THIS IS MY 97TH BLOG ON UNDERSTANDING MONEY TOOLS
My mind is telling me it is time to write another blog on a
couple diverse subjects.
First, I want to mention a computer “experience” I recently
had in hopes that it might prevent you from going through the same and wasting
money like I did. I guess that falls under “Understanding Money”. I am not a techie! My hard copy files are quite organized,
my files in my computer lack organization because of my non-techie
knowledge. A couple of weeks ago
my Dropbox files and photos were a mess, I decided to do something about it.
Several files and photos were duplicated all over the place. As I attempted to delete duplicate
copies I couldn’t and a box popped up at the top in red, stating that the
procedure could not occur and something was wrong. I went to Google, typed in
Dropbox to get a phone number and several Dropbox items appeared. I took one of the first 800 or 877
numbers and called. Of course, I
was connected to a man in India. I trusted the person thinking he was from
Dropbox; then he wanted control of my computer to see if there was a
virus. Yes, he indicated a Cerbrus
virus that I had from an email from California. Did I know someone there? Of course I do.
The next thing I asked was could he correct the problem, and
the answer was an immediate yes, and the cost would be $150. Then, as he didn’t mention the
“company” could correct the problem I became suspicious and declined the offer.
I took the computer to my normal computer repair place, they checked it out and
there were no viruses, and the number I had dialed was most likely bogus. Well, another $100 spent but some
reassurance and lessons taught. One, when you go to Google and put in
Microsoft, Dropbox, Apple or a company you want it may not be the intended
company you want, but a scammer.
The safest is not request a phone number, go to the company’s website
and there should be something in the site for “contact”. Apparently, even if you get the correct
phone number there are now hackers out in the techie universe that can
re-direct the connection and scam all they want.
With that out of the way, let’s get onto some of the
economic news that floats by me that I believe to be more accurate than what
most people receive off the evening news and media reports.
Let’s start out with something optimistic from me as many
friends say I always look for the worst.
I really don’t, but I do like accuracy on numbers. Well, the stock markets have done well,
and I thought they would continue down several months ago as I see the general
economy slipping away. The answers for this resiliency come from a few
things. One, a continued effect
that $4.5 trillion quantitative easing money has had which greatly went to the
markets from the wealthy and institutions. Point two, trillions of dollars under institutionally and
professionally managed money.
These money managers have parameters on how much of their portfolios can
go to cash positions. Point three,
low interest rates near zero have forced elderly out of bank CD’s and bonds
into higher risk securities. Point four, with the massive world turmoil in the
Middle East and now grave economic problems in Venezuela, Brazil, and Argentina
it has forced the wealthy to seek the safer haven of the USA and our markets. Point five, there are tons of small
“start-up” companies emerging with funding like “crowd funding” as banks don’t
lend.
Now, that I have covered those positive reasons for the
market values and general economy let’s again stress why it is abnormal and
only an amount of time will produce a changed picture.
- Unemployment
is already rising, and more companies are planning future layoffs. Production and demand are both
down-trending.
- People
have less money to buy things. Our
medium income, which is middle-class has not risen at all since 1999 (about
$55,000/year for a family).
- Government
inflation numbers have been proven wrong from 1995 to 2015, being off almost 1%
per year. 1% doesn’t seem like a lot (30% higher than reported numbers),
however compounded over a 20 year term it equates to about 80% change. This would mean that our middle-class
family making $55,000 in 1999 should be making about $85,000 today just to stay
on par. Americans understand this
when they look only at essentials of food, housing, gas and medical.
- There
has been a significant change in structure between the upper, middle and lower
income brackets just since 2008.
This comes from the PEW Research Center. The middle-income bracket has
slid from 53% of our population to 44% since 2008. Upper-income quartile has also slid from 21% to 15%, while
the top 1%-2% has come out quite nicely.
The remarkable difference (all these adding up to 100%) is the
lower-income group that has increased from 25% to 40%.
- Manufacturing
with our current laws and structure continues to migrate outside this country.
- Our
high corporate tax structure forces companies to domicile elsewhere in the
world.
- Even
if we can encourage manufacturing to return to the USA, it will be under a
robotic structure, rather than employee and union based.
- The
flood of immigrants coming into this country like in Europe need to be taken
care of e.g. food, housing, education, and medical. This week (May 9, 2016) it
was reported that the government is budgeting $17,500 for each immigrant. Right now we already have the second
highest debt per capita only to Japan of G-20 countries. I am not sure how we
can pay for this!
- There
is an inverse relationship between debt and growth, so the next 10 years do not
look promising as there is no rational way to get out of our significant debt.
Also, there is a relationship between zero interest rates, or even negative
interest rates, and growth. People
don’t have money to spend on goods and services. Negative interest rates really do not encourage new business
growth, but it has proven that large corporations will use cheap money to
buyout existing companies, thus shrinking the number of companies, with the
possibility of less “free market” pricing, and consolidation of employees.
- Corporate
bankruptcies are up 50% over the last fiscal year.
- Even
successful high tech companies are showing that markets can’t keep growing at
an exponential pace, for example Apple.
- PEG
down. This means the Price to Earnings ratio to future Growth is down.
- The
non-farm productivity in the USA from 2008 to 2015 is down 60% from the period
2000-2007.
- The
US stock markets have never been so overpriced except for the years 1929 and
1999.
Enough of all of that. It would be nice to put the world
back into a more normal situation, if there ever was one. I hope our next president realizes that
hegemony and imperialism financially breaks countries and the spirit of national unity. Our meddling in dictatorships like Iraq, Syria, Libya should
never have occurred. We wouldn’t have the immigration problems here and in
Europe if we left them be. Some
countries are just better left alone. We have no business intervening and
trying to control these countries with our people only to control their assets.
Now that I have depressed you I can move on!
