Economic Crisis Advice Writings And Financial Crisis Warnings

A Bubble Economy

2012-02-09T11:00:00.002-08:00

The U.S. government just announced a month of robust hiring, a drop in the unemployment rate to 8.3% and that the economic "recovery" is gaining momentum. It is nonsense being pumped out in an election year as the economy continues to deteriorate.

Reality is that most of the jobs that were added were low paying, such as those of a nurse's aid or a corporate clerical position. Worse yet, what it masks are the millions of people underemployed and the millions more no longer counted for having been out of work too long.

Reality is a mountain of foreclosed homes being kept off the marketplace because the government wants to encourage new building and is trying to do all it can to stop the continuing fall of real estate prices. In most major U.S. cities, a large percentage of the housing sales are foreclosures or short sales, in which the owner has lost his/her equity and the lender writes off a portion of the loan.

Reality is Fed Chairman Ben Bernanke just testified to Congress and painted a worrisome picture of the economy, which is understandable considering he recently announced the Fed will do all it can to keep interest rates at near zero through the end of 2014 (the next 3 years). Their hope is that this will help the economy finally take off with cheap money, while in the meantime masking the U.S. governments real borrowing costs as its deficits are rapidly mounting.

Reality is this is all being done so consumers, which make up an almost unbelievable 70% of the U.S. economy. and are already deeply in debt, will start to borrow more money to buy mostly foreign made goods they can't afford and get the economy going again.

Reality is the last two U.S. economic recoveries and boom times of the late 1990's - 2000 and 2002 - 2008 were based on a bubble, but created a ton of jobs until that bubble burst. The first "recovery" was led by the "new paradigm" in which Wall Street took vast numbers of new companies with few assets and no profits or proven track record public. This stock run up become so strong it soon led to "day traders" and all sorts of other related nonsense, until reality hit home and most of those new companies crashed, costing many millions of Americans their savings and millions more their jobs.

Reality for the second boom we are still fighting. Because of the economic fallout from the collapse of the prior bubble, then Fed Chairman Greenspan pumped tons of cheap money into the economy to avoid a possible Depression. The result was the huge run up in real estate prices and the many related jobs in sales, escrows, appraisals, lending and packaging and reselling of nearly all these mortgages. And with it millions more jobs in construction and the sales of appliance, carpeting and other furnishings. Then it all crashed.

Reality is the U.S. government is desperately trying to start a new economic bubble, which starts with consumer confidence. But consumers aren't confident, home buyers aren't confident and the government has no idea what bubble to create but is hoping creative entrepreneurs will come up with one. The consequences be damned after this new bubble bursts and it will, if in fact they can create it.

I believe the U.S. will have a better tomorrow but not without a time of turmoil, and by that I mean a Depression, as it continues to spend heavily on its military industrial complex, building weapons of mass destruction (nuclear and biological), fighter jets, drones, ships, tanks and other means of horror, has military bases everywhere and wages wars in its global "war on terror," all in an attempt to build a global empire that as you've seen in Iraq, a place the U.S. has never actually left, is done to serve its corporate political donors at the expense of the vast mass of Americans.

Please, if you haven't yet taken action to protect yourself, do it now. Sell unnecessary items such as an extra car, a boat, a motorcycle, or an RV. Pay down your credit cards and cross train at work so you have more to offer your employer. If the U.S. government does succeed in creating a 3rd bubble, when it crashes, there will be no resources left to provide a safety net. And if it doesn't succeed in building that bubble, you will have reduced the impact its failure will have on you. Ultimately, the answer is we as a people must take back control of our government, and working together allocate our resources to building a better world, one that serves us and all of mankind and provides a better future, a real future for our children. We are capable of doing this.

Dick

The Wealthiest Man Alive

2012-02-09T10:58:00.000-08:00

Dear reader, these insightful words, written by my friend Mary Ellen, are shared with you today because they offer from a wife and mother's perspective what so many women want but seldom receive from their husbands, the father of their children. She wanted me to expand on that but she said it so well, I'd like to offer the rest of her comments to you.

"The Wealthiest man alive feels alive because he is a pillar of support to his wife. His children want to grow up and be like him. He is invaluable to their lives." I would add he also offers his support to others in need, while claiming no credit for himself. This too is something that leaves an indelible favorable impression on his children.

"The wealthiest man alive is not necessarily wealthy by monetary gains as some of the most corrupt emotionally and ethically are people wealthy and estranged from their loved ones." We often see this among many of the rich and famous as they seek happiness in all the wrong places, not understanding life's real rewards are contained within and measured by the unselfish acts of generosity shared with others, starting with their own families.

"Knowing your value to your loved ones, feeling valued by them, knowing that if you died yesterday their mourning would be so deep that you could never be replaced in their lives, but they would live with more confidence, love, respect for themselves and as a 'wealthy' example to others.

"A 'wealthy' man is a teacher to future generations on how to truly live their lives. Blessings to you and your loved ones. Mary Ellen" www.angelscribe.com

Dick

Should We Run Our Home As Congress Runs Theirs?

2012-02-04T11:07:00.000-08:00

The U.S. Congress is spending money at record rates, with deficits to match, as it borrows like crazy under the premise it will cut spending at a future time by an undetermined amount. It doesn't even need to raise taxes to pay for all these things. Anne and I love this approach and have decided to run our home the same way.

From now on we should start buying cars (perhaps matching Cadillac Escalades), antiques (note to me, send for a Sotheby's catalogue), a flat screen 3D television, furniture, appliances, new clothes, lavish vacations (we've never been to Switzerland or Tahiti) and go to the fanciest restaurants, the best Beverly Hills has to offer. And to protect ourselves from those of lesser means, we should hire private security and to be safe, send some of that private security over to poor areas of Los Angeles and attack and occupy their communities.

We're not concerned with how to pay for all this because we have credit cards and intend to get more credit cards so we can spend to our heart's content. Our only worry is what happens if the credit card companies suddenly cut us off and we can't pay our bills. But this credit system seems to work well for the U.S. Congress and if Congress is not worried, why should we be?

Dick

Additional Comments on "Why I Believe In A Better Tomorrow"

2012-01-24T15:16:00.000-08:00

Dear Reader, My friend and webmaster Jon Barnes raised some compelling questions that caused me to revise an earlier version of "Why I Believe In A Better Tomorrow." The following is my reply to him, which I hope you will find useful.

Hi Jon,

There you go again, using your logic to require a better written piece. Because of you, I rewrote those two paragraphs you referenced. Thank you.

What America faces is horrific. In the best case, if the economy bounced back based on its current structure of the military industrial complex vast spending of taxpayer money, Wall Street financial engineering and consumer spending (70% of the economy and most of it on foreign made goods) the U.S. will be setup for a collapse so great, people would long for the Great Depression.

But I know the American people can do far better than to allow this to happen and I believe (hope) they will. When Bernard Baruch issued his optimistic piece in 1953, the U.S. had come out of the Great Depression, World War ll (and the Holocaust) and was fighting the Korean War and was threatened by a massive Communist paranoia led by Senators Joe McCarthy and Richard Nixon as the Cold War and nuclear threats took center stage. As Baruch did, you and I must find some basis for optimism and offer our readers hope as we seek solutions in the face of massive government corruption, endless wars and an economy that no longer has a viable foundation.

Dick

Why I Believe In A Better Tomorrow

2012-01-24T15:14:00.000-08:00

The world today is confronted by the U.S.'s horrific attempt to build a global empire for its corporate leaders ("The War on Terror") with the U.S. military and all of its weapons of mass destruction at the forefront. To make matters worse, the U.S. is so deeply in debt and sinking into such a vast crevasse of overwhelming borrowings, it will never repay the people across the globe who in good faith loaned this money believing it was safe.

As an adjunct of this, the U.S. government is thoroughly corrupted by corporate lobbyists, the only ones whose voice matters. If that wasn't bad enough, the U.S. Supreme Court in "Citizens United" (2010) ruled that corporations are people and are free to inundate the political system with all the money they want. Now in their new "Super Pacs," they secretly spend huge undisclosed sums as they extend their ownership of the two party political monopoly that rules the nation.

In recent years, led by American companies, we witnessed corporate wrongdoing on a scale the world had never before seen. Instead of suffering the consequences, the result was record level government bailouts of corporations, many of whom are now deemed "too big to fail," record corporate bonuses and no-one held accountable for any of this wrongdoing. Nor have there been significant rule changes or oversight to prevent it all from happening again.

So in the face of this dismal summary of events, how can I believe in a better tomorrow? I see it in the faces of immigrants and their children. Hard working, determined people who often left everything behind in their old countries to build a better future in the U.S., often doing jobs most Americans won't do and pursuing a dream many Americans have forgotten. They don't seem to know success is a thing of the past and ultimately they aren't going to be denied.

I see a better tomorrow each time I visit the Silicon Valley, the San Francisco Bay Area's gift to the world. This incredible collective brain trust, with money from investors worldwide, spawns new companies that employ vast numbers of people in constructive endeavors. Apple, Cisco, eBay, Facebook, Hewlett-Packard, Intel and Oracle are but a few examples of major taxpaying companies that provide numerous people with jobs and employee benefits, which in turn support massive numbers of small businesses that serve them. It is these prosperous ventures that provide people the money to pay for housing, shopping and other joyful enterprises while also paying for schools, hospitals, parks, police, fire protection and other perquisites that benefit people. For in the end, we all want to live a happier, better and safer life.

I also believe that America will start to produce top quality products again, much as it did in the past for it has thousands of tiny U.S. based manufacturing businesses seeking a chance to develop. For this to happen, it would take a President to actively promote buying "made proudly in the U.S.A." to the American people, while also explaining the connection to buying homemade products with jobs many Americans so desperately seek. This would create demand and with that demand, U.S. retailers would carry far more U.S. made products in their stores. I say this with compassion for Chinese and other low cost workers, many of whom work under sweat shop conditions with little or no health care and no consideration by their employers for labor or environmental laws that would be enforced were they to produce in the U.S. I ask for global understanding for until the U.S. produces vastly more of its own goods, it won't get back on its financial feet.

I also believe Americans will take back their political system. I see it in the fits and starts of the Occupy Movement, see it in an organized effort to recall a Wisconsin governor who attempted to end public employee collective bargaining and I see it in the public's emotional involvement in presidential and congressional races in which their vote currently means nothing. But they won't admit they have no voice because each of us needs to feel our voice matters. And our voices do matter for collectively, we could take control and determine the direction of our nation, while also instituting Constitutional Amendments requiring only public funding of elections, which will squeeze out the lobbyists, and sharply reduce political campaign times to 45 or 60 day periods to control campaign costs.

Men and women are incredibly clever and resilient and given the opportunities, can overcome the horrors of poverty, sickness and war to uplift the world. There is no acceptable reason today that children should starve to death or die of sicknesses long conquered in other parts of the world. And war is based upon men's greed and desire for power, however it is sold to the people who fight it. We as mankind can overcome this terrible tendency that has plagued us for ions if we are determined to do so, especially as television, computers, cell phones and other technology shrink the world and show us how much alike we all really are.

I grew up in a deeply segregated U.S. and as a young man witnessed the civil rights movement succeed. As a young man with little money, I was given educational opportunities by taxpayers who willingly sacrificed so my generation could attain more than any generation which preceded us throughout history. Now it is up to us to take control of our corrupt government, end our wars and to sacrifice some of our resources as well so future generations can rise from our shoulders and not from a rut in the road in which we placed them. I believe that after a time of turmoil, that is exactly what is going to happen.

Dick
This piece was partly inspired by "Why I Still Believe in the Future," by Bernard Baruch (1870-1965), which he read on CBS radio in 1953 and was reprinted in The Wall Street Journal on 11/20/10 http://online.wsj.com/article/SB10001424052748703326204575616882853314688.html?mod=WSJ_topics_obama

Are You Ready To Pay Far Higher Taxes?

2012-01-15T16:37:00.000-08:00

Throughout America, cutting government spending and tax cuts for the Middle Class are very popular concepts. In South Carolina (SC), for example, in the current Republican primary campaign, crowds are wowed by those concepts as politicians promise to deliver on them. Yet for each tax dollar SC pays, it gets back $1.35 and the people love that as well because there is plenty of money to pay for 7 military bases and all the military contracting, which employs thousands of people. SC people favor a "strong defense," and many of them support more military spending.

SC has many people receiving Social Security, Medicare, Medicaid and/or other entitlements. Many of them support even more spending for those programs and money as well for those in need, including to help the unemployed. Yet Republican presidential candidates are receiving tremendous support by promising to "cut government spending" (without defining which gigantic spending programs will be cut and by how much) and to provide a "strong national defense" (as military spending continues to grow).

Yet everyone knows the government is running staggering deficits. It is only still afloat because of its borrowing capacity, something it can't indefinitely do. So without cuts that equal the $1.5 annual deficits the government is running, with greater deficits to come from increased military spending, are you ready to pay far higher taxes? Government spending is like the real estate market a few years ago when most of America and the world assumed values could only go up. Then real estate crashed and continues to this day to fall. That's because there was no Fantasyland in real estate and there is no Fantasyland in government spending. We can't have it both ways. We must either dramatically slash government spending or prepare to pay 50% - 60% of our income to federal taxes and another 15% to 20% to state and local governments to make up for their lost revenue from the federal government. Anything else is political nonsense and you and I are too smart for that.

Dick
To learn more please see, "In South Carolina, a discrepancy on federal spending," The Los Angeles Times http://www.latimes.com/news/nationworld/nation/la-na-south-carolina-federal-spending-20120114,0,698798.story

Economic Ratings Downgrades Hit Europe

2012-01-14T11:35:00.000-08:00

Global credit rating agency S&P on Friday (1/13) cut the credit ratings for France, Austria and 7 other European nations, further endangering the rescue funds several of them desperately need as investors grow more scared. Other than from the two World Wars, the magnitude and depth of this massive European Economic Crisis is unprecedented and its impact will ultimately be felt all over the world.

Why? Because starting with Greece, these nations will begin to default on their debt obligations, forcing the investors in them to take huge write offs. Those investors are banks, sovereign funds, hedge funds and other vehicles whose money comes from citizens across the globe. It may be money from your retirement account or from my savings as those who manage our money were seeking the highest rates of return for our money by placing it in supposedly safe investments.

In response, the global banking system will begin to freeze up as banks and investors panic. They will cry out for taxpayer funded bailouts but the magnitude of the bailouts will be too big to pay as the situation falls apart. Some thriving export oriented nations such as China, South Korea and Brazil may assume they won't be affected but if so, they will be wrong for they will suffer a sharp reduction in exports to Europe and their economies too will get hit.

Some people will assume the U.S. with all of its resources will come to the rescue. But they will be wrong for the U.S. is by far the biggest debtor nation in the world and its government stays afloat now based only on its gargantuan borrowings.

Please take protective action. Pay down your credit cards if you can for the interest alone on those cards can eat you alive. Sell off any costly assets you no longer need such as a motor home, an extra car, boat or motorcycle. If you have a home to sell, consult with a local real estate professional but sell it now before prices drop further. At work, protect your job by cross training and by helping others to do their jobs better.

And don't lose hope. Together we will get through this economic Armageddon by helping one another as people did during the Great Depression. Eventually, as has happened throughout history, we will resurrect our economies and come into far better economic times.

Dick
To learn more, please see "Europe Hit by Downgrades: S&P's Ratings on France, 8 Others Are Lowered, Sparking Fresh Worries," The Wall Street Journal http://online.wsj.com/article/SB10001424052970204542404577158561838264378.html

As to why I am so confident the global economies will resurrect themselves, please see "This Time Is Different: Eight Centuries of Financial Folly," by Carmen M. Reinhart & Kenneth S. Rogoff.

Why Is The U.S. Suddenly Building Close Ties With Repressive Myanmar?

2012-01-14T11:32:00.000-08:00

For many years, the U.S. government criticized the Myanmar military run government as being brutal and repressive. Now, although that government became "civilian" last March and has only slightly eased restrictions, suddenly everything is different as the U.S. moves to reestablish diplomatic relations and end trade sanctions. What happened? Cheaper labor from a compliant government happened.

The U.S. and China are looking for cheaper labor sources, as the cost of labor in China is rising. And what better place to find it than the former British colony of Burma, now known as Myanmar, where much of the labor force will gladly work long hours for as little as $2.60 a day. It is a capitalist's dream as giant multinational U.S. and other companies can readily create jobs there rather than in more expensive and environmentally sensitive areas such as in the U.S.

Hopefully, Myanmar will be encouraged to treat its citizens better, providing education, housing and medical care and hopefully not child labor but for now, this is about U.S. and other corporate exploitation of very poor people, but with a far better media spin on it.

Dick
To learn more, please see "Washington Resumes Full Myanmar Ties: Release of Political Prisoners Responds to a Key U.S. Demand; Focus Turns to Congress Over Future of Sanctions," The Wall Street Journal, http://online.wsj.com/article/SB10001424052970204409004577157753489304474.html and "U.S. Restores Full Ties to Myanmar After Rapid Reforms," The New York Times, http://www.nytimes.com/2012/01/14/world/asia/united-states-resumes-diplomatic-relations-with-myanmar.html

German Economy, Europe's Savior, Suddenly Starts Sinking

2012-01-12T11:22:00.001-08:00

The German economic powerhouse suddenly slipped in the 4th quarter ended December 31st. This at a time when Portugal, Ireland, Italy, Greece and Spain will need a massive financial bailout and the U.S. will need German investment..

To learn more, please see "German Economy Heads Downward: Fourth-Quarter Slump Spurs Worry Over Strength of Euro Zone's Engine," The Wall Street Journal http://online.wsj.com/article/SB10001424052970204124204577154041654838990.html

Unfortunately this is as we have anticipated for the global economy. Germany financially is far stronger than the U.S. government which is dependent on immense borrowings to stay afloat. The U.S. and much of the world need German investment but under these circumstances, the German people may need those resources more as their economy contracts. If so, it will shake the global economy to its foundation. But whatever happens, we can help one another through this financial collapse to come, eventually to much better economic times.

Dick

Will The Global Financial Crisis Get Worse?

2012-01-05T17:28:00.000-08:00

The Euro Zone is desperate to avoid massive debt write offs that could endanger national banks and other major financial institutions and Portugal, Ireland, Italy, Greece and Spain are taking drastic cost cutting and tax hiking actions to accommodate them. The problem is those actions if implemented are so severe, their people will never allow it. Yet if they did allow it, their economies would face a Depression, something which is likely to happen anyway.

While in the U.S., with the exception of producing weapons of mass destruction, fighter jets, drones, ships, tanks, etc. there no longer is the greatest manufacturing powerhouse the world had ever seen. Much of it has been shipped to China. The government's strategy to revive the economy is for consumers to spend vast sums of money they don't have on foreign made goods they can't afford. That strategy is not viable, so along with its overwhelming military industrial complex expenditures at taxpayer expense, the economy is troubled and it will get worse. The only thing preventing a collapse is the rush of cheap panicked money not going into Europe.

While export driven nations such as China, Germany, Japan, South Korea and Brazil face huge exposure with their European and American customers in deep trouble. Protect yourself from the deteriorating situation if you haven't yet done so by paying down your credit cards and selling off overhead you may no longer need such as an extra car, motorcycle or boat. Cross train at work to protect your job, offer your employer ideas to generate revenue or cut costs and help others to do their jobs better, for these things will make you more valuable to your employer. And don't give-up hope. Together we will eventually get through this mess.

Dick
To learn more, please see "Austerity Reigns Over Euro Zone as Crisis Deepens," New York Times (1/2/12) http://www.nytimes.com/2012/01/02/business/global/in-euro-zone-austerity-seems-to-hit-its-limits.html?_r=1&nl=todaysheadlines&emc=tha2

Can The U.S. Economy Be Resurrectd?

2012-01-05T17:25:00.000-08:00

The U.S. government and the Fed have tried everything they can to save the economy. Huge corporate bailouts, multiple massive stimulus plans, interest rates near zero for banks, cash for clunkers and tax incentives to buy homes, yet other than stopping a collapse, it's not working, as the economy is stumbling and ready to fall. Home prices are dropping and foreclosures are mounting, while the job market is a disaster. What will resurrect the U.S. economy?

My Uncle Gene, a successful businessman, with more than 60 years of business experience and who at 84 continues to run a multi-million dollar business, has the answer. It is a "Buy American" program in which whenever possible every American would buy at least some U.S. made products rather than foreign made goods. This would put millions of Americans back to work and through the products and services they in turn would buy, it would put millions more Americans back to work, all in taxpaying firms, which would help to get our government back on its financial feet.

Walmart, Target and other major retailers would offer far more U.S. made products if they thought Americans would buy them. Home Depot already offers a list of made in the U.S. suppliers and my son Kyle, who runs a substantial property management firm now asks his managers to buy made in the U.S. through Home Depot and other suppliers.

It is also easy for you and me to do. If we go online or check with retailers, we can buy made in the U.S. products. Nearly all my jeans, socks, jackets and some of my shirts were made in the U.S.. For a list of U.S.suppliers, please click on http://www.madeinusa.org/ or Google "Made in the USA." We are sympathetic to the Chinese and other low cost workers but we remind them if the American people don't resurrect their economy, Chinese and other low cost suppliers will sell far less to their largest market and China and other governments and lenders will lose much of the money they have loaned to the U.S. government, which is already desperate for tax revenue.

How bad is the current situation for Americans? As my Uncle Gene said, "Now our leaders stimulate major corporations who in turn create jobs in China, Pakistan, India and even Burma who start with a $2.60 per day labor rate." Many giant U.S. firms are flush with profits but reinvesting those profits elsewhere to hire low cost workers to multiply their profits, while U.S. workers languish. If our workers don't have jobs in sufficiently large numbers, eventually neither will you and I. The most effective way we can deal with this is to help create a huge market for U.S. made goods, starting with our next product purchases.

Dick

How Sharply Is The Income For The Top 1% Of U.S. Households Rising?

2012-01-03T16:38:00.000-08:00

According to the bipartisan Congressional Budget Office, between 1979 and 2007, adjusted for inflation, income for the top 1% jumped nearly 400%. By comparison, they report the income of the middle 60% of Americans rose by just over 33 1/3%.

A big part of the sharp rise in income for the top 1%, the financiers and corporate titans, came from working class Americans becoming far more productive. How? Profits rose sharply which has meant big bonuses and dividends for the richest Americans. Why haven't workers gained more benefits from their increased productivity? Competition for their services. More workers are flooding into the U.S. workforce and most production has been shifted overseas to press wages down in America and to increase profits in general.

Under these circumstances, how has Middle Class America sustained its prosperity? It's an illusion. They did something that was uncommon in the 1970's and before, they began using credit cards en mass. If you can't afford something you need or want, put it on your credit card. Of course all those interest charges meant bigger profits to corporate giants and bigger payouts to their leaders, as the rich got richer. That vicious circle compounded until now, with Americans buried in debt.

What happens next? The discussion between the President and Congress and Republicans and Democrats has been about protecting tax benefits for the top 1% and continuing some tax benefits for the Middle Class why slashing vital services the Middle Class depends on. Not a word about slashing the military industrial complex because at taxpayer expense, they provide millions of jobs and huge corporate profits. As is apparent, we have an untenable situation and some tough decisions will have to be made but those will be postponed as long as America can keep borrowing money to pay its bills.

Dick
To learn more, please see "Presidential campaign needs to get real on salvaging middle class," by Los Angeles Time Pulitizer Prize winning writer Michael Hiltzik http://www.latimes.com/business/la-fi-hiltzik-20120101,0,180296.column

Will The Tightening Global Banking Squeeze Crush Your Economy?

2012-01-03T12:13:00.000-08:00

As the Euro Zone confronts a possible Depression with governments in Portugal, Ireland, Italy, Greece and Spain slashing spending and hiking taxes, lenders are facing huge write offs and are tightening credit standards and in some cases calling in lines of credit. This credit tightening is also taking place in Britain and in the U.S. where in the U.S. some giant lenders are calling in lines of credit or sharply raising fees and interest rates to small businesses. Small businesses are the U.S.'s job engine and if they don't prosper, neither will the U.S.

The result in these nations will be layoffs and non-hiring. As that happens, consumers will cut-back on their spending. In addition, people will buy fewer homes and cars and not spend lavishly on restaurant meals, jewelry, vacations and other non-necessities. Meanwhile, they face the rising cost of medical care and higher education. In the U.S., which has the world's biggest consumer market, 1 in 6 people now receive food stamps and/or go to food banks and that number will rise. Export giants like China, Japan, Germany, South Korea and Brazil are going to find fewer buyers for their products. What does all this tell us? That 2012 is going to be a very tough year wherever you are.

Please take protective action. Payoff or pay down your credit cards if possible and also if you can, set aside some savings for a rainy day for that rainy day is coming. If you have a home to sell, check with your local real estate professional but sell it now before prices drop further. If you have a car, boat or motorcycle or some other expensive item you no longer need, sell it now for its value is declining but its cost of maintenance and insurance are not. And at work, cross train and help others to do their jobs better, for these things will make you more valuable to your employer. Together we will eventually get through the brutal economic times to come but now is the time to take preparatory action and if you can afford to, please be generous with offerings to food banks and other charities.

Dick
To learn more, please see "Austerity Reigns Over Euro Zone as Crisis Deepens," New York Times (1/2/12) http://www.nytimes.com/2012/01/02/business/global/in-euro-zone-austerity-seems-to-hit-its-limits.html?_r=1&nl=todaysheadlines&emc=tha2 "Car Sales Fall Sharply In France and Spain - The Wall Street Journal" http://www.supercars.com/news/car-sales-fall-sharply-france-and-spain-wall-street-journal and "Bank of America abruptly severs some small business credit lines," Mail Tribune (1/3/12) (from the Los Angeles Times) http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20120103/BIZ/201030303

What Is To Become Of America's Middle Class?

2012-01-01T12:25:00.000-08:00

When I was young in the 1960's and 70's, the U.S. was a much different place. Those years brought us the great Civil Rights movement and its implementation, the vast Women's Rights movement and its implementation, Medicare, Medicaid, huge funding for public education, widespread infrastructure projects and a greatly expanded safety net for all Americans. People wanting jobs usually got them and the American Dream was meant for everyone.

But today any of these grand plans that cost money, along with Social Security, are under attack. As America expands its military machine, borrowing heavily to do it, we are told that America can no longer afford to take care of its people. As America extends its tax breaks for its wealthiest citizens, its "job creators," the Middle Class is left to struggle, confronted with unemployment, under-employment and for millions more people no longer being counted for being out of work too long, as the "job creators" create jobs overseas but not here.

While the government bailed out 100 cents on the dollar Wall Street and other giant firms, the Middle Class has seen an explosion of home foreclosures and a major and continuing drop in housing values. Nearly 1 in 4 mortgages in the U.S. is now higher than the home is worth and for most Americans, their home is much of their net worth.

Who in government represents the interest of the Middle Class? Both political parties claim to represent the Middle Class even as the Middle Class is becoming poorer and the economy is on the edge of collapse. Yet lobbyists on behalf of giant corporations and the wealthiest citizens deliver campaign contributions to protect their interests, while the Middle Class life style is falling apart. If this is to change, we as Americans must get actively involved in our political system and raise our voices loudly for it is clear that simply casting a vote is meaningless and the system that serves its moneyed constituency so well will not fix itself. But together, we can fix this mess and build a better future for our children and grandchildren. If you are a foreign reader, you too have a vested interest in what happens to the American Middle Class for we are the biggest buyer of your products and services and we will need your support.

What Is To Become Of America's Youth?

2012-01-01T12:19:00.000-08:00

In the 1960's and 70's when I was young, America offered magnificent opportunities to gain a higher education and a growing job market with many high quality, good paying jobs. I didn't have much money but Community and State Colleges were readily affordable thanks to the generosity of America's vast Middle Class taxpayers and I like millions of other young people took advantage of it to build a better future for myself, for my family and for my nation.

Later as a taxpayer and as an employer providing jobs and health care coverage to my firm's employees, and services to our customers, I gratefully paid those educational opportunties back and much more, while also providing educational opportunities to a new generation with my taxes. But today that system is breaking down.

Young people, whether high school dropouts or college graduates are finding jobs in short supply, especially jobs that pay well. Many of these young people are moving back in with their families because they can't afford to keep a roof over their heads, while many of the college educated are also struggling to pay their student loans.

This has terrible implications for America's future. If America's young don't good jobs that pay well and provide promotional opportunities, they don't buy homes, cars and appliances as they cut back on their spending and cut back on doctor and pharmacy visits they also can't afford. As a result, the U.S. economy creates fewer jobs and in what becomes a vicious circle spirals downward.

As a nation, we owe them and ourselves far better than this. Instead of wasting our money on the military industrial complex and its wars, we must reestablish our manufacturing base. We can do this if each person buys more U.S. made goods and pressures retailers and the U.S. government to encourage U.S. production. Many of those jobs will pay well, offer promotions and pay taxes, which in turn will offer the kind of upward mobility that was the American Dream. I also ask foreign readers for their support of U.S. production for if we don't get our financial house in order, we won't be able to afford your goods and services, nor afford to pay back the money we have borrowed from you.

Dick

The Coming 2012 Global Economic Crisis

2011-12-26T13:03:00.000-08:00

U.S. stock markets are surging because somehow our economic problems are behind us. Don't get caught up in this illusion for our massive problems are not being resolved and unless we as a people throughout the world change economic direction, the impact on us will be profound. These 5 brutal factors are confronting us:

1) The European Economic Collapse. It has already begun. European bankers and politicians tell investors the problems are under control even as they grow worse. For example, part of what drove up stock markets recently was the European Central Bank suddenly offering 3 year loans to help banks get through tough times. Unfortunately a mind blowing 523 banks rushed in to grab that money, yet in amounts not nearly enough to solve their problems.

To attract bond investors, European politicians are promising to slash spending and vital services and to hike taxes. In many nations their citizens will never allow it and mass rallies and strikes are already taking place. As the weaker economies are unable tor raise money and default on their prior financing obligations, their collapse will take down the economies of export driven powerhouses such as China, Japan, South Korea and Germany including their job markets, real estate markets and financial markets.

2) A staggering backlog of foreclosed homes with more to come. This will force housing prices and sales down and limit new construction while reducing real estate related jobs.

3) A job market on life support. In the U.S., Europe and elsewhere, many millions of people are unemployed or underemployed or no longer counted for having been out of work too long. And many of the jobs being offered are at lower wages than what jobs paid just a few years ago. This drains family finances and is bankrupting many families. This means millions of families are not spending big money on new cars, vacations and other luxuries that would have stimulated widespread economic activity.

4) Consumers buried in debt. Americans, Europeans and other consumers are choking on their debts, much like many of their governments. In the U.S. the government strategy is to build consumer confidence so consumers will buy foreign made goods they can't afford with money they don't have, all of it charged on their credit cards. To see what this silliness leads to, wait until consumers get the bills for all their Christmas spending and for those who did buy new cars, appliances and jewelry, the monthly payments and higher insurance rates.

5) Military spending. The U.S. is the global poster boy but many nations are also spending vast sums of money they don't have because military spending boosts employment and feeds the egos of political and military leaders, while scoring huge profits for military contractors. It is beside the point that it endangers the world and drains desperately needed resources from health care, including from the disabled, and from education, police and fire protection. We see it across much of the U.S. as even cash strapped states, counties and cities are slashing employment and much needed government services.

These are but 5 of the Mt. Everest sized problems confronting us. What can you do to protect yourself? At work, cross train and propose revenue generating or cost cutting ideas to make yourself more valuable to your employer. Outside of work, develop your income producing skills, whether with computers, electronics, cars or anything else that is legal and people will pay for. At home, slash your overhead. Sell costly items you no longer need such as an extra car, motorcycle, or boat. This might generate some cash and will get rid of monthly payments, maintenance and insurance costs. If you can afford it, pay down your credit cards. Those high interest charges alone will eat you alive.

It is human nature to be in denial of our problems hoping they will somehow go away. We all do it, as do our governments, which try to kick this ugly can down the road for as long as they can. But for us it is the time to act before the brunt of the storm hits. The good news is that economic crises are cyclical, people are resilient and they help one another through them.

Dick

Should The 10 Biggest U.S. Banks Be Broken-Up?

2011-12-12T13:20:00.000-08:00

Because of the massive multi-billion dollar government taxpayer funded bailouts, the 10 biggest U.S. banks now control 77% of all U.S. banking assets, an ironic reward for these banks nearly taking down the global economic system. But as a result, they have been deemed "too big to fail" by the U.S. government, which means they have huge leverage over U.S taxpayers and these banks make a mockery of the capitalistic system, as they can divide the spoils with the support of the U.S. Fed, which hopes to see them grow stronger so they can weather additional financial shocks to come such as from the European debt crisis and the home foreclosure fiasco. To ensure the support of the government and the Fed continue, these banks pay lobbyists big fees to give to politicians.

But if they are "too big to fail," they are too big to exist. Over a century ago, the U.S. government used to have "trust busters," led by President Teddy Roosevelt and others to break up monopolistic entities. Today the giant banks compete largely in theory but often have the same pricing for products and services and pay virtually zero for depositor's money. They are notoriously unresponsive to the home foreclosure crisis and they readily add more customer fees to the very people who bailed them out.

Given that the giant banks and their lobbyists have huge leverage and that the politicians won't soon take any action to break up these "too big to fail" institutions, I suggest customers consider taking their business to local community banks. While these community banks don't have comparable resources to the giant banks, at least they will value your business and will more readily listen to what you have to say.

Dick

Did Europe Solve The Debt Crisis Threatening To Crash The Global Economy?

2011-12-12T13:18:00.000-08:00

On Friday, it seemed so as the Dow Jones Industrial Average skyrocketed 186.56 points. But its sharp rise won't last for long, for what was far more important is the government bond markets barely responded. These bond markets fund the staggering and rapidly mounting debts of these European nations.

Most bond investors are already frightened of all of Europe, including Germany, which is very strong financially but heavily exposed to the huge losses of its European neighbors, which are pleading for money and importing German made goods. Meanwhile, Portugal, Ireland, Italy, Greece and Spain are paying very high rates for whatever money they can raise. Despite all the supposed good news, last week the only thing Europe's leaders committed to was a financial penalty system for nations whose deficits are too big and a rule that all nations must pass balanced budget laws to go into effect in the future. But if nations are penalized for having their deficits too big, how will they pay the penalties? With more deficit spending? As for balanced budget laws, when? What enforcement?

What Europe really wants is for the European Central Bank (ECB) to bail them out. But with what? The ECB is them. To gain massively more bailout resources would require the ECB to print Euros, which will only inflate the currency and crash their economies. But in any case, to take major action requires all 27 EU members to agree, a near impossibility. In the meantime, desperately cash strapped nations will try to borrow money in a market growing more fearful and charging them ever higher rates. At the same time, those nations are confronted by downgrades from rating agencies determined not to miss the pending collapse as they did 3 years ago, that led to all the bailouts.

For 2 1/2 years, we've received European assurances that their financial problems are behind them and each time stock markets skyrocket and then plummet when those financial problems grow even worse. And what effects Europe will soon impact all of us, for our finances and economies are all inter-connected. If you haven't already done so, please prepare yourself for tougher times to come by cross-training to make yourself more valuable at work and by selling costly assets you no longer need such as an extra car, motorcycle or boat. Pay down your credit card balances for the interest charges alone can eat you alive. You will be thankful you took these protective steps. And please rest assured that as happened in the Great Depression, we will unite to help one another.

What is the real problem? It is as Gordon Gekko said in "Wall Street: Money Never Sleeps" (2010), the severe financial troubles confronting the world are "systemic, malignant and global." And thanks to the gargantuan greed that overran the world in recent years, there is no painless way out of this mess.

Dick
To learn more, please see "Questions Plague EU Pact," The Wall Street Journal http://online.wsj.com/article/SB10001424052970203413304577087562993283958.html

Are U.S. Housing Prices Beginning To Rise?

2011-12-01T14:15:00.000-08:00

No, with few exceptions, they are continuing to fall. Some housing analysts, builders, economists and pundits became optimistic when during the prime summer selling season, in some markets prices edged slightly higher. But many of those sales were foreclosures, while vast numbers of additional foreclosures were held off the markets by lenders still getting their paperwork in order.

Now one of the most important indexes, Standard & Poor's Case-Shiller index of 20 major U.S. cities has shown prices falling again in most of them. http://www.latimes.com/business/realestate/la-fi-home-prices-20111130,0,3352737.story And I believe prices will continue to fall for months to come, despite interest rates as low as 4% for 30 year fixed rate financing.

Please, if you have a house or condo to sell, consult your local real estate professional but price it to sell and get it sold now, before prices fall further.

Dick

Oh God America, What Happened To You?

2011-12-01T14:13:00.000-08:00

1 in 4 American children now live in poverty! That's 16 million children, living in cars, cheap motels, homeless shelters and other makeshift housing, some of it on the streets. And those numbers are growing. Meanwhile the U.S. Military Industrial Complex (MIC) is flooded with money, as it builds fighter jets, drones, ships, tanks, weapons of mass destruction and sends "contractors" to help fight endless wars and military occupations.

The War Business and all the jobs it provides is now America's top priority as the U.S. lays off teachers, police and fire fighters and looks to slash Social Security, Medicare, and the safety net for a rapidly growing number of people. But war is extremely profitable, for the MIC firms are flush with bonuses for top management and big dividends for shareholders. Politicians are collecting campaign contributions and in many cases, when their political careers end, they land jobs with or lobby for those same companies. In fact, it's great for everyone but the U.S. taxpayer that pays the bill, the military families whose sons and daughters are being killed, severely injured or emotionally traumatized and the peoples of the nations being occupied for they too pay in blood and in destroyed economies and dreams.

Meanwhile the U.S. job market is a disaster as so many factories have been shipped overseas leaving Americans to buy foreign made goods they can't afford with money they don't have so they use credit, hoping they can continue to pay their credit card bills. While housing values have collapsed and keep falling in most of America.

Oh God America, What happened to you? What are you going to do about this mounting disaster? Surely it will be more than simply casting a ballot because as you can see, that doesn't work no matter how charismatic the politician. Are you going to take control of your political system as is happening in some parts of the Middle East? Or will you teach your children to dream small, think small and act small. You have the power to do something about this if only you will take action.

Dick
The statistics in this piece are from the television show "60 Minutes," story "Hard Times Generation: Families living in cars," 11/27/11, http://www.cbsnews.com/video/watch/?id=7389750n&tag=contentBody;storyMediaBox Another measurement of what is happening to children and their families is "Lines Grow Long for Free School Meals, Thanks to Economy," The New York Times, 11/30/11 http://www.nytimes.com/2011/11/30/education/surge-in-free-school-lunches-reflects-economic-crisis.html?_r=1&nl=todaysheadlines&emc=tha2

Did The Dramatic U.S. Fed Action Rescue The Global Economy?

2011-12-01T14:09:00.001-08:00

The U.S. Fed moved quickly with its banking partners the European Central Bank, and the banks of Canada, England, Japan and Switzerland to expand a program providing emergency cheap U.S. dollar loans to European and other banking institutions to try to prevent a collapse of the global financial system. In response, global stock markets skyrocketed. But did this solve the severe financial problems?

No, it was a desperate act to confront a pending state of financial chaos. Wednesday (11/23) when Germany, a nation with strong finances, couldn't sell 40% of its bonds, it told everyone how grave the situation really is. Possible defaults, contagion and collapse starting with the falling dominoes of Portugal, Ireland, Italy, Greece and Spain which are no more able to meet their financial obligations now, than before the dramatic U.S. Fed and bank partner intervention.

To bail them out, the European Central Bank (ECB) and the International Monetary Fund (IMF) demand those nations' governments layoff thousands of people, raise taxes, slash salaries and cut retiree incomes. This when those nations are already sinking into severe recessions and suffering from high unemployment. The people won't stand for it and have rioted in the streets. Further cuts will never happen and governments that pursue them will fall.

All the dramatic U.S. Fed and banking partner actions did was buy time to keep the global financial system functional for now. As for calming investor fears, that will be brief when they realize insolvent nations are simply creating the illusion of bailing out other insolvent nations. Ultimately the ECB, the IMF and the giant corporate banks and mutual and hedge funds are going to have to take huge write offs on their European debt and they will plead for massive bailouts from nations no longer able to provide them.

So please take actions to protect yourself from the very tough times to come. Cross train to become more valuable to your employer, add skills that will generate income and pay down your credit cards and other debt. Sell off any unused items such as an extra car, motorcycle or boat, things you can convert to cash. You will be thankful you did these things.

Dick
To learn more about this dramatic financial intervention, please see "6 Central Banks Act To Buy Time in Europe Crisis," The New York Times, http://www.nytimes.com/2011/12/01/business/central-banks-move-together-to-ease-debt-crisis.html?_r=1&nl=todaysheadlines&emc=tha2

Has A Southern European Bank Run Begun?

2011-11-25T12:12:00.001-08:00

Yes a huge bank run has begun as the European financial crisis is quickly growing worse. Fearful businesses, institutions and individuals are pulling their savings out of banks in financially troubled nations such as those in Italy and Spain, the 3rd and 4th largest European economies. This bodes badly because these nations desperately need to attract money to pay their bills especially at a time when bond sales are so weak and interest rates to attract that money are soaring. Banks that suffer a run on their deposits will have trouble loaning to governments or to businesses, which will help sink their economies.

It also means to rescue those economies will take far bigger bailouts than were projected only a short time ago. But from whom will those bailouts come? Germany? China? European Central Bank? IMF? They don't have enough financial resources. But even if those bailouts arrived, these financially troubled nations are struggling to pay the interest on the debt they already have. How can they pay the additional interest on new debt? It is with heart felt concern for our European brethren I share this terrible but important news with you. And what hits them will soon hit the rest of us for our banking systems are interrelated and the financial markets will freeze, as they began to do in 2008 when Lehman Bros. went bankrupt. But this time the problems are of a far greater magnitude and governments don't have the resources to come to the rescue.

Dick
To learn more, please see "EU Banks Struggle to Lure Deposits: Key Funding Source Is Imperiled; Ronaldo's 4% Rate Pitch," The Wall Street Journal: http://online.wsj.com/article/SB10001424052970203710704577052301603861304.html

Is This The Coming Of The Next Great Depression?

2011-11-22T14:26:00.000-08:00

Yes it is, for we never even escaped the 2008 collapse. What is happening? To make bigger profits, U.S. multi-national firms aggressively shipped U.S. factories overseas along with their middle class jobs. Those jobs were replaced with lower wage retail jobs selling foreign made goods. In fact, U.S. wages adjusted for inflation are exactly what they were 33 years ago. Yet the cost of housing, cars, education, medical care and other middle class necessities kept rising.* So how did U.S. wage earners keep paying for them? They went deeply into debt like never before in U.S. history.

For awhile, everything appeared to work out well. Borrowing money was easy and the middle class thought it was not only doing well but had hit the jackpot, first in the dot com boom and when that collapsed, it seemed to be rich in housing values, riches it quickly borrowed. Then the housing market collapsed. Meanwhile, Wall Street made wild and greedy speculations and in 2008, that collapsed as well but unlike the middle class, Wall Street got bailed out, ironically at the expense of the middle class.

Meanwhile, the U.S. government keeps spending huges sums it doesn't have and puts it all on the U.S. taxpayer credit card. So no surprise, since 2008 the U.S. economy is floundering and sinking, taking the jobs market with it. Even as its deficits and debts soar, Washington answers with no new taxes, as it expands its military spending and wars, in part because that military spending employs millions of Americans, ironically also at taxpayer expense.

Americans are frustrated and angry. Public surveys show a 9% approval rating for Congress for example. Yet the huge campaign contributions still pour in because the elite are well served by the current system and they refuse to share in any significant sacrifices. While at the same time, the Euro Zone is crumbling and will take numerous European and U.S. banks with it, as they will again line up for bailouts this time from governments that won't be able to provide them. As they crumble, so will the export dependent Asian economies.

So what can you do to protect yourself from the coming Depression? Lighten your load by paying down your credit cards and selling off anything you no longer need, such as an extra car, boat or motorcycle. If you have a house to sell, sell it now before prices drop further. At work, cross train and offer ideas that generate revenue or save money, for these things make you more valuable to your employer. And as happened during the last Great Depression in the 1930's, we must unite to help one another through the difficult times to come. When those times end, we will hopefully rebuild with a U.S. economy no longer based upon bringing military Hell to the world but one based upon medical, educational, social and environmental advancement that can make this world a far better place.

Dick
*According to the U.S. Department of Labor, the urban Consumer Price Index is 3.5 times what it was in 1978. http://research.stlouisfed.org/fred2/data/CPIAUCSL.txt. But as bad as this is the prices for some essentials such as housing, cars, education and medical care have spiked even more.

Will The Euro Zone Recover Or Collapse?

2011-11-22T14:23:00.000-08:00

It will collapse. Why? 22.6% of Spain's workers are unemployed and that number is growing. Spain is Europe's 4th largest economy yet 1/2 of Spain's young people are out of work! To put this in perspective, at the height of the 1930's Great Depression, U.S. unemployment hit 25%.

Unemployment is soaring as well in Portugal, Ireland, Italy and Greece and in Britain, the latter of which is not part of the Euro Zone. Scared investors are demanding higher interest rates to buy the bonds of those nations and in Greece, it is very difficult to sell bonds at all. These nations are so deeply in debt, they will have trouble even paying the interest on the bonds they already have. While the International Monetary Fund (IMF) and the European Central Bank are demanding that they slash their spending if they are to receive any further bailouts. Yet from the last spending cuts, their citizens are furious and taking to the streets, as their economies plummet. How bad is it? Europe is in its "most difficult hours since World War ll," stated German prime minister Angela Merkel.

What happens to the U.S. if the Euro Zone economies collapse? Giant European and U.S. banks are closely linked and if collapse comes on one side of the Atlantic, it will come to the other. Only unlike 2008, this time, as we are already witnessing in Europe, the magnitude of bailouts necessary are too great for governments and the Washington based IMF to absorb. These economies will sink and potentially take with them peoples' savings. Although most Americans are not yet aware of the full impact of a European financial collapse, they will become aware when their savings are jeopardized. We and our European brethren are in this mess together and we must do everything we can to help one another.

Dick
To learn more, please see: "Turmoil Spreads in Europe, Bond Market Selloff Hits Nations Seen as Healthy, Raising Specter of Contagion." http://online.wsj.com/article/SB10001424052970204323904577039490200567620.html

Would You Buy Products Made In The USA?

2011-11-15T11:59:00.001-08:00

If you were a buyer of Fighter Jets, Drones, Tanks, Ships, Weapons of Mass Destruction, Guns and "Contractors," you would buy Made in the USA because that is what the U.S. still does best, even if it is all at the U.S. taxpayer's expense. But it may surprise you to learn there are large companies such as Honda and Toyota which build some car models nearly 100% in the U.S. from parts made in the U.S. And there are many small U.S. manufacturers who make everything from toys to socks to shirts that need your business. Start this Christmas by giving those American firms at least some of your business.

We wish our Asian brethren continued success but if we are going to resurrect U.S. industry and all of its jobs and avoid defaulting on all of our debts, we Americans must start buying Made in the USA as often as possible. This Christmas for example, what follows is a list of some U.S. toy manufacturers: http://www.toysmadeinamerica.com/ At http://www.madeinusa.org/ is a list of other U.S. firms that still manufacture here, including electronics firms: http://www.americansworking.com/electronics.html and firms that make home appliances: http://www.stillmadeinusa.com/appliances.html As I write to you, my shirt (purchased in a specialy store), my jeans (www.allamericanclothing.com) and socks (purchased at Big 5) were made in the U.S.

But even if they could find U.S. made products in the stores, most Americans wouldn't buy them because they are often more expensive. With shipping costs, my jeans cost a little over $50 and I could have bought Chinese made Levis or other jeans for half that price or less. But I received a top quality product that U.S. workers made and they too have families to support. It was worth the extra $25 to help employ them, even if I have fewer jeans in my closet. About 10 years ago, China's president came to Chicago and while there he took the U.S. media on a walking tour with him, saying he wanted to buy U.S. made goods to bring home to his family and friends. By the time he finished shopping and found nearly nothing made here, he pointed out that China didn't shift the jobs overseas, the U.S. multinational firms did. As Americans, we can and must do something about this and now is our chance.

Washington hasn't and won't solve this problem for us. Wal-Mart and Target will carry very few U.S. made products unless they see there is a demand for them. Some of Sears' Kenmore and Whirlpool products are still made in America but what giant retailers see is the demand is for cheap and cheaper as American consumer product plants continue to close. Let's reach out to U.S. small businesspeople, America's jobs engine, and give them our business. What would start small now, like a group of tiny seedlings, could grow into a huge forest of redwoods if only we would support them. And "we" begins with you and me.

Dick

For Job Security: Should You Start Your Own Business? (4 Tips)

2011-11-15T11:24:00.000-08:00

With so many people unemployed, underemployed or who may be fired and good jobs so scarce, it makes sense to consider starting or buying your own business. But because of the bad times, you may be scared. The following story about a couple that bought a business during the the Great Depression may be helpful to you. In 1930, Ruth Graves Wakefield and her husband risked their savings to buy the Toll House Inn in Whitman, Mass.

Ruth did the cooking and she served the Inn's guests. One day she was baking chocolate cookies and saw she was out of baking chocolate. In place of that baking chocolate, she grabbed a Nestle semisweet chocolate bar and broke it into pieces assuming the chocolate would melt into her recipe. It didn't. Instead, she had created the 1st chocolate chip cookie and it became a huge hit, making their business an enormous success. When you're in business, you never know when such a great thing could happen to you. A lucky break as happened for the Wakefields or a burst of your creativity and you too could become an enormous success. But is taking the risk of going into business really right for you? Speaking to you as a founder and former CEO of a major company, the following will help you decide:

1) Do you love your business idea enough to risk your time, your reputation and your nest egg in it ? The answer had better be yes because if you don't love it, you won't stick with it and potentially all that you will have invested will be lost. This is a question you must weigh from the heart. In 1974, before I started what later became a major computer leasing company, I sat in a botanic garden with pad and pen weighing this very question.

2) Is there a market for your product or service? How do you find out? Talk to potential customers and ask them under what circumstances they would do business with you and what price they would be willing to pay. In 1974, I knew many computer users and discussed my prospective computer leasing company with them. If you don't have those connections, run some advertising to attract those potential customers. In the late 1990's when I had another business idea, I ran an ad and after speaking with potential customers, knew it was not a good idea and saved my time and money by not pursuing it further.

3) What are the costs to start your business and when will it make money? You don't need a computer or a CPA to do this unless you must raise funding. Do as I did in 1974 at that botanical garden. On a sheet of paper write down all the expenses you will incur and over what time period. Then project when sales will kick in. Be very conservative. Expenses in real life are often far more than expected and sales usually take longer than planned.

4) Is there an easier, less risky approach? Yes. For example, if you want to repair computers or cars, find out what the opportunities are by speaking with those already in the field. Maybe they would even hire you part-time and if that goes well, employ you full-time eventually making you a partner. You can also buy an established franchise, such as a Subway or a Taco Bell, if you have the savings to make the down payment but before you do, speak with those who bought that franchise to learn if they are pleased with their investment and why.

Dick

For Job Security: Should You Start Your Own Business? (3 More Tips)

2011-11-15T11:21:00.000-08:00

"I've been out of work for a year, who is going to hire me?" "I'm over 50, are there any jobs for me?" "Will I still have a job in 3 months?" If you've been asking yourself questions like these, you may want to seriously consider starting or buying your own business. Speaking to you as a former founder and CEO of a major company, I would encourage you to become your own boss but taking business risk is not right for everybody. Here are some crucial points to consider:

1) Are you a risk taker? To start or buy a business may require you to risk some of your nest egg. And you may also not receive a paycheck for weeks or months. Assuming you have adequate savings, are you willing to take this risk? Will you be able to sleep at night?

In 1974, when I launched my computer leasing company, for 9 months there was no income, just expenses. Each day I would make numerous cold calls seeking new accounts, and at other times I called on accounts that said they would do business with me but initially didn't. Anne and I had 3 small children to support and our savings paid the bills. Many a time, I sat up at night wondering if I had made the right decision. But 9 months in, deals began to close and my company began making money. It was a fantastic feeling, one I hope you one day can share in.

2) Can you sell? Without sales, there is no business. If you don't have sales talent, either you must partner with or hire someone who does have that talent. Successful businesses are built all the time by pairing people who can sell with people who can create a great product or service. Consider Apple. Steve Jobs was a great salesman and an extraordinary technology visionary. But he also recruited outstanding technical people that could create the products of which he dreamed and build the quality in them he demanded.

3) Are you well organized? To succeed in business requires being well organized to make the most of your time. In building Wal-Mart, Sam Walton had an incredible vision but he was not well-organized. He overcame that disorganization by having a superb executive assistant who was extremely well organized, understood his needs and could free him to focus on what he did best, while she did everything to support him including setting his schedule, booking his travel to locating brief cases he would misplace.

Dick

For Job Security: Should You Start Your Own Business? (3 Final Tips)

2011-11-15T11:17:00.000-08:00

The job market is a disaster. If you are unemployed, underemployed or fearful you may get fired, you would be wise to consider starting or buying your own business. But if traditional business is not right for you, pursue some other avenue that might allow you to become highly successful. For example in 1925, a 23 year-old African-American poet had huge dreams but faced a highly segregated system that made it almost impossible for him to succeed. But one day while working as a busboy at the Wardman Park Hotel in Washington, DC, he saw one of America's most famous poets, Vachel Lindsay having breakfast there.

This young man found the courage to approach Lindsay and set some of his poetry in front of him and quietly walked away. After reading those poems, Lindsay was so impressed by this young novice's writings, that he shared the poems during a reading that night, and when the young poet came to work the next day to start his shift, a throng of reporters greeted him and he was on his way. That young man, Langston Hughes (1902 - 1967) went on to become a famous poet and a novelist, playwright and columnist, so as this story illustrates, depending upon your skills, there are many ways to break out of a bad job market. As a former founder and CEO of a sizable company, I offer you 3 final tips to weigh carefully in whatever action you consider taking:

1) Are you energetic? Your energy level will not only determine how much you accomplish but it will effect how much those around you achieve for they will follow your lead. An energetic person, a "go getter" will inspire others to work at peak level while someone sleepwalking through life won't long have a business however great the business concept. Ross Perot built two outstanding companies by in part lighting a fire under everyone around him with his intensive energy.

2) Are you willing to learn? You will be confronted by many new experiences and you will make many mistakes. So as not to repeat those mistakes, you must learn and adjust as you go. No matter what, President Bush demanded the U.S. "stay the course" in Iraq. What a disaster. In business, if you "stay the course" rather than learning and making changes, you won't have a business.

3) Are you persistent? Business and every other aspect of life has its disappointments. The deals you thought you had that a competitor wins, employees who steal, new products that fail, banks that don't honor their commitments to you, etc. You must be resilient and persist through whatever adversity occurs. It is a frame of mind. And if you persist and adjust to what you learn, eventually you are likely to triumph and over time build an outstanding business or a successful creative career.

Dick
Note: Thank you to reader Ariel Feir for sharing the story of Langston Hughes in "Ariel & Sandi AbodeNews" (November, 2011)

Is The U.S. Really In Decline?

2011-11-08T12:43:00.000-08:00

No, it is not in decline, it has begun to collapse. Through its productivity, the U.S. once had the world's top living standard as well as being the greatest manufacturing powerhouse ever. But most of that manufacturing is gone and after six decades of taxpayer paid massive stimulus to the military industrial complex, the U.S. is now largely a "consumer nation," meaning 70% of its economy is now dependent upon its citizens borrowing money to buy largely foreign made goods they cannot afford. To sustain itself the U.S. government must borrow money from everywhere including from Social Security, borrowings it can no longer afford.

Adjusted for inflation, U.S. wages are the same as in 1978 and U.S. citizens are tapped out. They were actually tapped out in the 1990's until the Dot Com bubble created the illusion of prosperity, all of it on borrowed money. When that bubble burst in 2000, rather than face a Depression, the U.S. Fed made vast sums of cheap money available which started the real estate bubble, that has now burst. So the government bailed out corporate giants and issued stimulus, largely with borrowed and printed money, while also paying for weapons and wars. This time the "Recovery" is floundering and the government doesn't know what to do next.

When a collapse comes, it comes fast. The Roman Empire didn’t slowly decline. It fell within a few decades during the fifth century, through poor leadership and a vastly overextended military that no longer generated the income to support the Empire. The barbarian invaders finished the job and Rome's giant marketplace and its great centers of learning, along with its superb roads and aqueducts were history. The U.S. is in a far bigger crisis than its politicians acknowledge and the time for bold and sacrificial action such as dramatically slashing the U.S. military overhead is now, while there are still wheels on the American bus.

Dick

Is The U.S. Still The Global Financial Leader?

2011-11-08T12:40:00.000-08:00

Long led by the U.S. which used to be by far the most powerful nation in the world, the G-20 global conference of the world's most powerful financial nations recently concluded, with the U.S. as little more than an afterthought. Aside from the European financial crisis, China and Germany were the focus of attention. Before the G-20 conference, my son Kyle made his own comments and shared with us a New York Times article anticipating the U.S. playing a minor role but it turned out the U.S. played an even smaller role than the Times thought would be.

http://www.nytimes.com/2011/11/02/us/americas-waning-influence-has-a-silver-lining.html?_r=1

Sadly we are becoming a paper tiger. We are the guy living in the biggest house on the block and in foreclosure, yelling at all of the others in foreclosure to get their houses in order. And yes, we just bought another new car (or billion dollar airplane) on credit. Meanwhile the guy who has been saving big time for years and has a growing stack of money is also going to the others on the block. Guess what, they are taking him far more seriously than Big Deadbeat!

Our power has fallen financially and morally. While we certainly still wield a massive military, our days are numbered before that goes away since economics won’t allow it to continue forever (see every other fallen empire in history). Also, when it comes right down to it and pensioners (don’t touch my money), social security recipients (don’t touch my money), medicare recipients (don’t touch my money) will go bananas (see Greece) when all of the interests are fighting for the future budget which will be 25% of what it is today. UGLY times coming as our train wreck steams ahead full steam!

Kyle

Why You Care That Spain's Jobless Rate Just Hit 21.5%

2011-11-02T10:04:00.000-07:00

As Europe fights to avoid a financial collapse in Portugal, Ireland, Italy, Greece and Spain, on Friday, Spain, one of Europe's biggest economies announced its jobless rate hit 21.5% and it is rising. How bad is this? At the peak of the Great Depression in the 1930's, the U.S. jobless rate hit 25%.

Yet Europe and bond investors are telling Spain they must slash more of their expenses by laying off public sector employees, cutting the wages and benefits of the remaining public sector employees and capping the retirement income for Spain's fixed income retirees. As the jobless toll mounts, Spain is loath to cut jobless benefits and job retraining, yet that may be necessary to get a European bailout if one ever happens. What will become of Spain's needy, including their children, who knows? Meanwhile Spain's economy continues to crumble.

Why do you care? Because some U.S. and European financial institutions likely have substantial financial exposure there. If Spain can no longer pay the interest on its debts, those financial institutions may demand bailouts from their governments, meaning from taxpayers. If they don't get those bailouts and some of your money is in those financial institutions, you could lose some of that money. But it also shows you the European bailouts are unlikely to succeed despite European government assurances in the media, which send stock prices skyrocketing upward. We offer our compassion to our Spanish brethren in their suffering and hopefully we will also offer a helping hand.

Dick
To learn more about Spain's financial crisis, please see, "Benefits Run Out for Spain's Jobless," The Wall Street Journal, http://online.wsj.com/article/SB10001424052970204505304577003864242042958.html

3 Valuable Tips To Help You Keep Your Job And Get Ahead, No.1

2011-11-02T09:58:00.001-07:00

This is a very tough economy and it is growing worse. As the former CEO of a major computer leasing company that had 300 employees, and a company with a business relationship with many Fortune 500 companies, I would like to offer you 3 valuable tips that could revolutionize your career as well as to help you keep your job and get ahead:

1) The More You Know, The More Valuable You Are. Cross train which will make you someone your firm is more likely to depend on. And keep adding to your professional skills by taking classes, attending seminars and most of all by reading as you expand your knowledge, your vocabulary and in the process you will also develop new ideas to offer.

2) Learn Your Boss' Expectations For You. Don't assume you already know them. Sit down with this person and find out his or her objectives and where you fit in. Come prepared with a smile, a handshake, a gracious attitude and a list of questions, as you listen carefully and take notes. At the end of the session, summarize what you heard and ask if there is anything else you may have missed. Then show respect by asking for this person's advice as to how you can achieve at a level beyond what you have ever done before. Think of it as a singer consulting with a top voice coach or an athlete listening to a top coach. Why shouldn't you receive top flight advice from the person who is judging your work.

3) Speak With Passion And Have Positive Things To Say. Passionate people attract others to them because everyone craves positive energy and enthusiasm and they avoid those who are negative because it drains them. Tomorrow when you go into work, think how fortunate you are to have a job and a paycheck and be thankful for the good things in your life. Then put some energy in your step, a big smile on your face and conduct yourself with gratitude. You will generate a positive aura around you and you will discover a new found self-respect.

Dick

3 Valuable Tips To Help You Keep Your Job And Get Ahead, No.2

2011-11-02T09:54:00.000-07:00

Prior to becoming CEO and founder of a major company, I too worked for others and understand how unpleasant some of those employers can be. But so much of what happens to us in life is attitude and early in my career I lost my job or quit a job because of how I was treated. Sometimes there was no choice. But ultimately I succeeded as an employee by building rapport with people I worked for, starting with being respectful and then by being a good listener so I could help them attain their goals as I attained mine. By doing this and by learning from their mistakes as well as by my own, I became an effective leader for 20 years. Now in a brutal economy, from those many years of business experience, I offer you dear reader a helping hand.

1) Don't Gossip. I know sharing rumors and inside information momentarily gives you a sense of importance and makes you interesting to others but it will bite you on the touche. It is amazing how fast that information can travel and ultimately can be tracked back to you, with negative implications for your personnel file, your career and even potentially a law suit. You become a liability and companies can do without liabilities. In addition, no-one will trust you because they will fear the gossip you may spread about them. Instead, be someone people can trust through your compassion and discretion.

2) Don't Procrastinate. To succeed, you need people to depend upon you. So when you commit to something, get it done when you promised otherwise they will stop relying upon you as they find ways to work around you. And if they can work around you, you are not needed and can be fired.

3) Don't Criticize. When was the last time you enjoyed hearing someone tell you what you are doing wrong? And how did you respond to their criticism? With anger? With sarcasm? With tears? Did it make you a better person to hear it? Did you change your behavior as a result?

If you have criticism for someone, reduce it to one key point and weigh carefully how to express it for it could destroy your relationship. Try the "oreo cookie" approach, which is to find something in that person to sincerely praise. Then make the critical point as gently and positively as possible, explaining to the person how he or she will benefit by making a change. Then conclude with another point of sincere praise, along with a handshake or a hug and words of encouragement, to help the person to know you have their best interest at heart. To do this well comes from the heart and if it is done well, it will bring you greater appreciation by those who become more productive and thankful to you for your help.

Dick

3 Valuable Tips To Help You Keep Your Job And Get Ahead, No. 3

2011-11-02T09:51:00.001-07:00

This brutal economy is growing worse. As the former CEO of a major computer leasing company that had 300 employees, and a company that did business with many Fortune 500 companies, here are 3 additional valuable tips that could revolutionize your career as well as to help you keep your job and get ahead:

1) Breakout Of The Rut. Most people are bored and often just go through the motions at work, doing only what is necessary. Instead you be the ball of fire that not only tackles your job well but willingly helps others to succeed in theirs. Your enthusiasm will uplift others and your help, especially if you claim no credit for it, will make you a big favorite of theirs. And those who rise the highest are usually those with the biggest following of supporters.

2) Offer Sincere Compliments. Did someone get a raise or a promotion or win an award? Did someone celebrate a birthday, an anniversary or have a baby? Did someone lose weight, get a good doctor report or adopt a puppy? Did someone get a new outfit, shoes or haircut? In each case, these events or developments are important to them, and as a caring person, make them important to you. Kind words of acknowledgement or congratulations are very much appreciated. If you express your words in writing, do it in a handwritten card instead of by computer because it makes it more personal and people tend to save cards to be savored again and again. By doing this, you show people you sincerely care for them.

3) Don't Be A Know-It-All. Let others make their points without correcting them and don't top their stories. To do either of these things is to injure their self-esteem, which is compounded if you do it in front of other people. Let them have their moments in the sun. And if they have a political or religious or sports perspective other than yours, so what? Just acknowledge their position, which helps to validate them as people. The world won't change if they have it wrong but if you correct them it will change for you when they think of you as a blowhard. Your goal is win their respect and their support which you can do by being kind and thoughtful.

Dick

3 Valuable Tips To Help You Keep Your Job And Get Ahead, No. 4

2011-11-02T09:49:00.000-07:00

This brutal economy is already the worst since the Great Depression and it is crumbling. As the former CEO of a major computer leasing company that had 300 employees, and a company that did business with numerous Fortune 500 companies, here are 3 further valuable tips that could revolutionize your career as well as to help you keep your job and get ahead:

1) Forgive. As long as you live, some people will do you wrong. The common approach is one of endless anger and to try hard to get even. All this will do is hurt your health from carrying that animosity and as you try to get even, the other person will respond accordingly as the situation sinks to "an eye for an eye." You both look bad in front of others who will distance themselves from you, while your employer may choose to be rid of both of you. There is no way this benefits your career or your well-being.

The wise person forgives. You don't have to like or approve of what that person did but you don't want to hold on to resentment. Forgive, wish the other person well, even if only in your own mind, then smile and get on with your life. As Gandhi said, "The weak can never forgive. Forgiveness is the attribute of the strong."

2) Be On Time. This is a sign of respect. Others have set aside their other activities to be there and if you show up late, it tells them they and their time are not as valuable as other things you are doing. It also tells them you are disorganized, for "the freeway was backed up" or another excuse will sooth no-one. Be on time and there to greet everyone, as you make them feel special.

3) Have A Positive Attitude. Every person emits energy: good, bad or indifferent. It's like radio waves. Although you cannot see those waves, when the radio is on, you hear them emit sound. It's the same way with your energy. People can feel it. The more positive energy you have to share, the more uplifting it is to be with you and the more support you will get. I can't say this strongly enough to you: This is a crucial factor in whether people will want to be with you and in how successful you will become.

Why The New European Economic Bailout Will Fail

2011-10-29T11:39:00.000-07:00

After the dramatic new European bailout announcement, and despite few specifics, stock markets skyrocketed. But a day later, after investors saw how scant the bailout details were, markets sold off around the world, except in the U.S. where the market was up about 23 points. Also European representatives immediately went to China to beg for money and were told to provide far more details of their bailout. If China eventually participates, the terms will be onerous, which is reflective of the risk. And worse yet, bond investors despite the new "guarantees" bought little of Spain's and Italy's bonds yesterday and those who did demanded higher interest rates. In other words a vote of no confidence. Yet there is a far greater problem:

The economies of Portugal, Ireland, Italy, Greece and Spain are in a vicious tailspin and as they sink, their money needs soar. Yet to comply with the loan covenants, far more public sector people will be laid off, wages will be cut, retiree pensions will be slashed and taxes will rise. This will kill any potential economic recovery as it impacts the private sector as well. Already in Athens for example 40% of their youth are unemployed, one in four storefronts are vacant and over 100,000 people have repeatedly protested on the streets, while their strikes have shut down the country, including tourism, a vital part of the Greek economy. There are already calls to get rid of the Socialist government that just agreed to these bailout terms.

European unemployment rolls, home foreclosures and credit card defaults will soar and home values will fall. European governments are trying desperately to convince their citizens the severe economic problems are being solved as they Band-Aid them. Brace yourself for tough times, for their problems will have global impact, and please willingly help others as together we will eventually triumph over the world economic collapse.

Dick
For more information, please see "No Bounce for Greek Spirits," The Wall Street Journal http://online.wsj.com/article/SB10001424052970203554104577001773720092842.html

The Global 5 Year Financial Flatline Has Begun

2011-10-25T09:50:00.000-07:00

In 2008-09 this meltdown began with the huge unaffordable government bailouts and stimulus, which were done to avoid a global economic crash and supposedly to reestablish global prosperity. They succeeded in avoiding that crash by bailing out the giant banks and corporations and their investors, but there was no bailout for the public, which was left to flounder in joblessness, home foreclosures, mortgage and credit card debt, medical bills, layoffs of teachers, police and firefighters and a huge tax burden for all of the bailouts and stimulus. And governments did not solve the underlying problems of unregulated corporate greed and massive fraud that caused the near crash, nor have they reestablished prosperity for anyone but the giant banks and corporations and the wealthiest people. Now as the cost of the bailouts, stimulus and unsolved bank problems are overwhelming those governments, they are creating Band-Aids to postpone the inevitable economic crash to come, for a few more years if possible.

So what actions are they taking? Picture it this way: A long fleet of Rolls Royce limousines take exquisitely dressed politicians from the U.S., Britain, Portugal, Ireland, Italy, Spain and Greece to a Ritz Carlton where they are staying. Waiting to meet with them are China, South Korea, Germany, Switzerland and OPEC. After the limos arrive, everyone sits down together.

"We're here to borrow vast sums of money," says the U.S. "For how else could we continue to enjoy our high standard of living?" "Do you have collateral," asks China. "We have something better than collateral," boasts the U.S. "We have IOUs." "We already have a Mt. Everest sized bundle of IOUs from you all," China angrily replies. "And you are all already struggling to make the interest payments on those IOU's. What else can you offer?" "Something you are going to love," answers the U.S. "We and the European nations will guarantee each others debts." At that point Germany momentarily chokes and then composes itself.

"If you are already struggling to make the interest payments now on your current debts," Germany asks, "How will you make even bigger payments on new loans?" At that point, all the debtor nations look at each other quizzically, unable to answer. Then the U.S. spoke up. "I'm America," it said, barely able to control its aggression. "I have long had the highest standard of living in the world and I will continue to have it!" "It's a shame," whispered Switzerland to the other surplus nations. "They used to be by far the richest nation in the world. Now like a giant con man they are trying to pass and print bad paper to maintain their lifestyle."

This is the stage we are now in and as has happened many times in history, we will have an economic crash. Out of the ashes will hopefully rise a better financial system but in any case, it will be up to us as brethren to help one another through this difficult time.

Dick

How The European Financial Crisis Will Impact You

2011-10-20T10:37:00.000-07:00

Greece and other financially troubled European nations are overwhelmed by their debts. That is why other European nations and the International Monetary Fund may come to their rescue. But to rescue them would require lending them far more money. But if they can't pay the debts they already have, how will loaning them more money rescue them?

The supposed answer is to have these troubled nations slash their overhead to pay their old and new debts. But if they do, it will collapse their economies. If their economies collapse, where will they get the money to pay any of their debts? It seems the only real answer is for those who loaned them money to forgive much of the current debt. But this would mean the giant banks, hedge funds, mutual funds and insurance companies that loaned that money would have to take massive write offs, write offs most of them can't afford to take.

This means they will appeal to their governments for huge bailouts, bailouts the taxpayers of those countries can't afford. This will impact you as a taxpayer and may impact your savings if some of your money was invested in those troubled nations to get a higher rate of return. Your job may be impacted as well as write offs are taken and European economies shrink. As they shrink so will other economies also shrink. It is a vicious circle that will impact us all and hopefully encourage us to work together to solve the enormity of our problems.

Dick

How You Can Accurately Forecast The Financial Future

2011-10-19T11:16:00.001-07:00

Since 2007 when we published "How To Protect Yourself From The Coming Financial Crisis," when the U.S. and global economies appeared to be booming, we have kept making scary but accurate predictions. As the economic reality from these predictions will have a powerful effect on you, I would like to offer you some of the tools I use so you can do this for yourself:

1) Take a critical look at what any government tells you. The government may make a huge splash on television, radio, print and online journalism but it doesn't make their words true. For example, since the 2008-09 financial meltdown, the U.S. government and the media have heavily promoted the "economic recovery." But there is no recovery, the economy is actually crumbling. Their hope was to reassure consumers so they would spend again. But consumers are scared and most are spending only on necessities.

2) Selectively read. The New York Times today published, "Goldman Loss Offers a Bad Omen for Wall Street," which tells us this top global financial power broker lost money last quarter for only the 2nd time since 1999. The reasons Goldman lost money and why other "too big to fail" financial institutions, despite paying huge executive bonuses and shareholder dividends are actually struggling will tell you a great deal about what is likely to come. http://dealbook.nytimes.com/2011/10/18/goldman-loss-offers-a-bad-omen-for-wall-street/?nl=todaysheadlines&emc=tha2

3) Think carefully. The Wall Street Journal Friday published, "Bleak News for Americans' Income," in which pay fell 7% in the last 10 years, after being adjusted for inflation, according to the U.S. Census Bureau. This is the worst result since the Bureau began keeping these records in 1967. If real U.S. household income is falling, what do you think will be the impact on the U.S. Economy? What do you think will be the impact on real estate values, jobs, salaries for new college graduates and on tax revenues that support all levels of government? http://online.wsj.com/article/SB10001424052970204774604576628981208827422.html

4) Analyze. The Wall Street Journal Friday published "Widening U.S. - China Trade Gap Fuels Currency Battle." In August the U.S. trade deficit with China set a new record. How did this happen? And will it keep happening? As U.S. corporations continue to shift production (and jobs) to China the answers become obvious. http://online.wsj.com/article/SB10001424052970203914304576628702220717090.html

5) Think beyond your own borders. European economies are supposedly going to bail one-another out but Portugal, Ireland, Italy, Greece and Spain, as well as Great Britain are insolvent. Is the magnitude of their problems so great, even rich countries like Germany can't save them? And if so, how will they bail themselves out? And what will be the impact of their collapse on your economy? To learn more please see "Ratings Firm Warns on French Debt," and "Spain Hit by Downgrade, Falling Home Prices" from The Wall Street Journal http://online.wsj.com/article/SB10001424052970204346104576638411453105984.html, http://online.wsj.com/article/SB10001424052970204346104576638473880156108.html and "UK inflation rate surges above 5%," The Financial Times http://www.ft.com/intl/cms/s/0/ba3755d6-f96a-11e0-bf8f-00144feab49a.html#axzz1bFRJicDE

If you will take these 5 simple steps, it will amaze you, your family and friends how often you accurately predict the financial events to come. And by doing that you can also take steps to protect yourself and to advise others how to protect themselves as well.

Dick
Note: If you can't afford these publications, please visit them online or visit your local library.

If You Have A Home To Sell: Sell It Now

2011-10-18T09:45:00.000-07:00

In the U.S. and in much of the world, housing prices keep falling. But in some cases, when owners would be best off selling, they don't for fear of losing money, even though they still have equity in their homes. The following is a New York area example of a common dilemma:

"I don't want to sell at a loss," said a woman in her early 80's. But it turns out she bought this 2nd home many years ago for $275,000 and five years ago, the home was worth $700,000. Now it's worth $450,000 its price continuing to sink. But she won't sell at today's price even though it costs her $3,000 a month in overhead to own this home, which she no longer uses, because she wants the profit that existed five years ago, an emotionally driven bad decision.

By contrast, in the Los Angeles area, a home that sold for $700,000 five years ago, recently sold as a foreclosure or short sale to investors for $355,000. Those investors put an estimated $20,000 to $30,000 to improve and beautify the home and as of last week have it for sale for $495,000. They can make money even if they must under price other comparable homes for sale in the area. Sadly, this approach will become common once the lenders finally sell off their vast mountain of foreclosures and foreclosures to be, as the U.S. economy continues to crumble. But it is also the vehicle to put foreclosed homes back on the tax rolls so local governments can get tax revenue to help pay for schools, police and firefighters, while also improving neighborhood appearances as unmaintained homes often become eye sores.

These are examples of the U.S. housing market today. If you need to sell, consult with a local real estate professional, but get your home sold before prices drop further. If you want to buy but can wait, don't be in a hurry. Given the terrible job market and all the foreclosures, with more to come, prices are falling in most areas and if you are patient, you are likely to make a better buy.

Dick
Note: Thank you to my Uncle Gene Kazan for sharing these two examples with me.

Thank You Very Much Bank of America

2011-10-17T14:24:00.000-07:00

Recently the Bank of America, the U.S.'s biggest bank announced a new $5 a month debit card fee and set off an explosion of anger among already overwhelmed U.S. consumers. But the B of A actually did consumers a favor.

What their ill-timed action did was to tell their customers and prospective customers they should shop elsewhere for a banking relationship. Some small banks and credit unions would welcome this business and not charge this fee nor other fees that may soon come. So please don't get angry but instead see it as an opportunity to explore building banking relationships elsewhere where your business is appreciated.

Dick
For more information please see http://bankloansandrates.com/2011/10/17/oh-bank-of-america-we-never-knew-ye/

An American and Global Revolution Has Begun

2011-10-16T11:09:00.001-07:00

Americans are sick of having no voice in their government, angry at the crumbling economy, the home foreclosures, the lack of jobs, the gutting of schools, and the slashing of other vital services people desperately need such as medical care and Social Security. It's something the bailed out financial institutions, corporate CEO's, and the lobbyists and politicians who serve them still haven't grasped. Nor has the U.S. media which provides endless political sound bites.

Meanwhile the American Middle Class income, adjusted for inflation has slipped to 1970's levels while giant company CEO's are making record salaries and shifting evermore jobs overseas. And the U.S. spreads its "War on Terror" everywhere, no longer even bothering to justify it as its Military Industrial Complex receives a financial bonanza.

Americans know they are being had. Occupy Wall Street brought thousands of people to the streets of New York City and thousands more have taken to the streets across the U.S. and now it is spreading across the globe.* Rather than arrest those on Wall Street responsible for pillaging the nation's assets however, police are instead cracking down on the peaceful protesters. But in fits and starts and led by the young, by the vast number of unemployed and by those whose unions are being crushed Americans are beginning to take to the streets. As the U.S. and other economies grow worse, there will more protests, more demands for change and even louder demands that politicians become answerable to the people.

Dick
Note: Thank you to my friend Mary Ellen who encouraged me to publish this piece. Also, please note that an excellent case could be made that this revolution began in Greece with its vast protests and in the Middle East as in several nations, people have taken to the streets to peacefully overthrow their governments.

* To learn more, please see "Buoyed by Wall Street Protests, Rallies Sweep the Globe," New York Times http://www.nytimes.com/2011/10/16/world/occupy-wall-street-protests-worldwide.html?_r=1&nl=todaysheadlines&emc=tha22

As The European Economic Death Spiral Grows, It Will Impact You

2011-10-07T09:23:00.000-07:00

This is a death spiral with no way out. From a real estate bust that began in the U.S., the European economies are now crumbling in stages as we predicted 1 1/2 years ago. Portugal, Ireland, Italy, Greece and Spain are insolvent and so are the U.S. and England. Soon after, the strong economy of Germany will fall and so will the economies of China, Japan, South Korea. Not only will nations have trouble paying their bills, so too will companies as they default on their obligations, causing other unpaid companies to default.

Take Greece for example. To get another bailout, the government is to lay off 30,000 people, raise taxes and slash other overhead such as retirement benefits including to those senior citizens already collecting them, all to raise money to pay its creditors, such as giant banks. What do you think will happen to Greece as unemployment mounts and spending is slashed? Their economy will tank. Panicked creditors will demand even tighter budgets that will never materialize as Greek citizens replace their government and possibly withdraw from the Euro. Yesterday, Greek workers held a nationwide strike shutting down the country. The next such strike is scheduled for October 19th.

The spreading contagion will hit banks, mutual funds and other big financial organizations which will have to take huge write offs. Some will even seek new government bailouts, U.S. banks among them. But the situation will quickly grow worse as more European nations go bust. Please, if you haven't yet done so, slash your overhead, cross train to protect your job and develop your marketable skills. We are in for a financial tsunami of epic proportions.

Dick
To learn more, please see http://www.nytimes.com/2011/10/05/business/global/europe-finds-slope-ahead-is-growing-ever-steeper.html?_r=1&nl=todaysheadlines&emc=tha2 and http://online.wsj.com/article/SB10001424052970203388804576612261343333114.html

More Big Bank Fees To Come

2011-10-06T11:42:00.001-07:00

Many Americans are outraged that the Bank of America, a recipient of multiple multi-billion taxpayer bailouts, will be charging a new $5 monthly fee for the use of debit cards. Other giant bailed out banks such as J.P. Morgan Chase and Wells Fargo will soon do the same. But brace yourself for they will have many more fees coming. Why?

Because most of them, despite big CEO bonuses and generous shareholder dividends are in poor shape. They have huge losses hidden among their Financial Statements for some of them haven't even begun to take the write-offs from foreclosed and soon to be foreclosed real estate holdings for example. It's no wonder Fed Chief Ben Bernanke is nervous and keeping interest rates near zero to savers, some of them retirees living on fixed incomes, so giant banks can make a lofty return on that money.

What is the big bank response? "The free market should decide whether that was a smart move by [Bank of America] or not," said Camden Fine, president of the Independent Community Bankers of America. "The president and politicians should stay out of it." What "free market?" Since the 2008-9 bailouts the giant banks are working together closer than ever. And they didn't hesitate to demand bailouts from the "president and politicians" when it suited their purposes. It is a "free market" only for them and they make big campaign contributions to keep it that way.

Whether you are an American or European, brace yourself for many more new fees, most of them not publicly announced. The combination of European and U.S. defaults and write-offs will trigger a need for them, along with demands for new bailouts. What can you do? Seek out smaller, well managed community banks and financial institutions that value your business and have never needed bailouts.

Dick
To learn more, please see "Partisan Fight Flares Over New Bank Fees," The Wall Street Journal http://online.wsj.com/article/SB10001424052970203791904576611280523269082.html?mod=googlenews_wsj

An Empty Dinner Plate For Some Americans

2011-10-06T11:39:00.001-07:00

Many houses of worship join with food banks and missions to help feed the hungry. But as the economy is crumbling, the demand for food is growing greater, while there is less food to donate. As part of his Billion Dollar reelection campaign President Obama is crisscrossing the U.S. on Air Force One hosting expensive and lavish private dinners for giant campaign contributors.

Recently, he hosted a private $17,900 a plate dinner here in Los Angeles. Given the mounting hunger in America, may I suggest the President take but 1/10 of 1% of what he is raising, $100,000, and donate it to help feed the hungry, many of them poor and destitute. If that is unacceptable to him, perhaps he could cut back what the taxpayer is spending for him to fly Air Force One to these private dinners and donate that money instead. As an added bonus, the leftover food from those dinners could also be donated.

My intent is not to pick on President Obama. Political big wigs of both parties privately collect campaign contributions from wealthy donors and their lobbyists seeking favors. It's how America's political system operates. But in these hard times growing worse, surely the President and other top officials could part with a small percentage of the money they raise to help others in desperate need.

Dick

A Great Nation Is In Collapse

2011-10-06T11:36:00.000-07:00

Dear Reader, I would like to share with you my reply to my friend Ben Haney who said I was harsh on President Bush about the wars and about the economy but have been far less critical of President Obama:

I view President Obama much as I did President Bush, both guilty of extensive illegal actions and wish one would be impeached and the other who is out of office be indicted. But I’ve come to understand it doesn’t matter who is elected President or who serves in Congress, the system is bought and sold. Until the people take to the streets, this won’t change, up to the time we go bankrupt. It is my hope that the Occupy Wall Street movement or another movement becomes widespread and continuous, involving Americans across the nation in huge numbers to take constructive, non-violent action to seize control of their government and restore the Republic it was.

As for the wars, I take to the streets EVERY Wednesday and nearly every Friday and host http://www.candlelightvigils.blogspot.com/ and http://peacedemonstratins.blogspot.com/ in an attempt to fire up people. I’ve also written letters to the editor of the Daily Breeze to reach thousands more. But the combination of no military draft, widespread U.S. government censorship on news coverage and people scared about the economy, keeps them honking horns of support but not getting involved. Ironically, if they got involved in large numbers they could stop these wars.

It breaks my heart to see this nation, once the greatest nation in the world, fall apart. But it is falling apart and for now my solutions fall on deaf ears. But it won’t stop me from fighting the fight because humanity is worth it and I refuse to sit in silence while American drones and “Kill/Capture” squads conduct widespread murder in the name of peace. I refuse to be silent while America borrows and prints money to the point of insolvency to support the military industrial complex by building endless numbers weapons of mass destruction, fighter jets it doesn’t use, drones, tanks, ships and other weapons, all to employ people in U.S. based manufacturing and all at taxpayer expense.

I refuse to be silent while America’s soldiers and their families pay an enormous price. Soldiers are killed and maimed and their families bear the brunt, invisible to the U.S. public because the government doesn’t want to show the human price of war, not even the price paid by those who answered the call to arms issued by U.S. politicians, few of whom would ever send their own families to fight. I refuse to be silent while the military industrial complex provides hundreds of thousands of “contractors” all at taxpayer expense, while making huge profits for themselves as additional blood money to that they already make on weapons. The number of contractors is unknown to the American public for as usual with everything surrounding the military, it’s a secret and the U.S. news media doesn’t pursue it.

I refuse to be silent as the U.S. elite builds an American Empire, occupying or fighting in countries at will, despite it being illegal under the U.S. Constitution, the Geneva Convention and the United Nations Charter. And I refuse to be silent when the many victims of those wars including dead or orphaned children have no voice. I raise my voice for them and encourage others to as well, for we are all brethren and they are your and my extended family. We will all be impacted by the suffering we cause them.

Thank you Ben for your comments and questions.

Dick

The Crumbling U.S. Economy

2011-10-01T15:26:00.000-07:00

It's becoming a slow motion train wreck. U.S. households are being increasingly squeezed by rising prices and shrinking incomes. According to the U.S. Commerce Department on Friday, disposable income adjusted for inflation fell another 0.3% in August. Wages also dropped as businesses continued to layoff employees or to slash their hours.

As a result, Americans saved just 4.5% of their incomes in August vs. 5.6% a year earlier. U.S. family budgets are tight and growing tighter. People are scared and they are not going to go deeper into debt to buy foreign made goods they can't afford. They are increasingly using their savings to help pay their bills. If you are an American and haven't been cutting your overhead, please do so now so you don't become overextended. And if you are a foreign investor seeking safety in U.S. government bonds, think again for the government is sinking in its vast and rapidly rising debt.

Dick
To learn more, please see "Americans Tap Savings To Keep Up With Prices," The Wall Street Journal http://online.wsj.com/article/SB10001424052970204226204576602534216317712.html

What Tumbling Gold Prices Mean To You

2011-09-25T10:50:00.000-07:00

If you are worried about your financial future, the reason gold prices are falling may frighten you. They are falling because European banks anticipating defaults in Portugal, Ireland, Italy, Greece and Spain are selling gold to raise desperately needed cash. While some giant hedge funds are selling to meet bank margin calls on their falling portfolio values and some large investors are selling to cover stocks and other parts of their portfolios that are dropping sharply.

Last week global stock markets fell hard. The Dow Jones Industrial Average plummeted 6.4%, its worst week since the markets nearly collapsed in October, 2008. While gold on Friday had its biggest one day drop in five years, losing 5.8% of its value measured in U.S. dollars to close at $1,637.50. For the week, it was down 9.6%, gold's worst performance since 1983.

Global economic leaders are warning of a a financial "Red Zone," but they don't have the tools left to do very much about it. While in South Korea, where the economy has been strong, the government closed seven deeply troubled banks last week. Panicked depositors swarmed those locked branches to angrily demand their money. Their government will reimburse their losses up to 50 million won ($42,900) but some savers will suffer shortfalls and it sets the tone for fearful savers to trigger bank runs on other South Korean banks.

Like the 1929 Market Crash, events are beginning to overwhelm government officials and a global Depression is coming. So if you haven't already done so, please protect yourself. Slash your overhead by paying down your credit cards if you can afford to, sell unnecessary costly items such as an extra car or a boat and cross train at work so you become more valuable to your employer. And to the extent you can, be giving to those in need, for this is how people got through the last Depression in the 1930's and it is how we will endure this one.

Dick
To learn more, please see: "Market Rout Claims New Victim: Investors Dump Gold, Silver to Pay for Losses; All Eyes on IMF This Weekend," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903703604576589210888153064.html, "Economic Leaders Warn of a 'Red Zone:' Ammunition to Tackle Crisis Largely Spent, Finance Ministers, Central Bankers Face Lack of 'Clear, Coordinated Position,' " The Wall Street Journal http://online.wsj.com/article/SB10001424053111904563904576588830101878562.html and "Depositors Swarm Korean Thrifts," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903791504576588453692287010.html

There Will Be No Double-Dip Recession

2011-09-23T08:52:00.000-07:00

What we face is far worse. The global economic system is crumbling and it will take down governments with it. Each of us will be impacted. "Taxing the rich" as the answer to U.S. problems won't happen. Rich and powerful people and their corporations control the government and fund the politicians who only raise it as an answer to get the support of voters who will never see it brought to realization. And it is only a distraction from confronting the real issue, which is the U.S., much of the Euro Zone and Britain are insolvent from their wasteful spending and their generous contracts with and bailouts of giant corporations. And as they fall, they will take Asian and other markets with them.

Is there a more optimistic scenario? Yes but it would take enormous backbone politicians have not shown. The U.S. for example would have to end all its wars, close its 1,000 global military bases and slash its military spending. It would also have to ask its people not to borrow and spend money they don't have to buy foreign made goods they can't afford but instead ask the cooperation of China and other creditors to help America reestablish U.S. production.

The likelihood of this happening is nil. So governments and Central Banks will continue to offer assurances, but as we just saw with the new pathetic U.S. Fed stimulus, they are out of good options. So in their insolvency, they make empty promises. The situation is so desperate, some large investors are buying U.S. T-Bills for their "safety" because they don't know where else to put their money.

The jobs and real estate markets will continue to tumble and social services will keep being slashed. If you haven't already done so, please take protective actions such as paying down your credit cards and reducing your overhead by selling whatever you don't use that costs you money to keep, such as a boat or an extra car. And if you still have a full-time job, cross train so you have more to offer your employer.

Dick
For more economic information, please see "Markets Swoon on Recession Fears," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903791504576587150257111860.html

How The New U.S. Fed $400 Billion Stimulus Will Effect You

2011-09-22T11:17:00.000-07:00

Unless you are a giant company borrowing long term U.S. money or a U.S. home owner with huge equity in your home, have a big mortgage and strong personal credit and want to refinance your mortgage, it will have little effect on you. The economy is crumbling and the Fed wants to show it is taking action. Unfortunately for most people that action is meaningless and it shows us the Fed is out of good options.

Dick
For details of the Fed's announcement, please see "Fed Will Shift Debt Holdings to Lift Growth," The New York Times http://www.nytimes.com/2011/09/22/business/fed-to-shift-400-billion-in-holdings-to-spur-growth.html?_r=1&ref=todayspaper

A U.S. Financial Paradox

2011-09-19T12:55:00.000-07:00

Why is the U.S. government borrowing money to deposit in European banks that are going to fail?

The answer from the U.S. perspective is that making those deposits will help to prevent them from failing and by giving them money, they will loan it to one another, thus preventing the global financial system from freezing up, as it began doing last week. Unfortunately Portugal, Ireland, Italy, Greece and Spain are insolvent and these deposits will only slow the inevitable.

The U.S. was joined in making those deposits by the Banks of England, Japan and Switzerland and ironically, like England, the U.S. is also insolvent. But for now, the U.S. still has vast borrowing and printing capacity and is conducting itself as if it were still the world's wealthiest nation rather than its biggest debtor nation.

Dick
Note: Thank you to my wife Anne for posing the question raised in this piece.

The Global Economic Death Spiral Has Begun

2011-09-15T09:17:00.000-07:00

Greece is just the beginning of the collapse and despite all the assurances in the news media for the last 1 1/2 years that Greece's problems were being solved, and all the run ups in the stock markets with those assurances as is happening in the markets now, Greece will fall. So will Portugal, Ireland, Italy and Spain for they are all insolvent. England is also insolvent and it too will fall. Many of Europe's and the U.S's biggest banks will need new bailouts for they are all interlinked in the huge magnitude of financing they conduct and without those bailouts or government guarantees, a credit crunch is coming, as happened in 2008-09.

The Euro Zone is appealing to Germany, France and to China for gargantuan bailouts but the Germans don't have the resources for such a bailout and the German people would never allow it, knowing they would have to bailout a group of nations. France is no pillar of financial strength, its banks have huge European exposure and their credit ratings are already being sharply downgraded. As the industrial world's economies decline, so will China's manufacturing boom and China's economy will also be impacted by a domestic real estate bubble.

Meanwhile, the U.S., by far the biggest debtor nation in the world, has bought time because some panicked investors seeking "safety" are buying Treasury Bills. But the U.S. has no economic policy, its job market and home foreclosures are disasters growing worse, its government and trade deficits are mounting and its biggest bank, the Bank of America is reeling and will layoff 30,000 people. In addition to all of its corporate bailouts, the U.S. had two huge stimulus programs. Some say the bailouts and stimulus programs prevented another Great Depression, while others argue they failed to rescue the global economy. But in any case the bailouts and stimulus were extremely expensive and the U.S. and other nations didn't have the money to conduct them. They wound up printing and borrowing the money, hence the debt crisis of today, which has left Washington in gridlock as to what to do next.

The President's proposed "jobs program" is just more stimulus and the Democrats and Republicans can't agree on that. But while they dither, the U.S. economy is rapidly falling. According to the U.S. Census Bureau, average family income has fallen to 1996 levels and the average man earns what he did in 1978, adjusted for inflation. And 22% of America's children now live below the poverty line. In fact the number of U.S. poor has jumped to 46.2 million people, the worst since the Census Bureau began tracking those numbers in 1959.

9/16 Update: In another sign of how desperate the situation is becoming, on Thursday (9/15/11), the U.S. Fed, the Bank of England, the Bank of Japan and the Swiss National Bank all rushed U.S. dollar deposits to panicked European banks so they would continue to loan money, rather than start a credit freeze. This desperate approach was last used during the 2008-09 global financial crisis, the worst since the Great Depression.

So yes, the death spiral has already begun and the economies as we've known them will crash and burn. But do take heart. This is a natural cycle, repeated many times over the centuries and out of the ashes a rebirth always takes place, a Renaissance. In this case, hopefully a rebirth without all the U.S.'s wars and its military industrial complex behind those wars, which have drained so much of America's financial resources, its moral integrity and its compassion for humanity.

Dick
To learn more, please see "This Time Is Different: Eight Centuries of Financial Folly," a 2009 book by Carmen Reinhart and Kenneth Rogoff. "Census 15.1% of all Americans live in poverty," the Daily Breeze http://www.dailybreeze.com/latestnews/ci_18887429, "Income Slides to 1996 Levels," The Wall Street Journal http://online.wsj.com/article/SB10001424053111904265504576568543968213896.html, "Europe Lending Woes Deepen," The Wall Street Journal http://online.wsj.com/article/SB10001424053111904491704576570913474242974.html "Economy Clips Factories: Growth Prospects Shrink for U.S. Manufacturers Whose Profits Powered the Recovery," The Wall Street Journal http://online.wsj.com/article/SB10001424053111904491704576570900742148500.html and "Central Banks Pour Dollars Into Europe," http://online.wsj.com/article/SB10001424053111904060604576572442555810356.html

The Real Cost Of 9/11

2011-09-08T12:15:00.000-07:00

Nobel laureate and preeminent Columbia University Professor Joseph Stiglitz published a remarkable piece entitled "The price of 9/11." It begins, "Ten years after 9/11, al-Qaeda has been greatly weakened, but the price paid by the U.S. was enormous and unnecessary." What he wrote I believe will grab your attention, much as it grabbed mine:

"The September 11, 2001, attacks by al-Qaeda were meant to harm the United States, and they did, but in ways that Osama bin Laden probably never imagined. President George W Bush’s response to the attacks compromised the United States’ basic principles, undermined its economy, and weakened its security.

"The attack on Afghanistan that followed the 9/11 attacks was understandable, but the subsequent invasion of Iraq was entirely unconnected to al-Qaeda - as much as Bush tried to establish a link. That war of choice quickly became very expensive - orders of magnitude beyond the $60bn claimed at the beginning - as colossal incompetence met dishonest misrepresentation.

"Indeed, when Linda Bilmes and I calculated the United States' war costs three years ago, the conservative tally was $3-5tn. Since then, the costs have mounted further. With almost 50 per cent of returning troops eligible to receive some level of disability payment, and more than 600,000 treated so far in veterans’ medical facilities, we now estimate that future disability payments and health-care costs will total $600-900bn. But the social costs, reflected in veteran suicides (which have topped 18 per day in recent years) and family breakups, are incalculable."

To read more, please see: "The price of 9/11" http://english.aljazeera.net/indepth/opinion/2011/09/20119572556433850.html?utm_source=Al+Jazeera+English+List&utm_campaign=828a7dad99-Newsletter&utm_medium=email

Dick

How To Protect Yourself As The Economy Crumbles

2011-09-06T10:56:00.000-07:00

Across the world, manufacturing is slowing or declining and unemployment is mounting as are home foreclosures. In Washington we have skyrocketing debt, a falling dollar and political gridlock while in Europe, the debt crisis threatens the European Union as the economies of Portugal, Ireland, Italy, Greece and Spain are already crumbling. Japan is struggling to recover from the earthquake and tsunami while even in China, manufacturing is slowing and a real estate bubble is brewing. If you haven't yet taken protective action, please start now. And if this piece offends you, I apologize for its intent is not to upset you but to help you. Here are 7 steps you can take:

1) Slash your overhead. Pay down your credit card balances for the interest costs can eat you alive. If you are already buried in credit card debt, contact those credit suppliers and negotiate a payment plan and possibly even a forgiveness of some of that debt. And if you own a home, contact your local government to reduce your property valuation, which will drop your taxes. If you must sell that home, consult a real estate professional but price it to sell now, as in most areas, prices are falling. Run a yard sale to convert to cash things you no longer use. What doesn't sell donate to charity, which will help someone else get cheaply something they need and it will give you a tax deduction.

2) If your credit is still strong and you own a home with equity in it and a mortgage on it, and intend to stay, if you haven't yet done so, please refinance that mortgage on a 30 year fixed rate basis taking advantage of the lowest mortgage rates since the 1950's. If on the other hand, you must leave your home, perhaps you can move in with family or friends and pay them some rent. This is not a pleasant choice but it will slash your costs and provide income to someone near and dear to you.

3) Set up a part-time business to make money on the strongest of your skills. This will not only give you extra income but a paycheck in the event you lose your job. One such business, especially for underpaid or unpaid mothers could be to become licensed in childcare and offer a childcare service.

4) If you are fortunate enough to have a full-time job, cross train so that you have more to offer your employer. And take classes to enhance your job skills.

5) To cut your food bill, become a coupon clipper, join store clubs and also shop the discount giants like Costco and Sam's Club. And locate your nearest food bank. To reduce your medical costs, join a pharmacy discount club at Wal-Mart, CVS, etc. or negotiate lower prices with a small druggist. Negotiate as well with your doctor and your local hospital. In hard hit areas, hospitals will often provide a huge discount if you pay cash at the time of your treatment.

6) Barter. For example, if you grow fruits and vegetables, trade some of your bounty for what you need such as to compensate someone to paint, fix or do other handyman work for you.

7) No matter what happens, please enjoy each day of your life. It doesn't cost anything to smell a rose or to feel the sunshine or to check out a good book or movie from a library. And offer others a smile and a helping hand. That too costs nothing and will help to uplift the world around you. Together we will eventually get through this financial mess engulfing us all.

Dick
Thank you to my friend and webmaster Jon Barnes for his suggestions, which were incorporated into this piece.

What You Should Know About The U.S. Labor Force

2011-09-05T12:09:00.000-07:00

Dear Reader, To gain insight into the U.S. Labor Force, the following is a snippet from John Mauldin's Weekly E-Letter. John quoted Rob Arnott, founder of Research Affiliates and what Rob had to say is quite interesting as we gage what is to come next in the U.S. jobs market and in the economy. As you read this please keep in mind the vast number of manufacturing jobs the U.S. has shipped overseas.

“John, I looked at the composition of the labor force, men and women. Look at the graph below. From 1948 until 1980, men who considered themselves to be ‘in the labor force’ (working or wanting work) equaled roughly 98% of the male population ages 20-64. [Wow. What a quaint concept. If you could work, you wanted work.] From 1980 to 2005, this proportion fell steadily, from 98% to 92%. Then, in six years, it fell again by half this margin, to 89%. As for male employment, it averaged 94% of the population age 20-64, until the 1975 recession. Today, it’s 81%. Let’s assume that the old labor force ratio of 98% could, in fact, work. That means that male unemployment – including those who have given up on the idea of gainful employment – is over 17%, and is roughly tied with the levels of mid-2009.

“For women, society evolved from predominantly ‘homemaker’ employment to a point, about a decade ago, where women in the labor force equaled about 82% of the female population aged 20-64. The women in the labor force have dropped from 82% to 78% in ten years, with most of that drop in the past two years; that’s 5% of the female workforce that’s simply given up in two years. Using the prior peak of 82%, as the roster who would want to work, the current 71.6% who are working implies that female unemployment is roughly 13%, and is much higher than it was two years ago."

Dear Reader, This snippet paints an ugly picture about long term U.S. employment. If you would like to know more about these labor statistics and review the charts, please see John Mauldin's newsletter: http://www.johnmauldin.com/frontlinethoughts/its-all-about-the-jobs-and-gold But also remember, the situation is never hopeless and if we as Americans unite, we can take strong action to change this trend.

Dick

Are Your Savings Safe In The U.S., England Or The Euro Zone?

2011-09-05T10:39:00.000-07:00

U.S. government debts are skyrocketing, Washington is gridlocked and the U.S. is borrowing money as quickly as possible to cover its debts. Fortunately for the U.S. it bought some time from the latest financial panic as some big investors put money into U.S. Treasury Bills thinking they're safe. Meanwhile, England is floundering in debt, the latest Greek bailout has stalled and behind them will come Ireland and Portugal for 2nd bailouts if Spain and Italy don't get there first to receive their 1st bailouts.

What nobody wants to say is the U.S., England and the Euro Zone are insolvent and the International Monetary Fund and the European Central Bank don't have the money to bail them out. So are your savings safe in the U.S., England or the Euro Zone? They are if they are guaranteed by the government of each nation where they are held. That may seem contradictory considering their insolvency but what nations typically do as they go broke is to print more money, which then drives down the value of their currencies. So what will happen is you will be reimbursed but in money losing its value. While that's unpleasant, it's better than losing your money completely.

Dick
To learn more, please see the following Wall Street Journal articles: "Talks on Greek Bailout Are Stalled," http://online.wsj.com/article/SB10001424053111904583204576545811058225074.html, "Berlusconi Under Fire for Dawdling on Austerity Plan," http://online.wsj.com/article/SB10001424053111904583204576546403497996510.html, "Spain Is Closer To Controls On Budget," http://online.wsj.com/article/SB10001424053111904583204576546101414263340.html or just Google this topic and you'll see how dismal the situation is.

Protect Yourself As Even Global Manufacturing Is Now Crumbling

2011-09-03T08:56:00.000-07:00

In an ominous sign, factories around the world are slashing production in response to the darkening global economy and cutting jobs as well. U.S. production was barely break even as U.S. businesspeople join other Americans in losing confidence in the economy, as unemployment and foreclosures remain high.

While in Asia, South Korea and Taiwan cut production and China's expansion grew faint. In parts of Europe, manufacturing declined for the first time in two years as the financial turmoil gripping Greece, Ireland and Portugal is threatening economies in Spain, Italy and France. These are precarious times and people are scared as staggering sized debts mount in the U.S. and Europe with no answers in sight. Now we see the troubles spread to the global manufacturing sectors, the jobs engine of recent times.

Despite the optimistic statements from the U.S. White House, if you haven't yet slashed your overhead to protect yourself, please do so now. And if you have a house you need to sell, consult with a local real estate professional but price it to sell now and get out from under its financial liability. It is crucial that you batten down the hatches in the face of the storm already starting to come.

Dick
To learn more, please see "Global Gloom Buffets Factories," The Wall Street Journal http://online.wsj.com/article/SB10001424053111904583204576544243092319856.html

Re: Bank of America, Which Would You Prefer?

2011-08-31T09:37:00.000-07:00

Regarding Warren Buffett's Berkshire Hathaway rescue of Bank of America from financial collapse, some people are upset because Berkshire received super dividends and special stock options that could make it the bank's biggest shareholder. But which would your prefer?

Having Berkshire or the taxpayers bailout B of A? Even though the bank already got one huge taxpayer bailout and is designated by the U.S. government as "too big to fail," investors were actively selling off its shares as the bank was sinking in its troubled real estate and in its other financial problems. Either way, it was going to get a bailout. I would rather it be from private investors led by Berkshire than from you and me as taxpayers.

But Warren Buffett will also do something else. Because it's Berkshire's money, he will make a concerted effort to hold B of A management accountable for their performance, something the U.S. government has been ineffective at doing.

Dick

Buffett Rescues Bank of America

2011-08-27T11:11:00.001-07:00

In a stunning development, Warren Buffett invested $5 billion of Berkshire Hathaway money, a publicly held company he controls to rescue America's biggest bank, Bank of America, previously rescued by the U.S. government as "too big to fail." Despite all the help it received, B of A needed another massive government bailout without which its troubles could have led to a replay of the 2008 global financial system meltdown for giant banks are dependent on one another. That's how serious this development is. Although it will disappear from the news, be aware of how fast our fragile financial system could collapse.

For the B of A, it isn't just Berkshire's money that matters but Mr. Buffett's outstanding reputation, which will now attract or retain investors, investors who no longer had confidence in B of A's top management and were aggressively selling its stock for various reasons but most notably for the B of A's mounting black hole of real estate exposure. But B of A will pay a heavy price for Berkshire's funds and for Mr. Buffett's reputation. In return, Berkshire is to receive a special dividend stream and the option of buying more shares at prices near the bank's two-year low, which would make Berkshire the bank's biggest shareholder. In 2008, Mr. Buffett rescued General Electric and rescued Goldman Sachs. As with B of A, Goldman had been deemed "too big to fail" by the U.S. government which also bailed them out.

With bravado, B of A's Chairman and their CEO both claimed they didn't need the money but their Board of Directors immediately accepted it. While Mr. Buffett would not invest in anything he didn't believe in, I believe we will later find that he received strong secret encouragement from the U.S. Fed and the U.S. Treasury Department to make this investment, as they feared making a 2nd taxpayer bailout.

If you are a taxpayer, shareholder, bondholder, vendor or have money deposited in the B of A, Berkshire's investment is very good news. But if you are an employee, we'll see if this is good news for the bank is already laying off 3,500 people and preparing to lay off 10,000 more. If you are not one of those 13,500 people, that money may save your job, but likely, more layoffs are coming.

Dick
For more information, please see "Buffett to Invest $5 Billion in shaky Bank of America" http://www.nytimes.com/2011/08/26/business/buffett-to-invest-5-billion-in-shaky-bank-of-america.html?_r=1&nl=todaysheadlines&emc=tha2

Is Another Depression Coming?

2011-08-22T13:08:00.000-07:00

The global economy led by the U.S. and Europe is already crumbling. To save the Euro Zone from collapse will require Germany to bail it out, something neither it or the International Monetary Fund have the money to do. Meanwhile Portugal, Ireland, Italy, Greece and Spain are sinking and England is right behind them, which means European banks and other lenders have huge but undeclared losses and may need massive bailouts.

While in the U.S., the job market is a disaster and it is growing worse. And there is no such thing as "a jobless recovery." Small business, the U.S.'s primary "jobs engine," in many cases is struggling to keep its doors open. Wherever you live, failing businesses are all around you as are "For Lease" signs. With the falling job market, many buyers can't qualify for mortgages, home foreclosures are mounting and the real estate market is sinking. And from the Fed having pumped so much stimulus money into the economy, inflation at 3.6% is growing, which reduces the buying power of a paycheck. The U.S. economy is 70% consumer consumption yet consumers are overwhelmed in debt and not buying goods other than what they need.

Meanwhile, the U.S. government, by far the world's biggest debtor nation is drowning in deficits, yet still spending staggering sums it doesn't have on wars and on its military industrial complex. While the Washington politicians are in gridlock, even as our economy is crumbling. It's no wonder the Dow gyrates wildly up and down. There is so little confidence in the U.S. dollar, investors prefer owning Swiss Francs, the Japanese Yen, Gold and other valuable commodities rather than the U.S. dollar.

So where is the foundation for an economic recovery? If you have an answer, please share it. But in the meantime, you would be wise to slash your overhead and cross train, as you further develop your skills so that you have a better chance to keep your job if you are fortunate enough to have one. Because this is the U.S., it is hard to believe the U.S. government would default on its debts but that is exactly the path it is on. As the government takes in just 61 cents for every dollar it spends and is in gridlock, don't fool yourself to think it won't default. And when it does, we will need each other more than ever, for we will all be effected.

Dick
If you would like to know more about the economy, please see "Economy Sinks Markets," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903639404576516054025747710.html and "A Shaken Europe Looks for Bolder Fixes," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903596904576516663024370704.html

A Staggered Bank of America Is Slashing Jobs

2011-08-22T13:05:00.000-07:00

The U.S.'s biggest bank, the Bank of America is getting hit by giant mortgage write offs and lawsuits and has heavy exposure to the falling U.S. economy. So it is doing what many cash strapped U.S. households are doing, slashing its costs.

By September 30th, it will have fired 3,500 employees and it plans to fire at least 10,000 thousand more. After declaring banks such the Bank of America "too big to fail," the U.S. government bailed them out with billions of dollars of taxpayer money. Those banks were supposed to be back on their feet by now.

But Bank of America's shares are down 47% year to date, with the stock closing at $7.01 on Friday. This is a vote of no confidence from investors. And B of A is not the only giant "too big to fail" bank under fire, as Citibank, JPMorgan Chase and Wells Fargo are also feeling investor pressure. This is unfortunate because the U.S. needs them to hire more people, not fire them and it needs them to offer attractive rates for credit cards and other debt, not raise its prices and reduce its service to consumers.

Dick
To learn more, please see "Bank of America To Slice Jobs," The Wall Street Journal, http://online.wsj.com/article/SB10001424053111904070604576516813395283964.html

China's Real Estate Bubble Is Bursting

2011-08-22T13:02:00.001-07:00

China over the last three decades has gone from a 3rd world country into a global economic powerhouse, whose money finances much of the industrial world, most notably the U.S. But with China's enormous growth and its government providing plentiful cheap money, an unsustainable real estate boom began.

Now to try to let the air gently out of the real estate bubble, the Chinese government is tightening money and lending standards, raising the cost of funds and taking other actions. As a result, price have begun falling in Shanghai, Beijing, Guangzhou, Shenzhen and some other major cities.

Because a lot of speculative buildings went up, as the bubble bursts, there will be an abundance of empty apartments and falling prices. As in the U.S. the lack of construction and real estate financing will put a lot of people out of work and hurt the Chinese economy. Real estate investment plays a substantial role in China, 12% of its Gross Domestic Product and its drop will reduce the amount of money China has to invest elsewhere in the world at a time when the U.S. and Europe are desperate for funding.

Dick
To learn more, please see "Shanghai Slumps Amid Real-Estate Slowdown," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903596904576515314278100504.html

Is Gold A Good Buy At U.S. $1,800 An Ounce?

2011-08-19T10:48:00.000-07:00

The answer depends upon how you view the U.S. economy and its dollar. It may be way overpriced at $1,800 or way under priced at $3,000. We raised this same question at $1,500 an ounce on 4/19/11, just 4 months ago.

The U.S. economy is crumbling, the politicians in Washington are in gridlock and the U.S. government's debts are skyrocketing. Under these conditions, many investors prefer to hold at least some gold than to exclusively hold U.S. dollars. They also prefer to hold some other currencies such as Swiss Francs and Japanese Yen.

To quote what we said on 4/19/11: "To understand what is happening, it helps to put the price of gold in perspective. In January 1980, as a result of 1979's oil 'shortage' and skyrocketing gas prices, the Soviet invasion of Afghanistan, Iran seizing U.S. hostages and of U.S. high inflation, gold hit a record U.S. $850 an ounce as investors fled to something they viewed as safer than the U.S. dollar. Subsequently, the U.S. economy strengthened, investor confidence returned and the price of gold dropped.

"Right after the horrific events of 9/11, in 2001, gold reached $280 an ounce, up about $6. It's price kept fluctuating in the few hundred dollar an ounce range until the global financial meltdown in 2008, when its price jumped to over $800 and in 2009, to over $900 and while it keeps fluctuating, it has generally been rising since.

"Today, there are well founded fears for the U.S. government's financial viability and that of the Euro Zone as well, while inflation jumps sharply in China and Japan struggles to recover from the disasters that engulfed it. And the U.S. dollar, long considered 'good as gold' is now only as good as the confidence investors have in it. By their gold investments they are giving it a vote of no confidence."

Dick

Revenge Unleased Against S&P For Downgrading U.S. Credit

2011-08-19T09:43:00.000-07:00

Standard & Poor's downgraded the U.S. government's credit rating because of its serious concern for the U.S.'s rapidly growing deficits. S&P was saying "the king has no clothes," as they looked at his naked body.

But the two other major rating agencies, Moody's and Fitch didn't lower the U.S. government credit rating despite the U.S.'s rapidly mounting deficits, no plan to deal with them and the political chaos in Washington. Why? Because S&P is now in a firestorm from the U.S. government. The SEC, Justice Department and Congressional Committees are investigating whether S&P should be charged with fraud over its Triple A ratings of mortgage securities which played a crucial role in the financial collapse three years ago. This means S&P's top management will be repeatedly testifying, reams of material must be provided and huge legal fees await. Moody's and Fitch had also issued Triple A ratings, but for now, they are not under fire. Nor is there an explanation why it took so long for an investigation to be launched.

S&P also faces a financial blackball. On Wednesday, the City of Los Angeles fired S&P as a rater of its $7 billion investment portfolio and other governmental and corporate organizations may also do so. Without the fees from those ratings, S&P's livelihood may be threatened and their employees may lose their jobs. But as the U.S. government quickly sinks further into debt, which is happening even as you read this, S&P may hesitate in any additional downgrades, however warranted they may be. Shooting the messenger is an attempt to deceive you and me and it will not solve the U.S. government's severe debt problems.

Dick

To learn more, please see: "U.S. Inquiry Eyes S.&P. Ratings of Mortgages," The New York Times http://www.nytimes.com/2011/08/18/business/us-inquiry-said-to-focus-on-s-p-ratings.html?_r=1&nl=todaysheadlines&emc=tha2 and "Los Angeles fires Standard & Poor's from rating its $7 billion investments," Mail Online http://www.dailymail.co.uk/news/article-2027730/Los-Angeles-fires-Standard-amp-Poors-rating-7-billion-investments.html?ito=feeds-newsxml and "U.S. Probes Credit Raters," The Wall Street Journal, http://www.morningstar.co.uk/uk/markets/newsfeeditem.aspx?id=155144956493770

What Is The Real State Of The U.S. Economy?

2011-08-17T09:06:00.000-07:00

Most U.S. politicians, economists and pundits claim the economy is rebounding. But Wal-Mart, the world's largest retailer says no, stating U.S. economic conditions are worrying customers and making them hesitant to spend. And retailers that include Macy's and J.C. Penney that typically sell to higher income customers are finding similar fears.

"Our core customer continues to be strained," Wal-Mart Chief Financial Officer Charles Holley told The Wall Street Journal Tuesday. "The volatility in the headlines doesn't help the customer. They are really stretched right now," and he noted more of its customers receive public assistance. U.S. politicians, economists and pundits can say all they like about a "recovering economy" but reality is measured in dollars and cents by those who sell to the American public.

Dick
To learn more, please see "Wal-Mart Frets Over Uncertainty," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903480904576511962561155204.html

How The Soaring U.S. Trade Deficit Effects You

2011-08-16T12:57:00.001-07:00

The U.S. Commerce Dept. announced the biggest U.S. trade deficit in nearly 3 years, $53 billion, a trade deficit far larger then the Obama Administration and most economists and pundits anticipated. This means one of the last vestiges of a supposedly recovering economy is now faltering and it is faltering despite a weak U.S. dollar which makes U.S. made goods relatively cheap.

If you are an American, it means more layoffs, or a softer paycheck and a dollar continuing to weaken, meaning your money is worth less. If you are a foreign national whose nation is trading with the U.S. it means your country likely ran a surplus but it also means the value of the money you got paid in is losing its value. This is especially so for China, Japan, South Korea, Germany and the OPEC nations.

My suggestion for those who ship the U.S. manufactured goods, is to think seriously about manufacturing more in the U.S. and to employ American workers, so many of whom need jobs. Without those jobs, they cannot continue indefinitely to buy your goods.

Dick
To learn more, please see "U.S. trade deficit jumps," Los Angeles Times http://articles.latimes.com/2011/aug/12/business/la-fi-trade-imbalance-20110812

Will Governments Pay Their Pensioners?

2011-08-13T13:43:00.000-07:00

In the U.S., we have Social Security and state and local governments have made additional pension commitments. But in most cases, those commitments are only partly funded meaning state and local governments rely upon incoming revenue to fund them and now that revenue is getting squeezed by unending tough times. And Social Security, which is funded by its future recipients has been drained by the U.S. government and is packed with IOU's in the form of government debt. If you live in Europe in the Euro Zone or in England, you know your economy is under siege. This is especially true in Portugal, Ireland, Italy, Greece and Spain but it could easily spread to France and elsewhere throughout Europe.

So how good are all these pension "commitments?" Pretty shaky at best because if these economies don't strongly bounce back, bond holders will try to elbow their way to the front of the line to be sure they get paid before the pensioners. These pensioners include teachers, police, firefighters, paramedics and many other public servants. Meanwhile, inflation even at the 3.6% it is in America as of June 30th, reduces the buying power of those pensions and for everyone else as well.

From today's New York Times is a news article addressing this topic for Americans but wherever you live, please unite with others to do all you can to ensure your government will honor its pension obligations. http://www.nytimes.com/2011/08/13/us/13bankruptcy.html?_r=1&nl=todaysheadlines&emc=tha23

Dick
Thank you to my son Kyle for suggesting this piece.

The Silent Terror Gripping America

2011-08-13T12:39:00.000-07:00

It's the terror of losing one's job, which means losing one's paycheck, medical benefits and for some, their sense of purpose. Or it's being jobless and facing constant rejection as one's resume piles on to the resumes of many other despairing job seekers. It often leads to losing one's home and being overwhelmed by car payments, credit card bills and other debts. This is America today.

We see businesses closing, people being laid off and in some cases, unions being broken and working class people left to fend for themselves. Most people have little or no savings and live paycheck to paycheck. As for retirement accounts, those that have 401-k plans are watching the stock market wildly gyrate up and down risking their financial future. But for most people, Social Security and Medicare are what they will be counting on. Yet both of those vital programs are facing major cuts and are now comprised of government IOU's.

A friend of mine, a former executive, just turned 69 years old and has been out of work for two years. To the Dept. of Labor, he is not unemployed, he is "discouraged" and no longer counted because he has been out of work for over 99 weeks. His savings are gone. His and his wife's home, purchased about 3 years ago is worth much less than what they paid for it and for the first time in his life, he can't make the mortgage, property tax and insurance payments and is facing foreclosure. This will damage his credit score making it harder to rent an apartment. He like most of us pursued the American dream and played by society's rules. Now he is confronted by a nightmare, a nightmare faced by many millions of other Americans.

President Obama says the government's No. 1 task is creating jobs. But he is not specific on how and when it will do that. Yet the people of our nation desperately need work. It makes one wonder how the President and Congress can continue even one more day of wars and massive military spending when the need for financial resources and a helping hand is so great here.

Dick
Note: Thank you to Anne's and my friend Mary Ellen for strongly suggesting this subject to discuss on this blog.

The U.S. Economy Is Crumbling, What Can We Do About It?

2011-08-10T11:56:00.001-07:00

As you see global stock markets are jittery and the U.S. economy is crumbling. Without a massive restructure it will eventually collapse.

By a massive restructure, I mean ending the wars, sharply downsizing the Military Industrial Complex, which is draining the moral and financial life out of our nation, and uniting as a people to redirect our resources into productive uses that benefit mankind.

We can invest in Silicon Valley institutions that have created Apple, Facebook, Google, Hewlett-Packard, Intel, Oracle, Skype and numerous other high tech companies to create more companies that productively employ people all over the world, pay taxes and remind us of our connection with one another across the globe.

We can invest in biotechnology to address problems that have plagued mankind over the ages, we can create clean, environmentally friendly fuels and energy and we can enhance and build educational institutions, not slash their spending, for they are an investment in educating our young people, and it is those young people who will determine our future.

If this sounds impossible, remember how the U.S. ramped up to fight World War ll, completely redirecting the U.S. economy on short notice and it united the American people in common sacrifice. Later, when President Kennedy announced we would put a man on the moon by the end of the decade, it seemed impossible until we did it. All those resources, all that creativity, all that energy that captures the imagination is still there if only we will harness it!

Dick

The U.S. Fed Holding Rates Near Zero Will Not Save The Economy

2011-08-10T11:54:00.000-07:00

Yesterday, Wall Street was thrilled to learn the Fed will hold interest rates near zero for at least two more years and sent the Dow Jones Industrial Average up over 400 points. Unfortunately, cheap money won't save the U.S. economy from crumbling.

Since December, 2008 the Fed has held interest rates to near zero, bailed out giant corporations and funded enormous stimulus packages. None of that has brought prosperity and now the Fed is out of new options and is just promising to continue the one of cheap money. It will fail.

Until the U.S. government confronts its vast financial problems, starting with its wars and the staggering spending on its Military Industrial Complex, all of the Fed's approaches will fail.

Dick

Freddie Mac Needs Another $1.5 Billion Bailout

2011-08-10T11:45:00.001-07:00

Freddie is back again for another $1.5 billion bailout. U.S. Taxpayers so far have spent about $150 billion to rescue Fannie and Freddie and the U.S. government estimates the total cost will come to $250 billion. Among the reasons for those losses are both mortgage giants are carrying a mountain of foreclosures.

In addition, while Fannie and Freddie hold those foreclosures, those homes are not paying property taxes which hurts state and local governments and in some cases, the homes have become eye sores, detracting from their neighborhoods and threatening the value of other homes near them.

Instead of pretending these problems don't exist and allowing the properties to continue to fall in value, the U.S. government and its taxpayers would be far better off if a Resolution Trust Corporation would be setup. The government set up the Resolution Trust Corporation from the late 1980's through the late 1990's and it conducted a massive sell off of the foreclosed properties, putting the real estate market on a much more solid footing afterward.

Dick
To learn more please see "Freddie Mac reports April-June loss seeks more federal aid," The Los Angeles Times http://www.latimes.com/business/la-fi-freddie-20110809,0,7215623.story

Democrats And Republicans Finally Unite: But It Is To Threaten S&P

2011-08-10T11:43:00.000-07:00

Furious with Standard & Poor's downgrade of the U.S. government's credit, a downgrade based upon out of control deficits and dysfunction between the two political parties, the Democrats and Republicans finally managed to unite. Unfortunately it is to threaten S&P and by implication, anyone else who would downgrade U.S. government bonds.

The Senate Banking Committee staff is collecting information about S&P's evaluation of the U.S. government's debt problems and "all options remain on the table," a Committee aide told The Wall Street Journal. The House oversight committee is investigating whether S&P might have benefited by downgrading the U.S. government's credit rating and in addition, Congress is considering toughening restrictions on credit rating agencies. These are some of the actions angry politicians are quickly taking at the expense of the U.S. taxpayer.

Instead of shooting the messenger, Congress should be serving every U.S. citizen, who because of Congress' irresponsible actions, now owe $46,000 each. Congress can do this by getting its financial house in order, a Herculean task. S&P did us all a favor and deserves our gratitude.

Dick
To learn more, please see "S&P Is Facing a Bipartisan Backlash in Washington," The Wall Street Journal http://online.wsj.com/article/SB10001424053111904140604576498611687931304.html

Who Is The Biggest Dumb Ass, The U.S. Or China?

2011-08-10T11:40:00.000-07:00

Standard & Poor's just devalued U.S. government debt, a devaluation long in coming and likely the 1st of many to come. S&P just acknowledged the obvious, the U.S. is sinking in its own debt, much as China has been saying the last 2-3 years.

Last weekend Xinhua, China's state-run news agency called the downgrade "an overdue bill that America has to pay for its own debt addiction and the short sighted political wrangling in Washington". Yet as the U.S. government's biggest creditor with $1.2 trillion in Treasurys, China is risking the savings earned from the "blood and sweat" of its citizens to feed this addiction.

China's purchase of U.S. Treasurys plays a crucial role in allowing the U.S. government to issue a ton of play money at near zero interest rates, to fund its wars and war machine, to allow its citizens to buy Chinese made goods largely on credit they can't afford, to keep bailing out Fannie and Freddie, and to avoid confronting its massive and rapidly mounting debt problems. In recent years, all this cheap money sent to America without restrictions also set-off the real estate bubble.

So China, you are the drug dealer and the enabler and the addict is paying you in ever cheaper dollars. You can condemn the U.S. for being an addict but as long as you provide the drugs, America won't soon be going to rehab.

Dick
To learn more, please see "China's Debt Addiction," The Wall Street Journal http://online.wsj.com/article/SB10001424053111904007304576495873109283858.html
"The U.S. Downgrade: China Takes Aim at U.S. 'Debt Addiction' " Verizon Small Business Center reprint of a Wall Street Journal piece http://business.verizon.net/SMBPortalWeb/appmanager/SMBPortal/smb?_nfpb=true&_pageLabel=SMBPortal_page_newsandresources_headlinedetail&newsId=325729&categoryname=Technology&portletTitle=Technology
The title for this piece came from my son Kyle.

U.S. Adds 117,000 Jobs In July. Is It Good News?

2011-08-05T12:26:00.000-07:00

Most of those jobs were in health care, reimbursements of which the U.S. government is threatening to slash and in retail, in which such firms as McDonald's and Wal-Mart provide plenty of jobs but most of them pay low wages.

So unfortunately, it is not good news.

Dick
To learn more, please see the statistics directly from the U.S. government. http://www.bls.gov/news.release/empsit.nr0.htm

Are Europe's Big Banks Becoming Scared Of The Global Economy?

2011-08-05T11:53:00.000-07:00

As the world's economic outlook darkens and as the continent's financial crisis deepens, big European banks are selling government bonds and slashing credit lines to troubled European nations, while hoarding cash.

The have become fearful of European financial contagion and the rapidly mounting U.S. debt and are preparing to weather the potential huge financial storm they see coming. London based global bank Barclays is but the latest to express grave concerns as their CEO this week spoke of a "Loss of Confidence."

What does this tell us? That even huge conservative banks are growing jittery about the global economy and that we should carefully assess our own exposure and if possible, take protective actions.

Dick
To read more, please see "Europe's Banks Retreat," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903341404576483361004063864.html

Are Nations Rushing To Gold?

2011-08-05T11:30:00.000-07:00

Fearing heavily gyrating currency values and the falling U.S. dollar, many nations are diversifying their reserves into gold. South Korea this week became the latest nation to disclose this as it recently doubled its gold holdings.

In 2011, Mexico, Russian and Thailand have been major buyers, and in the last year, India confirmed also being a major buyer. And surely, many other large nations across the globe have taken this extreme step to protect themselves from declining values in paper currencies and from world economic upheaval.

What does that tell us? That nations with vast resources and a conservative outlook, are taking steps to protect themselves. Their vehicle of choice is a metal mankind has historically gone to when turmoil became the order of the day, as it is becoming now.

Dick
To learn more, please see "Central Banks Join Rush to Gold," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903520204576483223952488748.html?mod=googlenews_wsj

Loss Of Confidence In Governments Send Economies Spiraling Down

2011-08-05T11:09:00.000-07:00

In 2008, the global financial system nearly collapsed from its own greed and wild, unregulated speculation on financial instruments that had little substance. Governments around the world then conducted huge bailouts and it was their citizens who paid the price for the financial folly.

Now governments are under fire. The U.S. and Europe are overwhelmed in debt, trying to convince jittery financial markets things are under control, when they clearly are not. So money flies all over the globe in a desperate search for safety, driving stock markets sharply up one day, abruptly down the next, while the bond and currency markets gyrate up and down in extremes, as do precious metals such as gold and silver.

Meanwhile, giant corporations are flush with cash but most are too nervous to invest it. They are hoarding so much cash, that Bank of New York Mellon is taking the extreme step of charging them to store it.

What does all this tell us? That Washington's gridlock and mushrooming debt and European Central Bank and International Monetary Fund lies about the fast sinking economies of Greece, Ireland, Portugal, Spain and Italy are fooling no-one. The loss of confidence in governments along with their rapidly mounting red ink will ultimately crash the global economy.

Dick
For more information, please see "A Question of Confidence: In '08, It Was the Financial System That Faced Extensive Doubts, Now, It Is Government," The Wall Street Journal, http://online.wsj.com/article/SB10001424053111903885604576488672973950288.html?mod=googlenews_wsj and "New Fee to Bank Cash," The Wall Street Journal http://online.wsj.com/article/SB20001424053111903366504576488123965468018.html

Is The U.S. Economy Grinding To A Halt?

2011-08-05T09:54:00.001-07:00

U.S. manufacturing is falling. Health-care firms threaten to cut patient care for America's sick as the U.S. government threatens to slash payments and London based global banking giant HSBC, with a major U.S. presence is considering firing 30,000 employees over the next 2 years, 5,000 now, some of them Americans. Book retailer Borders is shutting, also firing thousands of people.

What jobs are being added are primarily lower paid jobs in health care and in retail (McDonald's, Wal-Mart, etc.) Meanwhile the debt deal President Obama signed lifts the U.S. government debt ceiling but undermines confidence in the economy and in the U.S. government, as major debt ratings agencies consider downgrading U.S. debt, which would sharply raise government borrowing costs.

While 9.1% of American workers can't find work, which is more than 14 million people. But add in all those who have been out of work for longer than 99 weeks and no longer officially counted and add in those who can only find part-time work, the number jumps to 22 million people.

Those people and their families aren't buying homes, cars, boats or furniture or spending on vacations, restaurants, clothing or anything else not essential. Many of them are among the vast number of Americans buried in credit card and other debt. Of course given these factors the real estate market continues to fall.

So where is the basis for an economic recovery? There is none. We are facing a collapse.

Dick
For more details, please see "Passage of debt-ceiling won't curb consequences, " Los Angeles Times http://www.latimes.com/news/politics/la-pn-debt-ceiling-senate-geithner-20110802,0,7957470.story
"HSBC Strategy Shift Cuts Jobs, Branches," The Wall Street Journal http://www.latimes.com/news/politics/la-pn-debt-ceiling-senate-geithner-20110802,0,7957470.story
"Health-Care Companies Are Infected By Severe Case of Washington Jitters." The Wall Street Journal http://www.rocketnews.com/2011/08/health-care-companies-are-infected-by-severe-case-of-washington-jitters/ and "Factories Slow Pace As Orders Contract," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903520204576481993587686186.html
"U.S. Economy: 117,000 Total Jobs Created in July: Unemployment Down To 9.1%," C-Span http://www.c-span.org/Events/117000-Total-Jobs-Created-in-July-Unemployment-Down-to-91/10737423230/?gclid=CLHbnP3HuKoCFYGJ5godQT9MyA

Gold Hits New High In U.S. Dollars

2011-08-02T12:02:00.000-07:00

Today U.S. President Obama signed into law the "Budget Control Act," which is anything but budget control. In response, gold hit a new high, measured in U.S. dollars, of $1,643, up over $23 an ounce.

Please recognize gold pricing will continue to flucuate up and down but this is a bad sign to those who believe the U.S. government is getting control of its staggering and rapidly growing deficits.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4944906

Dick

U.S. Home Prices Continue To Fall

2011-07-28T16:27:00.000-07:00

U.S.resale home prices are now 4.5% lower than they were a year ago, according to Standard & Poor's latest Case-Shiller home price index. Separately, the U.S. Census Bureau reported that U.S. new home sales dropped 1% in June from May to an annualized rate of 312,000 homes. This is the lowest annual rate of sales on record.

Speaking to you as a 35 year Southern California real estate investor, if you intend to sell your home soon, please consult with a local real estate professional but get your home on the market now. Not only are market conditions worsening, but the prime summer selling season will soon be gone. And interest rates are near record lows and could rise, which will take some potential buyers out of the market.

If you are a buyer, the market is coming to you. And once the big banks resolve their shoddy documentation differences with government authorities, in most markets more foreclosures will come. That is in addition to the foreclosures Fannie and Freddie are already trying to sell.

If you are an investor, foreign or American, you can buy collectives of properties at sharp discounts versus their pricing of even 1 year ago. But to be safe, don't heavily leverage them with debt, come in with a hefty down payment and plan to hold for an extended period, for the rental market is good and sales prices will likely continue to drop. Also if you are a foreign investor, with the weak U.S. dollar, in your currency U.S. houses may seem cheap. 20-25 years ago when the yen was super strong, the Japanese made that mistake and vastly overpaid for properties, ultimately losing huge money.

And if you have had your home foreclosed, my heart goes out to you. You not only lost what may have been your dream home but you likely have been mistreated, you're struggling financially, may have lost your job and you've had to uproot your family. Please feel welcome to express yourself here and know there are many others going through some form of what you are and vastly more who may yet face a similar path. Eventually, the housing market and the job market will turn up for they go very much together and times will be better.

Dick
For more information, please see "Home Sales, Prices Reflect Malaise," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903591104576469830286269192.html

Why U.S. Resale Housing Prices Keep Falling

2011-07-23T10:57:00.000-07:00

In June, according to the National Association of Realtors, U.S. home resales fell to their lowest level in 7 months. Worse yet, sales are running behind last year, the worst year in 13 years. This despite near record low mortgage rates. Why is this happening?

Because many prospective buyers fear the economy and fear for their jobs, while others are staying on the sidelines for now in anticipation of lower prices to come. Still others are deeply in debt and/or no longer have equity in their current homes and can't qualify for mortgages even at cheap rates.

The situation is spiraling downward. For the resale housing market and the economy to rebound will require a much stronger jobs market, a much higher level of consumer confidence and for the U.S. government not to set another debt cap but to get control of its soaring deficits.

Dick
To learn more please see "Home Resales Decline Again as Buyers Hesitate," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903554904576457830106557422.html?mod=googlenews_wsj

How Soaring U.S. Trade Deficits Effect You

2011-07-23T10:54:00.000-07:00

In May, the U.S. Trade Deficit hit $50 billion for the month, the highest in 21/2 years. Why should you care?

If you are an American, because for every dollar the U.S. spends on foreign made goods and services, it is a dollar not invested in producing U.S. made goods and services. This means fewer U. S. jobs. It also means that if you travel outside the U.S. in many places, including Canada, you will find it very costly as the U.S. dollar is so weak vs. the local currency.

Now our jobs market is not recovering for many of its production jobs are gone and U.S. citizens can't afford to travel which hurts foreign economies. It is also bad for our trading partners from China to OPEC, and from Germany to Japan who due to our nation's rapidly mounting debts, must worry about the declining value of the money we pay them.

The good news in the weak U.S. dollar is that it has forced some foreign producers such as BMW, Toyota and Honda to manufacture more of their products here to protect themselves from a dollar continuing to weaken against their currencies. And it has made it cheap for their citizens to visit the U.S. which creates tourist oriented jobs here. Ironically, this is the reverse of the way it used to be when America was the most powerful manufacturing nation and ran the world's biggest trade surpluses.

Dick
To learn more about this, please see: "Wider Trade Deficit Lowers Some GDP Forecasts," The Wall Street Journal, http://online.wsj.com/article/SB10001424052702303678704576441620125553048.html

Why China Still Loans Money To The U.S.

2011-07-22T12:39:00.001-07:00

China is a huge critic of U.S. government wasteful spending yet continues to loan the U.S. money in various forms. Why? Because it already owns $1.5 trillion in U.S. debt and a U.S. financial collapse could destroy the value of those holdings. How easily could such a collapse come?

China need only put away its check book and the U.S. government would be in dire straits. How is that for a national security issue? China can squeeze the U.S. government with the click of a computer keyboard if it wants to. But if it takes too strong an action, it threatens its biggest marketplace as China manufactures much of what Americans buy.

And if the financial markets come to believe China is ready to sell off its U.S. debt, a panic would ensue taking down the value of China's holdings with it, as buyers would pay pennies on the dollar. So for now, this shotgun marriage will continue.

Dick
To learn more about the China - U.S. financial relationship, please see "China's Treasury Holdings Make U.S. Woes Its Own," New York Times (6/19/11) http://www.nytimes.com/2011/07/19/business/china-largest-holder-of-us-debt-remains-tied-to-treasuries.html?_r=1&nl=todaysheadlines&emc=tha24

Are Americans Ready To Pay Higher Taxes?

2011-07-18T11:53:00.001-07:00

On Friday President Obama claimed they are as headlined in the Democratic Underground, a huge liberal Democratic Party site: http://www.democraticunderground.com/

"President Obama on Friday kept up the pressure on Republicans to agree to revenue increases in a deal to raise the debt ceiling, claiming 80 percent of the public supports Democrats' demand for tax increases. 'The American people are sold,' he said. 'The problem is members of Congress are dug in ideologically.' "

Rather than support tax hikes on themselves, the American people likely think the tax hikes will apply only to America's rich because the debate has centered around taxing America's highest 2% income earners. The vast number of Americans may not know that regardless of how this debate turns out, as historically been the case, they will be paying most of the taxes because unlike the rich, there are so many of these people and because most of them are wage earners, without the ability to readily redefine what constitutes taxable income,* as the rich are often able to do. Nor do they have the many tax shelters the wealthy have. Those conducting the debate know this and their performances are carefully crafted to appeal to the emotions of their supporters. In the end they will raise the debt ceiling and claim victory to their constituencies having fought their hearts out to do what was right.

Dick

*Please see "The Take Home Pay Brackets" http://www.bargaineering.com/articles/the-take-home-pay-brackets.html

Does America Have A Financial Calamity Coming?

2011-07-14T13:50:00.001-07:00

In 2001 when George W. Bush became President, the U.S. National Debt was $5.7 trillion. 8 years later when Barack Obama became President, it had skyrocketed to $10.6 trillion. Now it is $14.3 trillion and growing fast.

When the President and Congress raise the debt ceiling, it will be for the 10th time in 10 years, which is not unusual for it's been raised 74 times since 1962. But what is unusual is the explosion in the growth of the debt. This explosion is caused by a runaway military industrial complex that directly or indirectly employs millions of Americans building weapons that endanger the world and have led to endless U.S. wars and over 1,000 military bases throughout the world.

Because of all the American jobs it creates, there is no serious dialogue about ending the wars, closing the bases and cutting the military spending at least in half, which is what it will take to get expenses under control. And make no mistake, we will have higher taxes and not just on the rich to pay for all this out of control military spending and its debts we've already incurred, for all of this spending has been put on the taxpayer's credit card.

What is America's fiscal policy? Borrow until it can't borrow anymore? For 30 years, U.S. politicians have been financially reckless but now our nation so deeply in debt, that if China or other major lenders close their check books the U.S can't pay its bills! The U.S. would default and our nation would be in chaos. We are doing things to ourselves that no Osama bin Laden could ever do.

Is this leadership? Who is protecting the people? What kind of future will we and our children have when our nation is bankrupt? This is not a time to posture for the next elections, but time to tell the Americans how bad the situation really is and what you as office holders are going to do about it not over the next 10 years, but now. We are all in this mess together. If we work together, we can solve it.

Dick

Do Tax Cuts Create Jobs?

2011-07-13T14:55:00.000-07:00

Many Republicans insist tax cuts create jobs. But we've had those Bush tax cuts since 2001 and 2003. Where are those jobs?

It is true U.S. companies are creating jobs, in China, Mexico and in other low wage nations.* While extending those tax cuts, according to projections from the non-partisan Congressional Research Service show a 10 year revenue loss beyond 2010 of $2.9 trillion, with an additional $606 billion in interest charges, for a total of $3.5 trillion. And that's assuming interest charges don't skyrocket, which could happen as the U.S. sinks deeper into debt and investors get nervous. These are bills someone must pay!

My purpose is not to attack those who support huge tax breaks to create jobs but to encourage them to look at the results and recognize that after all these years, they don't bring jobs to America. Meanwhile, the American government is going broke.

Dick
*To learn more, please see "Despite Violence, U.S. firms Expand in Mexico." http://www.nytimes.com/2011/07/11/world/americas/11matamoros.html?_r=1&nl=todaysheadlines&emc=tha2

In The U.S. The Cruelest Tax Of All

2011-07-10T15:41:00.000-07:00

As the U.S. government sinks in its mushrooming debts and debates the extension of the tax benefits for its wealthiest citizens, there is not a word spoken about the cruelest tax of all, the one committed against its retirees and its other savers.

That tax came into being in 2008-09 and it was done with no debate, as it was quietly instituted by the U.S. Fed. It is the arbitrary and vicious suppression of interest rates on savings, so that the banking industry can rebuild its balance sheets after its self-induced wild ride on vast ill-conceived ventures.

While retirees and other savers receive virtually nothing in interest on their money, forcing many of them to live even more frugally than they otherwise would, after a lifetime or much of a lifetime of hard work, there is no end in sight to this undeclared tax, a continuation of the bailouts.

Yet at the end of May, 2011 the Consumer Price Index (CPI) had jumped 4.12% from May, 2010 meaning the purchasing power for retirees and other savers declined sharply. While at the same time, the cash strapped federal and state governments did not collect taxes on savings profits they otherwise would have gotten, for even not counting the CPI, "profits" amounted to relatively little.

But the giant banks have profited immensely and are paying out those profits in top management bonuses and dividends. While at the same time, not providing the liquidity to small business, low rates to consumer borrowers or forgiveness's to troubled and often out of work homeowners the Fed had hoped for.

This is Robin Hood in reverse. It is a transfer of wealth from retirees and other savers to enrich those with some of the deepest pockets. Recently, I listened to a lovely 96 year old widowed woman speak of the very small savings check she now receives and I thought of the Bank of America, Citibank, JP Morgan Chase and other giant banks that profit at her expense. It is unconscionable but readily correctable by the Fed if enough of us raise our voices.

Dick
For additional investment insight, please see "Today, Safe Investments Don't Keep Up With Inflation," by Scott Burns. http://assetbuilder.com/blogs/scott_burns/archive/2011/06/29/today-safe-investments-don-t-keep-up-with-inflation.aspx

With Dismal Hiring, Can The U.S. Economy Recover?

2011-07-10T15:35:00.000-07:00

Economists and pundits have been predicting a robust jobs recovery, yet the latest U.S. jobs report is dismal once again. In an economy that needs to add 150,000 jobs a month just to keep up with its growth in population needing a job, the U.S. added just 18,000 jobs last month, on top of the 25,000 it added the prior month.

Federal, state and local governments are laying off people and companies hired just 57,000 people in June. And some of those jobs are at Wal-mart, McDonald's and other low pay scale employers, while others are at military sub-contractors, which means jobs at taxpayer expense. The unemployment rate is now 9.2%, with 14.1 million people out of work, 6.3 million of those people jobless for over six months. Add in those who can only get part-time work and those out of unemployment benefits, and the unemployment rate jumps to 16.2%, its highest since last December. And corporate wages are declining on average for those who are employed.

Worse yet, the U.S. government's massive stimulus money is spent and the government is buried in debt. Meanwhile, consumers are overwhelmed with debt, deeper in debt now than 5 years ago as they struggle to make ends meet. So no surprise, they are not rushing out to buy homes, cars and appliances nor are they spending lavishly on restaurants and vacations, so the economy is in a vicious downward cycle. While this downward cycle is eating Americans alive, the government continues to spend heavily on its wars and its war machine.

This is not a spectator sport as the Democrats and Republicans fumble through their debt ceiling negotiation, a ceiling that will solve nothing but allow the U.S. to keep borrowing. As an American your voice matters but unless you and the rest of us raise our voices for our government to end its wars, slash the size of its war machine and get its finances in order, not only will the economy not recover but it will take all we have worked for down the toilet with it.

Dick
For more of the latest jobs information, please see "Job Growth Falters Badly, Clouding Hope for Recovery," The New York Times http://www.nytimes.com/2011/07/09/business/economy/job-growth-falters-badly-clouding-hope-for-recovery.html?pagewanted=1&hp

U.S. Food Banks Under Pressure To Meet Demand

2011-07-10T15:32:00.000-07:00

"Last week, we just about ran out of everything," said Noemi Sias, who operates a weekly food bank that feeds about 100 families a week at the Baldwin Park Bilingual Seventh-day Adventist Church. "The last families just got a few canned goods, a box of cereal and some chicken. But we always manage to give them something."

The Los Angeles Times food bank story this quote was taken from, covered Los Angeles and Orange Counties but if you Google titles similar to the one used in this piece, you will find numerous similar stories across the U.S.

These are hard times and food banks are struggling to meet demand especially as so many people have been out of work for so long, many of them with families to feed. If you can afford to help, please assist a food bank near you with grocery donations. Your heart will thank you and a hungry person will have something to eat in part because of you.

Dick
To see the Los Angeles Times food bank story, please click on http://www.latimes.com/news/local/la-me-food-pantries-20110708,0,7658519.story

4 Myths About The U.S. Economy

2011-07-08T10:58:00.000-07:00

Myth No. 1, the U.S. government bailouts and stimulus led the U.S. out of recession. But massive unemployment, falling real estate prices, the falling dollar, stagnant working class wages and record government fiscal and trade deficits tell you it's not so. The recession continues

Myth No. 2, consumer spending will get us out of recession. U.S. consumers are deeper in debt now than they were in 2006, as mortgage debt, credit card debt and college tuition debt mounts. While at the same time, the equity in their homes is worth far less than it was five years ago.

Myth No. 3, led by "too big to fail" bailed out banks, lending and liquidity will increase sharply, thus helping small businesses to expand. This was supposed to restart the U.S.'s small business job engine to hire people. But the opposite is the case. Lenders are fearful and stingy, even with all the government support they've received. They've tightened credit.

Myth No. 4, as giant U.S. companies grow stronger and the stock markets rise, they will hire en mass. Some giant firms have hired en mass. Wal-mart and McDonald's are prime examples, but at low wages. Some other giant companies have hired but overseas. Most large companies are instead sitting on a cash hoard, knowing consumers are hurting and fearful of the economy.

Reality is, we Americans must confront our problems, something we are very capable of doing. We must end our wars, downsize our military manufacturing machine, establish an energy program, while cutting greenhouse gases, and refocus our national attention through Silicon Valley to building businesses that bring greater benefits to mankind while contributing taxes to our coffers.

Dick
To learn more about the U.S.'s debt problems, please see "Debt Hamstrings Recovery," The Wall Street Journal, 6/27/11 http://online.wsj.com/article/SB10001424052702304314404576410141842025216.html

Big Discounts On Fannie, Freddie Foreclosures

2011-07-06T13:30:00.001-07:00

U.S. government owned Fannie and Freddie have 218,000 foreclosure homes to unload and more coming, so they are running a summer sale.

And it's got all the elements of a sale. Big discounts and cheap financing. Fannie will even help to finance the deal with a down payment as low as 3%. You can shop online at www.HomePath.com (Fannie) and www.HomeSteps.com (Freddie).

But like any sale, you must act now. Fannie wants their deals closed by Oct. 31st and Freddie wants theirs under contract by July 31st and closed by September 30th.

Personally, I find this heart breaking for the people who lost these homes and unfortunate for the U.S. taxpayers who are bearing hundreds of billions of dollars in losses. But these homes need owner-occupants who will care for them, as do the neighborhoods where the homes are located and the local communities need for them to again pay property taxes for schools, police, fire protection and other vital services.

Dick
For more details, please see "Freddie, Fannie Offer Summer Deals On Foreclosures," by Kenneth R. Harney, Syndicated Columnist, Seattle Times (6/26/11) http://www.pressdisplay.com/pressdisplay/viewer.aspx

Canadian Sticker Shock

2011-07-06T13:27:00.000-07:00

My wife Anne and I just returned from Vancouver on June 28th and she described the drop in value of our U.S. dollar vs. the Canadian dollar in one word, "ouch."

As of July 4th, the Canadian dollar buys $1.03 U.S. meaning the Canadian dollar is worth more than the U.S. dollar. We have been going to Vancouver nearly every year since 1995, and for most of those years, 65 to 75 cents U.S. bought a Canadian dollar meaning Canadian goods were bought for a 25% to 35% discount, including hotel rooms, food and travel.

But with the U.S.'s endless wars, out of control spending and staggering deficits, the U.S. dollar is not only weak against the Canadian dollar but against many other currencies as well. So as an American if you plan to visit Canada soon, please have a wonderful time but budget for much higher costs than in times past.

And if the ongoing fall of the U.S. dollar troubles you, raise your voice for fiscal responsibility. What you think matters and in a democracy, your government is accountable to you.

Dick

Is Vancouver Real Estate A Wise Investment?

2011-07-04T09:22:00.000-07:00

In the last year, Vancouver housing prices have jumped sharply, up 25.7%. The average home price is now C $831,555 (U.S. $856,501) and real estate is red hot there, seemingly a no lose proposition. So if you have the money, would you be wise to invest it in Vancouver housing?

Being a 35 year real estate investor and having just returned from Vancouver on June 28th, if your intent is to get a great return on your investment, the answer is no. While prices may keep rising in the short term, these prices are unsustainable because the average person can't afford them and is being priced out of the market, a market being driven by emotion and plentiful cheap money.

If you are going to live in Vancouver and need housing, please consult with a local real estate professional but my advice would be to rent as you get to know the area well and to allow prices to hit the ceiling and come down. You will make a much better buy. But if you want to buy now, then please plan to stay in your new home for an extended time period to avoid taking a resale loss.

To avoid a real estate bust as happened in the U.S., the Canadian government could tighten credit standards and raise interest rates. And local lenders should be leery of transactions that don't have credit worthy borrowers and a big down payment, preferably in excess of 20%.

With low interest rates common among industrialized nations, individuals, banks and mutual and money market funds are actively looking for higher rates of return and Vancouver, a beautiful city with an excellent business community can be very tempting. But please be careful and do your homework. You will be glad you did.

Dick
To learn more, please see "Canada's Housing - Boom War," The Wall Street Journal, 6/25 - 6/26/11 http://online.wsj.com/article/SB10001424052702304231204576406000393198650.html

Would You Buy A Greek Bond?

2011-06-22T11:38:00.001-07:00

The Greek economy is falling apart and its people have rioted over the severe financial cuts their government is trying to force on them as part of last year's European Union (EU) and International Monetary Fund (IMF) bailout. As we sadly and humbly predicted last year, Greece will default on that bailout.

The EU and IMF are discussing a new bailout with Greece but if a new bailout were done, it too would fail, for Greece is broke and putting them deeper in debt and more severely taxing its people, while cutting their wages further and slashing the retirement benefits of their senior citizens is not the answer.

What you don't see is behind the scenes, giant French, German, British and likely U.S. banks, along with U.S. money market funds and other huge investors from around the world bought the earlier Greek bonds and are now confronted with having to take massive losses on them. So instead, the 1st bailout took place shifting the entire burden on to the Greek people and now a 2nd bailout is being concocted. But the Greek people won't stand for it, for they are not the ones being bailed out, their bondholders are.

Why did all these giant investors buy those risky bonds. Because those bonds paid far higher returns than many other more conservative investments. But the reason they paid so much more was because of their risk and now as those bonds default, those losses must be taken. How bad is the problem? Greece a nation of just 11.3 million people owes 280 billion Euros ($400 billion)!

The EU and IMF will try to continue the earlier bailout to help these huge investors avoid taking the losses. This too will fail for the Greek people can't afford the old bailout nor a new one. In addition, Ireland and Portugal can't afford their bailouts and they too will default, once again forcing giant bank and money fund investors to face huge losses. Spain and Italy are next for they too are broke. The whole European financial system could implode, when these banks and money funds take these losses as part of appealing to their governments for "too big to fail" taxpayer bailouts. Add in England, which is also broke and the U.S. which is stunningly broke and the entire financial system is ready to implode. But the politicians in Europe and in the U.S. will try to postpone the day of reckoning for as long as possible.

So would you buy a Greek bond? You can buy them right now at a huge discount if you have a strong stomach for risk.

Dick
For more information, please see: "Europe Shifts Path for Greek Rescue," The Wall Street Journal, 6/18-6/19/11
http://online.wsj.com/article/SB10001424052702303635604576392080582974272.html?mod=googlenews_wsj

Does The U.S. Economy Depend Upon War?

2011-06-20T14:39:00.000-07:00

“If we were about to be attacked or had been attacked or something happened that threatened a vital U.S. national interest, I would be the first in line to say, ‘Let’s go,’ ” said retiring Defense Secretary, Bob Gates. “I will always be an advocate in terms of wars of necessity. I am just much more cautious on wars of choice.”

Mr. Gates was recruited by President Bush in December, 2006 to try to correct the U.S. mess in Iraq and retained by President Obama to try to do the same in Afghanistan. Both wars continue as does the pain and suffering to the men, women and children of those nations. It is apparent the U.S. has no intention of ending its occupation of either country, as the financial and moral toll to America mounts.

Fortunately, Mr. Gates succeeded in persuading President Bush and Vice President Cheney not to attack Iran, which based upon public threats Mr. Bush made, was something under serious consideration. In all likelihood, what then prevented a 3rd war was the U.S. forces were already spread too thin. This year, Mr. Gates tried unsuccessfully to persuade Mr. Obama not to launch the Libya War because of its cost in lives and in money. Yet a 4th "covert" war is also being fought by the U.S. military and the C.I.A. in Yemen, under President Obama.

Despite the U.S. government claims of being under siege from enemies everywhere, to understand what is really happening, we need to understand the underlying elements of U.S. policy. Since World War ll, the U.S. has been continually at war: Korea, Vietnam, Cold War, Gulf War and the current wars. The U.S. economy needs war for the Military Industrial Complex directly or indirectly employs millions of people.

No enemies and no wars, mean no staggering sized spending on nuclear and other bombs, nor fighter jets, nor tanks, nor ships, nor guns, nor biological and other weapons on this endless list. Nor are over 1,000 U.S. global military bases justified, including those in Germany and Japan (both since 1945) and in Korea (since 1953). Nor are the vast resources spent on the disastrous 40 year War on Drugs justified.

If we Americans are sincere about wanting peace, we must dramatically change our conduct and begin the biggest demilitarization the world has ever seen. Otherwise we will remain addicted to war until it drains every last ounce out of our humanity and our treasury.

Dick
The Bob Gates quote is from: http://www.nytimes.com/2011/06/19/us/politics/19gates.html?_r=1&nl=todaysheadlines&emc=tha22

An Ugly Truth About The U.S. Economy

2011-06-18T09:55:00.001-07:00

U.S. politicians are discussing slashing Medicare, Social Security, the educational system, police and fire protection and other essential services. But they don't discuss slashing military spending, which is the U.S. government's single biggest expense. Do you know why?

Because it is the U.S.'s biggest manufacturing job provider. Military contractors and sub-contractors account for 1-2 million high paid jobs, all at taxpayer expense. And those jobs are located in nearly every Congressional District, so Congressmen don't want those jobs touched.

But in the U.S., 24 million people are unemployed, under-employed or are no longer counted because they have been unemployed beyond 99 weeks. No-one wants those jobless rolls to grow, which would happen if tens of thousands of military contract employees were laid off. Yet the military machine is going to have to face layoffs.

Why? Because the U.S. government brings in just 59 cents for every dollar it spends. And no politician wants new taxes. So where does the additional money currently come from? Borrowing and printing. This is a recipe for financial disaster.

This ugly truth will effect each American, for our government is going broke. The sooner we face this ugly reality, the sooner we can confront our problems. We cannot borrow our way out of this mess no matter how much our government tries. It only makes it worse. Please raise your voice for fiscal sanity and to end these wars that are draining us financially and morally. It is long past time we held our politicians accountable for the wars, the spending and the military machine behind them.

Dick

What Happens If "Too Big To Fail" Banks Fail Again?

2011-06-08T10:56:00.000-07:00

One of the hottest things on Wall Street these days is speculating in commodities. The list of those who are speculating reads like a "Who's Who" of the U.S. bailed out banking giants: Bank of America, Citigroup, J.P. Morgan Chase, Goldman Sachs, Morgan Stanley and others.

Although commodities such as oil, wheat, corn, coffee, coco, cotton, gold and silver have hit the jackpot for banks, they are very risky because their prices can abruptly change. Just as real estate mortgages used to hit the jackpot for banks, what happens when some of these commodity prices suddenly fall sharply? Who bears the losses? Although for now bank bets aren't nearly as big as they were on real estate mortgages, there is no one but themselves to limit their speculation.

The 10 biggest U.S. banks now control 77% of the U.S. banking assets, a much bigger percentage than in 2008 when their collapse would have taken the global banking system with it. We Americans are now more vulnerable and more subject to being leveraged into another massive bailout.

But if another bailout is what they have in mind, the joke is on them. Unfortunately for the banks and their lobbyists, we don't have the money. We didn't have the money for the 1st bailouts either, and along with our military expenses, we are now wallowing in debt and in need of a bailout ourselves. Perhaps from their record profits and record bonuses, this time they could bail us out.

Dick
For more details, please see "Big Banks Cash In On Commodities," The Wall Street Journal, (6/2/11),
http://online.wsj.com/article/SB10001424052702304563104576359704074143190.html

Another Sharp Drop In Home Prices Is Coming

2011-06-02T12:08:00.000-07:00

I'm a 35 year real estate investor and what I'm about to tell you is not meant to scare you but to protect you. Come September 30th, middle and upper income home buyers and sellers will see another sharp drop in real estate values. Here is why:

In 2008 when home prices began their collapse, to try to stabilize the market, the federal government jumped in and raised their loan guarantees from $417,000 to as much as $729,750 per home loan. Without that guarantee, most lenders would no longer have made those big loans. But under the new formulas scheduled to take effect on September 30th, the top guarantee will drop to $625,000 or less depending upon where the home is. .

Without full government guarantees for these big loans, down payments could easily jump to 30% or more, credit scores and debt-to-income ratios will become stricter and interest rates lenders charge will also leap to 6% or more from the current 5%. That's because the lenders are scared of this real estate market and this economy and if they have to keep the mortgages, they'll demand much tougher terms. This means many prospective buyers won't qualify or will simply find the terms too onerous and not act.

If you're thinking this only impacts middle and high end buyers, think again. It will sharply limit the move-up market, which is a crucial part of housing demand, leaving first time buyers and investors as the primary purchasers. First time buyers like nearly everyone else are struggling to the point most are now renting. And investors are buying foreclosures or demanding low-ball pricing from sellers.

What does this mean to you? If you are a seller, consult with your local real estate professional but get your home on the market now. A typical escrow takes 60 days to close, and that's after you find a buyer. This means September 30th is closer than you may think. If you are a buyer, market pricing is coming your way, but the terms are likely to become much more expensive for you. Home prices will eventually stabilize but not any time soon. If you can afford to stay in your home, please enjoy it. If you can afford to buy, please buy something that will serve you and your family well for the long term.

Dick
For more details, please see: http://www.nytimes.com/2011/05/11/business/11housing.html?_r=1&nl=todaysheadlines&emc=tha2

Even A $20 Trillion U.S. Debt Ceiling Won't Be Enough!

2011-06-02T11:53:00.000-07:00

The current debt ceiling is $14.3 trillion but our government has already zoomed past it. But then the debt ceiling was always just a political creation, an illusion to convince the public our government is doing something about its out of control spending.

In the 200 years prior to President George W. Bush, the U.S. debt reached $5.7 trillion. While in office, Mr. Bush took it to $10.7 trillion, nearly equalling that spent by all 42 prior presidents combined. President Obama in his brief 21/2 years in office quickly took it to $14.35 trillion.

The Democrats and Republicans blame each other while both spend staggering and growing amounts of money on the military industrial complex, charging all of it to the U.S.'s credit card, as our nation sinks in red ink.

Both political parties are discussing "cuts" to the debt of a trillion dollars "in ten years." But the debt needs a trillion dollar cut this year, as it will easily hit $1.4 trillion or more. And those "cuts" as politicians mean them are simply a reduction in the rate of debt growth, nothing that will ever balance a budget.

Don't be fooled. If you are a U.S. citizen, you had better get involved before your government spends you and your savings into oblivion. Your voice matters. Please raise it loud enough so they can hear it in Washington and across the world, to hold your government accountable.

Dick

A Key Reason Why The U.S. Economy Is Not Recovering

2011-05-28T12:31:00.000-07:00

"New bomber could bring a jobs payload" headlined the front page of the Los Angeles Times (5/22/11)* as the great news spread rapidly across Southern California. But the U.S. is broke, laying off teachers, police and firefighters and may slash Medicare, Medicaid and Social Security, yet it has tons of money to invest in the Pentagon's proposed fleet of 80 to 100 next generation nuclear-capable jets.

The projected costs are $55 billion before even knowing the number of jets to be built. The costs will skyrocket as the aircraft is further designed and numerous features are added. Inflation will drive the costs still higher. The real costs including R&D will likely be hundreds of billions of dollars, as this jet is to be manufactured into the 2020's. No surprise, Republican "Buck" McKeon, chairman of the House Armed Services Committee and whose District includes part of where this jet would be built, strongly supports it.

In reply, I sent the following letter to the Los Angeles Times: "Los Angeles, like the rest of America, is desperate for high paying jobs, but not these. Their purpose is the delivery of weapons of mass destruction, assuming these planes are ever used at all. It may be like the F-22’s, they will simply be built and parked to provide jobs and all at taxpayer expense from a country rapidly going broke.

"The article never addressed where the money for these fighter jets would come from. Who pays for it if not the taxpayer? How? When? Will we establish a special tax on ourselves to pay for it? Or will we do what is done now with America’s weapons and wars, put it on an overwhelmed credit card?

"If this is what it appears, yet another military welfare jobs program, why don’t we save the taxpayers money and just give the money to the workers with the stipulation they do not build weapons of mass destruction with it. This way the world is safer and the U.S. taxpayer doesn’t have to pay for the additional cost of materials and facilities and other overhead."

This is a key reason why the U.S. Economy is not recovering. The military industrial complex is now one of America's biggest employers providing high paid jobs in nearly every Congressional District, and all at taxpayer's expense. The taxpayers can't afford it and the government, which raises 59 cents for every dollar it spends must borrow or print the money. This is leading to financial disaster and you and I must raise our voices for fiscal and moral sanity to rescue our nation.

Dick
*In the online addition, the Los Angeles Times changed the story title. Here is the story: http://articles.latimes.com/2011/may/22/business/la-fi-new-bomber-20110522