Business & Finance » Business News & Events » The Grass Is Always Greener Until You Mow the Lawn

The Grass Is Always Greener Until You Mow the Lawn



Tweet It
LinkedIn
Email

(Mybrotha.COM) - A number of years ago my older sister brought her chronically underachieving boyfriend home from college and announced that she planned to get married, apparently under the assumption that she could turn him into a good man. My father asked his love struck daughter to calculate zero times zero, then five times zero and finally one hundred times zero. His point was simple: anything multiplied by zero will always be zero. The United States government has been an active participant in the affairs of private enterprise, taking the "free" out of "free markets." But who am I to complain - I sort of like big government.

I have no formal musical training, but I certainly know what sounds good on the radio. The S&P 500 has increased by 57% from the lows of March 2009, emerging markets have doubled and Americans are saving money again. How could the collapse of the economy been so imminent? It's as if Armageddon morphed into something a little more acceptable, like a practical joke gone terribly wrong.

Upon closer inspection, it turns out that unemployment has reached 10.2%, one out of every seven mortgage holders is either delinquent or in foreclosure and 750,000 adjustable rate mortgages are due to reset over the next two years. Erudite Wall Street marketing professionals claimed this is all wonderful news, coined the term "green shoots theory" and watched investors eat it up like grandma cooked it in her favorite black frying pan. The federal government has spent or made commitments of over $12.2 trillion to resuscitate the economy, a figure our grandchildren will have etched in their paystubs. When the money supply increa ses by 125% in nine months , the ensuing rally is not an economic rebound, it's a sugar high. The unprecedented government spending has provided short-term relief, but the unsustainable debt has yet to be addressed.

Given the government's increasing role in business, there has been a growing consensus that we turned the page on a free market system to endorse socialism, whereby a centrally planned government controls the economy and distributes the nation's wealth according to need. While I appreciate the Ayn Rand romanticism, we have long toiled under a state run economy. Seventy percent of our economy is based on consumer spending, but 20% stems from government expenditures. General Motors didn't do the initial research and development on the Hummer; it was paid for with taxpayer dollars by way of the Pentagon. No disrespect to Garmin, Google or Verizon, but the same can be said for GPS, the Internet and satellites used for cell phone transmissions. When FEMA reimburses me for all the car batteries that were stolen during my days as a New York City resident, I'll feel better about helping flood and tornado victims. Until then, I'll blame Karl Marx for my troubles and count my blessings that I haven't suffered the same fate.

Nobody seems to like socialism, but everyone cashes their social security check. Two decades ago the welfare queens were castigated for living off the government dime, told to pick themselves up by their own bootstraps and turn lemon into lemonade. In today's environment, credit card legislation, mortgage guidelines and the taxable consequences of a real estate short sale have all been modified to accommodate the poor decisions and bad luck of mainstream Americans. It seems that no demographic can resist the temptation of government money when it suits their purpose. The nursing home business is a $100 billion a year industry and half of that is paid for by Medicaid. Either the poorest of citizens live well into their golden years, or middle class families justifiably structure their assets to preserve wealth accumulated through years of hard work, and in the process, pass the buck to Uncle Sam. Federal and state taxes pay for these benefits, but some will contribute more than their fair share whil e the rec ipients reap the fruits of another's labor. If personal responsibility is a two-way street, one of the lanes is blocked for construction, financed of course by the stimulus package.

Foreign lenders, however, are becoming openly vocal about the United States' runaway debts, diluted currency and future obligations. In fact, the leaders of Brazil, Russia, India and China (BRIC Countries) have met to discuss holding reserves in another currency on the grounds that the dollar is no longer safe. This is more than the tough talk of countries intent on raising their global profile; BRIC nations have 42% of the world's currency reserves. A declining dollar would impose significant damage on our foreign creditors because 70% of their reserves are denominated in dollars. Remember, as our currency declines, BRIC exports become more expensive to American consumers. This may be a temporary reprieve because it would take several years to create an infrastructure whereby emerging market countries could substantially diversify away from dollar denominated assets, but they're pouring the concrete.

I have no reason to believe I have cancer, but when my doctor told me African-American men are twice as like ly to develop prostate cancer as other racial groups, I started to eat more fruits and vegetables. Should the U.S. lose its credit rating or see the dollar supplanted as the sole reserve currency, we would no longer be able to print money and borrow cash from foreign nations at low interest rates. The United States spent two decades in hot pursuit of short-term profits and immediate gratification. First we borrowed the money; now we're borrowing time. Nobody knows if the best days of the dollar are behind us, but to ignore the possibility is irresponsible.

At some point we'll have to pay back a portion of the mountainous federal debt while facing the staggering entitlement liabilities of the baby boomers. I've always felt that the value of the dollar and the size of our national debt were our biggest concern because it requires very difficult political choices and deep personal sacrifices, for which we have no stomach.

Aside from our foreign creditors, a potential showdown is brewing between baby boomers and younger generations. The Pension Benefit Guarantee Corporation has a $33.5 billion deficit, liabilities at state pension plans exceed assets by 35%, social security and Medicare are unfunded and the national debt has already reached $12 trillion. Younger generations will essentially be asked to pay higher taxes, reduce their lifestyle and work into their 70's to subsidize pensions and robust social security benefits that they themselves will never receive.

Socialism works both ways. But just as death is a part of life, loss of personal wealth is imbedded in the symphony we call capitalism, and everyone cannot play in the orchestra. Until the economy sees job growth and stable home prices, government sponsored or otherwise, we may experience future market volatility and unanticipated hardships. We can all endure simultaneous forecasts of doom, gloom and economic recovery, but nobody will miss the wild swings of the market.

I once knew a man who was always very busy, but never seemed to get anything done. Let's enjoy the peace and quiet while we can.

Tweet It
LinkedIn
Email

About Ivory Johnson

Ivory Johnson, CFP, ChFC, is the Director of Financial Planning at Scarborough Capital Management.

Connect With Us

Facebook
Recommend On Google+
Tweet
Subscribe to RSS Feed
Bookmark this website

Get the Mybrotha.COM Newsletter

Enter your e-mail address

Around the Web

Job Search 
Enter Keyword(s):
Enter a City:  

Select a State:

Select a Category:



口碑,代表着女人运用丰胸产品的真实点评丰胸效果。丰胸产品口碑好代表着安全性高丰胸食物、作用好,毕竟实践才是检验真理的唯一标准。有此可见产后丰胸导师,产后怎么科学丰胸的答案,定然是口碑好的丰胸产品丰胸产品粉嫩公主酒酿蛋