THIS IS MY 107TH BLOG ON UNDERSTANDING MONEY
TOOLS
In this blog I will continue with more understanding on the
dysfunctional economic/employment level as we discussed in Blog 106. I write this with my thoughts and ideas
to hopefully help other people, then again, is the content inconsequential or
material to the reader?
First off a little philosophy, a close friend and very
successful businessman recently reminded me that the world is never as bad nor
as good as reported. Life goes
on. Keep in mind that you become
what your thoughts are. If we want
success we better be positive and think success. This was intended to be a reminder for me!
We elected a new president November 8th. At first the markets reacted
negatively, then positively driving the already sky-high markets even
higher. With the recent
positive reaction the Federal Reserve is likely to raise interest rates in
December. This reaction has already
negatively affected the bond markets. (Bond market value and the market price
for bonds are always inversely related to one another.)
Cause and effect.
Permit me to recap a few major issues from the last blog that are
financially paramount. This is not
to be negative, however accurate and concerning:
- The
banks around the world have set us up for failure with too long of a period
with Keynesian economics, and not a free market. This amount of debt is
currently approximately $152 trillion with bond defaults happening monthly.
- Essentially
interest free money in the USA has permitted large corporations to borrow money
selling corporate bonds and then buying their stock back. What this is doing is artificially
supporting or increasing stock price while their earnings deteriorate because
of additional debt and many have less demand for product.
- We
are the second largest indebted country per capita in the world, only second to
Japan. Like most countries we are
becoming illiquid. With this illiquidity personally, corporately and publically
we will be hard pressed to maintain debt levels.
- The
need for human workers is lessening. This will only increase because of
driverless vehicles along with robotics in the refurbishment and building of
new manufacturing plants.
- Increased
demand from corporations for HB-1 foreign workers at lower wages displacing Americans.
Mr. Trump needs to face many important issues. Here are a few I believe he needs to
contend with quickly:
- Lower
corporate income tax rates from a high of 35% to 15-17%, similar to Ireland to
keep corporations here and attract new companies.
- Billions
of dollars have left the USA. We
are not going to have companies cash come back, however we can penalize and not
support companies leaving the USA.
We can stop paying for new manufacturing plants built in other
countries.
- Government
jobs are accounting for 10 million more than manufacturing jobs at the
moment. We need to help private
sector employment and encourage them to be a substitution for the US
government. As a for instance,
highways could be built and maintained by private companies running more
efficiently. These companies would charge toll fees for use, especially large
trucking lines that eat up and damage the highways. For efficient and accurate use an electronic vehicle system
would be used.
- Amend
and restructure the Dodd Frank Act.
Cut the paper work down, simplification of systems and add
efficiencies. Commercial banks
need to make sensible loans to small businesses and retailers, taking a bit of
a risk. Commercial banks are
operating incestuously with investment banks and only lending to large corporations and the very wealthy.
Private sector lending is currently at 11-15% interest, and lenders want
collateral far exceeding the norm of about 125% of loan value.
- Negotiate
fair and equitable trade and security agreements with countries like Japan,
China, and Russia. Renegotiate
NAFTA and eliminate the Pacific Trade Agreement that will only hurt our middle
class and further damage jobs here in the US.
- Attempt
to reunite the people of this country and restore nationalism.
- Hopefully,
Mr. Trump can be a somewhat honest politician making his family proud by
reforming the current corruption in politics, the industries of
commercial/investment banking, pharmaceuticals, health insurance, health care
and many more.
On to other things. The information world and technology
companies boggle my mind. Two that
have amazing values are Google and Facebook. They are driven by accumulating data. Myself coming from Denver, I knew the
people involved in this sort of endeavor in its primitive stages. In the late 1980’s a couple of guys
started a company called National Demographics and Lifestyles (NDL). They recognized information could be
sold to various businesses to target certain audiences. This is how it worked. Let’s say you went to Target and bought
a hairdryer. Attached to the
hairdryer was a card with all sorts of “likes” (gardening, golf, tennis, music,
handyman things, wine, bicycling, etc.).
If you liked certain things there was a box to check. The card could be mailed free of charge
to NDL. For the most part NDL
gathered these cards and data in Puerto Rico, as labor was less expensive, and
the information was placed on large computer files and sent back to Denver. A successful company.
Today, Facebook and Google sell data on a much larger scale
and collect data in ways most people don’t realize. As a for instance, your cell phone has a “location”. Big Brother is watching you! Most techies say to turn it off unless
you need it for a purpose. Here is
a specific situation and reason to turn it off. Until a year ago I had a second home in the suburbs of
Milwaukee. I came home late one
afternoon with the police at a neighbor’s home, one house away. The husband and wife both had routine
corporate jobs. They left each
morning at a specific time, came home normally at the same time. They had their “location” on their
phones turned “on”. Someone
probably was able to tap into their location on their phones, see they were 45
minute drives away from home, and burglarized their house using a large
truck. My next door neighbor,
between my house and this couple, was at home all day, watched the very
respectable fake movers take everything out of the house including appliances,
and thought the couple just wanted to keep their move private not telling any of the neighbors. Lesson learned.
Here is another example. About 6 months ago I was interested in cars and
pricing. In the old days a person
went to paperback Kelly Blue Book and looked up cars and what the reasonable
value was. Today, it is computers
and on-line. I went on-line, used
Google and put in Kelly Blue Book.
I put in my required information, thought nothing of it. Then, searched Ford and Kia autos. Within a few minutes I had a call from
a local Ford dealer, then another call from a Kia dealer. This is within minutes from when I
first went on-line. You can’t use
your cell phone or computer on-line without the world knowing, if they want
to. As we all know, this
information is sold to other companies.
Ad Block is a useful app to avoid ad pop ups.
Another irritant in my life was having my Facebook contact
list stolen by someone. Now, I receive phony emails from friends I had in my
contact files recommending different products.
I guess most know all about what I wrote above, but for me a
learning experience. What
matters to me most is the size of business this has created out of so
little. These companies don’t
create a given product nor employ many people. Wall Street has been in love with these companies now for
several years and they are highly overrated….exception may be Google.
Another overly priced company lies in nothing more than
distribution and I refer to Amazon.
So far they only distribute other company’s product and yet their stock
so overpriced. A replication of
this with unbelievable value is Alibaba in China. So easy to become a billionaire, and yet so hard to get a
job that pays only $10 per hour!
The presidential election is over, thank goodness. Media has made a financial
killing. Hopefully, the country
can somehow unite, find a bit of business honesty once again, report this
information accurately and move ahead.
