Wednesday, January 12, 2011
State of the Future (my take)
Looking into the future is a difficult thing when you're gazing in the rear view mirror to do it. We've come a long way since the financial melt down but there are so many left moaning in the ditch by the side of the road wondering if they'll ever be able to get back on the bus. Companies that survived actually did quite well. They trimmed staffs, cut back on inventories and equipment and made due with much less. Not to mention help from the government. Profit margins were increased. But this was all at the expense of about 15 million workers who are still wondering who sucker punched them and stole most of their retirement and home equity. From what the smexperts are saying many of the jobs that went away will never come back. Business is still leery of adding more personnel and why shouldn't they be? They're still pulling in profits without the extra luggage of adding to the payroll. Couple that with the fact that many of the workers were replaced with younger cheaper ones. Why hire a fifty something when you can get two twenty somethings at less than half the cost?
Where is this all headed one might wonder? To a new lower class of people would be my guess. But unlike those of any other era these will be well educated with some assets. The question will be then will they be able to hang on until it's time to retire? Will they burn through what's left of their nest egg or have even that snatched from their hands from rising costs and a dim future? No they wouldn't burn through it but they would watch it slowly melt away like a faded dream. It's happening now. You can't sell your home if you're underwater in the loan. Two choices there. Either continue paying on it or let the bank have it. To continue paying may result in having nothing in the end as retirement funds are cashed out for expenses. Or let it go, cash out the retirement to use for a roof over your head. Some are already beyond that point now.
The new powers that be would love nothing more than slashing spending. Okay what if they do? Where will that get us? You throw yet more people out of work and where exactly would they find jobs with an unemployment rate at near 10%? And with thousands more hitting the unemployment lines you cut that much more demand in the economy for goods and services. People can only survive on tuna and mac and cheese for so long. And that goes hand in hand with the issue of health care but as we know those at the top don't want us having any. What they fail to realize is that they'll land up paying for it one way or another. They could do it the cheap way by having everybody covered but they'd rather let an emergency room handle it and have the cost come back at them with higher medical bills and premiums later. Penny wise and pound foolish I believe is the expression.
So what does this year hold? I'm expecting higher prices in gas at least in the short term. Higher prices for food (remember the new boys in town would love nothing more than to eliminate farm subcities). A temporary increase in raw materials (Australia mines over a third of the coke - coal for making steel and nothing is moving there at the moment). Then I'm sure there are other natural disasters we haven't seen yet as the year unfolds. I'd also expect more industrial accidents as the profit mongers have not yet learned that it's still cheaper in the long run to do it right the first time.
And one last item of note, the federal government has for years been passing the buck to states with unfunded mandates and the like. Now that the states shoulder the burden they are passing that on to the counties and it's trickling down to the cities. With nowhere left to cut we're seeing police and fire get hit. Maybe it is time to go out and buy a handgun or rifle and a good fire extinguisher as well.