Is Inflation A Good Or A Bad Thing?

Economics, economic theories, and political realities often cross paths, and make many people wonder what's going on. We have offered heard about the dangers of inflation, the dangers of recession, and other similar terminology, yet most of us will hear the media, and especially the business media, one day warn of the risk of inflation, and another day cite the lower than anticipated inflation rate as something to be concerned about. There are even different sets of indexes, one that includes core items (whatever that really means) and another that measures the inflation rate including energy costs.

The only thing that most American consumers concern themselves about from day to day, is how these costs impact them. Is their cost of living going up, staying the same, or going down. I have not met anyone recently that has told me that he feels that things are costing him less. At the supermarket, manufacturers continuing their clever "game" of effectively raising prices by keeping prices the same but reducing the package size. Shouldn't pricing be considered for these cost of living indexes the way the unit pricing is required by a lot of states, that is, by showing the cost per ounce, or per serving? Most of us have observed increased costs in milk, most meats, fowl, fish, cans of soda, bottles of soda, etc. Yet, we are being told that there is no or little inflation.

Gas prices are constantly fluctuating, yet the pattern is that prices go up. About the only thing that has not kept pace with these increases is average wages. Many workers are being paid for fewer hours, while others have been laid off. The unemployment rate statistically is about 9.5%, but realistically is more than 15%. Many Americans are either under-employed or unemployed, and this has been going on for so long, that, for many, unemployment benefits are expiring. If these people's benefits run out, the statistics will show a lower unemployment rate, because the official statistics does not count people not collecting benefits. It also does not count individuals who owned small businesses, that had to go out of business, because owners of these types of businesses are generally not eligible for unemployment,

The bottom line is that statistics are misleading. There is an old saying that the difference between a recession and a depression is, that it's a recession when it happens to someone else, and a depression when it happens to you. It is time for the American public to demand that our government officials stop partisan politics, and realistically address the economy and the joblessness issues, making those the overwhelming top priorities.

Following Up On The Job Search

Many people do not get their desired results from interviews, discussions or preliminary phone calls, because of either their failure to, or inability to properly follow up. Young adults, especially, seem to believe that simply sending someone a resume, an e-mail, or having a preliminary discussion or interview, is sufficient, in and of itself. They often claim that if the other person is interested, they will get back to me; or that they do now want to bother and annoy the other party.

The adage, "The greasy wheel gets the oil," is certainly appropriate, because, in today's busy and competitive world, most individuals come into contact with so many people, that unless one really "sticks out" with exceptional abilities, or traits, it is usually necessary to follow through.

When I train people in hoe to interview, I emphasize the importance of following up the interview. This follow up can be by letter ("snail mail"), e-mail, or by telephone. I generally suggest that in most circumstances, an interviewee immediately send an e-mail to the individual that interviewed him. One suggested e-mail format consists of:

"Dear ______________,
It was my pleasure to have the opportunity to meet with you today, and discuss the opportunity offered at ___________. I feel that my expertise, training, abilities, and life experiences makes me an ideal candidate for the position. I hope that I was able to fill in the details of the resume I gave you, and to properly articulate why your company and I would be the 'perfect fit.' I look forward to having further discussions with you, or whomever you feel appropriate, and to have the opportunity to commence the beginning of a mutually beneficial relationship.
Thank you for your time today. I look forward to speaking to you soon.
Yours truly,

_________________"

I then suggest that someone immediately hand write a similar note, and immediately mail it to the same person. By doing this, the candidate immediately separates himself from the "group," and increases the potential for further consideration.

During the interview, the candidate should also ask the interviewer what the timetable that the company is using for considering candidates. Based on that time table, someone should decide the best time to call back and inquire about his status. While this procedure is an effective one in the job interview situation, it is equally important in the follow up to any meeting, discussion, important phone conversation, etc. The follow up should always be brief, to the point, and friendly, as well as being focused toward the achievement of the goal or aim of the original meeting. Proper follow up is an essential and useful part of any "get it done" procedure.

WHERE's THE BEEF?

Several years ago, Wendy's ran a very successful and memorable ad campaign with an old woman screaming, "Where's the Beef?" This ad's theme, for those who may have forgotten it or never seen it was that Wendy's competitor's hamburgers were very, very small, while Wendy's burgers were substantial. This same slogan can be used when talking about and/ or evaluating the main two programs that the President and the Congress have been spending so much time on - - health care, and joblessness.
Yesterday, President Obama gave a speech (it is beginning to seem like the "Speech of the Day" club) about how he would like to have Congress address the extremely high unemployment situation (What took so long?). Some of the President's suggestions included help for small businesses, transportation, energy- efficient homes, etc. Mr. Obama stated that the U.S. has to "spend our way out of this recession." Since more than 7 million Americans have lost their jobs since the recession began about two years ago, and the unemployment rate is 10% (that's the statistic although the reality is far higher), Mr. Obama called the rate "staggering" and made several proposals (cost estimates of about $150 billion +) he said would stimulate hiring and put Americans back to work again. Those proposals included: bridge and highway construction (MY NOTE- short-term and long-term, infrastructure programs usually add value and provide something eventually needed); for small business tax cuts (including elimination of capital gains if expenditure was accompanied by adding jobs); and credits for making homes more energy efficient. In addition, the President recommended more protections re health insurance for laid off workers, and suggested additional spending for seniors and veterans, and additional aid to states and municipalities so they won't have to lay off workers. This plan, of course, would have to go through and be approved by a splintered Congress, which is extremely time consuming and the result is unsure. All of this is being proposed while the President continues to talk about the need to address the growing Federal deficit. Many Republican leaders have already scoffed at this proposal, and if any program finally passes, I fear it may be another case of "too little, too late," and contain as much "pork" as effective program. It is always easy to criticize and point out the weaknesses in a plan, but isn't it about time for politicians to actually work FOR their constituency, instead of constantly playing politics (SEE YESTERDAY'S BLOG ABOUT POLITICIANS VS STATESMEN)?
In the meantime, the health plan debate goes on. Last night, an announcement was made that a compromise was reached where the "public option" would be replaced by a different alternative. There was another announcement that a vote was taken regarding language about abortion, and the more severe exclusionary language would not be included. Since the House bill that was passed last month will differ substantially from this Senate bill, a joint compromise bill will have to be arrived at, after which both the House and the Senate will have to approve. Further complicating the matter is certain language in each version appears to be distasteful to a large number of the supporters of the other version. The truly sad thing is, that after all this time and expense, if and when a final bill is approved, there is no assurance that it will be better, less expensive, or provide any better quality medical care. In fact, many independent (?) studies have indicated that the likelihood is that insurance will be more expensive for many, and provide lesser coverage for those fortunate enough to presently enjoy good medical insurance coverage. The costs, medical liability issues, unnecessary testing, expense of drugs, malpractice grants, etc. do NOT appear to have "made the cut" in either plan, but, of course, we do not really know what the final plan might look for. However, I have a hunch, that when all is said and done, that little voice in my head will hear the old lady chiming in, "Where's the Beef?"

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Shouldn't Politicians Eventually Become Statesman?

SHOULDN'T POLITICIANS EVENTUALLY BECOME STATESMAN?

Since our American political system has become one where politicians seem to run for office forever and spend obscene amounts of money on their campaigns, we shouldn't be surprised that once elected, our elected officials are so often dysfunctional. When a bunch of guys sitting around in an office or in a bar often seem to have a clearer idea of what needs to be done than our elected officials, one should realize that we have approached a political reality that is the equivalent of the "inmates running the asylum." When more time is spent discussing Tiger Woods and his alleged trysts than how to put our jobless back to work, there is something very wrong with our society!
Our elected officials put together patchwork proposals, filled with "pork," that are unnecessarily expensive, and do not adequately address the needs of the American public. Our elected officials tell us that they recognize the problem, and that is of the highest priority. Then they tell another group that their problem is the highest priority. And then, they don't adequately address either!
Let's look at the United States' pressing needs at the moment. Most observers would agree that the economy and the joblessness rates are the most disturbing! Yet, let's look at how our government has addressed these challenges. The much- maligned TARP (meaning TROUBLED ASSET RECOVERY PLAN) bailed out our major banks, because of the theory that these institutions were "too big to fail," and that the ramifications of bank failures would cause economic catastrophe. The government is now elated that the plan will cost $200 billion less than believed, because of early repayment by several banks. Yet, two banks who have not yet repaid the monies, Citi (owing $20 billion) and Wells Fargo (owing $25 billion) now are pleading with the government to be allowed to repay these amounts, and the government is telling them that they cannot repay it unless they raise substantial additional funds. Citi and Wells Fargo state that not repaying the TARP funds puts them at a competitive disadvantage against those that did, because of the additional restrictions associated with TARP. Remember that many non-banks reorganized to make themselves banks in order to be able to receive the TARP funds (predominantly investment houses, etc). Now, the government is discussing how to account for this $200 billion "windfall," reportedly discussing paying down the enormous national deficit/ debt, and using those monies for other purposes, such as creating jobs. However, the language of the TARP legislation specifically speaks of lending, so most viable job programs could not be funded with those funds. Adding to the farce and follies is the fact that TARP was supposedly created so that banks would free-up lending, which it has not done. Most banks have used those funds simply to enhance their own financial position!
Several months ago, our representatives were SO pleased with themselves for creating what they were referring to as a "Credit Cardholders Bill of Rights." In their infinite wisdom, they announced what the legislation would require, but that it would not take place for nine months (NINE MONTHS!). So, of course, most credit card companies (translation= banks) have raised interest rates, lowered credit lines, changed to variable rates, etc. And, of course, because of the crazy manner in which our credit scores (such as FICO, etc.) are calculated, having reduced credit lines changes the ratio of debt to available credit, thus lowering credit scores. The lending institutions (translation= banks) then use that new score as one of their justifications for declining lending. Yet, our legislators have bailed out the "too big to fail" on the backs of the individual citizens!
The President continues to showcase high profile job summits, and give speeches about how essential job creation is. Then, on the other hand (or should I say "face"), he says that the government needs private industry to help take the lead, because the government can't do it alone! Isn't this a bit of revisionist history, when we consider that same argument could have been used regarding huge government infusions into big businesses, war efforts, etc.
And, what about our war efforts. The candidate Obama, at least partially, ran as the "peace" candidate, against the Iraq surge, and stating he would not have voted to go in when the first vote was taken (it's great when you're a candidate and you were not in the Senate and therefore did not vote at that time, under those conditions). Yet, now, President Obama wants to commit additional billions, as well as 30,000 - 35,000 US troops to an effort that could be referred to as a "surge" in Afghanistan, while at the same time promising to limit the amount of time troops will remain, giving the public the indication that substantial troop reductions would begin in July 2011 (18 months). Then on the following Sunday morning programs, Secretary of Defense Gates and Secretary of State Clinton strongly indicated that the 18 month period would be when the first of the troops would be withdrawn, and US troops could be there substantially longer. Defenders of increased military action and "surges" point to the success in Iraq, yet in the last few days, there have been substantial deaths due to bombings, etc. Does anyone really believe that when we eventually leave Iraq, that it will be a stable, sustainable nation? What is really our goal? Does anyone really have a plan? What do we expect to achieve?
The candidate Obama ran for President with the campaign slogan, "CHANGE." During President Obama's first ten and a half months in office, he is using economic advisors who were at least partially responsible for this mess in the first place (where's the change?), the same Secretary of Defense, his campaign opponent as Secretary of State, etc. To this observer, he seems to still be campaigning. Granted there is a need for communicating, but there is an even greater needed for real action that works!
We cannot just throw money at a problem, nor simply blame others for how we got there. We need some common sense and straight talk. It took the US a while to get into this mess, and it won't be overnight getting out of it. But the time for rhetoric is over! Let's create jobs now! Putting people back to work will be the fastest and most permanent cure for our economy. Provide incentive for employers to rehire. Provide even greater incentives for employers in "future growth" industries (such as alternative energy, gas exploration, etc., technology, and manufacturing)! Create a situation where the US becomes not solely a consumer-driven economy, but that we once again manufacture items here! Give companies an incentive to manufacture here instead of abroad! That would be monies well spent that would come back to the government in the form of taxes, less unemployment benefits payouts, etc.
Create something, and stop making excuses.
When Mr. Obama ran for office with the campaign promise of change, little did most of us realize that what he meant was that change would be the only thing left in our pockets. Let's get America working again, reducing our deficits so that our children and their children don't have to keep paying for our excesses, and regain the United States' dominance in the world economy.
How strange that while our economy has suffered, the an average price of a gallon of gas has increased by 50% since this time last year. And that is with reduced consumption! It's time for the American public to wake up, and demand that our politicians, once they are elected, act as statesman, instead of just continuing to be ruled by politics. Does it really make any sense that Democrats of Republicans keep voting as a bloc, regardless of the issue? The late Senator Charles Goodell summed up the situation, "Politicians are like antelopes. When things get tough, they pain their behinds white and run with the crowd."
The US public must demand leadership NOW!

HOW ECONOMIC DATA & THE HYPE CONFUSES!

HOW ECONOMIC DATA & THE HYPE CONFUSE

I am sure that many of you have heard that gold was a great investment, and that investors like gold as a hedge against bad economic news. Since gold is now experiencing its best year since its last peak in January 1980, it is a good time to review the reality. On December 3rd, gold reached a record high, exceeding $1,225 an ounce. A gold investor who purchased gold during the last peak at $850 an ounce, has seen a return of approximately 44 percent. To put that into perspective, if one reinvested dividends, the Standard & Poor 500 stock index multiplied approximately 22 times. Even Treasury vehicles rose more than ten times, and interest-bearing bank accounts (not including Certificate of Deposits) almost doubled! When one factors in inflation, gold investors are still VERY far away from breaking even on their investment! Am analysis of gold investing leads one ro realize that gold is NOT a good long-term investor, and that the security of owning something tangible for "peace of mind" can be very costly.
Similarly, the originally cost of the TARP bail-out has been recalculated because many banks have repaid the loans much earlier than forecast. The cost of the TARP bailout has therefore been recalculated downward by approximately $200 billion (over 10years). The Government has actually made money on many of the TARP loans repaid. Does anyone think they know why these companies are repaying early? Could it have anything to do with not wanting to have the government have the "leverage" over them?
Several months, the politicians and the media were celebrating what they referred to as landmark legislation regulating the credit card companies. However, the law that was passed would not take place for nine months after enacted. So what have the banks done? They've configure themselves to make significant moves ahead of the deadline, so they are in the most advantageous position possible. Many of the banks have raised their interest rates; many others have arbitrarily and across the board lowered credit limits. And to make the system even more ludicrous, the way credit scores are calculated, the banks lowering of credit limits causes many people's credit scores (FICO, etc.) to go down!
So, what did the banks do with the monies they received to bail them out? Wasn't the public led to believe that it was necessary to bail out the banks, so that credit would be available for purchases, mortgages, etc? Well, what most of the banks did was use the funds to make their own bottom line look better, while tightening credit more and more!
President Obama called a huge jobs summit, which appeared to accomplish less than a typical jobs fair! The President then made a speech that addressing jobs was a priority (then where does it go on the priority list with his other stated priorities?), but that it needed to be a combined government- private sector approach, because the government has to be mindful of the growing US deficit and its inherent problems, and that the government isn 't in a position to spend all the needed funds. Yet, if this is a priority, it must be treated as such! Since Mr. Obama took office, the U.S. deficit has grown from a ridiculously high $400 Billion, which he inherited, to over $1.4 Trillion today. We have been told that the Afghanistan surge will cost $30 billion (but that number is only the additional funds we are told will be spend over the next 18 months). Will anyone be surprised to see that number grow exponentially! On the Sunday morning shows, Secretary of Defense Gates and Secretary of State Clinton kept saying that basically there would be a slight first pull-out of some troops, beginning in July 2011! Haven't we heard before that there was "light at the end of the tunnel," as LBJ used to say?
Beware the jobless/ unemployment figures! I am always wary when the government produces "better than expected" figures, right before the President's big speech tomorrow night on jobs. Factoring in those that are counted, those that are working part-time instead of full-time, those that have given up looking, and those who have, out of desperation taken significantly lower paying positions, the joblessness and employment/ unemployment issues should the U.S.' number 1 priority! The U.S. must seriously address this issue for our economy to fully recover.
Are things a little better? Yes, I don't think we are getting worse, and I do believe there will be improvement. It is rumored that the Federal Reserve is already discussing when (not if) they will begin to raise interest rates. So, the one thing that any consumer who is in a position to - - who can afford to - - should do, is seriously consider purchasing real estate now! Mortgage rates are historically low, home prices are low, and qualified individuals with reasonable credit who can put 20% down, can get a mortgage on a properly priced home! Those considering it, but waiting are most likely going to be very disappointed when sometime next year, mortgage rates go up, housing prices begin to rise, and the Housing Credit expires! This may be the best real estate buying opportunity in some time!
Nobody can foresee the future, and nobody can pinpoint the precise low point of a market. Those than panicked and sold off stocks at their low, and did not step in when the Dow was about 8400 because they were waiting for the low, missed an opportunity to take some advantage. The ideal stock-buying strategy over time has always been dollar-cost averaging. That strategy has worked in up markets, down markets, and do-nothing stock markets. It takes dicipline, but averages out purchase prices so that the market swings are not catastrophes!
Patients, being wary of the hype, and understanding that all markets are cyclical is the best long-term strategy. Nobody ever makes a profit unless they sell, so one should be much more interested in a long-term, successful approach.

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ECONOMIC NEWS,JOBS&HEALTH-What it all means?

Over the weekend, and this morning, there was a lot of news and reports bantered about regarding the US and World economies, joblessness predictions, and the proposed Health Plan. As some anticipated, house sales in October were up 10.1% over last year. Any increase is always good news, but since last year's number were so dismal, it's not as good news as it might seem. But, at least it's somewhat encouraging! Several sources have predicted that the worst of the joblessness numbers will be over by the end of the first quarter of 2010, but not before the rate rises somewhat to approximately 10.5%. These same sources are predicting a slight decrease in joblessness throughout the balance of 2010, and the consensus prediction for the year-end 2010 is approximately 9.6%. It is probably an indication of where we are at now that many are cheering a 9.6% unemployment rate as good news! The consensus among economists is that we are nearing the end of the recession, and the recession will end by the second or third quarter of 2010, and would then gradually improve based on other economic news and conditions.
The Senate, voting along straight party lines, voted 60-39 (Who was that 1 Republican who didn't vote?) to permit the health plan discussion to come to the Senate floor. However, at least 4 Democrats (who have been labeled by the media as Moderates) have stated that they voted to let the bill be discussed, but are opposed to the "Public Option." The media is also reporting that the liberal bloc of the Democratic Party has said that if the "Public Option" is removed, they believe the plan will be too watered- down, and they would then have to oppose the bill.
It is important to understand that because of certain peculiarities in the Senate's rules, that it takes 60 votes to pass this type of legislation, not just a majority. Since, to date, the Republicans have opposed the bill unanimously, it would take ALL Democrats and the 2 Independents voting Yea to advance the legislation. Further complicating the issue, is the politics involved since one-third of the Senate, and all of the House, is up for election in November 2010. That is the reason that the pro-plan advocates have been trying to get this accomplished as soon as possible, because politics will become an even greater factor the closer to the mid-term elections we get!
Proponents of this health legislation state that it is necessary to cover as many Americans as possible, control medical costs, and make the health care industry more responsible and fair. Opponents complain that the legislation proposed is excessively expensive, legislates medical care policy, and does not rein in the true causes of escalating medical costs. Opponents state that is essential to cap non-medical aspects of medical liability cases, permit insurance companies to be sold nationally to create "economies of scale," bring down the costs of drugs, reduce/ eliminate waste including excessive tests done(because doctors feel they need to protect themselves in a litiganous society).
The reality is that there are truths and fallacies on both sides of the political aisle, and unless our politicians magically begin to act as statesman, we will not get a good plan that works and accomplishes many needed areas. It is essential to remember that the costs and numbers that are put forward and publicized must be taken with a "grain of salt," because historically costs are higher and revenues are lower than the advance projections we are given.
In a previous blog, I discussed what I felt were the most important factors that needed to be discussed. Nobody has all the answers nor all the solutions, but I hope that whatever decision is made is responsible, effective and considers all the ramifications of their decisions. It is hard to believe that a 2,000 page piece of legislation has not been loaded with "pork" to get it passed! The challenge, as usual, is that most politicians consider their primary "job" running for office and getting elected, rather than being a statesman for the public good.

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Why is economic news is so confusing to understand?

No wonder most people don't understand the economy. Often what might seem good on one hand, has bad side effects on the other. For example, the stock market rises- one would think that was good! But that was mostly due to the rising price of oil- bad news. But the price of oil is rising because the "experts" believe the economy is improving and thus more oil will be needed in production- good news! But that rise in oil prices causes the cost of living to increase- bad news. But that helps the Gross Domestic Product (GDP)- good news! But that then causes inflation- bad news. But that inflation means the economy is improving- good news! But then the Fed becomes concerned about inflation and raises interest rates- bad news! Which causes the value of the dollar to improve- good news! But that hurts exports because now American products cost more overseas- bad news! But that means foreign products cost less in the US- good news! But that hurts American companies competetiveness- bad news!
And so on, etc. So you see why economic news often seems co confusing. Because it is- what is good for one consumer, might be bad for another- what is good for one company, bad for another- what might be good for one sector of economy- bad for others.
The stock market is often the most confusing. On days when there is "bad news," the market often goes up, while on some "good news" days, the market sometimes goes down! While the Dow, or the S&P, etc., might go up, it does NOT mean that the stock(s) you own, will follow suit.
Too often, for the sake of a sound-byte, the media tries to over-simplify economic news. Yet the economy is by definition quite complex.
The one issue there should be some agreement on is that high unemployment is not good. Yet even in that case, the "experts" can't agree upon, nor act upon a viable solution.
The best way to think about the economy is this-- the difference between a recession and a depression is that it's a recession when it happens to someone else-- it's a depression when it happens to you!
It is my belief that a healthy economy requires certain factors to be in place - - low joblessness; high consumer confidence; a strong manufacturing sector; and reduced government deficits. That is what we must demand!

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