Herman School of Business
Perception versus Reality...
A few weeks back as gas went flying past four dollars a gallon people were shutting down their cars and cutting back on their buying. The country was slowing down and realizing things were getting tight.
The bank stocks were continuously sliding South taking the whole market down with it. Oil was over one-hundred forty dollars a barrel and T. Boone Pickens was touting an oil price of two hundred in the near future and you could buy someone’s Hummer for a song.
Leasing a car went kaput as lenders doing leasing deals realized the vehicles coming off the lease were worth far less than expected. Holy Debt Batman…this condition would surely cause people to get fed up with the current administration and vote the Republicans out and the Democrats in.
And then suddenly the price of oil dropped thirty dollars a barrel. And Commodities slipped a bunch so that prices of fruits and vegetables fell. About this time Freddie Mac and Fannie Mae “fessed” up that at the end of September they have Bonds due in the amount of about two hundred billion dollars. To just “roll them over’ they would need to raise thirty billion dollars. Or…bye-bye mortage industry. Could the Republicans let that happen just a few weeks before the election?
Is perception reality? C’mon people…open your freaking eyes. We still have a mess to clean up so please don’t get fooled by recent positive trends. When this election is over the new guy will have a huge problem to face. And either one who wins will simply blame the last administration and then not fix the problem long term.
So…if Uncle Sam wants to tank America, whether he is a Republican or a Democrat…you must learn how to win in the coming environment of higher interest rates, higher taxes, higher debt for the country and a continuously weaker dollar. What do you do…you ratchet down spending a bit and rid yourself of any debt. Forego that new car one year and save about five grand on car payments. Maybe you should take your money OUT of the stock market before more erodes away. This past month Warren Buffet sold his stock in Budweiser because he had made a profit and didn’t want the coming slide to take it back. What you lost already is gone…why give away more.
Where can you put money today to be safe for tomorrow? Why is having cash such a bad thing? The notion that your money must always be invested somewhere is a good long term policy…but then…why do so many Fortune 500 Companies right now have so much cash?
Look, you live in the same world I do. If you can tell me when people will wake up and stop crushing their lives with debt…then that is when our economy will get better for everyone. Until that happens (if that happens) slow down your buying and investing and let the slide reach a true bottom. And then a phrase will return that could make your life richer faster…Cash is King.
- Posted: 23 August 2008
- Comments: 0
- Category: Business success
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