Economics Tricks

The Office of Homeland Security's National Terror Alert is one of the recent organizations to advise that we plan for times when food Supplies are low (link to article is available on the Pro Food Storage website). Groups advancing provident living provident living like The Church of Jesus Christ of Latter-Day Saints (Mormons) have been urging their members to have a two-years supply on hand now since the middle of the 20th century.

Most of us know in our hearts that it is a good idea to plan for disasters as we have seen the rise of community groups like the Community Emergency Response Teams (CERT) that have sprung up all around the country. CERT members train to be able to help individuals in medical emergencies for the two or three days when other emergency assistance may not be able to help in a disaster.

With the focus on this type of help and having a few medical supplies around to take care of our needs, it makes sense that we should have a supply of food on hand as well. Groups like the Mormons have create good guidelines as to how much food is needed and of what type and amount and have published this information in pamphlets and church manuals and articles in their member magazines. This information is readily available by searching for it on the web.

This is a good time to be looking for creative ways to store your 2 years supply of food as well as sharing your experiences and ideas along those lines with others by contributing articles giving others ideas as well.

With the price of oil rising there is a definite threat that the trucking industry may be slowed or halted or that the price of food might skyrocket. The important thing is not to panic but to plan and and realize that we are the only ones who secure our health and happiness through that planning. We should not focus on the negative, but look at the gathering of food as an enjoyable activity similar to the way we look at securing our financial future.

Sometimes the hardest part is just taking that first step and overcoming inertia. We tend not to get started because we look at the whole picture and it seems over whelming. If you just start making a plan and and then once a month start adding something to our food storage supply, in a very short time you'll be surprised at how quickly you meet your food storage goals.

"If we think something is impossible, then, consistent with our minds in thinking so, even things possible will become impossible. On the other hand, if we have the confidence that we can definitely do something, we are already one step closer to achieving it." - Daisaku Ikeda

In summary, let's get creative now and find ways to get started and follow the teachings of leaders from all walks of life who urge us to get our food storage and to build up a 2 years supply of emergency food storage. I hope to see some great creative articles submitted for everyone to learn from.

So it begins. Preparation for a recession that was generally considered highly unlikely last summer is now considered by most economists to be more than likely. Of course, a recession was always likely, because recession and growth are two fundamental components of the economic cycle. The word recession carries a huge emotional burden, much like the words cancer and bankruptcy. What we don't understand we fear. But the word recession can be used in the same paragraph as the words optimism and health. Let's explore what this could mean to us as individuals and business owners, because our personal responsibilities and our economic responsibilities are potentially in conflict during this time.

Our young country and economy have done a generally admirable job of understanding and ultimately managing the economic cycle, particularly when one considers how much the world has changed in 250 years. Yes, we failed to mitigate the economic meltdown that led to the Great Depression in the early 20th century. Until then, corrections had been allowed to go deep enough to rid the system of all excesses of the prior growth period, and that had been a successful formula. The increasingly global nature of economics by the 1920s introduced new risk, and global poverty was the result. Our country's economic and financial management skills improved dramatically as a result of those lessons, and we can be reasonably sure that history will not repeat itself.

Since the end of World War II we have been in an era of economic management that allows the economy to experience the necessary booms and busts (i.e., growth and correction), but with controls. Each upswing of the economic cycle is associated with some form of speculation that eventually builds to excess. In the 1980s it was junk bonds, in the 1990s it was tech stocks, and in the 2000s it has been real estate. What will it be next? Watch emerging market equities and resources like alternative energy -- good candidates for our next phase of excessive growth. Though the roots of the next phase of excess are being planted now, first we must deal with the necessary correction phase, which given the recent rounds of government intervention, will likely be preceded by one more uptick in growth.

The tax rebate and spending program just announced is generally responsible. Theoretical debates aside (Democrats want more unemployment and safety net benefits, Republicans want to lock in Bush's tax cuts beyond 2010), getting consumers to spend more freely will have a positive impact on the contracting economy, which will delay and soften the oncoming recession. But from another perspective, the individual responsibility to save and prepare for the future, this approach smacks of immoderation. Which one is correct? Both perspectives are correct.

In an ideal world, consumers would all have paid off credit card debt, increased home equity, and put money into retirement savings and short-term liquidity accounts during the past six years of economic growth. That type of fiscal prudence at the individual level would have reduced the economic growth we experienced and it would have reduced some excess in the system.

The US government will provide incentives for consumers to spend more money, starting in May when US citizens below certain income levels receive their rebates. The mere anticipation of the rebates will motivate many people to spend now, so the benefits of economic stimulation will begin almost immediately.

How do individuals reconcile the need to demonstrate fiscal responsibility with the overall economy's need for spending? Depending on your perspective, this may seem a moot point. Those who have been mindful of future recessions are savings minded. Those who have not started taking savings seriously are not likely to begin now. But this is a serious personal philosophical question with which serious people should grapple.

Start by understanding that all debt is not bad. The savings-minded have a tendency to be debt averse. Extreme debt aversion is what prolonged the Great Depression long past the point when the economy should have recovered. As long as the debt incurred provides greater return than savings alone would yield, debt is an intelligent choice. Debt is bad when it fuels consumption that has no long-term benefit. Even with the housing market continuing its correction, housing remains an intelligent debt. This correction will end, the next growth cycle will begin, and smart investments in real estate will continue to pay off.

Recent economic anxiety and fear of changing government administration in 2009 has caused businesses to batten the hatches, slightly increasing unemployment for the first time in a few years. But an interesting trifecta -- the government's new financial incentives for business to invest in infrastructure, the weak dollar creating export growth, and the emerging baby-boomer retirement wave -- should contribute to earnings growth for American workers.

This adds up to one more opportunity to improve individual financial positions without the cumulative effect of short-term contraction of the economy. If individuals were not spending so much money servicing credit card debt, those dollars would be available for consumption that has no long-term economic benefit, giving individuals rewards such as vacations while providing the economy with cash flow. Now is a very good time to invest in homes, commercial real estate, and reasonable-return infrastructure for businesses. It is time to pay down short-term debt in order to be financially healthy when the correction occurs. If increased wages pan out, consumers will have money to both spend and save. The discipline is to ensure that saving is a well-considered part of that equation.

(c) 2008. Andrea M. HIll.

As the sub-prime mortgage scandal continues to play out badly for many US companies, more and more questions have been raised as to whether the impact of a slowdown in one area will translate into a nationwide, or even global, recession. Growth prospects within the US are limited for this year by the unprecedented scale of bad securities that have become investments for many companies around the world, exposing them to grave losses and destroying investor confidence. According to polls, more and more Americans are becoming wise to the potential crises and have shored up spending, in turn triggering further softening of retail markets.

One cause of this problem with American consumer spending, the practically guaranteed market for many goods even in tough financial times, is that the borrowing people must first default on their mortgages before the securities (that their loans have been repackages and distributed) can truly become worthless. The speculation (or realization) that they will be unable to pay off their loans has led to the economic slowdown of the past several months, even though mortgage defaults have barely hiccuped in the same period.

Nevertheless, the certainty of two million or more foreclosures over the next year cannot translate into hefty consumer spending, because so many consumers will be unable to make ends meet and many more will be on the verge. While a plan has been introduced by the Bush administration to freeze mortgage loans for an unspecified number of borrowers, no reference to the specific criteria used to decide who is eligible has yet been made. Thus the underlying cause of this shifty-eyed economic malaise is in no way addressed.

Now the President has stated that the economy at large runs a great risk of recession without his impending stimulus package. Unfortunately, no one who can't pay for their house will be able to pay any taxes or credit card bills (which famously outpaced the median income this year), or for other things that cost money. A tax cut may be able to stem the defaults for a little while if implemented quickly, but if the Federal Reserve (the other institution that can help steer the economy) is any example, lip service and hawkish reticence is likely all the average American can expect. As job creation slowed to terrifyingly low numbers in November, (a paltry 18,000 new occupations) the US government finally issued a statement that growth cannot be expected to surpass 2% this year. Before it even started.

So, is recession inevitable? Well, if the definition of a recession includes "no longer being able to spend more money than one makes," or collectively changing expectations about wealth and the common good, then the answer is yes. If we continue on a path of breakneck consumerism, we will trade our economic security. No one is going to complain that Americans will always spend. After all, as a market of last resort, the US consumer has, time and time again, been able to keep the growing world economy robust and secure. But if these attitudes don't change, a recession will be the least of America's worries.

Is it possible to unite small business people and solo professionals in each city in the US in order to boost consumer confidence? The prospects of a severe recession are ever present in the current economic forecasts. Most economists will agree that the conditions and of dire concern. Indeed, this is why I am suggesting this grass roots effort to shore up the brewing consumer confidence crisis.

Now then, I am not necessarily suggesting that these groups go out to paint a false picture, rather to let Consumers know that actually they control the 1/3 and if the other 2/3rds are only performing at half, then that still leaves an economy viable with the consumer side 1/3 strong. So, even if the other 2/3 of the economy, real numbers are looking horrible and operating at only 50%, boosting consumer confidence can save this economy. Thus, we would be at:

[1/3 - 50%] +[1/3 - 50%] + [1/3 at 100%] = 2/3 of the total of 100%

And that sure beats:

[1/3 - 50%] +[1/3 - 50%] + [1/3 - 100%] = 1/3 of total performance

Either way we can make a difference in my estimation, and if we don't attempt it, we automatically accept it. A bad economy is not acceptable in my opinion, and having been thru a couple in my career. I prefer not to do it again, but I will survive. I know how too, but for a good many Americans, like those who bought real estate at the top, those who will lose their jobs, those who fail to save, are debt laden, or have kids college age - well, I just hate to see that really. Since the consumer is something we can do something about, let's do it.

One economist reviewing my plan stated:

Rather than discounting the facts that are before our eyes and attempting to paint a rosey picture of our current situation, I believe that our industry would be better suited to accept the truth and offer an accurate picture to consumers.

A recent political cartoon in my small-town newspaper showed a little man with big ears standing in a boat wherein a fat man sat smiling and smoking a cigar. The fat man was labeled "Banks"-obviously one of the two being rescued. The small guy with big ears-the other person being rescued-was bailing water from their beleaguered craft, to keep it from sinking into the black as night sea called "SUBPRIME." Trouble was, as the bucket's contents were hurled with great speed (indicated by the ferocity of the cartoonist's splash marks), they hit the face and chest of a passerby in another boat-labeled "Homeowners."

According to "saman" at Foreclosure DataOnline, "There is, of course, a difference between steps that can be taken to prevent foreclosures and a bailout, but many people fail to recognize the difference and remain steadfastly against both. Some economists even believe that proposed remedies might do just the opposite of what they are for, and actually make things worse."

Lenders, by and large, are not known for holding their customers' interests closest to heart. That's why they didn't offer fixed rate loans to 45% of people of color (Black or Hispanic) who qualified for them! And of course, by reselling the mortgages as securities, lenders including the government's Freddie Mac entered into contracts with investors. Now that really complicates saving anybody besides the government and the lenders, with the possible exception of investors.

Jack Hough, over at SmartMoney.com, is clear the bailout will hurt homeowners far more than it will help them. But his reasons may surprise you. Here's Hough:

"The government's new 'teaser freezer' plan would extend for five years the artificially low introductory rates on mortgages made to some buyers with spotty credit between January 2005 and this past July, a period that contained the real-estate market's bubbliest months. A typical such mortgage carries a teaser rate of 7% to 9% for the first two years, and an ordinary rate of 9% to 11% thereafter. Without government intervention, monthly mortgage payments on these loans will increase as much as 30% over the next two and a half years...The president's plan will keep some of these people in their homes, no question.

"But it will also make them poorer. That's because if two percentage points on a mortgage rate decides whether someone can afford to keep their house or not, then they can't afford to keep their house. They're paying too much. By continuing to pay too much, they'll divert their would-be savings to an asset that's likely twice as expensive as it should be right now, and even if it's not, tends to produce poor returns over long time periods."

Hough himself rents, and has good reasons for doing so. He goes so far as to say that renting would make more sense for most people in this day and age. As a homeowner, and a renter until five years ago, no one appreciates his point more than I. He dumps his "excess cash" (my term, not his) into business investments, which even at 1% profit have a greater yield than the house you live in. (The house you live in generates no yield until you sell it, and even at what most folks call a huge profit, may not cover maintenance during the time of ownership.)

He says if the government intervenes at all, it should do so in a way that will make folks wealthier, not poorer. I like that idea. Let's make sure every homeowner in America gets a comparable favor or cash flow similar to what's being forgiven those who can't pay. Then we'll all be wealthier!

We can propel our economy out of recession and quite easily. It is unfortunate all the doom and gloom in the media about the greatest economy ever created in the history of mankind. The US economy will soon surpass 20 Trillion Dollars per year, most likely before 2010. Today we do have a few challenges, but that is just part of the natural and normal economic cycles. Now then, to the critics, I say;

I will certainly not be one to deny what you have stated here about the Iraq re-stabilization efforts. I do concur, my dear sir, that it is much too costly, and it a very poor use of our national treasury, unless the oil there is used to pay back down our debt for our involvement. Indeed, that is a whole other issue of epic proportions and such a debate will rage on forever, but a trillion plus dollars on Iraq is nuts anyone who would debate other wise is fully of poppycock.

And I say to the critics of the strength of the US economy that; no doubt that the cost of milk, meat, heating fuel, energy, and diesel fuel and gasoline is huge and those costs are rising. Diesel fuel costs are causing wholesale inflation, let's call it an invisible tax or artificial inflation, on everything else, and that on top of the issues that too there is real inflation on consumer goods, not necessarily having to do with transportation, and distribution fuel costs, but other factors. Some of the increased prices are finally, moving up to where they should have been all along, yet hardly an opportune time, considering all the other issues you mentioned, as have I.

The pumping of more money into the economy to shore up (Economic Stimulus Plan) things now will only cause more inflation, having government try a spending economic bailout package is counter to sound economic theory, but politicians will promise anything to the mob in order to get elected. Still, the thought of recession + inflation is no fun either, we've lived through that before.

And on top off all that the monetary flows out of the country due to un-balanced and unfair trade (as if there were ever such things as utopian free trade) is assisting in the of sinking dollar further. Although, that might have been considered a strategy of past administrations, it is not a viable long-term plan, as in previous periods as our manufacturing base has been eroded by over regulation, outsourcing and competition where labor is cheaper.

Indeed the over all economics is global and local and everywhere in between including the largest chunk of the consumer dollar is about as local as it can get, the individual's pocket book. And their individual circumstances, which you allude too and in which I am in agreement of, to deny your statements, would be words uttered in pure hokum.

In fact, I doubt I would disagree with the critics of the US economy or the challenges we face on the road ahead or on the ailments of our current economy or the repercussions. Now then, my good sirs, I hereby propose a grassroots marketing effort to shore up the loss of trust and consumer confidence in our nation's great economy. So, I ask what say you about a strong and united effort to do just that?

Do you believe that an organized grass roots effort with 3-5 small business people, professionals and influences per town in rural areas and 4 teams of 4 each (16) per DMA putting forth, pre-packaged information to shore up the negative media momentum would be a good start in slowing negative consumer sentiment. All this in an effort to boost consumer confidence, using it as a battle cry of "unity in motion" to bring the nation together in a common cause in healing itself is a good idea?

Because, it can work and it is a start and this industry is not the only one which would get behind it. Too, we must remember the largest employers of all are our small businesses employing 75% of the workforce and accounting for 10% of the population as those small business owners. The NAR, would jump on board, once the program got going, so would others in many industries. There is power and synergy in the numbers represented here, and real estate people being natural "influencers" only makes the pie even sweeter. What say you?

The greenback has been slipping against the euro, the Chinese Yuan, and the pound for the past nine months or so, reaching record lows amidst a global credit crunch and plummeting real estate prices. What does this mean for US growth? According to the Federal Reserve, projected economic growth will slow from more than 2.5% to around 1.8%, and inflation remains a concern. But one figure does not an explanation give.

The slipping dollar is an indicator of how strong and robust the US economy is, relative to other countries and currencies. As news of record mortgage defaults, volatile markets, and skyrocketing oil prices continue to trickle in from throughout the US, consumer confidence has tumbled and with it their spending has tightened. This signals an impending shift that Americans will have to weather, but which actually provides a useful impetus for making some fundamental changes in the economy.

If Americans are forced to actually save, (rather than going into negative savings, as the average American has within the past two years) a falling currency can actually be absorbed without causing economic devastation. Simply put, most Americans don't plan for their economic future very well, and are in fact in debt more often than not. No matter how much growth the US economy may generally experience, it is unsustainable for our present levels of spending to result in a beneficial outcome indefinitely. Therefore, a falling currency forces a necessary economic reality to be faced, which may have a much better end result, even if the transition is somewhat unpleasant.

A depressing currency also makes US exports cheaper for other countries, hence ensuring that demand for American labor will be attractive to foreign interests. While this may guarantee some growth, if US manufacturers aren't hiring Americans, (because we aren't willing to do the work and illegal immigrants are) the US cannot reap these benefits. Hence another attitude shift is in order: That there are no jobs in America that Americans should be unwilling to perform. This has been a huge strength in US history, as American manufacturing and industrialization fueled its development into an economic powerhouse throughout the twentieth century.

The falling dollar is also beneficial in that OPEC prices oil in dollars. This means that even though oil almost reached 100$ a barrel within recent weeks, it was still less expensive than it could be if they decided to price oil in euros. Therefore OPEC absorbs the weakness of the dollar in tandem with consumers, thus placing no special burden on Americans. If they were to price oil in another currency, Americans would be hard-hit, but perhaps the US would be able to cut back its dependence on foreign oil. It's possible that rising oil prices, coupled with the other factors mentioned, could trigger the growth of alternative energy production on a wider scale.

Above all, the US benefits from a less powerful currency because the current model for economic growth is unsustainable, if not downright foolhardy. In order for America to remain a world leader, it must be able to lead more than amount of products consumed. The US also has to be able to produce more sophisticated solutions for its weaknesses at a lower cost, which it now has the opportunity and incentive to do.

Each month the Bureau of Labor Statistics (BLS) prepares the Employment Situation Report for the prior month. This particular report is a big deal because it's a "market mover" meaning the results of this report have the ability to push the Dow Jones Industrial Average, DJIA, higher if the results are good, or send the stock market spiraling if the numbers are poor.

The employment report consists of a combination of data from two separate sources

• Household Survey is a sampling of approximately 60,000 households and only covers a small percentage of employed persons.

• Establishment Survey is a survey conducted on approximately 400,000 businesses of all sizes and represents about 33% of total nonfarm employment.

Between the two data sources the BLS is able to provide us with various information in their report, including the following figures for December 2007, as released on January 4, 2008.

• Unemployment Rate - 5% - Household Survey

• Nonfarm payroll employment - %2B18,000 - Establishment Survey [138,495]

• Number of unemployed persons - 7.7 - Household Survey

• Total employment - 146.2 million - Household Survey

The figures released each month are the seasonally adjusted totals and the key number is the increase/decrease in nonfarm payroll employment. In the month of December 2007 the increase in nonfarm payroll employment is %2B18,000, meaning 18,000 jobs were added to payrolls during the month of December 2007.

During a President's term of office, the number of jobs produced during his/her administration becomes a very important issue because job creation is based on economic policies put in force by the administration.

Upon release of the January 4, 2008 Employment Situation Report, the White House placed a Fact Sheet on their website claiming "Since August 2003, more than 8.3 million jobs have been created".

Knowing the Bush administration didn't start in August 2003 and knowing 8.3 million jobs since August 2003 averaged out to little more than 160,000 jobs a month I decided to research the subject further.

During the eight years, Bill Clinton was in office, his economic policies produced 23.1 million jobs [average 240,000 per month] as follows:

Data extracted on: January 12, 2008 (11:19:19 AM)

Employment, Hours, and Earnings from the Current Employment Statistics survey (National)

Series Id:     CES0000000001 Seasonally Adjusted Super Sector:  Total nonfarm Industry:      Total nonfarm NAICS Code:    N/A Data Type:     ALL EMPLOYEES, THOUSANDS 

Year

Dec

1992

109418

2000

132484

The new resolution and the optimism of the new year 2008 for the economic growth is dented by the unemployment report last week at 5%. This has prompted Fed to sooth-saying the market that the interest rate cut is imminent and is able to prop up the economy. However, one may wonder why the decision is announced after so many falls and news about the sub prime crisis have prevailed and how effective the previous policies on the market?

The mortgage crisis came to everyone's scrutiny since 2005 and 2006, and the question asked is; the lending policies were too lenient and outright lagging the prudence professed by the developed worlds which blamed the Asian financial crisis 1997 on the developing worlds, mostly Asian Economies. However, the stack of mortgage loans and its weaknesses were further prolonged by the hedge fund companies which introduced the novel instrument to allay the fear of spiraling bad debts through CDO, collateral debt obligations. CDO is an instrument to sell short term securities and buy higher return and longer term loan papers. When the market was awashed with potential bad debts, the introduction of the instruments became hot cake.

This instrument was guaranteed by financial companies, in the event of non-performance, the holders are guaranteed the investments. But why the guarantee? It is because the hedge fund guarantees to buy the potential bad debts from the institutions and of course there are fees involved. And since the packaged securities were guaranteed and graded highly by the international agencies, the shot term papers were selling fast in the market, due to the attractiveness and the potential of cushioning the write downs, it drew in much money market funds. And as long as the price of the paper was booming and the sentiment was positive, no one will withdraw their money from the pyramid type investment. It is pyramid type because the early investors reap the profit in the expense of the later investors.

The mechanism caused more selling of mortgages and the borrowings were made very easy, as the money became cheaper. This in turn drove up the house prices, holding off defaults and foreclosures. Therefore, everyone was happy, as there was always someone who comes in later to take up the risk by buying the short term papers. Therefore, the prevalence and the worries of potential write downs of the mortgage loans were allayed and the problem enhanced and prolonged.

When this fragile mechanism imploded and proven to be non-sustaining, the spiraling effect proves to be non-ending, the agencies exposed to the mechanism are spread across the world, and its seriousness and end are still no where to be seen. To cushion the effect; the credit squeeze (banks are now reluctant to lend, the inter bank lending dropped because the exposure of the banks to the problem is still not known), Fed and ECB, announced trillions of loans to the affected parties, to boost the lending and thus to rejuvenate the economy. However, the problem faced is the damaged balance sheets, and thus the loans given by the central banks are barely heeded by the banks. Although the loans helped to boost the sentiment, the drop of interest rate was meager. Many of the banks focused on non financial related money, mostly from Asia and Middle East.

The crisis affected the value of the currency, and have lowered the price of the country's export, and thus helps to boost the local manufacturers and exporters. However, price of wholesale is increasing, and the country risks the potential of inflation as wholesalers will tend to pass the increase to the final products. And since US is the main importer and user of oil, the increase of oil will further fuel the tension and worries of stagflation.

The offer and auction of loans to the conventional banks are proven to be non effective in ensuring liquidity in the market. The offer was mainly of the opinion that the effect on the price increase is less than the cut of interest rate. However, the recent announcement by Fed of potential interest cut was completely in contrast with the stand made earlier. What guarantee that the cut can rejuvenate the economy and what is the different between the policies in cushioning the squeeze? Is the Fed fire fighting instead of getting to the root of the problem? Is the Fed putting on the fireman hat every time when the problem emerged instead of approaching the problem with a more sustainable policies?

According to the press service of the USA State Department in Washington, the consular fee paid at presentation of documents for receiving non-immigration visa to the USA rises in price starting with 1 January, 2008, from today's 100 dollars to 131 dollars.

Among the reasons of increase in rates the State Department names inflation, the need for costs on new technologies and visa protection, as well as invoices issued by the FBI to the State Department for processing finger-prints of both hands taken at receipt of the visa documents.

"Now we take ten finger-prints from each person who presents his documents, and the rate charged by the FBI for the processing of these finger-prints does not allow us to do this any more", the press service explains.

"The fee in the amount of 100 dollars for a machine-read visa is less than the real price of processing non-immigration visas", the report emphasizes.

The State Department reminds that the last time the visa fee was raised five years ago, in the year of 2002.

USA introduces more and more security measures on the entrance border posts like airports or sea ports. The problem is not the security measures itself, but their selection. For example - the effectiveness of the fingerprint scanning is a matter of argues, but the negative attitude of the tourists to this process should not be underestimated. Only because of this measure - enormous amount of tourists have decided not to visit United States at all. And in the last time there are news to hear that the tourism development state departments of the USA are seriously bothered with the problem of the decrease of the tourist flow. The problem seems to be evident in hotels reservations and flights booking that have significantly decreased in amount after all these security measures were introduced.

The news programs that are targeted to lead more tourists into the USA are already being developed and some of those are started. Let's see what kind of balance between security and hospitality outcomes.

If nothing else you have to admire the perseverance of this administration. No matter how bleak the news, the White House continues to put on a happy face and the December 2007 employment report is no exception.

The fact that only 18,000 jobs were created in December 2007 is basically set aside by the White House to remind us that more than 8.3 million jobs have been created since August 2003 and 1.3 million jobs have been created during 2007.

"Since August 2003, more than 8.3 million jobs have been created, with more than 1.3 million jobs created throughout 2007. Our economy has now added jobs for 52 straight months - the longest period of uninterrupted job growth on record."

You'll note the 8.3 million dates back to August of 2003, not January of 2001 when President Bush took office. Do you think it may have something to do with the fact that jobs were lost during the first 30 months of his presidency? The number is correct for the period indicated, but the period indicated is not an accurate representation of job growth during the Bush presidency.

What the White House also fails to mention in their focus on the economy is the overall decline in job creation in 2007 v. 2006. During calendar year 2006 payroll employment growth averaged 189,000 per month, compared to 111,000 per month during 2007, or a decrease of 936,000.

A decrease in jobs equates to an increase in unemployment with the number of unemployed at 6.8 million in December 2006 rising to 7.7 million in 2007.

The number of discouraged workers has also increased over the year and is now at 1.3 million. Discouraged workers are those that do not bother to look for jobs during the reporting period because they don't feel jobs are available for them.

While the White House is gloating over the 8.3 million jobs created since 2003, Standard and Poor's economist David Wyss is suggesting the December jobs report brought the chances of recession to 50-50.

"After this report, I'd have to say the chances of recession are about 50-50," said economist David Wyss, of Standard & Poor's in New York."

One dismal jobs report may have the power to put the DJIA in a tailspin, but alone it should not have the power to increase the chances of a recession to 50-50. What will increase the chances of a recession is continued job losses in the manufacturing sector.

212,000 manufacturing jobs were lost in 2007, with only 30% of the lost jobs attributed to industries that provide home building materials.

The winner for 2007 is the healthcare industry gaining 381,000 jobs. Based on 1.3 million jobs created in 2007, this means one out of every three new jobs added in 2007 was in healthcare.

Unless the U.S. is planning on becoming the healthcare capital of the world, we need to start taking the necessary steps to create more jobs in this country. This administration, faced with the possibility of a recession, is doing what it does best - thinking about a tax cut.

Apparently they haven't figured out tax cuts for the rich are part of the reason the economy is in the shape it's in now.

we have seen the fallout from rising gas & oil prices for the past year. It is one thing we can't do a darn thing about but doom & gloom isn't what we need right now. We just have to work smarter.

Indeed, that is right about right. If you ask folks in various industries about how they feel they will tell you. Many sub-markets are really hurting, take the smaller cities in the hills of Arizona for instance. The folks did not drive up to Flagstaff to get out of the Phoenix heat for the day much this summer either, I guess by the time you drive out of Phoenix with the air-conditioning blazing up that hill, you have killed a half-a-tank. I talked to some shop owners downtown there, they said things were tight.

Some of my family in "Winslow" Arizona, tell me the store was not as busy there either, fewer travelers, fewer RVs on the road, etc. It is obvious that people are traveling less and some travel destinations suffer, others do well, which are closer. Amazing that Airline travel is up and driving travel is down, but then again, my last trip from CA to DC in the motor coach was $3300 in fuel as opposed to $1200 back in 2002 and $800 in 1999.

So, I suppose I understand better why people are traveling less by car, but it can affect some economies more than others and these are challenges that must be faced head on and applied directly to the forehead to figure it all out. Of course, high oil challenges are not our only problems, through in a little politics, such as the anti-Corporate speech from Edwards and the Oprhama - after their Iowa caucus victory calling for complete change, + the $100 per barrel prices the stock market went immediately to where the analysts said it should be and thus the technical traders were right.

Many anticipated all this and sold all their stocks on December 30 at the end of the Santa Clause Rally. Why, well, believing that Auto, Retail, etc. would report poorly and the slowing economic figures too (most of which are BS inflated embellishment anyway, the reality is much worse). More questions, why, well, due to off-shoring, outsourcing, layoffs, trade deficit and of course, high oil, which is killing the little business person and families (consumer confidence and spending) too.

With the stock market back down, soon we could be looking at another up-trend, as the FED will have to shore up investor confidence too with a rate cut. We have been discussing here at the Think Tank a 2.5 year bottom in real estate from now and buying in along the way would make sense. Additionally, we see this stock market testing twice with some volatile mood swings and an occasional bad hair day, and flat for a week and then back up it shall climb, not like a Saturn V rocket, but upward like the Peloton Pack in the Tour de France. Think on it.

**Note: I am not a financial advisor, these are my sole opinions based on a radio show script I have been writing for an interview tomorrow, which could change at will. If you are looking for good advice call Jim Cramer and read his disclaimer to understand the reality of financial advice on TV, radio or the Internet.

In Capitalist America, owning a business is the main ingredient in the recipe for creating wealth. Although the number of self-employed Black Americans doubled from 1984 to 2003, the Black American self-employment rate is less than half the national average and still lags behind Latino, Asian and White Americans.

According to the Small Business Administration, only 4.5 percent of blacks own their own business, compared with 7 percent of Latinos and 11 percent of white and Asian Americans. Black-owned businesses generate dramatically lower annual sales than firms owned by white and Asian Americans, and they are more likely to fail.

For years, University of California Santa Cruz (UC Santa Cruz) Economist Robert Fairlie, has analyzed data to understand these disparities and along with Alicia Robb of the Foundation for Sustainable Development, has uncovered the main factors that account for the lack of black owned businesses compared to other races:

? Insufficient amounts of startup capital

? Lack of self-employed work experience

? Lack of educational attainment

"Half of all Asian Americans in the labor market have a college education or higher," said Fairlie, emphasizing the importance of education.

"Business ownership is an alternative to unemployment and discrimination in the labor market, and political influence comes with success in small business," he said. "Historically in this country, we've seen rapid growth of business ownership among immigrants, including Chinese, Japanese, Jews, Italians, Greeks, and, most recently, Koreans."

Yet business ownership rates have been stagnant among Black Americans, said Fairlie, who presented his research during a conference titled "Race, Families, and Business Success: A Comparison of African American-, Asian- and White-Owned Businesses." His presentation was sponsored by the UCSC Equal Employment Opportunity/Affirmative Action Office as part of its diversity lecture series.

In his analysis, Black-owned businesses average annual sales of about $60,000, compared with $167,000 for Latino-owned businesses, $219,000 for white-owned businesses, and $245,000 for Asian-owned businesses.

Only 14 percent of black-owned businesses generated annual profits of $10,000 or more, compared with 30 percent of white-owned businesses. Business failure rates during the first four years are 27 percent for black-owned businesses compared with 22.5 percent for white-owned businesses.

Sufficient startup capital, prior work experience in a family-owned business, and education emerged as the biggest differences in the success and survival of black, white and Asian-owned businesses. Having sufficient start-up capital accounted for 43 percent, self-employed work experience - 11 percent, and educational level about 6 percent of the difference in business ownership success.

Businesses launched with $100,000 or more of startup capital were twice as likely to prosper, but only 1.7 percent of black-owned businesses start out with more than $100,000, compared with 4.9 percent of white-owned firms, said Fairlie. Furthermore, only 6.5 percent of black-owned businesses start a business with more than $25,000 in capital, compared with 11.1 percent of white-owned firms and 12 percent of business owned by Asian Americans.

Why the large differences in start-up capital? Not surprisingly: Wealth! The net worth of blacks and whites accounts for the disparity in startup capital, said Fairlie. Defined as total assets, including home equity, automobiles, and savings, net worth for average Black Americans is about $6,000; Latino net worth averages $7,000; and White and Asian Americans net worth is about $70,000.

"Wealth inequality leads to these low levels of capital, which is a huge factor in determining the outcome of a business," said Fairlie, adding that, "Economists tend to focus on wage and income inequality, but there really needs to be more attention paid to wealth inequality in this country."

The alternative source for start-up capital are Bank and Government (SBA) loans. Not surprisingly, Asian Americans have been the leaders in snagging SBA business loans. Over the past ten years, Asians obtained 12.2% of the $85 billion in loans guaranteed by the SBA, while Latinos received 5.6% and Blacks 2.8%.

The USA Today also reported earlier this year how self-employed Asian Americans assist each other in business with alternative financing:

"Many Asian immigrants finance start-ups through informal loan associations. How they work: Twelve established Asian U.S. business owners will contribute $1,000 each to a fund. That $12,000 is loaned to a new immigrant entrepreneur. Loans are often interest-free, and agreements are sealed with a handshake," says Greg Fairchild, a professor at the University of Virginia. "It's a new version of what people have negatively called the good old boys' network," he says."

These types of business associations are dated back to the early 20th century in the United States when Asians were the primary foreign immigrant group. Unfortunately, there are no direct equivalents in other minority communities. Harry Alford, president of the National Black Chamber of Commerce, hopes one day there will be. Asians don't form loan pools "because they love each other," he says. "They see it as a necessity for business growth. We African-Americans have a natural dependency on waiting for the government to do something."

After reflecting on their discoveries, Fairlie and Robb point out several issues for government review, including improving bank lending laws to further protect Black Americans from financial discrimination, addressing wealth inequality, and developing internships that would help narrow the gap for the lack of work experience in family-owned businesses available to Black Americans.

Create Wealth, Enjoy Life!

James "Bird" Guess

President & Founder

The Black Economy.com

Millions of savers were shortchanged this year as banks and building societies failed to pass on the full benefits of rising interest rates. The Bank of England had increased interest rates from 5% in January 2007 to 5.75% in July.

And yet, the Big Name Banks, Barclays, NatWest, ING and First Direct have no savings accounts that matched the rate increase. In fact, the average rise across the banking industry was only 0.67 percentage points, costing savers an estimated ?400 million.

Britain's biggest savings provider, The Halifax actually only pass on 0.44 points of the 0.75 point interest rate increase to it's savings customers, building a nice little profit cushion for themselves. And in a premature, but profitable move, it slashed it's savings rate by 0.25 in anticipation of the Bank of England's base rate cut. The cut will not be passed onto borrowers until January 2008, clawing back millions for the bank.

If you're saving in any bank account, you must be vigilant and make sure you're getting the best rate possible. I urge you to dump poor performing accounts and switch to better paying options.

Of course, higher rates made a lot of borrowers feel significant pain. And what did our lovely banking industry do to help their customers cope with the increased payments caused by the higher interest rates?

Why, they hiked up their fees of course! with a typical flat fee to arrange a mortgage now ?800. And true to type, the banks are charging a percentage fee on large loans, which is averaging at about ?10,000 per loan.

Another new fee, this one for the abused credit card user, is designed to punish the responsible user. An annual ?35 fee has been introduced by some banks for infrequent users and for those who pay off their bills in full every month. and of course, it's up to the banks to decide just what constitutes infrequent use!

Interest rates jumped on credit cards without any adherence to basic rate movement, with some companies, Lloyds in particular pushing one of their card rates up by 10.4%!

And even though we have had an interest rate cut, relief will not be felt by all borrowers as banks fail to pass on the full benefit to their customers.

Still trusting your money to these people? The only person you should trust with your money is you!