Friday, April 17, 2009

Change to Plan B

If you are among the many who have lost their jobs, or find yourself living with relatives because of a home foreclosure, it is probably time to change to Plan B, while Plan A is at least temporarily on hold. Plan A was what you wanted to do while you thought that you were in control of your future. Now that you know that you can't always be in control, you have two choices. You can sit around and wait for something to happen, or you can change to Plan B. Even though you aren't doing what you wanted to be doing, you can accomplish a lot with this interim time you have been given. Here are just a few examples: You can spend some quality time and rebuild relationships with those family members for whom you never could find time under Plan A. You can finally get to do some of the things on your Honey-Do list (and save contractor/maintenance cost if you are still in your home, or you can help your relatives with their house if you are a temporary tenant). You can take that course at the local college for fun or to improve your qualifications for a new job. You can volunteer to help at a hospital or food bank to aid people who are worse off than you. (Sometimes this even leads to a new career.) You can approach a realtor or bank and seek a temporary job maintaining foreclosed houses so that they are in good enough condition to be sold. You can work on that art project or invention that you had in the back of your mind.
You are in between desirable situations right now, but don't waste this very valuable time. Right now, you are free to do anything you want. Once you get resituated in a new job and/or house, you will be back on the treadmill, and you will have lost this opportunity to just be yourself. Don't find yourself looking back and wishing you had used this time more wisely. As Omar Khayyam once wrote, "Of all sad words of tongue or pen, the saddest are these: It might have been."

Wednesday, April 8, 2009

Unemployment & the Poor Housing Market: Mutual Solutions?

It's actually possible that unemployment and the poor housing market may be at least partial solutions for each other. Consider the fact that if you are unemployed, along with many others in your area, it is likely that you will have to go somewhere else to find a good job. If you go somewhere else, you will have to get a home there. When you look for that home, you will be helped by the facts that home prices are depressed and interest rates are low. In order to move, you will have to go through the ordeal of selling your existing home, but it is likely that you have more equity in your current home than the amount you will need for a downpayment on your new home. That means that you will have some remaining capital as you start your new job in your new location. Having cash resources will allow you to furnish and remodel your new home as desired. Spending that money to get your new house ready will contribute to improving the economy, which will create more jobs and make more people able to afford a new house. In every transaction, someone spends money to get something he or she wants, and the seller of that product or service gets cash to do the same thing later on. Spending circulates cash and builds up the economy. Spending only cash that you already own builds up the economy more slowly than spending other people's money through loans and credit cards, but it is a lot safer in times like these.

Monday, April 6, 2009

Go with the Flow

If you are among the many who have found themselves laid off from a long-term job, be prepared to welcome change in the future. Companies that are laying off lots of employees are not just trying to limit their economic risk. They are trying to morph themselves into a more viable configuration for the future. In most cases, they will never bring back the same employees that they once considered essential. If they do engage in substantial hiring in the future, they will probably be looking for employees with different skill sets, and employees who will start at the bottom of the compensation ladder, rather than at the top due to seniority. Even now, there are firms and industries that are hiring, and you always have the option of handling your situation by starting up a venture of your own. Your best approach is to face your future as having great but different possibilities from the past. You should network with past associates, and monitor business and national/international news to identify trends toward new kinds of companies and jobs. If you are set to interview a new potential employer or a potential customer for your new venture, take advantage of modern technical capabilities to prepare yourself. In the old days, a smart job applicant would try to get a copy of the annual report for a company at which he was interviewing. Now, you can learn all about that company or potential customer through searching their name and key activities/products on the Web. Do all you can to walk in knowing something specific about the company so that you can engage in knowledgeable conversations with the interviewer. Being able to give them specific compliments about their business is a big plus. It shows your interest, and it gives them the feeling that you will be able to join the team without as much training expense as other candidates. It is a lot easier for potential employers and customers to communicate with people who already know something about their businesses, and it makes the meeting less awkward. There is an element of fear on the part of the employer, because there are many liabilities and hidden costs in selecting improper employees. If you search company information well, there will be more comfort in your interview, and the company's sense of "Stranger - Danger!" will be allayed.

Wednesday, April 1, 2009

Why "Buy American" Means Something

As we sit in the middle of this depressed economy, the government's hands are tied when it comes to "Buy American" discussions and rules. Because of our participation in the World Trade Organization and other international trade negotiation groups, our government has to take the position that our markets are open to products from any other country, so that other countries will equally allow open sale and distribution of our products. Way back during President Reagan's administration, I attended a meeting on international trade at the Chicago Mercantile Exchange, where the top U.S. Trade Negotiator was the speaker. During that meeting he talked about our disadvantages in trade because other countries had lower costs than we did. At that time at least the U.S. market was the source of the majority of consumption in the world. When I suggested that we offset cost advantages of other countries by controlling access to our markets, he looked at me as though I was absolutely crazy.

Maybe the government won't talk or think about "Buy American", but individual Americans certainly should. If you buy an American product, the dollars you spend stay in this country and circulate through the hands of many businesses and individuals. If you buy a product from another country, you send most of those dollars (except for the retailer's share) outside of the U.S. financial system, and they circulate through hands in another country. This costs U.S. jobs and endorses the terrible financial bias in favor of short term profits over long term planning and profits. If we had been thinking long term, we wouldn't have our industries (especially automobiles) in the terrible situation they face now. When we consistently run a huge multi-billion-dollar-per-month trade deficit for many years, we find that our country and our stock market have to get funding from other nations to support our economy. Right now, China's government is questioning the ability of the U.S. Government to pay back the money America has borrowed from them. China is also trying to get the dollar replaced by a different currency as the standard currency for settlement in international trade. We have had great advantages in the past because of the strength of our market and our currency. As they both weaken, we have to make decisions with a constant concern for how the countries to which we owe huge amounts of money will react. These are not good trends. Maybe, as an individual, you have bought goods from other countries because of lower prices, perceived status, or even technical preference. I suggest that if we all keep up such practices, we will undermine our future standard of living and even our ability to negotiate deals and treaties from a position of strength. Americans have the opportunity to guarantee that their country remains strong if they take the American product and service options when they are purchasing in the marketplace. Back when Britain was the greatest international power, there was the common expression, "penny wise and pound foolish". Look where that approach got them. Don't take the approach that a present bargain has no connection to a strong future. If American firms are supported, they will achieve greater volumes of units sold, reduced costs, and increased technology. All of these things will benefit you in the long run.