THIS IS MY 53RD POST ON UNDERSTANDING MONEY TOOLS
In this blog I thought I would comment on three areas that I
feel are important these days; they are social interactions, the economy and
today’s politics. (This primarily written before the November elections.)
I am going to let my subjective opinions flow. Although I
read and study a lot I don’t have the academic qualifications or titles to
stand behind my opinions.
First to social interactions. It disheartens me every time we have an incidence where a
troubled young person shoots and takes the lives of other students. This is not
just a reflection on an individual but our society as a whole. We are all
responsible individually and collectively, and need to be held accountable for
a future resolve. Granted media coverage is so much faster these days with the
internet, radio and television news brining us immediate details. This was not
available 60 years ago or even 25 years ago. We know in a flash what has
happened in any state or around the world.
I will date myself with some comments here. I think the USA
had its best years after World War II. Men came back from war, but there was
the unification in our country and a national spirit to get things moving
again. There was a need for goods,
services and manufacturing was going strong, although we had built a lot of
national debt just like with any war.
In the 1950s
the norm was that the father went to work, mother stayed at home and took care
of household duties and raising the children. The father normally returned home
from the workday around 5:30 and the family was united for dinner. Then the kids did their school homework
and played outside, they got exercise and were in better physical condition.
In the late 1960s things started changing with both men and women
in the work place, more people immigrating to this country, and a definite
divide on thoughts with the non-popular Viet Nam War. Still people worked and socialized more closely. There was
time in the day for quality of life, but life was changing.
In the mid-1990s came the individual computer with internet
capabilities. Then came cell phones. Technology was really advancing;
Microsoft, Dell, Apple….then, Google, Facebook Twitter and more.
Advance to today. There is little time for anything. The US workers
have tons of work stress upon them.
It takes both husband and wife working hoping they can pay bills. With this stress comes divorce, two
households and more stress. You don’t see children playing outside after
dinner. America’s corporate workers
have fewer vacation days than any of the top world countries. No one is really
taking good care of the children, spending adequate time. What is adequate
time? An old expression, however true, is that it takes the community to raise
good children, meaning a unification of family (grandparents and relatives
included), educators and schools, church, neighbors/mentors and more.
Go to a Starbucks or places where younger people migrate
socially. They aren’t talking intimately to one another. They are sitting at
tables on their cell phones or computers texting friends. We’ve lost human
connection with one another. Once
we lose our human/natural connection to one another including verbal and
non-verbal communication, emotions,
empathies, sympathies, laughter, etc. we have become robots, computers
ourselves. With this comes intolerance, subjectivity, lack of objectivity, and
some people go crazy. They can’t cope; shootings in the workplace, on the
highways, and shootings in the schools.
The stresses to compete and place only number one. Number two is no
good. Crazy. There can only be one number one. The rest aren’t losers, they are
all participants and just as important. Combined participation is the important
thing, you do your best.
I hope America and the world sees where we are heading with
all of this, but I am afraid nothing will turn around. The desire to change
does not exist with the masses. Many don’t care and many have given up. The connection to the human race has
been lost. Now, on to other topics, but they all tie in together.
What I talked about above regarding the 1950s was my
baseline, or standard to work from. It is important for me to realize that each
new generation has a new and different baseline to work from. An example of
change can even be related to cars.
The Barrett Jackson Car Auction will again be coming to the Phoenix
area. My father’s generation “hot car” collectables were the Model A and Model
T Fords. They could relate to them. Now, the hot cars are the muscle cars of
the 1960s and early 1970s, the Cobras, the Corvettes and the big engine Dodge’s
like the Charger. People of my generation can relate to them. Is the next hot
car for the younger generation to collect the Toyota Prius?
Second, let’s go to economics. We have discussed this topic
in many previous blogs from different angles. Economics from a very basic
standpoint is really quite fundamental that most people can grasp. GDP (Gross
Domestic Product) and growth, or lack thereof, can only come from two places,
the private sector or the public sector. Public sector being some sort of
government job.
We have macro economics, the large picture, and micro
economics, the closer range economics or the smaller picture. We have supply side economics (supply
and demand), and manipulated economics with interventions. A true market does
not exist.
Let’s go back about 25 years when the first President George
Bush wanted to vote NAFTA through as a trade agreement mainly between the US,
Canada and Mexico. The Bill passed with President Clinton working well with
both the Senate and Congress. Since then, more and more jobs have been lost
with companies seeking lower wages and bigger markets abroad. This is not new
to anyone. What it has done is make people more competitive individually and
less a team player because there is so much competition for few jobs.
The sad lesson to be learned here is money buys. Big
corporations don’t have your interests at heart as they have moved jobs
overseas, and wages in this country are low and haven’t moved upward in 18
years. Companies are all about bottom line and “upping” the price of their
stock. Behind the scenes few Americans know what is going on. A for instance,
many doctors and veterinarians receive a dollar percentage of the drugs they
prescribe. A person needs to look at special or unique situations to find good
paying work.
Don’t forget Board members answer to stockholders. They also
select top management. In “Understanding Money Tools” a great reminder is not
your actual knowledge or ability to perform, it is your perceived value by
others. Without mention of a name, I remember years ago a top airline CEO who
managed to bankrupt 4 airlines. I always wondered how this good-looking man
could get away with such a feat. He was perceived to be good. One thing he did
accomplish, good or bad, was breaking apart union strength, and with that wages
and benefits were lowered.
The sad thing about today’s economics is that we receive so
much bogus information from the government and private reports that no one
knows exactly where we stand. The government learned long ago how to measure
things differently, manipulation of facts. To move the country ahead the
government needs to ease up on regulations. The next step is to make money
available to the private sector, middle class and small companies. Many
politicians and corporations look at only cutting expenses. Yes, this is
important, but more importantly is how to increase revenues and GDP. Right now
we could use growth of 4-6% for a couple of years to make up for the past 7
years of essentially no growth. I
want to equate this to the corporate sector. Too many times companies are run
by accountants or engineers who cut marketing budgets that include advertising
and sales departments. Sales deliver revenues.
I have predicted a stock market correction for some time,
but now it doesn’t look like we will have a major one. Historically, we have
never gone over 1000 days without a strong correction of the market, but now we
are well past 1000 days and the market continues upward or level. We have
“engineered” a very artificial manipulated market. The investment community in
general has only one outlet right now and it is the stock market. The Central
Banks and our government including politicians will protect this market. If the economy staggers too much, or if
the stock market falls significantly “Quantitative Easing 4” will start and the
Federal Reserve will authorize the printing of more US dollars. This money goes
to the big banks and wealthy in the form of very low interest loans, and that
money goes back into the stock market propping it up.
The dollar has reached new highs in recent months compared
to the past few years. This has pushed the price of commodities including oil
and gold down. This will help the American public with lower gas and fuel
prices, however the high dollar will have an effect on large companies and
exports. As many international companies are leveraged 2:1 or more on debt, for
every one percent the dollar goes up, large corporate earnings should drop 2 or
more percent, thus corporate earnings will be off.
OPEC nations could continue with strong oil production until
we have a very significant over-supply and drop prices further. Most Middle
Eastern oil producing countries have a very low cost per barrel for production,
much lower than the US. The
dramatic price cuts of oil will hurt small US oil companies most as they
normally carry more debt. Russia
just signed a 30 year agreement to supply oil to China. Russia intends to be a
super power in the energy arena. A new book coming out mid-November is “Colder
War” about Russia and energy, and will be an interesting read. (The author is
Marin Katusa.)
While we are on economics, let’s talk briefly about
international markets. A current
measure of countries strength these days has been debt to GDP (Gross Domestic
Product). Some of the emerging countries have been getting a lot of free or low
interest rate money the past few years from Central Banks and the International
Monetary Fund. If the world economies continue to weaken this is going to be a
problem. In South America three
countries stand out that could have big financial problems, these being Brazil,
Argentina and Chile. Japan has had economic issues since the late 1980s. Even
China may not be able to keep up with unprecedented growth and growing debt
that has enabled its exports to be number one in the world. The Chinese may be
forced to sell off more government owned assets including real estate to
foreign or private parties to pay debt obligations. Included in the list of debt-burdened countries are India,
France and Italy. I am a suspect
person, so I will make this statement that perhaps the reason Central Banks
have lent money so liberally to poor emerging countries is that if these
countries cannot pay back debt big business and the wealthy can move in, take
over assets and gain control.
A point I am making is that we are building tremendous
stress personally, corporately and nationally. The world “kicks the can” of
debt down the road, but at some point it cannot be maintained; a worldwide
bubble will/should occur. Few care about people collectively or individually.
I will mention again that one of the sad things happening to
the middle class is jobs and incomes not rising. We haven’t had an increase in
middle class income since about 1996, yet there has been inflation. Even though
inflation has remained low, if you compound it over this period of time it
becomes significant, over 40%. (Inflation/deflation manipulation. Is it asset
based or price based for a number? Calculations over what period of time? Does
it include oil and gas or agricultural product?)
I work for new home-builders and they are now feeling a
financial bind and lowering expectations. Nationally this is happening although
some markets remain strong. (35% of new home sales are created by the big
public home-builders almost doubling in the last year.) The small home-builder
can’t get money. They have gone out of business or sold out to the big
builders.) Here are recent facts: home ownership will slip to about 50% down
from the highs of 68%, currently about 59%. The younger generation learned that
home ownership may not be a good investment because of the devaluations from
2007 on. As of October, first time home buyers hit a low, the fewest first time
buyers since 1987. 63% of baby
boomers now intend to keep their homes versus sell and retire to warmer
climates. People can’t sell and pull equity out of their homes they once
thought was available. Instead,
baby boomers will renovate their homes to a significant degree,
The auto industry has done well the past few years but
manufacturers are building financing into the sales of autos. Many people can’t
qualify for bank loans to buy cars, but auto manufacturers will qualify these
people for loans. This could result in a big problem down the road if people
default on the loans because they lost their employment.
The US dollar itself is interesting. The Feds stopped
Quantitative Easing (end of October 2014) and will wait to see the outcome on
the economy. If necessary they will again start printing money. Here comes the
interesting aspect in all of this. We have printed trillions of dollars of new
money, yet the dollar has increased in relation to world currencies and we have
very low inflation. Normally, if you dilute any currency the value should go
down. Also, inflation was
predicted to sky-rocket and it has not.
In prior blogs we have discussed these reasons, but I will
briefly hit upon them. We are in a state of total governmental manipulation,
beyond Keynesian Economics. You can print all the money in the world, but if it
only reaches a few sources, these being the wealthy who have the ability to
borrow, and large corporations, you “ain’t” going to have inflation. Measurements that are necessary here
are the quantity of new money printed, availability to reach this money, “V” or
velocity of the money to circulate through a given economy and Federal
regulations. Inflation is not a
threat for now, but should be some time in the long term.
Regarding big business, what have they done with all these
new dollars made available. For one, they have been buying back their own
stock, assessing that it is relatively inexpensive compared to future
projections. Corporations are borrowing money for next to nothing and issuing
bonds at low rates. Then, with the money they buy their own stock and make the
stock go higher. This is one reason you have had an incredibly strong stock
market and many are expecting it to go higher and ignore fundamentals. Smells
to me of a Ponzi scheme. (If you don’t know who Ponzi was, Google him.)
Elections and early voting are over. You saw political signs
everywhere and advertisements on every TV channel. All the negative ads against
the opponent rather than what someone could actually accomplish. Few details,
positive or negative, are made public. Sad, but true, it has been found that
negative ads are more influencing on the vote than positive ads. It’s foremost
all about getting elected, there is no such thing as a righteous, honest
approach to politics.
Locally and nationally what is wrong with public officials;
they are voted in to serve the public.
Nothing has been accomplished in the past 6-7 years except to try to
bail us out of a big financial jam. Politicians need to work together and
attempt to guide the country for the betterment of all people, not just
specializing on self interest groups. Term limits are constantly talked about,
but nothing is done as no politician will vote for a limited term and put
himself/herself out of business. This would help keep politics cleaner and get
away from some of the long established conflicts of interest.
Another example of our growing lack of working together and
intolerance comes along personal attitudes and party lines.
Tea Party members and right wing Republicans won’t debate
topics, even over coffee and are very dogmatic. They are fixed on beliefs and
non-flexible. As you get into more liberal thinking people they are willing to
debate and seem to be less argumentative.
I don’t know if one is better than the other. I do know it
takes working together to get things done whether in the corporate world or in
politics. Perhaps a good oligarch, an autocrat would be good for this country.
We’d have more change without a lot of debate. Could we actually find an honest
one?
Are elections in this country more honest and above board
than other countries? My answer is
no, we just approach elections and manipulate differently. Granted, we do not
have armed guards at voting offices.
The people running for offices here spend more money than any other
country on earth. Money buys votes. These are the special interest groups. Special interest groups and lobbyists
spend millions to push their candidates into office for special considerations.
Once an individual is elected they are going to watch out for themselves, not
you and me.
Bottom line, we have become a very individualized society,
is that an oxymoron? Drawing the point of this blog together, we don’t
socialize as we once did, we work individually, and our politics end up with
our elected official serving themselves or small private sectors rather than
for the long term betterment of America.
Periodically, it is good to remember that we are all made up
of atoms and molecules, all the same, unique to ourselves, however no better or
less than any other person on the planet.
Believe in yourself, don’t rely heavily on team effort, have
faith, visualize your positive future and go for it!
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