I want to wring Ben Bernanke's neck. His, and the Fed's belief that in order to restore the economy we have to get the credit markets moving again is absolutely ludicrous, if not downright stupid. I can't help but think that credit was and is the very reason we are in this situation to begin with.
It doesn't take a rocket scientist to conclude that there was clearly far too much access to credit, and the only criteria for getting it was to have a pulse. We'll not even go into the shenanigans that went on behind the scenes at the world's biggest banks with regard to mortgage backed securities and layers and layers of margining.
The simple truth about credit is that at some point someone has to pay it back. It's a loan. It's not really the borrower's money. It therefore shouldn't be what drives consumerism. That should come from good wages provided from gainful employment. If our economy was as strong as we'd have ourselves believe (I thought it was stronger too as earlier blogs would indicate, but I've now been forced to reconsider), then consumerism would have been more a product of people having real money in their pockets to spend, from real jobs. Not from credit. In addition, they'd have had real savings that could be used to bail themselves out of a problem if something went bad. Unfortunately that is not the case at all, and the proverbial shit has literally hit the fan.
The fact is that wages have been stagnant in this country for a very long time. Companies have been allowed to ship work overseas and good, high paying industrial jobs which were the backbone of the middle class have all but gone. The ones that are still here teeter on the brink of extinction.
I think that's thanks to credit. The whole idea of credit seems to have effectively replaced the greater need for income. And when everyone can get credit, and get things with it, it creates the perception, rather than the reality, that people have money to spend, and therefore everything is going well. Right?
Wrong.
We've been misled to believe that money is available no matter what, and that we can therefore borrow to our heart's content, heedless of whether or not our incomes would ultimately support that. That kind of thinking has led us down a very precarious path, and we're now feeling the harsh reality of that. I don't get why the Fed doesn't get that as well.
Who needed to have a good job? So long as we could have a credit card in our wallets we could rule the world. Even the 40-something working the french fry vat at the local McDonald's restaurant carried a Platinum Visa in his wallet.
And let's not forget the other side of the coin. The CEOs, who continue to rape the average American worker of their wages and benefits while cashing in their own paychecks worth millions of dollars in salaries and bonuses - even while their own companies and finances go down the tubes. To them, job losses were okay and paying people less was okay as well. The money flow was still in a nice groove despite it all.
What the government powers-that-be need to do to in order for this economy to get rolling again, is to take a serious look at jobs. Jobs are, in my opinion, at the heart of it all. In order for people to obtain things to drive consumerism that has any real economic value, people need money. Good paying jobs provide that. Not banks and plastic cards. We need to restore in American's a real sense of security that their families, their lifestyles, and that their futures are safe. We need to foster a sense in American companies and the CEOs who head them, that capitalism only works if everyone, not just a select few, have a real chance to compete and achieve a gain. Jobs are what are important to the economy. We have to create them, and we must protect them.
As it stands right now, I don't think Ben Bernanke gets that. He therefore should resign. As for the rest of the Fed, it should rightly yank it's head from its ass-crack as well, or we are in jeopardy of a severe, and historic economic disaster.
Thursday, September 18, 2008
Saturday, September 13, 2008
GM AND FORD MAY GET $50 BILLION TO HELP SHORE THEM UP
If Congress allows an additional $25 billion in low-interest federal loans to ailing General Motors Corp. and Ford Motor Company on top of the already authorized, but not yet funded, $25 billion, which was part of last year's energy bill, it is not, as some would like to believe, a federal bailout. These companies will have to pay these monies back, and the funds would provide a great deal of help to an industry caught up in some very tough times of late.
General Motors Corp. stock is down a staggering 47% this year so far. Ford's stock is down 27%.
Part of what these funds would allow the two companies to do would be to retool existing plants, which have primarily been used to build larger SUVs and sport-utility trucks which have fallen out of favor, in order to better compete with new demand for more fuel efficient cars. Right now, Japanese automakers Toyota Motor Corp. and Honda Motor Co. dominate this market.
Of course, all kinds of arguments can be made that US automakers made some poor decisions which led, ultimately, to myriad financial problems, and governments should not be involved in helping to buoy companies that get it wrong. For the most part that's true, and certainly the airline industry, notorious for receiving federal help, is a glaring example of abuse of the system. But the US auto industry, perhaps one of the last of the strong wage jobs in America, is important to the economy. And in a time when many thousands of American workers continue to lose jobs as the economy yet wheezes more, someone has to step up and do something to curb the damage.
Right now, both presidential candidates support this. They see the very real potential for major bankruptcies if the top two US automakers cannot fix their problems, and soon. Americans should be on board with this plan as well. It's good for jobs. It's good for the economy. It's good for the markets.
General Motors Corp. stock is down a staggering 47% this year so far. Ford's stock is down 27%.
Part of what these funds would allow the two companies to do would be to retool existing plants, which have primarily been used to build larger SUVs and sport-utility trucks which have fallen out of favor, in order to better compete with new demand for more fuel efficient cars. Right now, Japanese automakers Toyota Motor Corp. and Honda Motor Co. dominate this market.
Of course, all kinds of arguments can be made that US automakers made some poor decisions which led, ultimately, to myriad financial problems, and governments should not be involved in helping to buoy companies that get it wrong. For the most part that's true, and certainly the airline industry, notorious for receiving federal help, is a glaring example of abuse of the system. But the US auto industry, perhaps one of the last of the strong wage jobs in America, is important to the economy. And in a time when many thousands of American workers continue to lose jobs as the economy yet wheezes more, someone has to step up and do something to curb the damage.
Right now, both presidential candidates support this. They see the very real potential for major bankruptcies if the top two US automakers cannot fix their problems, and soon. Americans should be on board with this plan as well. It's good for jobs. It's good for the economy. It's good for the markets.
Sunday, August 24, 2008
ANOTHER SENSELESS DEATH
It was a strange experience for me to see my mother on the 10 o'clock news last night on our local Fox station, channel 6. But there she was nonetheless. The situation that got her there was a tragic auto accident that happened on Friday around 6:30 PM that left four bodies and a mangled mess of a car on my grandfather's front lawn.
The car had been speeding along W. Morgan Avenue around 67th St. when the driver hit a curb, lost control and crashed into a tree. They rolled at least three times according to police before finally coming to rest inches before the flagpole my grandfather has had in his front yard for years. On impact all of the occupants were ejected from the vehicle. One of them, an 18-year old, was killed instantly. Clearly none of them had seat belts on, and there's a strong indication as well that alcohol may have been a contributing factor, as beer cans were scattered all around the scene of the crash.
What concerns me is the reckless abandon with which teens continue to pursue their lives. Tragedies like this are a dime a dozen, and this is a story that has been told time and time again. Things like this do not have to happen.
I'm quite aware that kids are going to be kids, and I think we can all certainly relate to the feeling of invincibility that goes along with being young. Yet that still doesn't make it okay. It doesn't take away from the pain the mother of that 18-year old that died will feel for the rest of her life, knowing that her son will not be there anymore.
Hopefully this tragic moment serves as a reminder and saves a couple extra lives. Kids are going to at least think about it. Talk about it. Some will give a second thought before drinking and driving, or perhaps even speeding recklessly. And maybe they'll also see the importance of wearing a seat belt. Perhaps the 18-year old would have survived had he been wearing one at the time of the crash.
This story serves as a wake up call. Unfortunately though, the effect will only be temporary, and therein lies the real tragedy. This story will undoubtedly be told again.
The car had been speeding along W. Morgan Avenue around 67th St. when the driver hit a curb, lost control and crashed into a tree. They rolled at least three times according to police before finally coming to rest inches before the flagpole my grandfather has had in his front yard for years. On impact all of the occupants were ejected from the vehicle. One of them, an 18-year old, was killed instantly. Clearly none of them had seat belts on, and there's a strong indication as well that alcohol may have been a contributing factor, as beer cans were scattered all around the scene of the crash.
What concerns me is the reckless abandon with which teens continue to pursue their lives. Tragedies like this are a dime a dozen, and this is a story that has been told time and time again. Things like this do not have to happen.
I'm quite aware that kids are going to be kids, and I think we can all certainly relate to the feeling of invincibility that goes along with being young. Yet that still doesn't make it okay. It doesn't take away from the pain the mother of that 18-year old that died will feel for the rest of her life, knowing that her son will not be there anymore.
Hopefully this tragic moment serves as a reminder and saves a couple extra lives. Kids are going to at least think about it. Talk about it. Some will give a second thought before drinking and driving, or perhaps even speeding recklessly. And maybe they'll also see the importance of wearing a seat belt. Perhaps the 18-year old would have survived had he been wearing one at the time of the crash.
This story serves as a wake up call. Unfortunately though, the effect will only be temporary, and therein lies the real tragedy. This story will undoubtedly be told again.
Wednesday, August 13, 2008
HQ SUSTAINABLE TAKES A TUMBLE
There are times when one feels he's quite clearly inserted his foot into his mouth. The staggering 34% nose-dive that HQ Sustainable Maritime Industries (HQS) took today would mark one of these fabulous occasions. The stock I've recently been touting here at The Springboard closed at the end of today's trading at $7.86. That's still higher than the stock's 52 week low of $7.01, but falls horribly short of its $16.45 high which it reached back in July.
Still, I think this stock has plenty of upside, and today's drop is simply a short-term setback which also happens to provide an interesting opportunity to add more shares for the patient investor. As far as I can tell, the fundamentals are still strong and today's drop is clearly a severe overreaction on the part of nervous investors in a market that still incites a jitter or two here and there.
In response to an email I sent off to HQ Sustainable's CEO Norbert Sporns, he told me that the company is experiencing a "temporary speed-bump," and that the company is in great shape going forward. "We have improved our buyer base and expanded our fish by-product sales network," said Sporn. According to Sporns this will result in additional sales and profitability. "This quarters results were affected by rapidly rising costs which rose faster than we could pass them along."
It's not an unfamiliar story lately. And the fact that HQS does its farming in Hainan, China to export to the US, the weaker dollar may have had an impact on profits. Going forward, a strengthening dollar will also help to give them a little boost. That, and the fact that farm-raised fish continues to be of interest to consumers will help HQS to improve its margins and return to profitability.
I'd wait until HQS reaches around $10 a share again before buying any more, though.
Still, I think this stock has plenty of upside, and today's drop is simply a short-term setback which also happens to provide an interesting opportunity to add more shares for the patient investor. As far as I can tell, the fundamentals are still strong and today's drop is clearly a severe overreaction on the part of nervous investors in a market that still incites a jitter or two here and there.
In response to an email I sent off to HQ Sustainable's CEO Norbert Sporns, he told me that the company is experiencing a "temporary speed-bump," and that the company is in great shape going forward. "We have improved our buyer base and expanded our fish by-product sales network," said Sporn. According to Sporns this will result in additional sales and profitability. "This quarters results were affected by rapidly rising costs which rose faster than we could pass them along."
It's not an unfamiliar story lately. And the fact that HQS does its farming in Hainan, China to export to the US, the weaker dollar may have had an impact on profits. Going forward, a strengthening dollar will also help to give them a little boost. That, and the fact that farm-raised fish continues to be of interest to consumers will help HQS to improve its margins and return to profitability.
I'd wait until HQS reaches around $10 a share again before buying any more, though.
Thursday, August 7, 2008
OIL'S DOWN AND THE MARKET IS A BUY
I'm sticking to my guns with regard to this market and the stocks I like best. If one thing holds true, you have to believe in your plan and stick to it, and that's exactly what I'm doing. Oil is coming down as I predicted, though its happening much sooner than I could have hoped for. We're now teetering around $119 a barrel and we've seen more declines in the price of crude in the past month than we've seen gains. This bodes well for consumers who get a brief break in the price of gas at the pump, and bodes well for investors who will see their portfolios rise as consumer confidence and spending also rises.
But before we get too excited, I'm not so sure we're quite out of the woods yet. As I see it, oil could simply be taking a little breather before it rockets back up for a little while to then finally take it's fatal plunge back into the $100 a barrel territory. Will it see the $150 or $160 range we all thought it might? Maybe not. In fact, probably not. The recent price hike in oil has been surprisingly effective in actually changing peoples habits. We've reduced driving miles by the billions of miles, and we've seen record declines in interest for gas-guzzling trucks and SUVs. It's by no means an overstatement to say that many of these large vehicles are rottting where they lay on the lots, and in fact just the other day I drove past a sign along the highway offering Dodge Ram's for 40% off. Even at these giveaway prices SUVs and large trucks are far from flying off the lots. So, oil could probably jettison up to around $135-$140 a barrel before we head back down if we see another run up in the price. Of course I'm no expert and I've clearly stated this before. But I do consider myself to be obervant.
What stocks am I buying right now? I'm still a buyer of HQ Sustainable Maritime Industries (HQS) which operates in Hainan, China. They mainly deal in farm-raised fish and distribute both under their own brands and co-pack for other companies as well. With people having a growing interest in the benefits of Omega-3, and with many wild caught fish being riddled with contaminants, such as mercury, HQS has lots of wiggle-room to grow its business. I also like Marcus Corporation (MCS). I'm banking on the premise that in bad economic times people will escape to the movies. Marcus also manages a number of resorts which I think stand to benefit when the economy eventually rebounds.
Western Union (WU) is one to watch as well, and while I haven't bought yet I'm thinking about it. It's currently up 13% since I started watching it back in July and I think it's a $32 stock. I'm waiting for a slight pullback and then I'll start buying.
Target Corporation (TGT) also continues to interest me (though I do not currently own this stock). I think they will have a strong position going forward when the economy does finally break free from its current circumstance as people who have been strapped for cash, and who have been patronizing the discount stores like Dollar Tree (DLTR), Big Lots (BIG), and of course the behemoth, Wal-Mart Stores (WMT), in order to stretch their wheezing dollars, are going to want to treat themselves. Target Corporation enjoys a sort of middle ground between the low-end discount stores and the higer-end like Kohl's (KSS) and Boston Store (BONT). I'll wait to start buying into this one when oil gets closer to $100.
It's my opinion that we have seen the market bottom, right about the time we teetered around the 10,000 territory on the Dow Jones, and so I am a buyer right now, even if we may still have some pullbacks such as today's 200 point drop. The Dow will likely still see shakiness, especially if oil does start to work its way back up, but I don't think we'll see the numbers drop below 11,000 points before the end of the year. A couple of key points here is whether the Fed can keep inflation at bay and whether the credit markets can see a clear path to recovery. Housing prices need to stabalize as well, and in fact I think we may have seen a bottom there also.
Again I stress patience. The best is yet to come.
But before we get too excited, I'm not so sure we're quite out of the woods yet. As I see it, oil could simply be taking a little breather before it rockets back up for a little while to then finally take it's fatal plunge back into the $100 a barrel territory. Will it see the $150 or $160 range we all thought it might? Maybe not. In fact, probably not. The recent price hike in oil has been surprisingly effective in actually changing peoples habits. We've reduced driving miles by the billions of miles, and we've seen record declines in interest for gas-guzzling trucks and SUVs. It's by no means an overstatement to say that many of these large vehicles are rottting where they lay on the lots, and in fact just the other day I drove past a sign along the highway offering Dodge Ram's for 40% off. Even at these giveaway prices SUVs and large trucks are far from flying off the lots. So, oil could probably jettison up to around $135-$140 a barrel before we head back down if we see another run up in the price. Of course I'm no expert and I've clearly stated this before. But I do consider myself to be obervant.
What stocks am I buying right now? I'm still a buyer of HQ Sustainable Maritime Industries (HQS) which operates in Hainan, China. They mainly deal in farm-raised fish and distribute both under their own brands and co-pack for other companies as well. With people having a growing interest in the benefits of Omega-3, and with many wild caught fish being riddled with contaminants, such as mercury, HQS has lots of wiggle-room to grow its business. I also like Marcus Corporation (MCS). I'm banking on the premise that in bad economic times people will escape to the movies. Marcus also manages a number of resorts which I think stand to benefit when the economy eventually rebounds.
Western Union (WU) is one to watch as well, and while I haven't bought yet I'm thinking about it. It's currently up 13% since I started watching it back in July and I think it's a $32 stock. I'm waiting for a slight pullback and then I'll start buying.
Target Corporation (TGT) also continues to interest me (though I do not currently own this stock). I think they will have a strong position going forward when the economy does finally break free from its current circumstance as people who have been strapped for cash, and who have been patronizing the discount stores like Dollar Tree (DLTR), Big Lots (BIG), and of course the behemoth, Wal-Mart Stores (WMT), in order to stretch their wheezing dollars, are going to want to treat themselves. Target Corporation enjoys a sort of middle ground between the low-end discount stores and the higer-end like Kohl's (KSS) and Boston Store (BONT). I'll wait to start buying into this one when oil gets closer to $100.
It's my opinion that we have seen the market bottom, right about the time we teetered around the 10,000 territory on the Dow Jones, and so I am a buyer right now, even if we may still have some pullbacks such as today's 200 point drop. The Dow will likely still see shakiness, especially if oil does start to work its way back up, but I don't think we'll see the numbers drop below 11,000 points before the end of the year. A couple of key points here is whether the Fed can keep inflation at bay and whether the credit markets can see a clear path to recovery. Housing prices need to stabalize as well, and in fact I think we may have seen a bottom there also.
Again I stress patience. The best is yet to come.
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