945. All the factories were producing tanks and military vehicles. There were no imports available at that time either.
We have used strings, mirrors and smoke to stretch our seeming prosperity since the 1970’s. Tricky Dicky Nixon was in charge when we went off the gold standard (one troy ounce of gold = $37USD). Today gold is trading at $952 per ounce. That is some serious inflation in just 30 years. What the future will bring is anyone’s guess. Those people who sell Gold based investments keep saying things like $2000 or $2500 per ounce. They have a self interest motivation for such speculative statements. Still, I wonder. The growth in gold since we dropped the gold standard has been about 12% per year compounded (not in a straight line, of course). But what if that continues into the future? Where will gold be in 2039 (thirty years from now)?
Taxing the rich is an interesting and time honored tradition. What is interesting is that, since women joined the work force in large numbers, the gap between rich and poor has widened. The expression “birds of a feather” comes into play here. Women with education tend to marry men with education. Education has a high correlation with income. Therefore it can be stated that women with high earning potential marry men with high earning potential and conversely women with low earning potential tend to marry men of similar potential. (I believe the gay community mirrors the straight community in this regard). Thus the gap in income is magnified. Large gaps tend to create a "them and us" society which can be a volatile problem. Remember the race riots of the 1960’s?
The moral and political question is how to shrink the gap. Do you tax the wealthy and give to the poor "the Robin Hood syndrome", or do you tax the wealthy and spend more on education programs and incentives to reduce the income gap forever? One is a more politically expedient method and the other longer term but more lasting and sustainable. To date we have been working, it seems, with a foot in each camp. Low income earners pay no taxes and get money (EIC credit etc) from the government (which it collected from the richer of our citizenry). School spending per student is amongst the highest in the world yet the results are abysmal. Perhaps it is not how much we spend but how we spend it. Again, politically charged decision making. Which programs are working and which are not. No child left behind was a well intentioned program. Are its results supportive of continuing or should we admit error and move on to a new idea? Should charter schools be continued and even helped to grow? Are they more effective at educating people? What percentage of our resources should be spent helping children with learning disabilities and what percentage should be spent on the brightest, most gifted children? Should schools be allowed to discriminate based on ability? How can we judge in a fair and unbiased way?
I don’t have answers, just questions. Questions I hope you have and are concerned about too. I want to hear the answers proposed by our elected officials in clear and unambiguous terms so that we can judge their motives...and their results in the voting booth.
Health care reform is again in jeopardy. The economy is in a very fragile early stage recovery. Anything that impacts income negatively could derail the recovery. Increases in taxes by local, state or federal governments are a real show stopper.
Foreign demand for US Bonds, a principle source of funding for spending not covered by taxes, is in a decided decline. Foreigners are afraid of an inflationary devaluation of the US Dollar. Do they have good reason to suspect that it will become our only option if we continue to spend on new programs?
Perhaps health care reform, real and meaningful reform, which I personally favor, may have to wait until we get the economy back on track. The glory days of the 1950’s and 1960’s were a function of pent up demand from the great depression and WWI & WWII. Europe and Japan were largely destroyed so global competition wasn’t a real factor. In the 1950’s “made in Japan” meant use it once and throw it away. Here at home we were implementing technologies that were developed in war time and productivity growth was enormous.
Today is a very different story. Japan, China and Europe are rebuilt providing modern production options with quality and reliability equal to or better than our own. Today there is no pent up demand around the world anxious to replace things destroyed by war or made unavailable by the war effort. Remember, no cars were produced in the United States in 1942 – 1945. All the factories were producing tanks and military vehicles. There were no imports available at that time either.
We have used strings, mirrors and smoke to stretch our seeming prosperity since the 1970’s. Tricky Dicky Nixon was in charge when we went off the gold standard (one troy ounce of gold = $37USD). Today gold is trading at $952 per ounce. That is some serious inflation in just 30 years. What the future will bring is anyone’s guess. Those people who sell Gold based investments keep saying things like $2000 or $2500 per ounce. They have a self interest motivation for such speculative statements. Still, I wonder. The growth in gold since we dropped the gold standard has been about 12% per year compounded (not in a straight line, of course). But what if that continues into the future? Where will gold be in 2039 (thirty years from now)?
Taxing the rich is an interesting and time honored tradition. What is interesting is that, since women joined the work force in large numbers, the gap between rich and poor has widened. The expression “birds of a feather” comes into play here. Women with education tend to marry men with education. Education has a high correlation with income. Therefore it can be stated that women with high earning potential marry men with high earning potential and conversely women with low earning potential tend to marry men of similar potential. (I believe the gay community mirrors the straight community in this regard). Thus the gap in income is magnified. Large gaps tend to create a "them and us" society which can be a volatile problem. Remember the race riots of the 1960’s?
The moral and political question is how to shrink the gap. Do you tax the wealthy and give to the poor "the Robin Hood syndrome", or do you tax the wealthy and spend more on education programs and incentives to reduce the income gap forever? One is a more politically expedient method and the other longer term but more lasting and sustainable. To date we have been working, it seems, with a foot in each camp. Low income earners pay no taxes and get money (EIC credit etc) from the government (which it collected from the richer of our citizenry). School spending per student is amongst the highest in the world yet the results are abysmal. Perhaps it is not how much we spend but how we spend it. Again, politically charged decision making. Which programs are working and which are not. No child left behind was a well intentioned program. Are its results supportive of continuing or should we admit error and move on to a new idea? Should charter schools be continued and even helped to grow? Are they more effective at educating people? What percentage of our resources should be spent helping children with learning disabilities and what percentage should be spent on the brightest, most gifted children? Should schools be allowed to discriminate based on ability? How can we judge in a fair and unbiased way?
I don’t have answers, just questions. Questions I hope you have and are concerned about too. I want to hear the answers proposed by our elected officials in clear and unambiguous terms so that we can judge their motives...and their results in the voting booth.
Sunday, July 19, 2009
July 20,2009
July 20, 2009
I took last week off and went to the beach without my laptop, blackberry or anything other than a basic cell phone. I wanted to see if I could go a whole week without any outside contact. It was amazingly liberating…after the first few panic attacks.
It was really refreshing to be able to think without having my thoughts interrupted by tweets, face book, text messages, etc. Thinking is a good mental exercise. The mind, like other body parts requires exercise to stay healthy and at the top of its game. The Ocean and the weather really cooperated making it a wonderfully relaxing week.
Now I’m back with a clearer head on what the economy is doing and how panic struck the administration and congress is. It is going to be a challenge for us and for them. Now is the time to make your feelings known to your representatives on the key topics of national debt, taxes and health care. Just remember you can’t have programs without the funding for them. Tough choices are going to be made. Get your voice heard.
Democrats, minus Sen’s Byrd and Kennedy (both ill), don’t have the magical 60 votes in the senate and there are some more conservative Democratic Senators who are uncomfortable with the size of the Debt. The once Messianic President is seeing the ratings drop as debt and unemployment climb and the economy fails to respond to his brand of stimulus. Check out the stock markets of Asia and even Europe and compare them to ours. Not pretty.
On the brighter side, The Philadelphia Fed Index and the Empire State Index are running a parallel and very positive trend although neither has passed the “0” point yet which is the transition from contraction to expansion. First time unemployment claims have slowed, meaning unemployment continues to grow, just at a slower rate. Not great news but positive. The State Street Investors Index is showing the highest results in more than a year in both the last two months. Other leading economic indicators are showing positive signs as well. The overall unemployment rate will continue to rise, since companies don’t hire people back until they are sure that there will be a need. Overtime is a nice expansion valve and an easy economic indicator. When it is cheaper to hire a new employee than it is to pay overtime, unemployment will start to decline. That will be awhile.
In the interim, if you have cash available, you can get some great deals on just about anything you need. Note that cash is king. Financing is still difficult to arrange for all but the very best borrowers and then only for the best of deals. A year or 18 months from now these deals will be gone, so keep that in mind. Mortgage money is starting to get more expensive and housing prices have begun to stabilize. If you are a potential first time buyer the government will give you major bucks to help you get that first home. That deal may disappear in the not too distant future so remember the phrase- He who hesitates is lost.
In summary, Congress is afraid of the cost (read that tax increases) of the reforms Mr. Obama is pushing and at the same time afraid that doing nothing (their favorite approach to dicey issues) is no longer an option. The economy is still contracting and the national debt is skyrocketing. No easy fix this time. Just hard facts and tough medicine. What will they do and will you remember at the polls in 2010?
I took last week off and went to the beach without my laptop, blackberry or anything other than a basic cell phone. I wanted to see if I could go a whole week without any outside contact. It was amazingly liberating…after the first few panic attacks.
It was really refreshing to be able to think without having my thoughts interrupted by tweets, face book, text messages, etc. Thinking is a good mental exercise. The mind, like other body parts requires exercise to stay healthy and at the top of its game. The Ocean and the weather really cooperated making it a wonderfully relaxing week.
Now I’m back with a clearer head on what the economy is doing and how panic struck the administration and congress is. It is going to be a challenge for us and for them. Now is the time to make your feelings known to your representatives on the key topics of national debt, taxes and health care. Just remember you can’t have programs without the funding for them. Tough choices are going to be made. Get your voice heard.
Democrats, minus Sen’s Byrd and Kennedy (both ill), don’t have the magical 60 votes in the senate and there are some more conservative Democratic Senators who are uncomfortable with the size of the Debt. The once Messianic President is seeing the ratings drop as debt and unemployment climb and the economy fails to respond to his brand of stimulus. Check out the stock markets of Asia and even Europe and compare them to ours. Not pretty.
On the brighter side, The Philadelphia Fed Index and the Empire State Index are running a parallel and very positive trend although neither has passed the “0” point yet which is the transition from contraction to expansion. First time unemployment claims have slowed, meaning unemployment continues to grow, just at a slower rate. Not great news but positive. The State Street Investors Index is showing the highest results in more than a year in both the last two months. Other leading economic indicators are showing positive signs as well. The overall unemployment rate will continue to rise, since companies don’t hire people back until they are sure that there will be a need. Overtime is a nice expansion valve and an easy economic indicator. When it is cheaper to hire a new employee than it is to pay overtime, unemployment will start to decline. That will be awhile.
In the interim, if you have cash available, you can get some great deals on just about anything you need. Note that cash is king. Financing is still difficult to arrange for all but the very best borrowers and then only for the best of deals. A year or 18 months from now these deals will be gone, so keep that in mind. Mortgage money is starting to get more expensive and housing prices have begun to stabilize. If you are a potential first time buyer the government will give you major bucks to help you get that first home. That deal may disappear in the not too distant future so remember the phrase- He who hesitates is lost.
In summary, Congress is afraid of the cost (read that tax increases) of the reforms Mr. Obama is pushing and at the same time afraid that doing nothing (their favorite approach to dicey issues) is no longer an option. The economy is still contracting and the national debt is skyrocketing. No easy fix this time. Just hard facts and tough medicine. What will they do and will you remember at the polls in 2010?
Friday, July 10, 2009
July 10, 2009
This week started out where last week left off. The economic news, frankly, stinks and the markets are reflecting it. Billions pledged for a stimulus and less than 20% spent so far. Talk about to little to late. Of course there is talk of “green shoots”. The number of people filing for unemployment benefits came down under 600,000 for the first time since the beginning of February. That means that the employment picture is getting worse, but at a slower pace. Mr. Obama said the stimulus bill would keep unemployment at 8%. We will likely hit 10% nationally and much higher in some regions.
The National debt is running wild, wild even compared to Bush. That is a frightful thing and will mean billions of new taxes. Obama may have made the George Bush 41 error. Bush 41 said “watch my lips, no new taxes” and then raised taxes. Probably cost him a second term. Bush 43 figured he’d cut taxes and borrow whatever Congress over spent. He got a second term. Can you see where this is leading. Obama 44 is borrowing and raising taxes.
Retail sales reports are showing that retail sales are significantly depressed but they don’t appear to be getting worse. With unemployment stats where they are, that is actually a positive sign. Remember that our economy is 70% consumer driven. Even a small move, positive or negative, has a meaningful impact on the overall economic picture. Housing it seems will have another round of problems. No real surprise, many 3 year and 5 year arms are now about to reset and while they may be affordable, they may be far enough underwater not to be worth paying. Walk away and rent for a couple of years then buy another house for a lot less. Might even be able to find a rent to own deal at less per month than the mortgage on the old house and be building positive equity in the process. Not that I’m recommending anything here. I’m just suggesting that some people might see that as an option. Others might stay, paying way more for a house than it is now worth rather than dislocate the family and upset schools, church/synagogue/mosque and other family support institutions while hoping that in 10 years the house will have regained its value and they will have substantial equity. Profit, it seems is made on the sale, not on the purchase.
Based on oil at $60 per barrel, the fall price of gasoline will be around $2.25 - $2.35 per gallon. Oil at $60 per barrel indicates no fear of rising demand. This translates into no expectation of economic recovery world wide in the near term. Rising insurance rates and rising taxes will suppress recovery. This is going to be a long drawn out process.
Congress needs a wake up call. Perhaps we should replace a number of them in the up coming 2010 election. There are numskulls on both sides of the aisle who would be excellent candidates for recycling.
If Mr. Obama wants to reach across the aisle and get the best candidate to work on health care reform he should call Mitt Romney. Why? Because Massachusetts has healthcare available to everyone and it was shepherded in under Mr. Romney as Governor. He understands how it works, why it works, what it costs and how to pay for it. He has been a businessman, he has demonstrated managerial expertise and he did it as a Republican Governor with a Democratic legislature (in the home state of Senator John Kerry and Senator Ted Kennedy). Clearly he is adroit at negotiating the important issues across partisan lines.
To sum up this past week, there is no good news except that the news is less bad. As slowing down as you approach a red light signals your intention to stop, the economy may be signaling that it is going to stop declining before much longer. As the stop at a red light is followed by restarting when the light changes to green, we can assume that the economy may soon begin to reverse course. How soon is anybody’s guess, but mine is mid 2010. And when it does it will be slow and tentative, with some false starts.
This week started out where last week left off. The economic news, frankly, stinks and the markets are reflecting it. Billions pledged for a stimulus and less than 20% spent so far. Talk about to little to late. Of course there is talk of “green shoots”. The number of people filing for unemployment benefits came down under 600,000 for the first time since the beginning of February. That means that the employment picture is getting worse, but at a slower pace. Mr. Obama said the stimulus bill would keep unemployment at 8%. We will likely hit 10% nationally and much higher in some regions.
The National debt is running wild, wild even compared to Bush. That is a frightful thing and will mean billions of new taxes. Obama may have made the George Bush 41 error. Bush 41 said “watch my lips, no new taxes” and then raised taxes. Probably cost him a second term. Bush 43 figured he’d cut taxes and borrow whatever Congress over spent. He got a second term. Can you see where this is leading. Obama 44 is borrowing and raising taxes.
Retail sales reports are showing that retail sales are significantly depressed but they don’t appear to be getting worse. With unemployment stats where they are, that is actually a positive sign. Remember that our economy is 70% consumer driven. Even a small move, positive or negative, has a meaningful impact on the overall economic picture. Housing it seems will have another round of problems. No real surprise, many 3 year and 5 year arms are now about to reset and while they may be affordable, they may be far enough underwater not to be worth paying. Walk away and rent for a couple of years then buy another house for a lot less. Might even be able to find a rent to own deal at less per month than the mortgage on the old house and be building positive equity in the process. Not that I’m recommending anything here. I’m just suggesting that some people might see that as an option. Others might stay, paying way more for a house than it is now worth rather than dislocate the family and upset schools, church/synagogue/mosque and other family support institutions while hoping that in 10 years the house will have regained its value and they will have substantial equity. Profit, it seems is made on the sale, not on the purchase.
Based on oil at $60 per barrel, the fall price of gasoline will be around $2.25 - $2.35 per gallon. Oil at $60 per barrel indicates no fear of rising demand. This translates into no expectation of economic recovery world wide in the near term. Rising insurance rates and rising taxes will suppress recovery. This is going to be a long drawn out process.
Congress needs a wake up call. Perhaps we should replace a number of them in the up coming 2010 election. There are numskulls on both sides of the aisle who would be excellent candidates for recycling.
If Mr. Obama wants to reach across the aisle and get the best candidate to work on health care reform he should call Mitt Romney. Why? Because Massachusetts has healthcare available to everyone and it was shepherded in under Mr. Romney as Governor. He understands how it works, why it works, what it costs and how to pay for it. He has been a businessman, he has demonstrated managerial expertise and he did it as a Republican Governor with a Democratic legislature (in the home state of Senator John Kerry and Senator Ted Kennedy). Clearly he is adroit at negotiating the important issues across partisan lines.
To sum up this past week, there is no good news except that the news is less bad. As slowing down as you approach a red light signals your intention to stop, the economy may be signaling that it is going to stop declining before much longer. As the stop at a red light is followed by restarting when the light changes to green, we can assume that the economy may soon begin to reverse course. How soon is anybody’s guess, but mine is mid 2010. And when it does it will be slow and tentative, with some false starts.
Saturday, July 4, 2009
Happy 4th of July
July 6, 2009
To say that this week has not been one of positives would be an understatement. On Thursday we heard, to some surprise it seems, that unemployment is continuing to rise at a steady rate. It is not slowing as had been predicted by the government distributors of Cool Aid. The “Porkulus” package promulgated by Queen Nancy has only been 15% implemented so far and it is no wonder it has not yet accomplished its alleged mission of stimulus. Billions poured into the car industry has done little, especially when you recognize that of the top 10 selling cars made in America, only one is built in Detroit. The other nine are built in states other than Michigan and most of them are built by Toyota, Honda and Ford.
“Payrolls in U.S. Decline More Than Forecast; Unemployment Climbs to 9.5% Employers in the U.S. cut more jobs than forecast in June and the unemployment rate rose to the highest in almost 26 years, offering little evidence the Obama administration’s stimulus package is putting Americans back to work.” (1)
The market is virtually ALWAYS in a funk in the summer. Investors sell and go away for the summer for vacation. New cars are hot in the fall when new models are traditionally introduced, not in the summer. The real indication of how things are perceived to be going will come when investors return in the fall. If the markets fail to rally it will be a long, cold and difficult winter. With nearly 1 worker in 10 (16,000,000) unable to find work – the most workers in the history of the Untied States – we could be facing a really bleak winter.
State and local budgets are in deep trouble nationwide and without income tax revenues they, too, will see the crisis deepen. Perhaps it is time for all of us to respond to the 1961 inaugural command of John F. Kennedy “Ask not what your country can do for you. Ask what you can do for your country”. Volunteerism maybe the only solution. If critical services (Fire/Police/Teachers) must be cut due to budget issues, perhaps each of us could volunteer to pick up the slack until things improve. Parents can be teachers or teacher’s aids. Can’t get a job anyway, might as well help out. Fire fighters and Police need extensive training but dispatchers, and other support tasks aren’t as complicated. We might even find that we like it. Perhaps it could be the start of a major cultural shift back to the value of being good neighbors that made this country great. A mind shift to what can I do for you rather than what can you do for me.
On the International scene, "India Joins Russia, China in Questioning Dominance of U.S. Dollar Reserves Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said he is urging the government to diversify its $264.6 billion foreign-exchange reserves and hold fewer dollars." (2)
This suggests that the dollar will be allowed to fall in value making exports cheaper and imports (cars and other goods including oil) more expensive. That means the dollars you have saved will buy less than they did when you saved them. And when the government gets done raising your taxes you’ll have fewer of those dollars left. It also means that interest rates will rise. This is not a good sign for the coming years for the average American unless we can recover our manufacturing base and begin buying goods made in America, thereby putting Americans back to work. Then we will still have a dollar worth less than it was but at least we will be able to earn more of them. Buy cars made in America. It helps American workers and doesn’t hurt you. Most of the cars we want are already made in America, Honda Civic and Accord, Nissan Altima, Toyota Camry and many more.
Let’s remember that we need to support one another not just ourselves. Times are tough, are you part of the solution or part of the problem? It is time to stand up and be counted. Which column will you be in?
Does that sound protectionist? I’m not suggesting that we revert to official protectionism, I just intend to increase our awareness of the consequences of our actions. Buying things made in America may cost a bit more today but will put someone back to work sooner and that will cost us all less tomorrow.
Happy July 4th. I hope your Holiday is safe and great fun. Just remember the long range thinking that was behind the fight for independence that we celebrate and personally take on the mantle of that responsibility as we go forward each day in each decision we take.
(1) Bloomberg News Online 7/2/2009
(2) Bloomberg News Online 7/4/2009
To say that this week has not been one of positives would be an understatement. On Thursday we heard, to some surprise it seems, that unemployment is continuing to rise at a steady rate. It is not slowing as had been predicted by the government distributors of Cool Aid. The “Porkulus” package promulgated by Queen Nancy has only been 15% implemented so far and it is no wonder it has not yet accomplished its alleged mission of stimulus. Billions poured into the car industry has done little, especially when you recognize that of the top 10 selling cars made in America, only one is built in Detroit. The other nine are built in states other than Michigan and most of them are built by Toyota, Honda and Ford.
“Payrolls in U.S. Decline More Than Forecast; Unemployment Climbs to 9.5% Employers in the U.S. cut more jobs than forecast in June and the unemployment rate rose to the highest in almost 26 years, offering little evidence the Obama administration’s stimulus package is putting Americans back to work.” (1)
The market is virtually ALWAYS in a funk in the summer. Investors sell and go away for the summer for vacation. New cars are hot in the fall when new models are traditionally introduced, not in the summer. The real indication of how things are perceived to be going will come when investors return in the fall. If the markets fail to rally it will be a long, cold and difficult winter. With nearly 1 worker in 10 (16,000,000) unable to find work – the most workers in the history of the Untied States – we could be facing a really bleak winter.
State and local budgets are in deep trouble nationwide and without income tax revenues they, too, will see the crisis deepen. Perhaps it is time for all of us to respond to the 1961 inaugural command of John F. Kennedy “Ask not what your country can do for you. Ask what you can do for your country”. Volunteerism maybe the only solution. If critical services (Fire/Police/Teachers) must be cut due to budget issues, perhaps each of us could volunteer to pick up the slack until things improve. Parents can be teachers or teacher’s aids. Can’t get a job anyway, might as well help out. Fire fighters and Police need extensive training but dispatchers, and other support tasks aren’t as complicated. We might even find that we like it. Perhaps it could be the start of a major cultural shift back to the value of being good neighbors that made this country great. A mind shift to what can I do for you rather than what can you do for me.
On the International scene, "India Joins Russia, China in Questioning Dominance of U.S. Dollar Reserves Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said he is urging the government to diversify its $264.6 billion foreign-exchange reserves and hold fewer dollars." (2)
This suggests that the dollar will be allowed to fall in value making exports cheaper and imports (cars and other goods including oil) more expensive. That means the dollars you have saved will buy less than they did when you saved them. And when the government gets done raising your taxes you’ll have fewer of those dollars left. It also means that interest rates will rise. This is not a good sign for the coming years for the average American unless we can recover our manufacturing base and begin buying goods made in America, thereby putting Americans back to work. Then we will still have a dollar worth less than it was but at least we will be able to earn more of them. Buy cars made in America. It helps American workers and doesn’t hurt you. Most of the cars we want are already made in America, Honda Civic and Accord, Nissan Altima, Toyota Camry and many more.
Let’s remember that we need to support one another not just ourselves. Times are tough, are you part of the solution or part of the problem? It is time to stand up and be counted. Which column will you be in?
Does that sound protectionist? I’m not suggesting that we revert to official protectionism, I just intend to increase our awareness of the consequences of our actions. Buying things made in America may cost a bit more today but will put someone back to work sooner and that will cost us all less tomorrow.
Happy July 4th. I hope your Holiday is safe and great fun. Just remember the long range thinking that was behind the fight for independence that we celebrate and personally take on the mantle of that responsibility as we go forward each day in each decision we take.
(1) Bloomberg News Online 7/2/2009
(2) Bloomberg News Online 7/4/2009
Wednesday, July 1, 2009
Recovery???
June 30, 2009
6 months into the year and a little over 5 months in to the new administration and the economy is still floundering. We can point to the Bush administration as the cause but the current administration hasn’t made major in-roads into its solution despite committing billions upon billions of your future taxes. Today the troops moved out of major cities in Iraq turning the security for those areas over to the Iraqi government. Pray for the people of Iraq as the next weeks and months could be really tough. Hopefully we can start saving some of the money we were spending there. We can use it for the overhaul of health care.
Afghanistan continues to consume enormous amounts of money and material not to mention American lives. When do we follow suit and leave the Afghani people to protect themselves.
The economy continues to disappoint. Unemployment continues to rise. People are losing their retirement savings and politicians seem to have no idea how to cut a budget. It is time to admit we can’t do everything we want to do for everyone who needs help. We are no longer the richest country in the world (actually #10 in GDP per Capita according to the CIA World Book). We are deeply in debt and we must tighten our collective and individual belts. Of course that hurts votes and might risk political jobs. Can’t help the people if I’m not in office to do it, they argue. Won’t help the people if I want to stay in office is how that translates. We need political leaders who are willing to make the right call whether we like it or not. Washington, Lincoln and other greats did. They deserve our support when they do the right thing even when it doesn’t fell so good personally. They deserve informed and educated voters who can see past their personal self interest and put the best interest of the country first.
Gasoline will top out below the $3.00 number this month and begin to decline back toward $2.40 maybe even $2.25 per gallon by fall. Watch for it to skyrocket at the first real sign of economic recovery.
Energy will be a huge tax problem if cap and tax carbon tax program is passed. Everything you and I buy is made with energy and carbon based fuels. This will drive up the cost of…everything. While you and I may not get a tax bill directly like we do on April 15th, it will be included in everything you and I purchase, including food which is planted and harvested, processed and transported using carbon based fuels.
We just put Billions into two failed car makers and I was passed on the highway (I-140) here in Wilmington North Carolina by a Tesla Roadster. For you who don’t follow the car scene, Tesla Motors (California) produces a high performance ALL ELECTRIC sports car capable of Corvette and Ferrari performance completely electrically and gets lots of miles (220 according to the web site)between recharging. So where is Ford, GM and Chrysler? Where did those Billions go? Why aren’t we supporting Tesla and others engaged in creating the next generation automobile instead of trying to save the old generation? That would be like trying to save an old computer company who still produced main frame technology instead of I-Pods and I-phones. Why support one G technology when we could be support 4 G and 5 G technologies? Hmmm... Does campaign contributions come to mind?
Mr. Obama promised change but has yet to fix any of the real problems. He is just attacking symptoms. Rising health care costs could be contained if we limited Doctors liability (Tort Reform). Gitmo is still open (and should remain so), Unemployment is still growing, Mortgage rates are starting to climb and even the first time buyer credit is only minimally effective. The Speaker of the House, Nancy Pelosi – 3rd in line to the Presidency – represents California where the biggest problem has been and continues to be their inability to balance their budget under Governor's from both parties. They are more than 20 billion away from the constitutionally mandated balanced budget because they won’t raise taxes and won’t be fiscally responsible. So they will have to cut costs with a fire axe to bridge the enormous gap between revenue and spending. Police, Fire and other essential services are going to get cut. Some say decimated. I wonder if there will soon be billions more spent helping out state and local governments who won’t help themselves.
On the plus side, I am beginning to sense that the economy is finally nearing a bottom, maybe even slightly, I repeat, slightly past the bottom headed upward. The decline was severe and sharp. The recovery will be very, very slow and strong growth isn’t likely until 2012 and maybe even later than that. Unemployment will remain high until the economy is well into recovery, so I’m thinking maybe 2011 before we see any real signs of improvement on that important front.
This recovery is frail and even the slightest problem, Iran, Iraq, etc. and the whole thing could come apart.
6 months into the year and a little over 5 months in to the new administration and the economy is still floundering. We can point to the Bush administration as the cause but the current administration hasn’t made major in-roads into its solution despite committing billions upon billions of your future taxes. Today the troops moved out of major cities in Iraq turning the security for those areas over to the Iraqi government. Pray for the people of Iraq as the next weeks and months could be really tough. Hopefully we can start saving some of the money we were spending there. We can use it for the overhaul of health care.
Afghanistan continues to consume enormous amounts of money and material not to mention American lives. When do we follow suit and leave the Afghani people to protect themselves.
The economy continues to disappoint. Unemployment continues to rise. People are losing their retirement savings and politicians seem to have no idea how to cut a budget. It is time to admit we can’t do everything we want to do for everyone who needs help. We are no longer the richest country in the world (actually #10 in GDP per Capita according to the CIA World Book). We are deeply in debt and we must tighten our collective and individual belts. Of course that hurts votes and might risk political jobs. Can’t help the people if I’m not in office to do it, they argue. Won’t help the people if I want to stay in office is how that translates. We need political leaders who are willing to make the right call whether we like it or not. Washington, Lincoln and other greats did. They deserve our support when they do the right thing even when it doesn’t fell so good personally. They deserve informed and educated voters who can see past their personal self interest and put the best interest of the country first.
Gasoline will top out below the $3.00 number this month and begin to decline back toward $2.40 maybe even $2.25 per gallon by fall. Watch for it to skyrocket at the first real sign of economic recovery.
Energy will be a huge tax problem if cap and tax carbon tax program is passed. Everything you and I buy is made with energy and carbon based fuels. This will drive up the cost of…everything. While you and I may not get a tax bill directly like we do on April 15th, it will be included in everything you and I purchase, including food which is planted and harvested, processed and transported using carbon based fuels.
We just put Billions into two failed car makers and I was passed on the highway (I-140) here in Wilmington North Carolina by a Tesla Roadster. For you who don’t follow the car scene, Tesla Motors (California) produces a high performance ALL ELECTRIC sports car capable of Corvette and Ferrari performance completely electrically and gets lots of miles (220 according to the web site)between recharging. So where is Ford, GM and Chrysler? Where did those Billions go? Why aren’t we supporting Tesla and others engaged in creating the next generation automobile instead of trying to save the old generation? That would be like trying to save an old computer company who still produced main frame technology instead of I-Pods and I-phones. Why support one G technology when we could be support 4 G and 5 G technologies? Hmmm... Does campaign contributions come to mind?
Mr. Obama promised change but has yet to fix any of the real problems. He is just attacking symptoms. Rising health care costs could be contained if we limited Doctors liability (Tort Reform). Gitmo is still open (and should remain so), Unemployment is still growing, Mortgage rates are starting to climb and even the first time buyer credit is only minimally effective. The Speaker of the House, Nancy Pelosi – 3rd in line to the Presidency – represents California where the biggest problem has been and continues to be their inability to balance their budget under Governor's from both parties. They are more than 20 billion away from the constitutionally mandated balanced budget because they won’t raise taxes and won’t be fiscally responsible. So they will have to cut costs with a fire axe to bridge the enormous gap between revenue and spending. Police, Fire and other essential services are going to get cut. Some say decimated. I wonder if there will soon be billions more spent helping out state and local governments who won’t help themselves.
On the plus side, I am beginning to sense that the economy is finally nearing a bottom, maybe even slightly, I repeat, slightly past the bottom headed upward. The decline was severe and sharp. The recovery will be very, very slow and strong growth isn’t likely until 2012 and maybe even later than that. Unemployment will remain high until the economy is well into recovery, so I’m thinking maybe 2011 before we see any real signs of improvement on that important front.
This recovery is frail and even the slightest problem, Iran, Iraq, etc. and the whole thing could come apart.
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