Recommendations for U.S. Politicians

I don't like it when people point out negatives / problems without trying to FIX anything so I am going to try and propose some solutions here to our economic problems.

I propose the governement tell companies getting financial assistance to STOP stupid spending as in.....

STOP AIG spending $25 million a year for their name on Manchester United's shirts.

STOP Citigroup spending $20 million for naming rights to the Mets new stadium.

Just STOP STUPID behavior. Look, I am NOT saying stop spending altogether or get "all up in their business."

Lets make sure this is 100% absolutely, positively clear. I think myself, like most Americans and people throughout the world, would simply like our government and business LEADERS to act RESPONSIBLY and don't ACT LIKE LEADERS. BE LEADERS.

In my opinion, that is what ticks off the average American working family. When they work hard each day to get educated, get a good job, send their kids to college, etc. and watch DUMB decisions made by guys making a BOATLOAD of $$$ (who get paid MILLIONS when they screw up and get golden parachutes) it really disenfranches people. It KILLS momentum and the American Spirit.

Then, to top it off, the U.S. citizen watches our elected politicians going to jail left and right for corruption, giving pardons to RICH THIEVES like Mark Richt, probably Koslowski (Bush in 50 days?), etc.

EVERY decision.....and I mean EVERY decision, needs to be done INTELLIGENTLY and rationally and be in our citizens bests interests. If we (government, U.S citizens and business) could spend 10% of our $$$ towards MORE INTELLIGENT actions that would give the economy a bigger boost over the LONG-TERM then lets do it. BE SMART. BE CALCULATED. BE LEADERS..

Dan Ross
http://www.BetterBizBooks.com/

Peter Schiff was RIGHT! I agree with him.....

History shows us, time and time again, that high debt loads and a troubled economy can lead to potentially RAMPANT forms of inflation. We've seen that happen in TONS of places in the last 20 years. If the U.S. dollar collapses it will begin to erode the standard of living in the U.S. like nothing that we have seen since the late 1970s. I believe inflation WILL happen but, in the interim, we have deflation occurring like never before seen (except in the 1930s). Even Nouriel Roubini's comments on http://rgemonitor.com/ support that view.

The real question is the TIMING of the dollar collapse. When will it happen? How soon? Will we be at 10% unemployment when ANOTHER "shoe drops?"

If and when it does collapse, where will oil prices go and will hybrid auto production be enough to come to the rescue for U.S. citizens? Unfortunately we don't eat oil because the price of groceries will also go up AGAIN, thereby pinching the American lifestyle. The standard of living for the average American citizen is at risk here folks and we need to start fixing problems INTELLIGENTLY quickly.

The final point I want to make, before everyone clicks on the video below, is that today's bailout of Citigroup, in my opinion, is VERY dangerous. We need to STOP THE STUPID behaviors that are getting us in trouble.

Dan Ross
http://www.BetterBizBooks.com

Inflation vs. Deflation - Let the debate begin! Small Businesses and Deflation

Let the debate begin.

I for one, think Deflation and Inflation will be fighting for quite awhile. Deflation is here and it is getting NASTY in a hurry (oil from $140 a barrel to $60 in 4 months?) but the governments of the world have the printing presses going OVERTIME to avert such a situation. So, as the printing presses go wild to prop up the economy (and add inflationary worries) get prepared for WILD, VOLATILE markets. Get your employees and customers prepared for WILD, VOLATILE markets. If you look like you know what is going on you are 20 steps ahead of the next business. Below is a video from yahoo discussing the situation. Below are some helpful tips for businesses to succeed in this environment.

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Six ways for small businesses to prepare for deflation:

1. Scenario Planning: This is what successful, large enterprises do LEAPS and bounds better than smaller enterprises. Typically because they have resources to dedicate SOLELY to this purpose. They develop action plans based on various changes to their industry and look for threats and opportunities based on how they see things playing out in their industry. How will input prices and market forces (like interest rates) impact their company/industry. Which companies have too much debt or are poorly hedged with commodity exposures? Which management teams have depth and can survive an exodus of talent given a volatile market? Deflation may not cut across all sectors equally since commodity prices swing more wildly than semiconductor prices. How will your company adapt?

2. Inventory Reductions: Imagine buying oil as an input for your business at $140 per barrel in July. Today it is $60 per barrel. The business that has to sell its products at $140 is either going to sell at a loss or sell for a MUCH higher price than the business that bought at $60 per barrel. The raw materials cost can destroy a business with such volatility. As such, you need to operate your business on the Just-In-Time (JIT) inventory model or learn to order smaller amounts in shorter cycles to take advantage of dropping prices and optimizing profits.

3. Avoid Commodities: Have you seen oil come down from $140 + in July to the low 60s recently? You can count corn, soybeans, natural gas, etc. in that same bucket/set of issues. Commodity based businesses will have MORE volatility in the next 12-18 months than you can shake a stick at. You need to reposition your business as a niche marketer of high value goods. You need to be selling on VALUE and not on price. How can you add value?

4. Increase Productivity: Not all deflation is negative and wealth destroying. Deflation can benefit small business by making technology affordable. In such an environment you would be well served to buy technology boosts the productivity of your company. This should enhance the bottom line and give you more flexibility with your financials.

5. Cut Costs: Understand which costs are truly adding value in your enterprise. Which costs can be upgraded at the same cost? (ie. better quality) At the same time understand what costs are "nice to have" goods and services. Are you getting maximum productivity in your employees? Is there "dead weight" and which employees truly go "the extra mile" for your customers.

6. Review Contracts: This is a HUGE concern, especially for manufacturing companies. Holding a long-term contract during a period of dropping prices locks you into a high price point. On the contrary, negotiate longer contracts with clients if at all possible to hold your margins and profits.

Dan Ross
http://www.BetterBizIdeas.com/

Food costs coming down?

I ate at wendys today. My #1 combo, medium sized was $5.50. Given that commodity prices and gas prices are coming down do you think consumers will see any relief at the grocery store or restaurants anytime soon? I don't think so myself ....Post your thoughts....

Dan Ross

http://www.BetterBizIdeas.com

Grocery prices / Inflation about to hit your wallet!

I posted some similar commentary on this topic 4/12/08. Well, here are some additional datappoints/articles backing up my thoughts.

If Grocery stores post FLAT results isn’t that really -9% to -10% growth as they are passing along higher costs to their customers? Inflation at the grocery store is up there and I think this is a topic that few are discussing. How much are Walmart’s numbers propped UP due to HIGHER prices that they must pass onto customers? Are there numbers as solid as everyone would like to think they are given their focus on supercenters/groceries, etc? I know Macy’s isn’t eggs and dairy products, up 20% + in the last 12 months.

http://news.yahoo.com/s/ap/20080414/ap_on_bi_ge/inflation_squeeze;_ylt=As1L9m0HHQcGWZVuiBUgBItv24cA

Hope somebody will understand that $60 to fill up my gas tank every 4-5 days + higher grocery bills = less $$$ to spend eating out/shopping….

Dan
http://BetterBizBooks.com

Interesting to think re: the company below...
http://Walmart.com

Inflation Causes Riots WorldWide...Food costs..

http://www.npr.org/templates/story/story.php?storyId=89583839

I commented re: how inflation will hurt retail spending and the economy in a previous post.

Imagine if you could barely afford to feed your family. Egypt and Haiti are highlighted in the above article but, in China & Vietnam, as an example, there are HUGE problems going on with the rice prices going up by nearly 100% in a few years (the main food staple).

Forget a declining economy, we are talking about widespread panic/survival of the fittest in some 3rd world economies now....

Dan Ross
http://www.BetterBizBooks.com

Bear Stearns gone for $2 per share + backing of U.S. Gov't for Chase....

Wow....

Talk about unravelling quickly....World markets crash despite the Fed cutting an additional 25 bps.

Bear Stearns had more exposure than anyone else related to mortgage industry amongst investment banks according to industry insiders so now the leading MBS, investment bank has gone under, a major Private Equity company has been stung (Carlyle Group), there have been approximately $200 billion in write-downs & everyone is yanking credit left and right. \

This is a recipe for stagflation like no tomorrow.

For those that don't know what that is, stagflation "is a macroeconomics term used to describe a period of inflation combined with stagnation (that is, slow economic growth and rising unemployment, possibly including recession).[1] "

http://en.wikipedia.org/wiki/Stagflation

http://economics.about.com/od/useconomichistory/a/stagflation.htm

Dan Ross
BetterBizBooks.com

Grocery prices / Inflation about to hit your wallet!

http://www.dallasnews.com/sharedcontent/dws/bus/stories/031008dnnatnufoodprices.3c19156.html?npc&nTar&ybz

Key Points from the article:

U.S. retail chicken prices in January were up 10 percent compared with a year before, while whole milk was up at least 20 percent and tomatoes 25 percent, according to the Bureau of Labor statistics.

Bread was up 5.4 percent nationally. Skyrocketing wheat prices mean higher flour prices, which means everything from pizza crust to cake are likely to see a price hike in the coming months.
And that side of egg salad? Not cheap. Eggs gained more than 30 percent.

Food accounts for about 13 percent of household spending, compared with about 4 percent for gas.

Food prices are rising while home values fall and the stock market falters – all of which can shake consumer confidence.

Wholesale food prices, an indicator of where supermarket prices are headed, rose last month at the fastest rate since 2003, with egg prices jumping 60 percent from a year ago, pasta products 30 percent and fruits and vegetables 20 percent, according to the Labor Department.

A whole shopping basket of factors are combining to make a trip to the market more costly.
Higher fuel prices make it costlier to grow crops and get them to market. Corn, a key foodstuff for farm animals, has shot up as ethanol demand increases. Corn prices have more than doubled in commodity markets over two years, and soybeans nearly tripled, according to DTN, a commodities-analysis firm in Omaha, Neb.

"The biggest factors have to do with the ever-increasing demand for food products combined with the weak dollar," Mr. Leibtag said.

In 2005, wheat averaged $3.50 to $4 per bushel on commodities markets, he said. By December, the price was $7.75, and in January it was $8.55. Futures markets predict a further increase.

Corn inflation has translated to higher meat prices.

Bottom Line is that the consumer, while starting to get worried, has really ignored this impact so far. Reporting on this topic has been SLIM TO NONE but it will really start to kick in sometime this spring/summer as inflation and gas prices keep prices climbing.

Dan Ross
http://www.BetterBizBooks.com