Obama Defends Policies as Pro-Business

President Barack Obama has definitely taken some heat over his policies on business, his overall strategies to get us out of the worst economic slump in decades, and his proposed cap on executive salaries, which have become a major concern since the collapse of major companies that people felt gave their executives way too much pay and way too many fringe benefits. The problem with this, they say, is that it takes away the incentive to executives to do a great job, and it also detracts from company’s searches for top talent to make their companies run better.

I can sort of see some of their point there, but there does have to be some sort of common sense oversight of compensations that are just ridiculously disjointed when it comes to pay being directly related to how the company is doing. For example, a lot of companies that downright failed and had terrible numbers, their executives were STILL given stellar salaries and even bonuses.

That is unfathomable to be honest. They were still being rewarded for running their companies into the ground, that’s just not right, and that is certainly not incentive to make things go right when you know you’re going to be compensated at ridiculous levels no matter what you do to the company.

I do feel that this part of the Obama administrations financial policy is right, however, I think it needs to be adjustable per business and their unique circumstances. As any good business person knows, there is never a situation where a one size fits all approach is good, you have to take it case by case. If the companies numbers are terrible, no bonus, for example, if the companies sales are bad, then no bonus and less pay, common sense things like that, but you can’t just impose a broad, across the board limit on executive pay, that is boderline socialism in the end.

Stores Exit Season with Bare Shelves

As predicted, most retailers have exited the holiday season with almost nothing on their shelves. They know better, they’ve been burned due to overstocking in the past, especially in the unpredictable job and economic climate we’ve found ourselves in lately, and had to let things go for next to nothing. Gone are the days of things being reduced down to eighty and ninety percent I suppose!

I went shopping a few days after Christmas, and was pretty shocked at how barren all the shelves looked. Even places that were huge retail outlets like Target and Wal-mart, didn’t have their usual volumes of clothes and other ticket items for Christmas time, so I was a little disappointed that I wasn’t really able to find all the awesome deals that I had been able to in years past. It was kind of a bummer, but at the same time, I understand and am glad that these establishments have it figured out so that they aren’t forced to close their doors, and God forbid we then suffer another downturn, perhaps more severe than the first because of that.

This means that people are starting to get the hang of the new economic reality, and that’s a good thing in the end. I do wonder how larger ticket items fared this Christmas season. It seemed that I was not seeing things like large exercise equipment and other typical large gifts that people might ask for as sort of a spoiler for themselves or for a loved on, go off the shelves (so to speak) like they have in years past. In fact, I didn’t even really see big ticket items like that advertised too heavily for this Christmas season either, so it doesn’t surprise me that they weren’t a hot seller.

However, the numbers do show that retailers have gotten bigger sales numbers this holiday than the last year, which is great news, and they actually had to bring in new merchandise to restock their shelves for the new year after Christmas, which is pretty unusual for this time of year.

Home Sales Down, Big Time in November

Boy, it seems like every month you hear something different about home sales. You have to wonder how true some of the information is since you read differing accounts on different news outlets, but this one seems to be pretty consistent everywhere I have looked to cross reference it. I’m interested in what home sales are doing just because we recently started the refinance process for our home, which I’ve detailed in several stories to you, mostly about how annoying it has been, and because our home appraised for a lot less than we thought it would, which was only the first wrench that was thrown into our refinance bid.

I wanted to know when the homes sales were truly going to post better numbers for significant portion of time, none of this, one week they’re up, one they’re down, or one month they’re up the next they’re down. After all, we need to see that they’re up for several months or even years before we can gauge how the housing market is truly faring.

That’s just my opinion though. Take for instance the fact that home sales supposedly plummeted in November. The reason is probably that the massive tax credit that was appealing to so many was winding down. A lot of people were only buying because of this crazy tax credit incentive, and now that is gone, are people still going to want to buy homes as readily? Also, you have to consider whether these one offs are truly any sort of sign that the economy is improving or if they are just that, one offs.

Actually, the tax credit was extended after it was considered to be done away with by end of November, and people discovered they now had lots more time to shop around, which probably wasn’t the best incentive to take advantage of the great tax credit quickly, so economists think that is why they dipped almost 12% in november. It may have had to do with the coming holidays too, no one likes to move around the holidays.

I wouldn’t put too much into what this means though, it’s typical for home sales to dry up around this time, and this is just speculation that it means the recovery is not going to happen any time soon.

The Fragility of the Recovery

Nothing brings to mind how truly fragile this economic recovery is more than the news about Dubai. Now, because the debt in Dubai, the playground of the rich, has skyrocketed out of control, they are saying that the plummeting real estate values there, where they once could charge millions for even the smallest home and lot of land, and the fact that the debt has skyrocketed as well, could have very serious effects on world markets, which it already did the Friday after Thanksgiving when this hit the news. Not too badly though. I noticed some of my more fragile and volatile stocks did go down substantially, but my stable blue chips were fine.

But it’s not just the Dubai news and things of that nature, it’s also what’s happening here at home. It seems that we are constantly being warned that we are one news report away from the economy taking another nasty dive down to the level below. News reports that can harm the fragile recovery are things like consumer confidence being down, holiday sales being much less than expected, jobs reports being lousy, and other fun news like that.

Oh, and at least the housing reports have been coming in slightly rosier than they had been in the past, because that has at least added some sort of (albeit somewhat false) sense of security for those that are most skittish.

I still think that we will recover in the next two years at least mildly to where we see an improvement in jobs and a gradual steadying of incomes, but what of all the massive debt we have taken on as a nation, and the fact that China practically owns half of the US through the purchase of treasury bonds? There are many economists who think that the recovery will be greatly hampered by the fact that the US is largely under water to other countries and to itself with the massive deficits and debt we have taken on to unbury a lot of our financial institutions and prevent total and utter disaster.

The sad part is, there probably was no better way to do it, and since hindsight is always 20/20, we’ll never truly know what would have been the best decisions to make with the money we were given, it’s just going to have to do.

Is All the Economic Growth a Crock?

The recent claims that the economy has been growing at “record pace”, at least a record for the last few dismal years, is coming under fire from many who will be surprised to see any sort of economic growth or strength continue beyond the massive government payouts and programs that have been put into place to help artificially inflate the economy. Once these programs are done, and many of them are, they think we will start to see a true picture of how fragile this recovery really is, and how strong this so called recovery is for real.

Very scary thoughts I know, but it’s good sometimes to be realistic about these things too and not get too caught up in these artificial numbers that are being thrown out there to make people feel a little better and not totally freak out and lose all hope over the state of the economy. The latest news shows that incomes are still flat, unemployment is flirting with ten percent, which is over a quarter decade high still, and that the consumer spending we’ve seen in months past was largely due to government backed programs that simply can’t go on forever. So, where is the sustainability in that?

There really isn’t, and that is the problem that people are now starting to see. The true, lasting recovery is going to be fueled by employment. When more people have jobs and less people are getting paycuts or getting laid off, that is when we will see the start of a truly sustainable, realistic recovery that we will all benefit from in numerous ways.

My fiance just worked for a soup kitchen and he said that some of the stories he heard were pretty close to home. There were men and women coming there who had jobs, but got laid off and couldn’t find other work. Of course, there are always people there that don’t try also, but there were a lot who seemed to be genuinely trying and not having luck. Unfortunately, this is the state of things right now, and we’re going to have to wait it out a little longer for a true recovery to begin.

2010 Shaping Up Well?

Boy, did I get excited when I saw the headline that “growth” was expected in the year 2010, which is right around the corner really, considering we only have another two months and some days left in the year 2009, which I think many in precarious situations, and even if not in bad situations, would like to soon forget. So, what’s this “growth” they’re talking about? Is it economic, overall? The housing market? Stock market? What gives, and is it really going to impact us as the average American Joe in any real way, or is this another statistic that doesn’t really affect us on individual levels?

Well, it’s good news, that’s for sure, but it’s still considered somewhat of a sluggish recovery, as many so often like to say in the news these days. At any rate, it’s an improvement, and we’ll take that. The “leading indicators” as they’re called, which help to forecast whether the economy will grow or contract further in the near future, have been on their way up, albeit slowly and not with huge gains, for the past six months, hence the calls that the recovery has become from numerous people.

These indicators are seeming to show that the trend will only continue and break it’s highs for the year 2010. However, this still doesn’t mean that jobs will get any better in 2010, as we’re so often cautioned, and I think that a strong job market and stronger demand for consumer goods is what is really going to drive this market back to where it needs to be, and that’s when we know we’re starting to hit a real period of true growth again.

I’d love to see the jobless rates fall dramatically, as I think that is the single strongest indicator of a real, sustainable recovery we can see. It can only mean that people will start to freely spend their money again, which will accelerate the economy as a whole, and put businesses in the position to hire even more people, it’s all a cycle, and we need to get back on the good end of that cycle again if we’re going to experience anything real and lasting in this recovery.

Layoffs Slowing Down But Hiring Still Slow

It seems like every day I’m hearing stories about someone getting laid off, doors closing to a business, or people getting their hours cut. Inevitably, these stories end in people searching for weeks, many times months, sometimes a year or more, for jobs to replace the ones they lost. What does this result in?

The erosion of the American dream, the increases in anxiety and depression we are seeing due to joblessness, and the increasing lines at places that are hiring or interviewing on the spot. It’s the same scenario we’ve seen now for over a year, and Alan Greenspan even predicts that unemployment is going to balloon to somewhere around ten percent before companies actually start actively hiring again. It seems that there is a collective anxiety about this as well, as the decrease in consumer spending is almost disproportionately worse than the actual jobs situation.

I know myself, still having a job, and still being somewhat financially secure, am cutting back on spending. Sure, a lot of my extra income besides my nine to five job is drying up because I sell things on the side and people just aren’t buying like they used to, but Thank God I kept my nine to five, even when times looked like I could get rid of it earlier on in 2007, and 2008, because I would have been frantically searching for something now if I hadn’t.

I guess it makes you a lot more grateful for what you have when you see others struggling to make ends meet, and it makes you wish for a swift end to this unemployment issue as well. I think that amongst those of us that have not had to seriously worry about our jobs or have not experienced a layoff yet, we almost feel a bit guilty, at least I know that’s how I feel sometimes, like I’m not feeling the pain others are, but somehow that’s not fair. I also feel incredibly lucky, blessed and grateful that I have a roof over my head, food on the table, and money in the bank (although like many others my savings took a hit).

One thing we have to remember is to always be grateful for what we have, and to never spend frivolously, because this recession has taught us that you should always save for a rainy day, as you never know when the chips might fall against you and you could lose your job or has some sort of pay reduction. I know it certainly has made me even more of a saver, and I don’t think that learned habit will ever change, even after this recession is over.

The Jobs Just Aren’t There Now

Well, we’ve heard a lot of other promising indicators that the economy may be on the mend, however, the most important factor, the number of jobs that are being created vs. cut by companies large and small, still continues to decline, and that is not a good sign at all for a sustainable and real recovery, according to most economists who are worth their salt. In my opinion as well, it is foolish to think we are anywhere near full recovery mode or relief from this dismal new reality, without the jobs being there that we need to permanently increase the GDP and the consumer spending that actually sustains the capitalist environment that we have grown to have a love/hate relationship here in the US.

Jobs in the last month were cut more than were forecasted, as well as the number of people claiming unemployment benefits, which increased more than Wall Street and economists had forecasted, which is compounded bad news for this recovery period that we were all hoping for. Until we see those numbers start to rise, we are still in a lot of trouble, and there needs to be more discussion around jobs creation in the government if we are to hope to jump start this whole process of getting back on track.

We are starting to see the true consumer numbers now, especially in the month of November which is coming quickly, because huge government funded stimulus programs that helped to fuel the purchase of new homes and cars, are ending. That will tell a true story about how much trouble we’re still in, since people won’t be rushing to buy houses to get that awesome $8k credit, or rushing to buy cars due to the great deal of the Cash for Clunkers program.

We will finally see a more true portrait of the state of consumerism when those programs are no longer enticing would be purchases out of the wood work. When the dust settles, there are numerous economists that fear the true numbers are going to tank the stock market again. Who knows though, this stock market has been so unpredictable that you just never know what’s going to happen.

The market went way up before anyone thought it would, so you just don’t know what the mass mentality is going to be, or quite what drives it any more.

Tea Party Demonstrations Starting

Whenever I hear that a “Tea Party” demonstration/opposition march is starting it always brings me back to the days of sitting in a classroom, talking about the Boston Tea Party, one of the first organized events that gathered folks to protest government spending. Sometimes I forget that these demonstrations still exist, but it does bring back a sort of sense of collective nostalgia, that we once did this before in the early days of American government, and we all once learned about this famous piece of history sitting in a classroom somewhere in the US, in the thick of winter or beginnings of summer.

The Tea Party movement, which is demonstrated by the Tea Party Express organization, gathers to protest things like wasteful government spending and the under utilization of american tax dollars, which we have all known has been a problem since the day Americans started to be federally taxed.

This time, the demonstrators are protesting the specific wasteful spending that has been identified in the newer stimulus packages, and also something dubbed “Obamacare”, which is his administration’s healthcare plan which has come under a lot of scrutiny for it’s dependence on American tax dollars to fund the health care plans for the public who cannot get healthcare through their employers.

The arguments against this health plan have been aplenty, and there has been a lot of controversy surrounding the plan’s dependence on tax dollars and increase of corporate and employed person’s costs to support the rest of the country. A lot of people I know that are in healthcare are opposed to the plan, but there are also some who see it’s merits, I think it really depends on the point of view you support, and it big time depends on whether you have democratic or republican based philosophies when it comes to social programs.

I tend to be a mix of the two. I see the merits of a public health plan, but I also see how it can actually not benefit those that do have employer paid healthcare, and may ultimately be the burden of the higher paying tax payers.

That part worries me. Don’t get me wrong, I will support whatever is for the greater good, however, the part that gets to I guess the more selfish part of me is that I may be pitching in a lot more than my fair share because I might be in the upper tier of tax payers. I definitely am against paying higher taxes or penalties for a public healthcare system, as I feel there is already a lot of wasted money out there that can be better compartmentalized by the government instead of them adding a higher tax burden.

Nervous Nelly Consumers Hampering Recovery?

Who can blame people now, the average Joes of the world who keep this great economy of ours running by buying things and keeping that American spirit of consumerism alive, for being a tad bit nervous about spending their hard earned cash when they think it might be taken from them again in either a job loss or a bad stock market crash where they have their money invested.

Not only that, but a lot of the consumers that keep this great economy going actually don’t have jobs right now or are biting their nails waiting for or partially expecting that pink slip that no one wants to see these days since it means going out and looking for a job in a market that’s really tight and extremely hard to bust through now.

Apparently this nervousness is going to cost the economic recovery and slow it down so that it may be delayed for quite some time. But how could we not have expected this when unemployment rates are nearly 15% in many areas, in some areas worse than that? It’s like asking people to forget the last year and a half, the pain of losing money through investments, losing jobs, getting paycuts and maybe even losing their homes because they could no longer afford their mortgages? People definitely don’t forget that easily, and that’s exactly why a lot of that commercial space that is empty will stay empty for at least another year most likely.

There just aren’t the consumers out there to buy the products to get the economy going again. People are either too nervous to buy goods and services or they are looking for a bottom of the barrel deal. Just yesterday I read an article headline that suggested that now that consumers are so used to paying low prices for things
that once the prices do go back up to “normal retail” we may experience a bit of consumer backlash where people downright refuse to pay those normal prices again. I think that’s called stagflation maybe? I’m no economist though!

There is actually a consumer sentiment index that sort of reads how consumers are feeling about the economy and their financial security, and it still isn’t all that great with most jittery about losing their jobs and becoming another one of the depressing stories we keep hearing about and reading about almost every day. Also, add onto that the fact that retail sales actually fell in July, and this created a bit of a selloff in the stock market last Friday due to the fact that most investors felt these readings could definitely stall the recovery.