Friday, April 4, 2008

More Indications Of Bush’s Mismanagement Of The U.S. Economy

Fact Tidbit: George W. Bush is the first U.S. President with an M.B.A. Ironic, isn’t it?

Payrolls shrank by 80,000, more than forecast
Employers in the U.S. cut the most workers in five years last month, signaling that the economic contraction is deepening and that the Federal Reserve will continue to lower interest rates, according to Bloomberg.

For my readers, you would have already known that this is the next step in the recession. It appears that we are facing a similar pattern of the 1990-91 recession where the unemployment numbers are steadily declining in random sectors. With almost stealthy decline in employment, the numbers will be almost imperceptible. Therefore the risk.

If you are have a job, then this is the time to hunker down; batten the hatches; and keep yourself busy, engaged in your work. Any thoughts about moving jobs should be only contemplated if you REALLY hate what you are doing. Even then, talk with a friend first. As more people are being laid off or without a job due to companies going under, it will be a tough job market in 2008.

81% Disapproval Of Country’s Direction
According to NY Times, Americans are more dissatisfied with the country’s direction than at any time since early 1990’s. In the New York Times/CBS News poll, 81% of those polled said they believed “things have pretty seriously gotten off on the wrong track,” up from 69% a year ago and from 35% in early 2002.

This result should not surprise my readers since I have been writing about this from the beginning. As the poll revealed a near unanimous consensus on the state of the country and the economy, then why isn’t there more call for review of government malfeasance? We have a federal government that is willing trample on our constitutional rights from illegal wiretapping (and here), unreasonable seizure (and here), usurping laws, non-competitive bids for government contracts, lax regulatory oversight (and here for FEMA, here for Transportation Dept., here for TSA, here for DHS), federal agency not doing their job, and a federal agency acting outside of its authority. All the while, Mr. Bush is AWOL, again. This time, he is supposedly in Europe, trying to secure his legacy.

Well, his legacy has been made. As he declared “Mission Accomplished” before, he continues to declare that things are not as bad as they seem and the federal government is working to resolve the issues. We disagree. If what Bush says is true, then I can beat Tiger Woods in golf with one arm tied behind my back.

Why isn’t Mr. Bush talking with the residents of Texas who are upset with the seizure of their land to build a border fence? How about meeting with the people in New Orleans who are still waiting for the revitalization? How about talking about the FEMA trailers that are making people sick? How about meeting with Iraq War veterans who have suffered head trauma and are trying to piece their lives back after sacrificing themselves for our country? How about proper medical treatment and financial support for these heroes? How about addressing the increased suicides among returning Iraq war veterans and other veteran’s issues? Where is the Supreme Court on these matters of constitutional right violations?

Paying For A College Education Got Tougher
Never mind the fact that the Ivy league colleges admission got tougher. Now, the worry is if there will be sufficient financial aid for students. With tightening credit, students are the one who will feel it the most, as about two-dozen lenders have dropped out of student loan program. Fortunately, some colleges are now offering low or no tuition (and here). Hopefully this trend continues.

The bad news continue to mount up daily. It has become so commonplace that investors are becoming numb to bad news. How else can you account for the mini rally in the stock market with so much bad news?

It must be the new logic: bad is good and good is bad. While investors are acting quite irrational, stay out of their way. More bad news will come out, taking out those ‘smart’ investors who think that it is the bottom of the market. Value investors, hold on to your cash and do your due diligence because there will be good times ahead again; but not just yet.

Have a Great Weekend!

Ed Kim
Practical Risk Management

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