Things just keep getting worst.......

Mr. "It affected me"

I'm sorry to hear of your financial situation. I hope things get better for you. As you can see some people just do not care about individual losses. I hope you and your family are together over the holidays and find peace during these difficult times.

I also hope that the 3,000 people who have lost their jobs in Southeast Wisconsin since November 1st will be better off in 2009.

I fear that the worst is yet to come.

Stacker,

I guess that I am just too tired to play with you today. Go find another bone to chew on.

Steve:

Obviously neither of us are economists and have all the answers but we always talk civil to each other and listen to each others ideas with an open mind. I’ll give you my viewpoints and you can take them for what it is worth.

Many of us personalize our ideas on how it affects “me”. When we speak about the national economy that reasoning is normally unrealistic because of where we live. As a general rule, the Midwest is buffered by the extremes in the market, economy and short term trends. I believe that you understand what I mean. If you watch what happens on the east and west coasts, they are always on a bigger “rollercoaster ride” than those in the Midwestern States. Generally the reasoning, of “this doesn’t effect me, so it can’t be all that bad” is a mentality that is the “self- fulfilling prophesy” because of the buffering effect that I speak of. Unfortunately, I believe that we will see the more drastic effects this time around. I guess that was my intent with the two previous posts concerning bad news in Wisconsin and the fishing industry. I just cut and pasted articles that I came across and didn’t editorialize them in anyway except for the title of the thread. IMHO, like it or not, we are all effected or will be effected.

You also suggest that allot of this may be media hype. Where was the media when we actually started this recession a year ago? Why wasn’t that reported? Weren’t all the signs there?  I believe the signs were there but not the hype you speak of. Or the slow effects were not as apparent. Or the government did their normal smoke and mirrors routine until it was too late. This is a snowball effect that started long ago and many people smarter and with power saw the signs and chose not to do anything. Even Alan Greenspan now reports that he was in error because he felt the banking industry would self impose corrections and police themselves. Greed got in the way.  In September he said: "There's no question that this is in the process of outstripping anything I've seen and it still is not resolved and still has a way to go and, indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes. Is the sky falling? Ask those who have lost their homes and jobs. You’ll get a different answer than those in the fox valley who have not seen the direct effects yet.  Let’s see what happens after December 23^rd when 1,500 people are jobless in Janesville. The predictions are that the plant closing will affect 9,000 jobs in Rock County alone. How can this not affect Wisconsin who already has a deficit projection that may rocket to $5.4 billion? Take a look at the S&P price index. Most years the index moves a little bit up or, somewhat less often, a little bit down. But take a look at the historic trends. Five times since 1825 the index has soared more than 60 percent. But in only two years during the last century-and-a-half has the index dropped by 50 percent or more. One was in the Depression year of 1931. The other was this year.

You mention the worry about deflation, a chronic reduction in retail pricing that will hurt company profits but drop consumer prices. Should this be a real worry? YES!  Doesn’t history tell us that this is what is next? There will be winners and losers in this scenario.  You mention one such example with the Japanese Yen. Let’s hope that the US increases exports because of this and it helps the overall economy. There is more to the story for individuals also. The individuals who saved their money and actually have disposable income will do well during the low markets and deflation cycle. They will be rewarded for not getting into big dept and listening to their favorite lender. You mention the fall in housing sales. Again, I already see friends who have capitalized on the first fire sales in the housing industry. My point? There will be winners and losers but more losers than those who will profit. Why? Because most people in this country have gotten wrapped up in the “possession game” that the author Daniel Pink speaks of in his book, “The Whole New Mind”. We have bought things that we really do not need with money we really do not have. Want an example? There are more purchased automobiles in this country than registered drivers. Wonder if this is apart of the auto industry problems? Some feel that the automobile industry is suffering from their own prosperity. Something to think about when we speak bailouts.

You say that if we all react by tightening our spending despite the fact many of us haven't seen a drop in income and probably won't, we personally help deepen the crisis and create a self-fulfilling prophesy. My point is that you will see personal affects. I hope that you do not see a loss or drop in wages. But if you are like me, your nest egg for retirement has become drastically smaller. Any money that you have saved is making nothing in interest. And you are fearful of the stock market and feel that you are in a damned if you do and damned if you do not situation. Want to hear my personal financing solution? I’ll take the advice of Warren Buffett who says: “Be fearful when others are greedy, and be greedy when others are fearful.” Why? Because I can. I listened to my grandparents who lived through the depression. I saved my money for a rainy day. I was frugal with my purchases. I didn’t buy things when I did not have the money. Unfortunately, this has not been the American way. That’s why we are in this mess and why there will be more losers. Many people just do not have any money and they were banking on homes prices to continue escalating to bail them out.

You say that if everyone in the US and every other industrial country who has it went, out and spent $600 on anything they need or want tomorrow this thing would begin to turn around. This sounds awfully familiar, didn’t we try this already? Hmmmm, seems to me that I received a check from the government just for this purpose. Didn’t work then and I do not believe it will work a second time. Besides, most people just do not have the money. They would just be borrowing again.

Thanks for making me think. That is the real purpose of web sites like this. Not the bashing and pot shots. As always, your threads make me think outside the box. Like you, I also worry about the Senate handling labor negotiations. That scares me. I have already given my viewpoints on unions on another thread so I will not repeat my personal feelings here. But they are not the main cause of this fiasco. The real culprits in my mind are the insurance companies and the health industries. They are one of the major reasons that those benefits keep climbing. In my eyes, it is no longer the hourly wage that people are making concessions on. Everyone wants unions to give up benefits because of the skyrocketing costs of health insurance. But yet, where are the screams of the injustice because of those increases? The focus is in the wrong place.

Merry Xmas

Stinger:

Take care my friend! I am sure everything will work out for you and your family. You are too good of a person to be out of work for long. Let's get together, my treat.

Steve:

I know that you think allot of this is media hype but as I scan my Sunday morning paper a few excerpts stare me in the face and cause me and others to worry even more. Here are a few things that we all should be worried about:

General Motors Corp. said Friday it will temporarily close 20 factories across North America and make sweeping cuts to its vehicle production as it tries to adjust to dramatically weaker automobile demand. These production cuts are unrelated to the rescue’s failure and had already been planned. GM said it will cut 250,000 vehicles from its production schedule for the first quarter of 2009. The move affects most of GM’s plants in the U.S., Canada and Mexico.

Honda Motor Co. said it was cutting production in North America by 119,000 vehicles for its fiscal year ending March 31.

Please remember this when you think of the big 3. As reported in the Milwaukee Journal today……… Outside vendors produce about 70% of the parts that go into a new car.

(this is my understanding and not a paper quote) As we all know Wisconsin and specify SE Wisconsin has a large number of “mom and pop” businesses that supply parts to the big three. The “trickle effect” or your “bumps in the road” could be devastating.

Back to more news (all quotes from the paper)…….

After mass job cuts at the end of this year, 2/3 of US employers plan to freeze their staff size for the first quarter of 2009 according to a Manpower report

One in ten US home owners are delinquent on mortgage payments or are in foreclosure.

45 million people in this country are without health insurance.

The state of Wisconsin’s projected $5.4 billion budget gap is 17 percent of its biennial budget and one of the worst looming deficits in the country.

All of this while my good friends in Waukesha are preparing for the worst as GE Healthcare and Rockwell have announced that they will be announcing job reductions. These are two very important employers in my area.

Oh, and because this is a fishing web site I’ll share some fishing related data. There are 1.4 million licensed anglers in Wisconsin and 617,000 boats. There are 37,000 boats in Waukesha County alone (where I live). This data came from the real estate section where they were trying to say it was a good time to by lake property because of declining prices. Maybe the article was written for the winners in all of this economic turmoil.

Oh, and guest................

I believe that Red Neck was making a point that most of the monies that you speak of come from your pocket book in the way of taxes. Don't get me started on what has happened since we stopped using the gold standard. The current global monetary system relies on the US dollar as a reserve currency by which major transactions, such as the price of gold itself, are measured. Now, isn't that scary in our global economy.