Month: June 2009

What if the “Green Shoots” are Poison Ivy?

We hear over and over again from commentators on TV, Radio, and alike that there are signs of “Green Shoots” all over the economic landscape. You hear them quoting this statistic and that statistic. You hear them compare this with that, and so on and so forth, blah blah blah.

I’ve been speaking and writing for a while that the so called” Economic facts and figures ” can not be looked at with the same reverence or the same indicator weight that they once seemed to infer. One example that I’ll sight is the recent jobless claims. I listened to so many so called “Experts” rally around any microphone or TV camera they could find to start yelling….”This is a sign we’re heading in the right direction….Jobless claims are a lagging indicator so this shows the recession is beginning to fade”….an far too may other such nonsensical gibberish that left me shaking my head.

I’m not saying I’m smarter than the people who claim to be “Experts” But…. I am saying to just listen to their analysis of the data, and not look for ways or means other than theirs to substantiate or to contradict so you can weigh the validity of either and make an informed decision is not only foolish….It’s Stupid!

The continuing claims for the jobless numbers is watched very carefully by those who want to keep a pulse on what’s happening in the economy. However, the people who are informed and have their OWN MONEY in the game, and base their livelihoods on their decisions understand, “The drop in numbers might not be people Retuning to Work…but Worse…They are now No Longer able to collect Unemployment because their benefits have RUN OUT.” If that is the case, then things are not getting better, they might be getting much worse.

I can’t say that I’m correct in my assumptions ( But I feel I am closer to what is actually going on than most others.) but at least I have looked at both sides, and will base my decisions on what I believe is truer to the situation at hand. I will not walk blindly into a patch of “Green Shoots” just because they’re green, when it could be a patch of poison ivy. I’ve had a similar thing happen once before.

I grew up in the inner city as a kid, we regarded plastic grocery bags blowing down the street as ” urban tumbleweeds”. Three tenements houses was where we lived, so when I bought my first house, I bought a house in the country on a couple of acres with a forest as my back yard. One day after clearing branches from my yard, I had a bad rash on my forearms but didn’t know why. After going to the doctor, I was informed I had poison ivy. I never had it before, and I didn’t know where I could have gotten it from since I didn’t even know what it looked like. So I looked up what poison ivy is, and what it looked like. Low and behold all those pretty green vines and white lace flowers growing all over my trees and stone walls….Yup!..all poison ivy. I had never known how to spot them before, but now with my new found understanding my eyes were wide open, and could not look at all green shoots the same way again.

It’s kind of like the way one should look at economic data….. Is the way it’s being presented making you feel a little itchy?

Mark

The Sharks are no longer looking for blood….They’re chumming!

To anyone who’s not an avid fisherman, the word chumming might mean palling around with some friends. Trust me…that’s not what I mean!

It has been said many times that “Truth is stranger than fiction” , but reality can stand all conventions on it’s head. What went as the norm yesterday or was an unbroken or unwritten rule is now either thrown upon the scrap heap of days gone by, or is relegated to the land of heresy.

It’s a funny thing about economy shifts. Whether for good or bad no one can say things will stay the same. So here’s the latest…..

We’ve all been a custom to those commercials we see over and over again on TV….”If you’ve been injured in a collision….or  If you’ve been given medication that……”  for the ambulance chasing type lawyers. But to my greatest surprise I was shell shocked the other night ( does that qualify for a damages suit?) when on the TV came a commercial stating ” Have you been misrepresented by an attorney in a lawsuit….Did you feel your lawyer didn’t perform his duties the way you believe they should have, and you lost your case resulting in not getting the judgement you feel you were entitled to?   Call us the Law Office of………” Well I almost fell out of my chair. ( Could almost falling qualify for maybe half as much as truly falling in a suit?)

It has long been an unwritten rule that lawyers don’t sue other lawyers, or to say it another way…if there are 3 people in a lawsuit and only 2 will get paid, it’s the lawyers not the defendant who’ll get the money. Doctors, manufacturers, and many others have been at the brunt of trying to rectify or subdue the skyrocketing cost for protection under the so called Torte Laws. So far it has been an almost impossible plight. Most companies and even many professionals have been put out of business, or decided to change careers rather than paying the extorted fees of trying to keep enough insurance protection to dodge a wave of assaults on their business or capitol even if they hadn’t done anything wrong! Just the mere fact that they might have deep pockets from running a successful business has made them targets to prove something they might have never done, or worse…settle for a payment that was less expensive than defending ones self. ( The latter in my book is called extortion..Sorry but that’s how I feel!) All frivolous lawsuits don’t get paid for out of some giant slush fund that someone else pays for. The people who pay are You and Me. We pay in higher prices, or we pay in advances in medicine that wont come on line or be available to the public for fear of lawsuits and too many others to list. It takes a degrading toll on Capitalism and Free Enterprise. This is not to say that there are not legitimate suits and lawyers that work from the highest degrees of ethics. The problem with this like everything else is that the best become mixed with the trash and it hurts and cost us all.

The one glimmer of hope that might now be showing a faint light is that for the first time I can recall or have seen, Lawyers just might start to feel the sharks teeth that are just as sharp and viscous to the extremities that the rest of business has dealt with for years. I can picture it now….3 lawyers sitting at a table in some dim lit tavern…the TV playing in the background, when all of the sudden a loud boom is heard followed by the ungodly sound of….” If you think your lawyer showed malfeasance…Call the Law office of…..”

I think they’re going to need a bigger boat!

Mark

Mark this date down…..Our world just changed..

I know..I know….how many times has someone said the world changed and nothing seems different in your life. It seems to everyone, life is going on just like normal, what’s all the fuss I hear from some of these guys? They’re  just Chicken Little’s looking for the sky to fall, Right? I would like to agree, but this time I can’t, and worse, I find myself feeling a little like poor Mrs. Little, and here’s why……..

Money, finance, and business to many is an esoteric exercise in their minds. It’s too complicated or it’s too boring for most people to grasp. As long as they have a job to pay whatever bills or fees that come about in ones daily life, they feel secure that the so called ” Big Stuff ” will be handled by others. World finance, Bonds, and all that stuff is much too complicated. They just invest in their 401K’s and seem to be done with it. Gives everyone the “feeling” of being an investor. Trust me……you’re going through the motions similar to an investor, you have money in the markets, but an “Investor” you’re not.

People were scared when the collapse of Lehman Brothers happened. The stock market tanked, the news was dire, and people saw the effects pretty much immediately in their 401K’s, but unlike “Investors”…they just looked at their statements in disbelief, and believed all the talking heads on TV that said in almost unison” Hey..Corrections are normal…Stay in for the long haul…Things will get better” and so far it seems to have been the case. Some wouldn’t even open their statements for fear of seeing their balance. ( If that is you..You are Not in control of your finances as much as you would like to think, but that’s another column.)

The reason for the United States being the “Financial Capitol of the World” has been the rule of law. Some think the word “law” means the “Rights and Protections” afforded by police and such, but the world of finance is much different. Your protection is the ” Rule Of Law ” for business. People, Countries, Pensions, and like invest in certain structured dealings based on how much money can be made..and most important…How Much They Can Lose!. If you now change the rules that…for 250 years if X happens…You’re protected by this law. To now if X happens….Who knows what might happen, and you could lose Everything, but we can’t say for certain…You have just given your Gold Standard away…and You’re NO LONGER even a precious metal or stone……You resemble Costume jewelry…and nobody will pay you , or treat you like the Diamond you once were.

It wont happen overnight, but trust me, it will show it’s head very, very soon. The frightening thing about this type of shock to the system is this…250 years of contract law has just been eradicated in the last 24 hours, the damage I believe that this will do not only to our economy, but to our standing as the “Financial Capitol of the World” will be horrific, and will NOT be able to be remedied for years, if not decades.

Chicken Little was a fable….My hopes in the end that this column turns out to be one also, but I feel a little like you know who.

Mark

What if Nobody thought…….What if?

As I write this column we are less than 12 hours away from General Motors filing for bankruptcy. There are so many legs to this story a spider would be envious, but I only have two so lets look at this from the only sides I think matters…The Pros…and The Cons.  I’ll leave all the hoopla for the “Left..Right…Dems… Repubs..Union… Non Union, et al. (Fasten your seat belts, keep your hands inside the car, and restrain all loose objects, it’s going to be a dizzying ride!)

The pros of this decision to many will be,” The company is saved at this time, workers will still be employed, a collapse would have been debilitating, it gives us time to reorganize”, and there are many others. All of them sounding like they’re on sure footing. So one might say “OK Where’s the Cons?” Well here’s  a couple….”What happens now that the UAW and the Government owns GM and the price, and wage concessions were not enough. They were too zealous in their assumptions, cuts of another 10, 20, 30 percent are needed immediately. What then?…..The new “Greener Models” are not selling…projections were far too optimistic…the forecast for sales is off 10, 20, 30 percent. What then? The competition such as Toyota, Nissan, Honda, begin building even better ” Greener ” cars than GM, all with American workers, and factories located in the USA. What Then?”  As you can see, true business decisions are far more black and white than others would give credence to.  That’s also the reason for the distinct difference of being a “Businessman”, and being an “Employee”. The mindset of each comes from two different universes where the expenditure of  money and resources are involved.

As in all these scenarios, one never knows exactly which way is best with 100% certainty. If one could, you would never be in trouble, and also be the richest person in the world because you would know Everthing! So all we can do as business people or investors is put Capitol or Money if you will, in the surest and seemingly safest place we can. From the outside looking in, I believe the whole General Motors story will be written in the history books of economics 101 as a detailed map, and example of  what NOT to DO and what Wont Work!

Some will say …”You have to give this time too work….Things take time to work out….You can’t turn a large boat on a dime!”…Seems like all that makes sense, but I’ll give you the other side of the coin….If  I told you 18 months ago…Investment Banks as you’ve known them over the last 100 years will cease to exist….The Government will OWN…Freddie Mac, Fannie Mae, AIG, Citi just to name a few….Spent over 8 Trillion Dollars, and propose to put the USA federal deficit to over 12 Trillion dollars when we were at a surplus just a few short years ago, and General Motors would be owned by 70% of the US Government and 20% by the UAW, and be bankrupt, and DE-LISTED from the Dow Jones as of today.

You’re right….a boat that big doesn’t turn on a dime….It’s more like a pin!

Mark