THIS IS MY 32ND POST ON UNDERSTANDING MONEY TOOLS
It has been ages since I posted my last blog. I spent most of the month of March
looking at businesses and people in my home state of Arizona and thought I
would reflect on my observations….people, jobs, future of the economy. Meandering mentally through the jungle,
with no real point.
Bottom line, sad.
The middle class has disappeared.
Looking at rural areas of Arizona through my eyes, typically I viewed
older people in most areas away from the Phoenix Valley. The reason I say “sad” is that I saw
over-weight humans, whether young, middle aged or older, not caring about
appearances in any respect, which carries forward to caring at all. They were
poorly dressed for the most part, un-groomed, and many not even clean. People
are struggling to survive. How do you expect to work when this is the average?
Would a company hire you if you were looking for a job? How about your own
pride as far as a human being goes?
So many people have tattoos these days. I don’t have
anything against them, however many employers will not hire a person unless
they cover their tattoos with clothing.
If tattoos are on the necks or hands, how do you cover them up?
Talking to many people I found that if they can find work it
is in the $9-12/hour range and a person cannot live on that. America’s business needs to learn that
the only way to survive as a country is to pay respectable wages. If you don’t
pay higher wages people won’t be able to buy goods and services, therefore hurting
all the businesses out there. Short-term thinking, not long -term. It is said
that Henry Ford was asked why he paid his workers higher wages than anyone
else, and his remark was “so they can buy my cars”. This holds true of all businesses. As we know, over the past
13-14 years we have diminished the middle class significantly and increased the
assets of the top 1% wealthiest.
In the long run, the wealthy will have a very poor America to live in.
We have a had a job-less economic recovery producing outside this country,
keeping our corporate revenues in trusts or other vehicles outside the country
to avoid corporate taxation, yet corporately we can book the profits here and
appease Wall Street and the stock exchanges.
Yes, we have taken our production of goods to other
countries like Mexico, India and China.
It has propelled the stock markets to all time highs for now, but what
is happening in the USA. Many people are working out of their homes. This is one reason people don’t care
about appearances, they don’t need to look good! They don’t need to rise every morning at a particular time,
eat breakfast, exercise, take a shower, put on clean clothes and interact with
other employees face to face.
Unfortunately, today’s world doesn’t need to communicate face to face,
but computer or phone to computer or phone. We are losing social interaction, thus our emotions aren’t
the same as they were only a decade ago.
Unemployment really hasn’t changed much in the past few
years, being much higher than the stated 8.6%. College graduates can’t find work, people have lost interest
in applying for jobs, job applications are done on line, and for the most part
the application falls into some sort of black hole where the applicant never
gets a courteous “thank you for your application”. There are thousands of applications for most open positions.
Where does this lead? What does this tell us? First of all, we have a world
population that continues to grow, and there just aren’t enough jobs. The world had a population, give or
take a couple of people, of about 2.5 billion in 1950. Today, the world is reaching toward 7
billion. The World Health
Organization does some great work, but we also are creating an older
population, and much depends on countries for financial support, health support
and food to live. Many years ago
one of my favorite college classes was anthropology and the study of the Eskimo
people. The old Eskimos produced
within their society or died.
Older, non-economic functioning Eskimos took it upon themselves as part
of their culture to wander out into the cold, and would never come back, as
they did not want to be a burden on their families as well as on their
community.
Many of the biggest cities in the world have non-productive
communities. Most of these people do not interact well, are not educated or
trained and therefore cannot find work, nor do they want to. It has become part of their culture
within a culture. Therefore, the
city, county, state and country needs to support them. As you know, this eventually breaks the
system and we fail.
How do I see us going now? Well, for one, the economic numbers for the world and USA
are not getting better, but getting worse. Europe is slowing economically and has problems, the Middle
East is a mess and is spreading.
Who wants to travel to the Middle East as a tourist anymore, so they
have removed the tourist dollars, as in Egypt, Turkey and other countries. The
USA has relied on the “Q’s” (Quantitative Easings) the past few years, meaning
the Federal Reserve is feeding money into the system. The biggest mistake of
all is that with this huge supply of money, very little has reached the middle
class that supports the economy.
This totally escapes me as far as fundamentals for economic
recovery. The big banks received
the money, the big corporations got the money, and the wealthiest can borrow
money to leverage their investment portfolios. You and I know that banks, money and big business control
everything, but what I see is so short sighted. Today, we are looking at stopping Quantitative Easing, and
the Federal Reserve is going to cut back on purchasing US debt, meaning US
bonds. In the past couple of
weeks, interest rates have been going up on bonds and mortgages. As of June, 27th, the
interest rate on a 30 year mortgage hit 4.46%, still low in historical terms,
however the highest in a couple of years.
The GDP estimate has been lowered from about 2.4% growth to 1.8% growth. If this continues we will be in another
recession in less that 2 years and the housing recovery will come to an end.
Even the price of gold and commodities have dropped. Gold is down about 30% from highs. Part of this is due to the dollar
gaining strength. Too strong of a dollar hurts our exports to other countries.
Currently, talk is of a weakened Chinese economy, or perhaps
even a bubble there. The Chinese
float their currency to stay competitive in pricing goods, have a growing
middle class that will want goods, a country that has no debt and is sitting with about $4 trillion
in assets including US bonds, gold and cash. Not that bad.
