When my wife and I first got married we hardly had two nickels to rub together. I had just graduated from college and was just beginning my accounting career so; of course, my income was at an entry level. We had just purchased our first home, or what you might call a home since it was a mobile home.
I remember when a pre-approved credit card for Woolco came in the mail. It had a $500 credit limit which at the time seemed like a million dollars. Thinking we had just won the lottery, we went out and bought all the things we had to put off because we lacked money.
We had so much fun buying small appliances for our new home, things for our new baby, clothes, records and cassettes (the CD had not been invented yet). The fun lasted for about three to four weeks but ended when we received something in the mail. What we received was our bill meaning we now had to pay for our fun. Since we did not have the funds to pay the entire balance, our fun came at a price. That price was interest since we could only afford the minimum payments. Such is the reality of spending money on credit; the money eventually has to be repaid, usually with interest, to the person from whom it was borrowed.
Since the present economic downturn began in September, we have witnessed one government bailout after another. The recent stimulus plan was nothing more than additional government spending. The government is not spending money it currently has since it has experienced budget deficits for several years. The money being spent is just like the money my wife and I spent when we used our credit card.
The money currently being spent is coming from two sources. The first is being borrowed from foreign investors through the sale of treasury bills. However, the government has reduced the interest being paid on these investments so they are less attractive to foreign investors. Since this source of funding is drying up the government has created a second funding source. The second source of funding for this spending is being created out of thin air through monetary policy.
The bill is eventually going to come in and someone will have to pay. The treasury bills have terms ranging from one to 30 years. This means that when they mature, the government will have to pay back the lenders with interest. The good news is we can predict when these payments will become due and budget accordingly. However, the money being created out of thin air also has to be repaid. This repayment will occur as the increased supply of money in the system causes the value of the dollar to decline. This will cause inflation, which means consumers will pay this money back through higher prices for the goods and services they consume.
Senator John McCain during debate on the stimulus bill called it the generational theft act. His reason for this was that future generations will be the ones paying back the money through higher taxes that will be required to pay back the debt when it matures and higher prices brought on by current liberal monetary policies. The question we need to ask ourselves is this. Is this the legacy we want to leave our children and grand children? Personally, my answer to this question is no that is why I urge everyone to write the president, their senators, and their congressperson telling them to quit this spending spree and restore some sanity to our government and its monetary policy. If they refuse to listen, inform them that there will be an election in 2010 and 2012 and they can be replaced.
We have not maxed out our nation’s credit card yet so it is not too late to stop the insanity. I invite you to comment or contact me at dalewsr34@gmail.com.
Monday, February 23, 2009
Sunday, February 15, 2009
Do You Feel Stimulated
After many weeks of debate, we finally have a stimulus package. The advertised cost of this package is $787 billion. However, according to an article entitled “Stimulus Verdict: A $3.27 Trillion Porker" written by David A. Patten on Newsmax.com this Saturday, the true cost is $3.27 trillion. This is because there is an estimated $744 billion in cost to service the debt plus $2.527 trillion needed to fund the new programs in the bill over the next decade.
There can be no doubt that an infusion of $787 billion into the economy will have an affect on some economic sectors but we must look at the details of the bill to determine what sectors will be affected. Here is a list of some of the items in the bill according to Mr. Patten’s article.
• The plan has more than $3 billion in “neighborhood stabilization” and Community Development Block Grant funding, much of which may go to benefit ACORN, a low-income housing and voter registration “community” organization that is under federal investigation for its suspicious voter registration practices.
• $1.3 billion to bailout AMTRAK, the perennial money-loser railroad.
• $1 billion for educational programs, including courses on sexually transmitted diseases.
• $30 million for restoration of wetlands to be spent in the San Francisco Bay Area – House Speaker Nancy Pelosi’s district. The money will go in part to protect the endangered salt marsh harvest mouse.
• $200 million for a low-pollution, coal-fired power plant in President Barack Obama’s home state of Illinois.
• $45 million for ATV four-wheeler trails, and government office renovations, according to RNC Chairman Michael Steele.
• $200 million to provide computers to community colleges.
• $50 million for the National Endowment of the Arts.
• Over $650 million in coupons to help consumers buy digital TV converter-box coupons.
• A reported $300 million for hybrid vehicles and electric-powered cars. According to the Washington Times, this item will include buying golf carts for federal workers.
These items represent a small sampling of what is in the bill but they demonstrate what occurs when the government tries to stimulate the economy through spending.
ACORN was an organization that worked extensively to elect Barack Obama. It is suspicious when a bill advertised as a stimulus bill to get the country out of its current economic recession contains $3 billion for an organization, who recently helped the president be elected. Other than those working for or helped by ACORN, this spending will do little to stimulate the economy.
AMTRAK has been losing money for years so why do we suddenly think giving them $1.3 billion is going to help. If they continue to operate at a loss, what will they do when this money runs out? Ask for another bailout.
We have a high illiteracy rate in our nation yet the government feels it should send $1 billion dollars to schools for courses on sexually transmitted diseases. Why not take this same money and spend it on courses to teach these students to read so we can reduce the illiteracy rate. That way these students could find better paying jobs and be contributors to the economy instead of being on the government dole.
It also looks suspicious when the house speaker gets $30 million for wetlands in her district and the president gets $200 million for a coal plant in his home state.
I am sure the ATV riders will enjoy their new trails but why does every one of us who do not ride ATV’s have to pay for it.
Why the government offices should be renovated when people in the private sector are being laid off boggles the mind. I am sure some of these laid-off workers would agree to work in the old office without the renovation using the money the government would spend on the renovation.
I can see a benefit of spending $200 million for new computers since this will enable these colleges to provide a higher quality education. However, why not take the $50 million going to the endowment for the arts and give it to the schools so they can buy additional computers or other equipment they may need to retrain some of the workers displaced by the recession.
It has been widely known that TV was going digital. People have had several years to make the conversion. We have also spent millions already for coupons to buy converter boxes. Before spending more, we need to find out what happened to the money we have already spent.
Finally, federal workers using golf carts. I hope this does not mean that more of our federal workers will be out playing golf while workers in the private sector are losing their jobs.
Do you feel stimulated? I know I do. That is I feel stimulated to vote for some changes in personnel in our government this next election. Especially those personnel holding elected office.
There can be no doubt that an infusion of $787 billion into the economy will have an affect on some economic sectors but we must look at the details of the bill to determine what sectors will be affected. Here is a list of some of the items in the bill according to Mr. Patten’s article.
• The plan has more than $3 billion in “neighborhood stabilization” and Community Development Block Grant funding, much of which may go to benefit ACORN, a low-income housing and voter registration “community” organization that is under federal investigation for its suspicious voter registration practices.
• $1.3 billion to bailout AMTRAK, the perennial money-loser railroad.
• $1 billion for educational programs, including courses on sexually transmitted diseases.
• $30 million for restoration of wetlands to be spent in the San Francisco Bay Area – House Speaker Nancy Pelosi’s district. The money will go in part to protect the endangered salt marsh harvest mouse.
• $200 million for a low-pollution, coal-fired power plant in President Barack Obama’s home state of Illinois.
• $45 million for ATV four-wheeler trails, and government office renovations, according to RNC Chairman Michael Steele.
• $200 million to provide computers to community colleges.
• $50 million for the National Endowment of the Arts.
• Over $650 million in coupons to help consumers buy digital TV converter-box coupons.
• A reported $300 million for hybrid vehicles and electric-powered cars. According to the Washington Times, this item will include buying golf carts for federal workers.
These items represent a small sampling of what is in the bill but they demonstrate what occurs when the government tries to stimulate the economy through spending.
ACORN was an organization that worked extensively to elect Barack Obama. It is suspicious when a bill advertised as a stimulus bill to get the country out of its current economic recession contains $3 billion for an organization, who recently helped the president be elected. Other than those working for or helped by ACORN, this spending will do little to stimulate the economy.
AMTRAK has been losing money for years so why do we suddenly think giving them $1.3 billion is going to help. If they continue to operate at a loss, what will they do when this money runs out? Ask for another bailout.
We have a high illiteracy rate in our nation yet the government feels it should send $1 billion dollars to schools for courses on sexually transmitted diseases. Why not take this same money and spend it on courses to teach these students to read so we can reduce the illiteracy rate. That way these students could find better paying jobs and be contributors to the economy instead of being on the government dole.
It also looks suspicious when the house speaker gets $30 million for wetlands in her district and the president gets $200 million for a coal plant in his home state.
I am sure the ATV riders will enjoy their new trails but why does every one of us who do not ride ATV’s have to pay for it.
Why the government offices should be renovated when people in the private sector are being laid off boggles the mind. I am sure some of these laid-off workers would agree to work in the old office without the renovation using the money the government would spend on the renovation.
I can see a benefit of spending $200 million for new computers since this will enable these colleges to provide a higher quality education. However, why not take the $50 million going to the endowment for the arts and give it to the schools so they can buy additional computers or other equipment they may need to retrain some of the workers displaced by the recession.
It has been widely known that TV was going digital. People have had several years to make the conversion. We have also spent millions already for coupons to buy converter boxes. Before spending more, we need to find out what happened to the money we have already spent.
Finally, federal workers using golf carts. I hope this does not mean that more of our federal workers will be out playing golf while workers in the private sector are losing their jobs.
Do you feel stimulated? I know I do. That is I feel stimulated to vote for some changes in personnel in our government this next election. Especially those personnel holding elected office.
Watch out for the wolves.
I recently attended a huge job fair in Phoenix. While I was waiting in line, the person in front of me asked what type of work I did. After telling him I asked him what he did. He informed me that he was there as a recruiter for an education company and was looking for people experienced in accounting and finance to become part of his organization. He then asked me if I had ever heard of the former president of the university from which I graduated. When I informed him that I had graduated from that university, he informed me that the former president was now the CEO of the organization he represented.
Many red flags came up as I talked with this individual the first of which was that if he was a recruiter, why was he waiting in line with the rest of us? However, I did give him my contact information out of curiosity, not expecting to hear from him again but boy was I wrong.
Later that evening he called me (this is another red flag in that most recruiters for a job will contact you during regular business hours). He then invited me to a meeting being held at a hotel the following evening (another red flag in that most companies will interview you during regular business hours at their offices). However, he said he would send me more details about his company via email so I gave him my email address to get the information.
After receiving the information about his company, I conducted my own research. What I discovered was that his company sold educational packages to people for as much as $16,000. The person selling the package received half of the fee in commission. The education package was about ways to profit buying and selling real estate. I am aware, as most of us are today, that one of the primary reasons we are currently in a recession is due to falling real estate values. So exactly how can they claim to know some secret way we can profit in this depressed market? It just makes no common sense. Most people I know who own property today are not selling it but are holding on to it until the market comes back. After my research, I did not attend the meeting but instead made some money helping a client file their income tax return.
Unfortunately, during times of recession, wolves come out to prey on fearful individuals who either have lost their jobs or fear losing their job. The best rule to follow is that if something does not smell right, do some research to determine whether the offer is legitimate or not. In this instance, my research most likely saved myself money and a great deal of frustration.
Many red flags came up as I talked with this individual the first of which was that if he was a recruiter, why was he waiting in line with the rest of us? However, I did give him my contact information out of curiosity, not expecting to hear from him again but boy was I wrong.
Later that evening he called me (this is another red flag in that most recruiters for a job will contact you during regular business hours). He then invited me to a meeting being held at a hotel the following evening (another red flag in that most companies will interview you during regular business hours at their offices). However, he said he would send me more details about his company via email so I gave him my email address to get the information.
After receiving the information about his company, I conducted my own research. What I discovered was that his company sold educational packages to people for as much as $16,000. The person selling the package received half of the fee in commission. The education package was about ways to profit buying and selling real estate. I am aware, as most of us are today, that one of the primary reasons we are currently in a recession is due to falling real estate values. So exactly how can they claim to know some secret way we can profit in this depressed market? It just makes no common sense. Most people I know who own property today are not selling it but are holding on to it until the market comes back. After my research, I did not attend the meeting but instead made some money helping a client file their income tax return.
Unfortunately, during times of recession, wolves come out to prey on fearful individuals who either have lost their jobs or fear losing their job. The best rule to follow is that if something does not smell right, do some research to determine whether the offer is legitimate or not. In this instance, my research most likely saved myself money and a great deal of frustration.
Sunday, February 1, 2009
The Forgotten Heroes
We hear much talk in the media and government today regarding businesses that are too big to fail. It is no doubt that when a big business fails, many feel the economic affect. However, what about the thousands of small businesses in the economy? Each of these businesses may be small but when looked at as a whole they represent a large percentage of the nation’s workforce and are the greatest producers of new jobs.
Politicians are motivated to stimulate large corporations because they can gain political capital for re-election by being able to tell their constituents they saved thousands of jobs. These companies may also be large contributors to these politicians campaigns making it difficult for these politicians to vote against bills that may benefit these companies. This is why they vote for economic stimulus bills that favor giving money to big businesses. However, someone must pay the price for these bailouts. This burden usually falls upon small businesses and individuals. This is usually through higher taxes higher fees or printing or creating money to pay for the program. Should the government choose to simply print up more money, they will create inflation down the road. Burdening small businesses and individuals with higher prices for what they need.
The question we must ask is how does the government print up or create more money. They used to do this by simply printing more money but today this is come by borrowing money through the sale of treasury bills. A large majority of this investment capital comes from foreign countries so it represents new money coming into the country. The law of supply and demand tells us that when the supply of an item goes up its price or value goes down. This influx of new capital into the economy causes the value of the dollars we have to go down. In other words, your dollars will buy less. Whether the bailouts contained in the current stimulus financed with higher taxes or higher prices, small businesses and individuals will feel the crunch.
All businesses in America were once small businesses. It is unconscionable to forget these heroes of our economy by squeezing them out of business. What we need is a stimulus package that will give these small businesses and individuals the freedom to once again become creative and create new jobs. The only way to accomplish this is to adopt a stimulus package involving government retraction instead of government intervention. Stimulation through government retraction involves cutting taxes instead of raising them. This will increase available capital that small business and individuals will invest in either their own business or other businesses making it possible for these businesses to expand and produce more jobs.
The economic stimulus package of more government spending has passed the House of Representatives and now goes on to the Senate. I urge each of you to write your senator and urge them to vote no on the pending stimulus program. Tell them that in its present form it fails to stimulate the largest sector of economic growth in our economy, small businesses. Unless the congress and senate can come up with a stimulus package of government retraction that will jump-start the economy by encouraging both small and large businesses in our nation to expand leading to new job creation, no real economic stimulation will occur. What we need now is less government not more.
Post your comments at this blog or contact me at dalewsr34@gmail.com.
Politicians are motivated to stimulate large corporations because they can gain political capital for re-election by being able to tell their constituents they saved thousands of jobs. These companies may also be large contributors to these politicians campaigns making it difficult for these politicians to vote against bills that may benefit these companies. This is why they vote for economic stimulus bills that favor giving money to big businesses. However, someone must pay the price for these bailouts. This burden usually falls upon small businesses and individuals. This is usually through higher taxes higher fees or printing or creating money to pay for the program. Should the government choose to simply print up more money, they will create inflation down the road. Burdening small businesses and individuals with higher prices for what they need.
The question we must ask is how does the government print up or create more money. They used to do this by simply printing more money but today this is come by borrowing money through the sale of treasury bills. A large majority of this investment capital comes from foreign countries so it represents new money coming into the country. The law of supply and demand tells us that when the supply of an item goes up its price or value goes down. This influx of new capital into the economy causes the value of the dollars we have to go down. In other words, your dollars will buy less. Whether the bailouts contained in the current stimulus financed with higher taxes or higher prices, small businesses and individuals will feel the crunch.
All businesses in America were once small businesses. It is unconscionable to forget these heroes of our economy by squeezing them out of business. What we need is a stimulus package that will give these small businesses and individuals the freedom to once again become creative and create new jobs. The only way to accomplish this is to adopt a stimulus package involving government retraction instead of government intervention. Stimulation through government retraction involves cutting taxes instead of raising them. This will increase available capital that small business and individuals will invest in either their own business or other businesses making it possible for these businesses to expand and produce more jobs.
The economic stimulus package of more government spending has passed the House of Representatives and now goes on to the Senate. I urge each of you to write your senator and urge them to vote no on the pending stimulus program. Tell them that in its present form it fails to stimulate the largest sector of economic growth in our economy, small businesses. Unless the congress and senate can come up with a stimulus package of government retraction that will jump-start the economy by encouraging both small and large businesses in our nation to expand leading to new job creation, no real economic stimulation will occur. What we need now is less government not more.
Post your comments at this blog or contact me at dalewsr34@gmail.com.
When Facing Possible Layoff
Many today either have been laid off or fear being laid-off. In an earlier posting I outlined things we can do when we have been laid off. This posting is from December 14, 2008 and is entitled "Surviving the Storm". In this posting I want to provide advice for those still employed but facing potential layoff.
This is not the time to look for a raise. The management of your company is most likely feeling the squeeze in their cash flow. They are most likely experiencing a decline in revenue from sales and are paying more for items such as energy costs to keep their plants and offices running. They are also most likely having a difficult time collecting on their outstanding receivables. Rather than laying off personnel or reducing hours, the company may opt to not give raises this year. Be thankful to have a job instead of complaining about not getting a raise.
You also need to look for ways to increase your value to the company. You may want to go back to school to increase your knowledge and value to the company. The good thing about education is that even if you are laid-off, you will have more to offer in the job market. You may also volunteer to do more. If companies have to lay people off, they try to hang on to their most valuable employees and those who always do more than they are asked to do. I encourage you to become one of these people.
Finally, if you have good reason to believe you will be laid-off, do not wait. This is the time to get your resume together and even list it on the many job posting websites such as Carrerrbuilders.com or Jobbing.com. You may be able to find your next position prior to being laid-off of your current one. This way you will not have any interruption of income.
I hope these tips will prove helpful and feel free to add any additional tips by posting your comment. If you need any personal advice, you can contact me at dalewsr34@gmail.com.
This is not the time to look for a raise. The management of your company is most likely feeling the squeeze in their cash flow. They are most likely experiencing a decline in revenue from sales and are paying more for items such as energy costs to keep their plants and offices running. They are also most likely having a difficult time collecting on their outstanding receivables. Rather than laying off personnel or reducing hours, the company may opt to not give raises this year. Be thankful to have a job instead of complaining about not getting a raise.
You also need to look for ways to increase your value to the company. You may want to go back to school to increase your knowledge and value to the company. The good thing about education is that even if you are laid-off, you will have more to offer in the job market. You may also volunteer to do more. If companies have to lay people off, they try to hang on to their most valuable employees and those who always do more than they are asked to do. I encourage you to become one of these people.
Finally, if you have good reason to believe you will be laid-off, do not wait. This is the time to get your resume together and even list it on the many job posting websites such as Carrerrbuilders.com or Jobbing.com. You may be able to find your next position prior to being laid-off of your current one. This way you will not have any interruption of income.
I hope these tips will prove helpful and feel free to add any additional tips by posting your comment. If you need any personal advice, you can contact me at dalewsr34@gmail.com.
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