My Thoughts on February 14, 2009 - The Valentine Day Massacre

Where do “I” sign up for a

February 14, 2009

…Bail Out?

Ed Ellis, Sr. 2009

The last time I looked, the town I live in is a part of the United States of America. The last time I checked the Constitution of this great country guaranteed me the Pursuit of happiness, nowhere could I find that it would be given to me. Did I miss something? The last time I checked, if I did not do my job, I was fired. The last time I checked, if I did not make a product that the consumer wanted, they would not buy and if I did not change, I went out of business. The last time I checked, if there were five other people were making the same product as I did and there were only enough customers to support five of the six, the one that was not providing the best product along with the best service would go out of business. Doing a good job and receiving a pay check should keep you motivated to continue to do a good job, so you can keep your job. Providing a good product or good service so you can own a business and make you money should motivate you to stay in business. Now, times seem to be changing, if you don’t do all of the above, no problem, your Uncle will step in and bail you out. “Uncle Sam, that is,” and with your own tax dollars.

Should we help each other?

 Without any question, the answer is “YES.”

Again, we live in the greatest country in the world, and we should always be available to help others in need. That does not mean that we do it for them or allow them to become DEPENDENT on others.  It all begins however with us.

A word seemed lost in today’s society… Accountability! Do we or dose anybody today accept responsibility or are we all caught in the emotions of the moment.

Let’s take a long hard look at some of our current economic conditions:

·         

•     Sub Prime lending and foreclosures
• ·        Retail Store Closing
• ·        Stock Market down as much as 50%
• ·        The price of homes plummeting
• ·        Banks and Financial Institutions closing
• ·        Job layoffs
• ·        Personal Bankruptcies

Sub Prime Lending & Foreclosures:

Homeowners Facing Foreclosure

1 out of every 200 homes will be foreclosed upon. For a city like Washington, D.C., that translates to 3,000 Washingtonians losing their homes to foreclosure each year.

–         Mortgage Bankers Association

Every three months, 250,000 new families enter into foreclosure.

–         Mortgage Bankers Association

The question again is; Why is this happing? Again, honesty must enter the picture and it begins with us asking ourselves the question and giving ourselves an honest answer.

The basic question, Who’s helping your neighbor? The answer, do you know your neighbors name? The question is more difficult than it seems. We are becoming a society of “Searchers” a society of individuals searching for someone to blame. I think it’s time to take a long and honest look in the mirror. Over the past few years we have sat around in the “A” typical gluttonous American way and watched the surface value of homes all around us in glee. We were all excited about how the value of our homes were going up, never asking ourselves, “WHY?” and really not caring because our wallets and our 401’s were getting fat. In fact, the only time we questioned was when if we invested in a particular bank stock and it wasn’t going up like the other banks that were giving (Questionable) loans. Well now we know why, the ones that were giving out those loans now have YOU paying. Who was fiddling while what was burning?

Think about it. Is there something you really want but can’t afford? Just imagine if your banker (whom you respect or at least use to) came to you and said don’t worry, you can afford it, if fact you can get a bigger one or maybe two. Well, that’s what banks were doing to potential home buyers, building up such false confidence with No Doc loans, interest only and of course the infamous ARM type loans. This feel good policy created a tremendous amount of excitement, a large demand for homes, therefore builders built more, banks lent more, and both to builders and new homeowners, and the basics of supply and demand went into play. Too bad it was not based on real value and too bad the majority of people were unaware that they were being manipulated by the excitement of the moment and did not understand they were buying an overpriced home that they were really not in a position to afford… Oh, forgive me, what do I know, the Banker told them they could afford this and more. Full circle; you have to understand the banker is responsible to shareholders who want the stock to go up. So give more loans and by the time anyone realizes I will have bought and sold my stock – at a profit by the way. Is some of it the CEO’s fault, you bet it is for not standing up to the Board and to the shareholders and telling the truth (yes, at the risk of his job) that bad loans will eventually take us down.

At this time the construction of new homes is down, that’s really a good thing, let’s straighten out our current inventory. It’s time to get some stability and accountability. Remember the “American Dream” is not a home, it’s the opportunity to go after one and hopefully that will never come to an end.

For those who have lost a home, learn from the experience, be thankful for the experience and work towards doing it again. The opportunity never goes away, this is America. The only thing we may lose is the desire to try again, that’s when we do lose.

Retail Store Closing:

Within a few months, more than one-eighth of the country's retail space will be sitting vacant, according to some estimates. That's about 1.4 billion square feet, or 50 square miles, of empty store space, ringed by roughly 150 square miles of useless parking lot.

Since the early 1990s, the pace of retail development has far outstripped growth in spending. Between 1990 and 2005, the amount of store space in the United States doubled, ballooning from 19 to 38 square feet per person. Meanwhile, real consumer spending rose just 14 percent.

Long before the financial crisis hit, PricewaterhouseCoopers had deemed the United States vastly "overstored." In a 2003 report, the investment research firm declared that the "most over-retailed country in the world hardly needs more shopping outlets of any kind." But few cities heeded that warning. Indeed, even as the economy began to slow in 2007, retail development continued at a furious pace, with more than 140 million square feet of new shopping centers and big-box stores opening.

It's too late to prevent the rash of retail vacancies that will emerge in the coming months, but, by putting an end to years of massive overbuilding and sprawl, we can ensure that these sites are first in line for redevelopment.

Does retail stores sitting empty or stores closing necessarily mean times are bad, if you read and understand what’s written above you’ll say “No”, today’s media will blame everything on the economy, I hope you understand better. The main reason for store closings is there are too many; the second reason is the company’s get caught up as well in the hype and wanting to be the biggest and the best. In the process of reaching for their goals they forget us the consumer, therefore opening the door to competition that will be concerned about us. Then it starts all over, they start to grow, they focus on growth and competition and again forget about us. Get the picture!

Stock Market down as much as 50%:

I believe in this area, we have to start with taking a long hard look at the system we support. Yes, we have a system that has helped make this country great, made a lot of people rich and yes, made a lot of people poor. To start with, the market to a great deal is emotionally driven; consider the fact that in order for you to buy a stock, someone must decide to sell. In other words, one thinks it time to sell and one thinks it is time to buy. Now when you think about a system that can be controlled by brokers, financial managers, planners and lawyers that only can make money when something changes hands, I would hope that maybe you would question what is REALLY happening. When we talk about the housing boom we always migrate to the dot com era when stocks were trading at 130 times negative earnings and the word of the day was “potential” and yes there was potential disaster and we reached it. Again, none of us want to hear the truth or the reality of life. Sometimes, no most of the time our expectations are too high, we want immediate gratification. We stand in front of a microwave and want to know what’s taking so long. We all hear that investing in stocks are for the long haul and when we buy on Monday we fail to understand that the price is the same or maybe even down a little on Friday, maybe we should sell on Monday. With all that in mind we wonder why there is no stability in the stock market.

Take a moment; I say to everyone we need a “Sanity Break” NOW!

Personal Bankruptcies:

 Consumer bankruptcy filings are on track to exceed 1 million this year, laying waste to the idea that bankruptcy reform changed anything fundamental about how Americans go broke.

Furthermore, lenders, not consumers, are the ones that seem to be abusing the system these days. According to U.S. Senate testimony, bankruptcy trustees are seeing "systemic problems" with mortgage servicers that:

• Tack on exorbitant fees.

• Miscalculate how much is owed.

• Refuse to communicate with borrowers or the court.

• Force homeowners into foreclosure without authority to do so, usually because the servicers can't figure out or prove who actually owns a mortgage, which has typically been chopped up and sold to investors.

In some cases, servicers have tried to push through foreclosures when the borrower wasn't even behind on payments, Indiana bankruptcy trustee Debra Miller told a Senate subcommittee last month. The servicers used the borrowers' bankruptcy filings, which were intended to erase other debt, as an excuse to try to take away their homes.

Payroll for Executives, Corporate Sponsorship of Stadiums

Now comes a time when we again want to attack the “Strivers”, can anyone say that they would not want our son or daughter go to the best schools, associate with the smartest piers and achieve the best job in the country? Picture yourself with a job with limited potential after you worked and struggled to learn whatever was necessary to get that job, not very exciting! Now I’m not saying that there are executives that are overpaid, because there are, lots of them. However, we should not limited there potential, we should reward their imagination their efforts and most important their results. Everyone should be held responsible for results, but we must have predetermined goals to have for both sides to follow. Yes, if a company gets a loan from anybody including the government if they want to set standards or pay plans that’s fine, if they are made clear before the company accepts the loan. Then and only then it is up to the company if they want the loan under the terms described.

If you mean: “Is the government handing out cash to small businesses the way it’s showering money on the banking industry?” the answer is no. To get any of the $700 billion Congress has approved so far for the Troubled Asset Relief program, you pretty much have to be a bank that’s in deep trouble because it made loans to people who couldn’t pay them back.

You also have to be “too big to fail” — which rules out help for the roughly 12 million companies with less than 500 employees (according to 2006 Census data, the latest available). Collectively, these companies employ more than 70 million people — or about half the total U.S. workforce.

BlueMauMau: Federal judge Morris Hoffman issued a ruling in December that said Quiznos seemed more concerned with its competitor Subway than its own franchisees' welfare.

Remember my first question; “Where do I sign-up for my bail out?” You already have, you are a part of life and this great country and this too, like the weather will pass, just like Fall turns to Winter and then to Spring, things will get better again and believe it or not you will be the better for it.

Current Crisis

• ·         Jobless rate 7.2% and climbing with 11 million people out of work
• ·         2.6 million jobs lost in 2008 - worst since World War II
• ·         791,000 jobs lost in the Manufacturing sector
• ·         260,110 jobs lost in the Financial sector
• ·         899,000 jobs lost in the Construction sector
• ·         522,000 jobs lost in the Retail sector
• ·         8 million people are now working part time
• ·         Average work week 33.3 hours - lowest since 1964

   

The Future

• ·         China's economic growth will slow
• ·         European crisis will widen
• ·         U.S. will loose 6 million jobs
• ·         U.S. economy to only expand 1% in 2010
• ·         Unemployment to hit 9%
• ·         all of the above is a possibility…

   

Looking for an Opportunity?

Now is certainly the time.

Some people need to know all their options before they make decisions. These people are called maximizers. They tend to need the best possible option and generally are less satisfied and happy in life. Satisfiers tend to be more satisfied with something as long as it has the qualities they want--unlike the maximizer who wants to examine every possible choice. Once you learn which you are, you can begin to train yourself to use your brain to your advantage and actually make better decisions.

Continue to hone your skills of mindfulness, intention and delayed gratification through all of your daily actions.

This was the year that pretense and pride fell by the wayside and the president reported to the nation that things have skidded wildly off course. Then over the course of nearly an hour, Mr. Obama sought to convince an angry, anxious America that a moment of crisis is actually a time for expanding aspirations, not shrinking horizons.

Guess what in some areas it has gotten worse, but this is the United States of America and things will get better... The American Entrepreneur will make it happed.