Nov
9
2009
A few years ago my wife and I traveled back to her families home in Jamaica. As we arrived to the Kingston Manley airport, I watched the palm trees swaying back and forth and enjoyed the wind and cool mist of the ocean. As I looked at all the beauty that surrounds this lovely island, there seem to be a difference in its view.
Jamaica is a very enterprising country. You can always notice a sense of commerce at every level of the island. When we departed on our journey to my wife’s parish, I could see the airport had gone through a modernization process. The government had also constructed a major expressway, which extended half way across its land mass. There was also a strong visual banking presents as seen on the islands billboards.
After a very pleasant ride throught the country side, we finally reached the families home. When we entered the property gate, it did not take long before the residences of the neighborhood had come to greet us. This was a wonderful welcome. We all hugged and shook hands. This type of greeting was something I only experience in the Deep South.
When I woke up the next mourning, I could smell the fresh valley air. My wife looks at me and said, “Come on, get dress, we have a lot to do.” Our first line of business was a drive to the parish town center with family to do grocery shopping. In Jamaica it’s customary for most islanders to shop on Saturday. Family food staples are meant to last for the duration of the week. After a view of the area my wife subjected having lunch at a friends home. When we arrived, the friend gave us a warm smile, and hugged both of us. As we sat down at the table, we could smell the kitchen flavors rushing towards the dinning area. This was such a special experience. As my wife and I sat at the eating table with smiles on our faces, our host walked in the room and put all the dishes on the table. This was a beautiful spread, rice and peas, fried fish, fried dumpling, and a very delicious salad. As we both began eating, my wife paused for a moment and said, “Don’t eat too much.” I looked at her and said, “What do you mean, this food is delicious?” She then explained, “We have lunch waiting for us a two other homes.” This was a big surprise. But when at Rome do as the Romans.
We both had such a great time in Jamaica, but there was one memorable moment I hope never to forget. With only a couple of days left to enjoy our vacation, family members decided to give us a ride across the country side. Our driver, who is a cab driver, stopped his vehicle about 50 feet from a wooded pathway. I didn’t hear any strange sounds or see any reason to stop, so I wondered why the reason for sitting. Then as I looked in the direction of the path, I could see a young goat emerging from the pathway. Then a bigger goat and then another. I imagine there had to be at least 50 goats which crossed the front of the vehicle. Then at the very end of the procession of goats, I saw this tall man following the live stock. This man appeared to be in great physical condition. He was dressed in clean pressed working cloths, and in his hand was a tall walking stick. I looked at him intensively as he walked by. Then he turned to his right and looked directly at me and gave a wonderful smile. This was such a great experience, not something you would expect on a drive across the country side.
With only a couple days left in Jamaica, I wondered how could some one find so much comfort in the ownership of live stock. But after thinking about the subject and talking to some of the locals, I came to the conclusion. If someone owns their own land and a adequate supply of live stock in Jamaica, they are thought to have achieved wealth. I would hope in the event of a U.S. economic depression, we in America could learn to accept the small or greater of what we have earned.
Nov
1
2009
When I first heard the report on cash for clunkers, I wondered do all of these people really need a new car. If you told a group of people, you would give them a substantial down payment and sell them a new car on excellent terms, it would cause a rush to the dealerships. For those who have not watched the evening news, that is exactly what happened. If you tried to explain the urgency of this economy and implied that this group would be better off correction their debt and buying investments that are suitable for the next 5 to 10 years, these people would most likely laugh you out of the room and say you are mad.
As American consumers, we have grown accustomed to possessing objects that gives us joy and comfort. Our American public would find it difficult to subject themselves to the public ridicule of not owing a new car or a well furnished home or apartment. But the fact is many of us can not afford this life style. With a zero percent savings rate and a consumer household debt plagued with credit card and numerous other debt issues, many of our citizens are approaching financial ruin. As we approach 2010, it maybe a good time to prepare ourselves for uncertainty. We as a society are not accustomed to living with less, but it may be time to tighten our belts and reassess the future. Our government is not in a position to continue the type of perks and entitlements we’ve have taken for granted.
When this economy reaches some extreme situation such as hyperinflation, or an act by one of our purchasers of bond debt, who may not want to sell anymore trade. Our citizens who have used all of their disposable income to maintain this current life style will find it difficult to manage the basic necessities.
These are very difficult times, but some may frame the argument, the stimulus is bringing us back to prosperity. These news accounts are deceptive. The improvements in the leading indicators we are seeing are base on increased debt. This debt may be from foreign bond sales or the printing of currency. This process may give some relief, but at some point we will have to pay the piper.
Oct
2
2009
Recently I went on line and logged into my Twitter account. I have always had an interest in the plight of the homeless, so I read a few of their twits, and responded to some. After doing so, I thought about my early beginning as a youth and my unexpected weekend as a homeless person.
It was the early 80’s. I had just arrived back in Washington D.C. after a job assignment. When I reached the front entrance of the hotel, I noticed my wallet was missing. This was a nerve rattling moment. As I looked around; I remembered I left my wallet in the back seat of the taxicab. This was not the way I wanted to arrive back in Washington. And as luck would have it, all of my friends where out of town for the weekend. I was not about to linger in self pity, so I started walking in hope of making the best of my time.
As I began my walk on that day of arrival, it appeared to be a pleasant sunny mourning, and for a time I enjoyed the stroll. But latter on that day I thought how some can maintain a day to day existence and not find any productivity in their life. I just could not understand how some could accept homelessness. As I slowly walked up and down the area streets, I began to feel as thou I was a member of the homeless community. But I had to stay consistent in my thinking. There was no way; I planed to make this a normal pattern.
With some creativity, I managed to find some where to sleep that night. When I woke up the next morning, it appeared to be a carbon copy of the day before. I looked at my cloths. They appeared to be spotted and somewhat soiled. This by no means was a pleasant experience. At some point you look at your surrounding as a permanent existence and wonder will you ever regain normalcy.
As I reflex on my weekend so long ago, I can only relate it to some of the tweets I noticed on twitter. The few words I remember seem so sad. I could only look at these writing as statements on people who had gotten accustomed to being homeless. Or may be the thought of homelessness seem to be their only way out. I read quite a few tweets, but there was one that got my attention more that the others. One young lady wrote in so many words that she was about to give up. She went on to say, her existence seem to be meaningless and the prospect of hope seem so distant. I took great concern in reading these few words. I responded, “Please don’t give up, you may not have seen the worst, and the worst may be much greater than any of us can imagine
Sep
12
2009
Recently I had the pleasure of speaking to a lady from Phoenix Arizona. This lady was happily employed in the corporate sector, and appeared to be pleased to have a job. Within the conversation, she asked, “how is the economy in the Washington D.C. area?” “Many are spending very freely as though this economic crisis will never hit Washington,” I said. But far as I am concern, it’s just a matter of time before reality sets in. The area city governments are sending out distress calls, but I don’t think most are listening.
After a few minutes of comparing the advantages and disadvantages of both cities, we both came to the conclusion, the outlook doesn’t look good. I was very concerned about the well being of this ladies city, so I began asking questions. “Is your economy fairing well these days?” “Oh no, our economy is deeply in trouble,” she said. Our government services are helpless; we currently have people who’ve been waiting for their unemployment checks for three months. The city and counties don’t have the money. “But where do these people live, and where do they get food,” I asked. The lady responds, “These people do not have homes, cars or money.” If you drove in my residential area, you would see abandoned houses on every street. Things are very serious. “Are you worried about your job,” I asked? I am very concern about my job. If my boss asks me to do something, “‘I’ll respond, when, where. I’m not about to take the risk of being on the umemployment line, I need my job.
As I listened to this young woman’s speak, I felted I heard this story many times before. I just can’t help to wonder, how this country can survive by lousing such a great portion of its middle class. Can we just watch these people disappear, or will we wait until our government finds funding to save us all? That’s just not good enough. We American citizens will have to find ways to buy land and construct housing units, know matter how small the units. Our objective should be to maintain shelter for those who can add value to our society. And by doing so, maybe we can find ways to construct a new work force.
Sep
7
2009
The troubles we are facing in our sub prime mortgage industry may have been a shock to many investors. Occasionally you may hear reports stating, who knew this would happen. Some may suggest there where groups in the housing sectors who may have seen the writing on the wall, but can they imagine the possible effects in the months to come. Small investors like myself, find it a necessity to be abreast of market conditions, and can not afford to have their portfolio wiped out. Know small or large investor want to wake up one mourning to find a dramatic drop in their portfolio, but that is exactly what happened in this current crisis.
If you listen to current news accounts, you might think the worst is over, but as Ronald Regan would say, “you ain’t seen nothing yet.”
Shortly after October 2008, many reports surface on the urgency of mortgage defaults. One report read, sub prime mortgages will continue their rise in foreclosures. The next report gave concern to the default of jumbo mortgage and commercial properties. When I first read the statement of a possible failure in commercial real estate, it was my thinking that those investments products where save. But when you think about it, they could not be any saver than sub prime mortgages. They where all supported by bond investors, and at some point there must be a return on investment.
The negative complication in the economy are multiplying. We not only have a imploding commercial real estate market, we share a crumbling sub prime and jumbo real estate market. To compound things, our states will soon run out of stimulus cash, sometime near early 2010.
The nations current crisis may not go away anytime soon. We can only look to the Obama administration to structure some kind of public relief. But how will he do it. Will the administration continue to print currency? At some point our inflation rate will rise, which could damage our federal bond rating. The administration may also decide to continue the process of selling Treasury and bond debt to our foreign partners, but at some point we will have to increase the interest rate. By doing so, this may add pressure to our damaged housing market. The choices are not easy.
Aug
23
2009
If you are one who monitors the reports of gold bugs and economics, you may have heard the choirs, get rid of your dollars. The dollar is falling. For 15 years, that has been sound advice, and the economic meaning may be more relevant today. If you are trying to explain to your family or friends the need to get rid of the dollar, it may be a hard sell. As Americans we know, know other form of currency exchange except the dollar, but it is just a government note, which its owner promise to pay its holder. And at this current date the owner in broke.
If you speak to those who have traveled abroad, you would know, the dollars buying power does not enable the buyer much value. As consumers you don’t have to travel that far to see the results of our economy. Just take a visit to your local grocery store. When I’m shopping, I find myself staring a food products as though I was purchasing hardware. The prices can be so high that it makes one adjust their budget to maintain a sufficient food supply. It’s true the dollar is losing value and could soon be devalued. If your not sure look at the price of gold. In the mid 1980’s the price was between $350.00 and $400.00 an ounce. Today the price has sky rocket to $975.00 an ounce, and at those prices it’s still a bargain. If the consumer has any concern about his or her assets, it may now be a good time to look at gold and silver coins.
The dollar is going thru a roller coaster of economic problems. But there is another issue we’ll have to face. As reported 77 backs have failed this year. In the past two years 102 banks have collapsed. The FDIC’s cost average estimates 24% of assets.
The problems our much greater than any of us can imagine. At some point our government may have to reasess it budget practice to determine under current economic coditions, whether maintain funding for FDIC suits the fundamental needs of its citizens.
Aug
22
2009
When I hear people casually speak of inflation, I wonder do they know how bad our fragile economy may be. I imagine there are many who are quite aware of the conditions we are facing. But for those who are not so informed, I would hope they would examine the price of food on their next visit to their grocery store. Inflation is slowly creeping into our net income.
The sad reality is, corporate profits are down and their cash flow is dwindling. If corporate profits continue this pace, we can well expect increase unemployment. This process would mean more foreclosures and another injection of stimulus relief. Recent reports subject, venture-backed liquidity fell 57% from $6.48 billion in the second quarter of 2008 to $28 billion in its recent quarter, as stated by Dow Jones VentureSource. This would mean the unemployment level is having some effect on corporate profits.
We are slowly approaching a cross road. If this trend continues, the process will increase business failures and a higher level of unemployment will ensue. The problem will also increase price inflation. Can we sit back and wait for the unthinkable, or will we as Americans find solutions to what may be the greatest financial diaster in modern history.
Aug
21
2009
When I first arrived in the Washington D.C. area at the age of 22, it was normal practice to visit as many house parties as one was invited. After entering these very nice homes and apartments and being introduced, I was surprised to be asked the question, “Hi, my name is so and so, here is my business card, do you have one?” This practice was very new to me, but I latter found, this was just a normal part of Washington D.C. social communication.
Latter in the 80’s the market took a down turn. If you were one who noticed the social moments of the city. You would have seen plenty of evidence to support prosperity in the area. But this was Washington D.C. Many people where not concerned about the nation’s economy. If you talked to some people, you would hear the old line , “We’re not worried about the economy, Washington D.C. has always been recession proof.”
At the end of 1990’s the tech boom came to an end, and the old line was repeated. But these where different times. If you worked or lived downtown, it was possible to see some one you knew living on the street or in a distress condition. The market was starting to show some weakness.
As we enter 2009 the old line is not use as often. Counties and cities in the Washington D.C. area are experiencing possibly the greatest foreclosure rate in its history. The unemployment rate in the area is 9.3., and the consumer house hold debt is climbing. These are not ideal times. It may be time to reassess our thinking.
Aug
20
2009
There is an apparent problem for job seekers in the state of Michigan. With an auto industry trying to gain new footing, and sub prime mortgage and business sectors in disarray, there appears to be no sign of relief for job seekers.
The state of Michigan currently maintains a 14% unemployment rate. It is the hope that the current administration may create some new stimulus plan to restart some of the states failing industries.
But this may be easier said than done. Because of stimulus and quantitative easing, the Obama administration may be anticipating economic relief for 2010. But at the same time in 2010 the states are due to exhaust their government stimulus.
The Michigan Department of Human Services has reported 100,000 jobless benefits will expire in January. Can the administration continue its printing press relief, or will we damage our current bond rating.
Aug
19
2009
The Labor Department reported July 2, 2009, the unemployment rate rose 9.5%. The report also stated employment fell by 467,000 jobs in June. For many of us who study the market on a daily bases, this came by no surprise. It is not inconceivable to see further drops at or near, or below the June figures for the foreseeable future.
I am surprise to hear columnist and economics make such statement as, the bottom is very near. Or we did not expect such negative numbers. How do these groups base their projections, and where do they reach their conclusions for economics support.
It would not be unrealistic to think with our current infrastructure and U.S. population that we would not expect economic growth, not feed by government stimulus. But how can the country maintain growth when there is a need to address a growing debt and deficit. We also share the issue of addressing an out of control foreclosure market, consumer house hold debt, and a inflated dollar.
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