Everywhere you look you can find someone or something in trouble. Our nation’s economy is in trouble with high unemployment, an oil disaster in the gulf and a war in Afghanistan.
The president of our nation is in trouble, according to the polls, because he promised too much and has delivered too little on his promises. The political party in power (Democrats) is in trouble because the legislation it is producing is not solving our nation’s ills and the Republicans are in trouble because they are not in control. It is truly a frightening time to watch the news on any channel on television or any newspaper you choose to read.
We Americans have had it too good for too long and have grown complacent by our success. That isn’t criticism in my view, just a fact. During the housing boom many people tried to buy real estate for investment purposes. An extra house as an investment looked like a fast way to increase one’s personal wealth. Money was cheap, down payments were low or non-existent, and the future looked rosy. Every boom must bust at sometime, however, and we now see the effects of building an investment portfolio on sand - much like buying stock on margin, trying to win the lottery or expecting to get rich in Las Vegas.
The debt our nation has encountered trying to perpetuate the American Dream is not a veryreassuring situation. As the example for all the investment community world-wide, we have led a lot of other nations down our path of potential destruction. Our nation will survive, but along with a lot of other countries, we are going to find ourselves making a lot of adjustments to our personal lifestyles before we return to a “new normal.”
My working years were spent in manufacturing so it is natural for me to believe we (as a nation) need to keep manufacturing jobs here and not depend on foreign countries for our labor force. As a result, it frustrates me when I watch Wall Street price the value of stock in a company only on its P/E (price to earnings) ratio. We have to have a means of evaluating a business whether it be a bank, a retail store or anmanufacturing company.
However, when we try to tie the “value” of the company too closely to its P/E we entice the management to make decisions that make the company attractive to the investing public (any investing group or private individuals fit into this category) but don’t help our nation in a time like this.
When I remember our attempts to stay profitable during my working years, all the performance measures led us to reduce our workforce during slow periods in the business cycle. This is “necessary” to keep the numbers in line with the company’s performance during good times but it contributed to the very problems that led to the economic downturn in the first place.
When I look at the government’s decisions today, such as the recently passed Healthcare Reform Bill and compare the choices the employer is going to be faced with, it doesn’t look like there is going to be much incentive to hire a lot of new employees.
If they have to keep their total labor costs per unit down to be profitable and can best accomplish that by going overseas to make their products, doesn’t that make them better managers in the eyes of Wall Street? Where are they getting credit for actually hiring more people and paying their salaries, and healthcare and helping our nation recover from our recession?
There are some companies that I have an interest in from a historical perspective. One is Caterpillar because they have had an effect on my family as a household name (my father worked on their equipment both as an operator and mechanic). The other is ATT because they were such a powerful force in the communications industry and used as an examplein every educational program during my lifetime.
These two companies were among the first to set aside reserve funds to pay for the effects of the additional costs associated with the Healthcare Reform package. How can that conceivably benefit our nation’s economic ills? And, now we are hearing the initial costs and savings promised in the reform of healthcare we in error, greatly exaggerated, and misleading. But I don’t hear the Congress talking about reviewing it.
We bailed out Wall Street investment banks (bankers) because they took ridiculous risks with investor’s money. Please help me understand why the government doesn’t feel it should use taxpayers’ money to repay Bernie Madoff’s victims. I realize that is ridiculous but it sure makes as much sense as thebank bail out.
I don’t know if the fall elections are going to actually improve things or if we will just have new names in Washington but anything that gives us hope in the future will be an improvement in my eyes.
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Editor’s note: Leo Lynch,
Opinion, Pages 4 on 07/07/2010