Friday, July 10, 2009

I wouldn't necessarily call it a return to the Smoot-Hawley Tariff of the 1930's, but readers should clearly digest the impact of G-8 leaders, and their push on green energies, and eco-friendly regulations... As it stands, there appears to be a growing rift between industrialized nations, and the rest of the world. As Obama led G8 countries in a push to adopt strict regulations on global warming, it was clear that the industrialized camp (those countries who are heavily industrialized... have a higher standard of living... are unionized... and produce industrialized products at a much higher cost) are competing against the up and coming countries like Brazil, China, and India whom for all intensive purposes would like to take the place of the industrialized nations. It is easy to demonize the non-G8 nations... and paint them into a corner as being the cause of higher green house emissions. Understand though, wealth and power are at the root of this discussion. And if people cannot read bwtween the lines on this one, then shame on them!!! while most research shows there is such a thing as global warming, and its consequences are dire, thi also stands as a clever way of setting up future trade barriers, and placing new stringent regulations on those nations who are growing the most rapidly...and sapping the wealth of the united States, and countiries in the Euro zne. At the end, I believe greed, power, and money will win out.

Debt for Sale

It worked for the United States under the Washington Administration... but will it work for California? This is the question that financial experts are wrestling with today as California was granted SEC clearance to sell their debt as a securities... A promise that if you loan the state of California money now, they will pay an investor back some time in the future with interest. The question becomes, is the purchase of California debt considered an act of investment or speculation? Consider the fact that the state of California is broke. True, it is one of the largest economic regions in the world. And in many ways, it shows an uncanny ability to leverage itself in ways that has created tremendous opportunities for wealth. However, the years and years of excessiveness is now being seen in massive deficits and budget short-falls. Excessive risk taking on one end, and excessive spending on the other has put California in a financial hole that it will not soon climb from. The question becomes whether it is smart to invest in California's debt. As an investment I would say hell no...however, if and when California debt becomes so excessive that it is no longer viewed as an investment, but more along the lines of a speculation, it may be time to consider that opportunity. A lesson from history would suggest that the Federal Government in some way shape or form will bail them out. Alexander Hamilton used this argument to start a national debt back in the 1788, and we have carried a debt ever since. If push comes to shove, the Feds will bail Arnold and friends out on this one!!!

Readers should not confuse Thursday's job report which showed a better than exected number with reality. The only holiday of the summer definitely threw off that number, and to be sure there were more pink slips waiting when people went back to work this week. For instance, some amusement park workers were laid off due to lower than expected attendance this summer. While we have been told that employment is "always" a trailing number in recessions, I believe we are well served to consider several other variables including a continuous job claims number that was over 6.5 milion. Throw into the mix a statistic that shows credit card default rates at a 35 year high, tapped out consuers who are now late on home equity loans, and emerging consumer driven problems for our neighbors to the North in Canada, there is no quick fix lurking around the corner. Please don't let the snake oil salesmen on CNBC convince you of something different. Aside from stimulus monies, the emperor has no clothes.

Interestingly enough, an article by Blomberg suggests that the recession will be over by 2010, and we will be in recovery mode thereafter. The report went on to suggest that there are signs that the housing industry has bottomed, which means there will be an opportunity to raise interest rates from 0%, to a 1% mark. When asked about the recent dip in stock prices “I think the market got a little bit ahead of the economy,” Fed Bank of St. Louis President James Bullard said yesterday in a Bloomberg Television interview. “I do not think the recovery is faltering. If you look at the projections that were made in December of last year, we’re right on track.” I'll let you be the judge on this one... another reportthis morning contradicted this sentiment...

Stretching the Dollar
I did want to mention a way to save a few bucks on health insurance deductibles. When you get a bill from a hospital, and call to question some of the charges or the rate to which the primary insurance company covers the bill, I have found customer service representatives to be more than ready to wheel and deal on deductible amounts. At the end of any conversation I have had of late, the last question I ask is "Is that the best you can do on the deductible charges?" On one bill the customer service representative knocked 15% off the bill. Another konocked off 20%. Evidently, these folks have been instructed to get money and get it now. This approach alone saved my family over $100.00 last month!!!

1 comment:

AX said...

dead-on on jobs report, TC, next week could be disastrous. Getting nervous about GS reporting, could be big boost.

And don't ya know the SEC said Cali IOUS are securities? Yeah, right.