Hello again. Its been awhile since I last posted my ruminations. I have been following the health care debate, the economy and the Ft. Hood disaster. Where should we stick that thermometer? I'll let you decide that answer.
Have you noticed a lot of commercials about gold lately? At $1,100 an ounce, I am tempted myself to yank out some teeth or melt down some coins to cash in. Why is this price so high? Gold has historically been the flight from panic commodity. Our money system used to be based on gold. Recently, India purchased a ton of gold from the IMF, in fact half of what the IMF was selling. Why is this important? It tells us that people, not just Americans, are nervous. While inflation seems to be far off, anyone that has any exposure to U.S. dollars, seems to believe that the dollar is not a long term play. Which brings me to the US dollar. There is an index called the Dollar Index that compares the dollar to a weighted basket of world wide currencies. Right now, that Index is very low. The weak dollar may help us sell goods overseas but doesn't help us buy stuff from overseas. As we all know, we have a trade deficit and import more than we export.
Where are the jobs? Stimulus? Hmm. I think there were some major problems with the way the stimulus was structured but it did have some benefit but not enough to prevent unemployment going to 10%. The weekly claims number came out and it was downright depressing. Another 500,000 out of work. This week, lawmakers ripped into the www.recovery.gov website. Apparently, people were reporting jobs created from Congressional districts that didn't exist. Yikes. Right now, companies are trying to get lean and mean. Making more with less is what the companies are looking at in face of less demand. Productivity is important. Once companies get to a point where they can't get any leaner, than we'll see jobs come back. At this point, my prediction is Q310 until we see sustainable and positive job growth.
Finally, government spending is alarming. The National Debt Clock just ticked at $12trillion. Wow, I can't even fathom that. Meanwhile, the various legislations passing through Congress are frightening. Cap and Trade (Climate Change), new financial regulation, caps on compensation and as of today, the health care reform bill. I believe the tally on that sucker is going to be $865 billion but it is tricky math. Did you know that the benefits for that plan don't roll out until 2014? Did you also know that you, me, everyone will be paying more taxes immediately to pay for it. I know this stuff is pretty dry and boring but like the mortgage situation that was ignored by the common citizen, if we don't pay attention, we'll see our taxes go up. I don't talk politics on this blog and will refrain. I focus on the financial impacts.
Before you grab the bottle of wine, Scotch or the pack of smokes, don't fret. We are Americans, with the Capital A. We live in the greatest country in the world and we'll survive. Keep your chin up and pay attention. Cheers!
