"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey
Today's economy seems a lot like 1973-74, only that people today are different.
I remember 1973-74 very well. Growing up in the suburbs of Detroit, I remember a lot of people who were hurting because high energy prices and inflation had all but killed the automotive industry.
My dad was in the car business (the blue collar side), and times were tough. I love onion soup, but when my mother boiled 2 onions in beef broth for three consecutive days, I knew something about dinner wasn't normal.
Today, Detroit is in shambles. The wonderful urban atmosphere of playing ball with your friends, riding the bus downtown, and visiting Henry Ford's home in Highland Park are all but gone. Don't get me wrong, you can still do all those things, but you might get killed in the process.
People have changed too. As accurately described in David Callahan's book, "The Cheating Culture", crimes against innocent people have escalated beyond the urban environment to just about every aspect of society.
Professional Athletes Cheat
Wall Street Cheats
Medical & Dental Professionals Cheat
Blue Collar Professions (Plumbers, Electricians, etc) Cheat
Corporate America Cheats
Bankers Cheat
Politicians Cheat
News Media Cheats
Students Cheat
And round and round we go. It seems today that everyone has an angle, and character, honesty and discipline has gone by the wayside.
Yep, people have changed. I attributed most of it to a lack of discipline. Discipline can be lacking in many aspects of ones life. It can be a lack of fiscal discipline (spending, real estate, the NASDAQ in 2000), or behavior discipline.
Discipline is often obtained thru behavior modification where punishment is the outcome for a person who does not act in accordance with rules of conduct. Ever since "timeout" took the place of a belt on a behind, or a good slap across the face, kids have become more unruly and lack respect.
ABC has made a fortune on society's lack of discipline when they came up with the TV show "Supernanny". My mother and dad would have put "Supernanny" out of business in about 5 minutes. After 5 minutes with my mom and dad, the little brats you see on this show would be acting like perfect little ladies and gentlemen.
What is occurring in the economy is a good ole dose of old fashion discipline.
I received a folder from a guy recently asking for my help on one of his clients who bought too much real estate. As I looked over the portfolio of "dirt" the first thing that came to mind was, "this guy never played or won a game of Monopoly".
If people had invested in real estate in the same manor as one who seriously wanted to win a Monopoly game, they would never have gotten themselves into the mess they are in.
The problem of course goes right back to the lack of discipline. The consequences for this lack of discipline will be a monetary belt on the behind, or a good fiscal slap across the face.
The only reason I can see that a person would buy 5 pieces of property they couldn't afford, versus two pieces that they could, is greed. I guess this is why greed is called one of the seven deadly sins.
The last big example of greed took place in 2000 as investors piled into the NASDAQ and the dotCon craze. As we speak, the NASDAQ still remains -53% below its March 6, 2000 peak.
Today, NASDAQ and Real Estate investors are not the only ones paying for their sins. The banks, who tried to sucker everyone on earth into an interest only loan, ARM, and home equity line of credit are paying the piper as well.
Oh, and what about all of the credit card companies that packed our mailboxes with lures of "no annual fee", "no fees for 6-12 months", on yeah, your day is coming too.
Oh, but wait! The supernanny's of the Federal Government want to bail everyone out! Talk is constantly circulating that the Government will assume mortgages, Hillary wants to freeze ARM rates, and the biggest supernanny of them all is throwing money out of helicopters, destroying the dollar, and creating massive inflation.
All I can say to Bernanke, Paulsen, and the rest of the clowns destroying our economy is my mother and dad would have liked to spend 5 minutes with you about 50 years ago.
Today, the DJIA market fell -35.99 points after aluminum maker Alcoa's (AA) earnings fell $0.04 short of estimates, and Advanced Micro Devices (AMD) said its first-quarter revenue estimates will be below Wall Street's expectations. AMD also said it was cutting 10% of its workforce.
Shares of Washington Mutual fell -10.19% after it said it would cut its quarterly dividend to one cent from 15 cents, and announce a $1.1 billion first quarter loss. The company said it had received a $7 billion cash infusion which is $2 billion more than most investors had expected.
Pending home sales fell 1.9% in February adding to fears that the housing market is still in decline. The recent release of the latest FOMC meeting revealed that central bankers were concerned about the possibility of a "prolonged and severe" business downturn.
