Business advice

The presidential race is getting crazy
February 28, 2008, 2:03 am
Filed under: Uncategorized

The debates are now discussing who did what and personal accusations. That is not what a presidential race should be about.

They are good at talking about the problems. Hillary talks about health care and the problems with the war. Obama is quick to bring up the fact that he also has a health care policy. I heard a little of the recent debate. Hilary kept talking about her affordable health care plan. Affordable, someone has to pay for it. It obviously isn’t going to be the individual consumer. How is it going to be financed?

Hillary wants to start bringing the troops home six months after her inauguration. I didn’t hear anything about what happens next. What happens to all the men who are going to be unemployed on return?

There has also been banter about NAFTA and immigration reform. Trade problems with other countries are not going to improve by putting barriers back up. This situation can only be improved when American industry starts producing widgets cheaper and more durable than the rest of the world. Since we can’t seem to figure out how to do that, we have a trade problem. The problem has nothing to do with putting trade barriers back up. Gee whiz; this stuff is really so simple.

America doesn’t ask politicians to explain themselves. Politicians wax eloquently about problems and offer a few tidbits on what they will do. I heard Obama in one speech talk about putting a tax rebate into the hands of the working class. Ok, where is the money going to come from? What is going to happen after the folks, such as the ones in the economic stimulus package, spend their small windfall? There was no idea as to how to improve those people’s position permanently.

What a concept that would be. Explain the problem. Detail how it is going to be fixed; how long it is going to take and how it will be ten years from now. Let the voters know that you understand economics. It’s not a bad thing to clue us in on. John F. Kennedy didn’t mind referring to economics.

We talk about politicians badly because they usually are not around when the consequences of their decisions come into play. Every plan and solution needs to have a budget to make it happen. We usually don’t print money in this country to finance health care. Where is it going to come from? If the care is affordable, who is going to cough up the extra money needed to pay the doctors who are used to a decent salary? There are no answers. If Hillary knew how to make it happen, it would have at least gotten started when her husband was in office.

Let’s talk about problems that have doable solutions. Let’s stop accepting politicians that couldn’t keep a company running for a nano second without asking for other’s people money to pay the bill.
We need to stop planning with deficit spending. They mention it some where in their pontificating, but that is about it. The only thing we are going to get are programs paid for by our grandkids. Are we going to stand by and let it happen?

For more examples of my work:

Laura Bell



Inflation may be a worry
February 22, 2008, 5:47 pm
Filed under: Uncategorized

Currently it seems the economy has its ‘undies’ in a bunch. Two problems are yanking its chains concurrently: inflation and the threat of a recession.

“U.S. consumer prices increased 0.4% in January and 4.3% from a year earlier, a worrisome sign for Federal Reserve officials who are trying to buck up the economy without fueling inflation. “Core” CPI, which excludes volatile food and energy prices, advanced 0.3%. Home starts increased 0.8% last month.” (This is from the Wall Street Journal.) The true increase wouldn’t be known until we hear more about fuel and other durable goods.

This information is of importance in conjunction with future Fed rate cuts. They always worry that slicing rates may stimulate inflation. It will be interesting to see what the changes in the indices show in the next few months.

(The following is from the New York Times.)

“Just recently, the central bank disclosed that Fed policy makers now expect the United States economy to expand between 1.3 percent and 2 percent in 2008. That would be the slowest growth in five years.
Making matters more difficult, the Labor Department reported on Wednesday that consumer prices are rising faster than analysts had expected and faster than the central bank’s unofficial comfort zone.

Consumer prices jumped 4.3 percent in January, compared to one year earlier, the fastest year-over-year jump since September 2005. Excluding the volatile prices of energy and food, consumer prices climbed 2.5 percent lower, but still significantly above the Federal Reserve’s unofficial comfort zone of 1 to 2 percent.”

There has also been report that the stock market, which usually slows down on the reports of inflation, was continuing to do well. A lot odd economic stirrings.

Then, there is the mess with the mortgages which doesn’t directly impact CPI. Housing isn’t included in that index.
Prices are going up, which usually means there is a larger demand. (Slow growth means not as much buying.) Not as much buying, when logic prevails, brings prices down.

It all boils down to an economic picture that is in bits and pieces. It is going to be quite awhile before the dust finishes settling. There have been so many changes that the true picture wouldn’t be clear for awhile.
I believe the Fed will continue with their interest cutting. Otherwise, unemployment will worsen and in the long run increase the number losing their homes. Sliced work forces, failing businesses and distraught home owners make for a nasty forecast.
Because of the upcoming economic stimulus package, the summer buying season will have distorted figures.
Spend very conservatively. Don’t make any business decisions you don’t have to. If you are a retailer, continue using your current price strategy since consumers are, for the moment, used to rising prices. You’ll know when it is time to change. Consider any pricing structure that will take into account that things may slow down in the second quarter. In other words, get it will you can. Above all, do not cut back on advertising. Give concern to the fact that you might have to buyer cheaper, however. The only businesses who keep up during slowdowns are the ones who continue advertising.
The slow down is going to hit the durable goods market harder. If that is your niche, you might consider an additional service to increase cash flow when sales decrease..

The next year or so is going to be critical as the economy will be floundering. Keep your eye on the economic indices more than you ever have. Being diligent is the only way to endure a bumpy economy.
For more examples of my work:
Laura Bell


Present versus future value
February 18, 2008, 6:23 pm
Filed under: Uncategorized

Understanding this concept is basic to making wise decisions when it comes investing. Now, with the values of real estate dropping like a lead balloon, this topic is even more important. No one invests with the idea of losing money. It is necessary to try and invest in things that will earn money. Otherwise, sad faces all around. A lack of this understanding is evident in the sub-prime mortgage loans.

My own roommate is frustrated with her financing package and would love to find a way out. Her property value has dropped. Like many others, during this crazy mortgage time, she didn’t make any down payment. Therefore, she has no equity. Getting out now would be a disaster. The only thing she would accomplish is getting this loan off her credit record. Those stuck in these situations need to look to the future if they can still keep up the mortgage payments.

She, like others, haven’t lost money yet. It is inaccurate for those with similar mortgages to say they have lost money just because they received a new tax bill showing the property value has decreased. You don’t lose money unless you sell when the value has decreased.

The only time someone makes money selling a resource when the value has declined is if they have shorted a stock in the stock market. (You bought an option that said it would go down.) Other wise, smart investors hold on to the property until the value bounces back up. This is, of course, doesn’t apply when you own a chunk of stocks and the price is dive bombing. In that case, you get out before you lose all the money you put in.

This principle of present versus future value may sound too simple for some. I’ve had several stock brokers as public relations clients over the years. I was in one’s office the day after monthly statements went out. He had to take a call from a client who was whining greatly because, according to him, “he had lost money.” The value of his stock was down at the moment. No matter, how long my client explained this was a temporary state, and to wait out the market, the customer hung up convinced he had lost a portion of his money.

Growing your money (putting your money to work) is the principle behind all investing and some other creative dealings. I have a son who understood present versus future value as a teenager. I didn’t get it then, but he did. His father would have him do a project and give him an IOU for the end of the month. Based on that, he would find a small electronic gadget/toy to buy and fix it up. He would then sell it to someone else for a profit. By the time he collected on his original money, he had already turned a profit.

Only a small percentage learn early on that there are only three ways of earning an income in life. Either you go to work as a wage earner, sign up for welfare or put your money to work for you. I know it isn’t easy when times are hard. Don’t let your money lie idle. Find a way to put it to work, even a small amount. There are always small collectibles one can get into. Forbes use to have a section on that issue at the back of the book. Like pretty tea cups and glasses? Buy a couple of books on antiques. It might sound insignificant. My antique china collection came in handy when I was unemployed in the 90s.

The point isn’t what you do, but that you do it. You can make it a family project. Children love collecting things and you will be teaching them a valuable lesson. Thinking bigger and might want to indulge in e-trading? Why not get the books and learn the tricks with the rest of your family.

On a final note, do not get into a mortgage that gives little or no chance of having your money grow. Your mortgage property is supposed to give you more than a roof over your head and a tax write-off.

Wherever you put your money, give it a shot of helping your future. It goes without saying that there are no guarantees. Except, of course, if you don’t do anything with your money but keep in your pocket, nothing happens and you spend the rest of your laboring at a job. Thinking about growing your money gives you a chance at a better future.

For more examples of my work:

Laura Bell


It’s rough out there
February 10, 2008, 7:33 am
Filed under: Uncategorized

This is the header for one of the last front-of-the-book commentaries in the “Economist” The only thing we can be sure in the next couple of years is uncertainty and there will be tough times.

The ripples from the sub prime mortgage market are being felt in Europe and other developing countries. They saw us get away with it and it was a matter of the blind leading the blind.

No one knows for sure just how many people are going to lose their homes this coming year. This will be the year the teaser rates go away for many. The owners are either left scrambling to pay the new note or begging another finance company to refinance. That has been relatively simple in years past if one had relatively decent credit and been making payments on time.

One problem with many of these loans is that the buyer didn’t make a down payment. To make matters worse, the value of many of the properties have gone down in the first two years. This leaves them with no equity in the home. This means they are holding a note to something that if sold would mean they couldn’t pay off the bank. Not a pretty picture. It is even a worse for the financing company. My roommate is trying for refinancing and she has to revamp some of her credit obligations.

If this wasn’t enough, tight credit is moving down to the credit card companies.
We wouldn’t see credit easing anywhere in the near future despite the Fed’s actions and the continued ads that it is now a great time to refinance..

The tax rebate has been passed and the legislators are hoping this alleged stimulus will give the economy the push it needs. The problem with this thinking is that the push is going to be short-lived. Employers are not dumb enough to hire permanent employees to keep up with the temporary increased demand. They can easily deal with that by bringing on contract employees.

Then, of course, there is the question as to whether or not the rebate checks will get spent. There are still a few among us who have enough common sense to put ‘found’ money away for a rainy day.

All this boils down to, how will you deal with all of this uncertainty? If you own a company, don’t plan any big expansions that you can’t already finance. Look for ways to scale down any expense that isn’t absolutely necessary. Start thinking in plan B mode. If your usual marketing doesn’t work, what are you going to do next? Do not, consider cutting out marketing, however. The only businesses which stay afloat during hard times are those who continue to advertise.

When it comes to personal finance, look at your spending and saving practices and see what you can do to improve them. If either you or your spouse has a hobby, think about turning it into a small part-time business. Filing profit and loss statements greatly improve your tax returns. Filing a profit and loss also usually allows you to change your W4 form so you increase your take-home pay. You are going to have a write-off at year end that will offset the fact the government didn’t keep as much. Before taking any of these steps, get advice from a tax professional.

On the credit side, are you using credit to buy goods that will no longer exist by the time you finish making the payments? Not good. Find a way to get around it. Do not use credit to buy groceries. If you are, it is a sure sign things need to be tightened up in your personal finance arena.

This is not the time to buy large ticket durable goods. These usually come with long-term contracts and ungodly interest charges. Put yourself into a different mode the next time an appliance or car breaks down. Try using the Net to find an used replacement.

If you are not currently saving and would be in a big trouble if you or your spouse lost a job, you need a coping plan. Are you comfortable in your own housing situation? Do not wait for the mortgage company to show up and ask for it back. Look for help now.

This is not going to be an easy year. The only sure thing is uncertainty.

For more examples of my work:

Laura Bell


Campaign promises and dilemas
February 3, 2008, 12:22 am
Filed under: Uncategorized

Wake up people! It’s time to get answers we can put our teeth into. Am I the only one who wonders about the how-to of their promises?

Both Hilary and Obama are talking big time about the need to fix health care and bringing the troops home. I have failed to hear any logistics about remedying these situations.

I read today on the Net about a push for bringing the troops home now, since we allegedly been promised this several times. Here is the thing, nothing as complicated as either of these issues can be solved ‘now.’

When our troops pull out in a hurry, chaos follows. Troop withdrawals have to be planned. What is going to happen to the troops that were enlisted and now may be out of job? Our armed forces haven’t been keeping extra personnel around for a couple of decades. I have run into a couple of Army personnel who had to be retired in a hurry. Their lives never fully recovered. We have to figure out how we are going to deal with returning personnel. Not doing so in previous conflicts let loose a host of social economic problems, we are still dealing with.

Then, there will be the unanswered question as to who is going to be to keep the contract workers safe once our personnel leave. According to a 2004 USA Today article, there were over 15,000 contract workers in Iraq.

We aren’t hearing anything about these issues. We only hear the emotional side. Practical guidelines as to how this will get accomplished don’t come out. Perhaps, they thing voters don’t need to know the details. Taxpayers end up paying for most programs.

Health care has been mentioned by both of the front runners. I saw a television ad where Obama was pontificating on how he was going to make sure that all Americans had affordable health care. Sounds good? How is that ever going to happen? If, for instance, the costs for doctor visits and emergency room care came down somewhere on the same level as generic drugs, what happens to the rest of the cost? Many can’t pay for health care and suffer. I understand that. Who in the universe is going to pay for the rest of the costs of running the health care industry? Overhead would have to be slashed. Let’s see, minimize doctors’ salaries to an equal level of a white collar worker? Get rid of mal practice and everything that goes with it? Do away with HMOs? Toss out all of the governmental red tape that currently slows the industry to a snail’s pace? Don’t allow the development of any new or better drugs? Is any of that going to happen? Is the United States government going to come in and make up the difference? Not unless there is a parallel Universe I know nothing about. Then there is the long term effect of sending all of our talented medical practitioners to other countries where they are still allowed to earn a decent salary. Let’s hope logic prevails.

Current problem with the California state budget also fall into the same category: promises with no proposed logical solutions. Right now there is an ongoing battle about the Indian casinos. After all, the state has to have these monies.

There is another way. Businesses have been leaving the state and setting up shop elsewhere for a couple of decades. It costs too much to operate in California. The officials looked at the short run by increasing business tax, etc. They ended up shooting themselves in the foot. The institution of a marketing plan to bring big business back to California would be a gigantic step towards getting this state back on its feet. Offer them incentives to cut their costs for the first five years they return. Publicize similar incentives for new business registering for the first time in the state. Business creates jobs. Businesses hire employees who pay taxes and spend money in the state.

If the politicians don’t give a logical answer to how they will execute their promises, don’t give them your vote. It’s time the American people started demanding the ‘how’ instead of just the ‘what.’ Wake up people! Stop settling for ho-hum leaders.

For samples of my work:

Laura Bell