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Glen Luckman Economy Turnaround

When Will the Economy Turnaround?

By Ki Gray

Is the worst still to come? That is the $789 billion dollar question. Or in the case of Treasury Secretary Timothy Geithner, the 2.5 trillion dollar question. Despite Congress getting ready to vote on the stimulus bill compromise, the Treasury Department getting back to work on the banking system and President Obama’s declarations that swift action will avert disaster, Americans seem short on hope and long on financial worries. Are bad economies like bad marriages–throwing money at them doesn’t necessarily solve the problem?

It is now largely believed that the recession began in the fall of 2007, although Central Texans didn’t begin to feel the financial squeeze until much later in 2008. In fact, Texas has even experienced job growth in the last year. But this doesn’t mean Austin is immune to the difficulties of a bad economy. The ripple effect felt across the country is making waves here with job cuts and budget tightening.

RealtyTrac announced this week that nationwide the number of foreclosures were down in January, falling 10 percent from December. However, the good news is often tempered with a dose of reality, as in this case the January foreclosure rate was actually 18 percent higher than a year ago. California, Florida, Arizona and Nevada are still leading the nation in foreclosure numbers, but states with previously stable housing markets like Oregon are racking up foreclosures, as well.

Will a stimulus package and a better bank bailout change things soon? The drop in foreclosures is an indication that government and big bank intervention can have a positive effect. According to the Associated Press, “Contributing to the monthly drop was a decision by government-controlled mortgage finance companies Fannie Mae and Freddie Mac to suspend foreclosure sales during the winter holidays. Plus, Florida Gov. Charlie Crist brokered a deal in which lenders in that state agreed to a 45-day halt to new foreclosure petitions.”

The issue at hand is how much government intervention will help and how long will it take to turn the economy around. The current economic climate is often compared to the Great Depression, which started in America in 1929, but was felt worldwide into the 1940s. It wasn’t until after World War II that the economy began to change drastically. Obviously, no one wants another World War to turn the economy around.

Is the worst over? Most analysts seem to think things may not get better until sometime in 2010. As Sheila Bair, the chairwoman of the FDIC, wrote in Fortune, “We need to return to the culture of thrift that my mother and her generation learned the hard way through years of hardship and deprivation.” Hopefully it won’t be too many more years of hardship. That is certainly what the Obama administration is hoping with the implementation of the stimulus package.

Glen Luckman Economy Turnaround

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By Glen Luckman
March 5, 2009

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Glen Luckman Marketing

How to Market in a Really Bad Economy

By Louis Bernstein

Eight marketing ideas to help your small business during a bad economy.

Even if your company is doing well during a down economy, you need to make plans for customers who may start cutting back. They key is to shift your marketing from image-oriented marketing to direct response, measurable advertising.

If your business is already feeling the effects of a weakening economy here are some strategies you can use to market in a bad economy.

1. Place your focus on more direct forms of revenues versus “image advertising.” It’s time to show good, measurable results. Coupon redemption programs and the use of promo codes can be very effective. When the economy is down everyone is looking for bargains. With coupons and promo codes you also get to track what’s working and what isn’t.

2. Learn more about your customers needs. Surveys don’t have to cost anything. If you have an email list, you can build a quick survey to send out using Survey Monkey. It’s free and easy. You can also put the survey on your web site and offer something free for people to take the survey. Since you may not be able to advertise everything during a bad economy, it’s smart to know where to put your money.

3. Call in favors from your vendors. You need to get the biggest bang for your buck. I’m not suggesting hitting up your vendors for such large discounts that it places an undue strain on them. However, get what you can while keeping your relationship good and making sure they stay in business to serve you throughout the downturn.

4. Not all customers are created equal. See who has purchased the most from you and make sure you stay close to them. As your best customers, they should be entitled to any perks you can afford.

5. Stress ROI. All of your campaigns need to convey how your customer will profit from your product. And you need to be as certain as possible that your advertising campaign will pay for itself. When you start a business you obviously need to watch your pennies. However, don’t abandon this practice as you grow your business.

6. Test. Test. Test. Segment your list and try different subject lines, headlines and sub heads. Try different offers. The key is to find the one combination that hits the sweet spot and use that one. This point brings us back to the importance of measuring your results. With limited funds when starting a business you need to know which message gets you the best results.

7. Try to “convert” everyone that comes to your web site. By convert I mean capture their name, company, email, and phone number. Get this valuable marketing information by offering your visitors valuable content. Reports and videos are great things to use. Think about any content and information that would help your customer or prospect succeed - especially in a bad economy.

8. It’s time for family values. When hard times hit, people tend to go back to the nest. Try to position your product in warm, fun, family-oriented scenes. Even if your product doesn’t quite fit that image or is more business oriented, every product will affect someone. The image could even be a coming together of office workers around your product. “Paint the picture” how your product makes a warm, positive impact on someone or something.

Glen Luckman Marketing

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By Glen Luckman
February 25, 2009

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The Importance of Marketing in a Downturn Economy

By: Kathy Klossner

Smart business owners continue to market in good times and bad. It seems logical to spend money on marketing in good times, but more importantly you need to spend on marketing in bad times as well. Companies that keep their names and logos in the public eye during a slow economy are more likely to be perceived as successful, enduring and solid. Strong marketing strategies will pay off in the future.

Marketing consist of market research, advertising and public relations. Experts suggest changing the marketing mix, but not the overall budget. For example, in down times a business may not know exactly who is buying and why. So market research is critical in a downturn economy.

Likewise, a business should find out what forms of advertising are producing sales and then increase the budget for those while reducing the others. Tracking and monitoring systems need to be in place to figure out which forms of advertising are giving your business the biggest return.

Even in downturns, folks are still paying attention to the news. Public relations can help to keep your business name out there. Or start to research your own ways in receiving free press. The Internet provides a vast opportunity to connect with your customers.

Tips on Marketing in a downturn economy:

1. Spend more money and time on your market research. Areas to pay attention to is opportunities in new markets. Consider the hot “Green” market.

2. Update your web site and offer discounts. People are shopping for deals and are looking for ways to stretch their dollars. Be sure to have a time limit on such discounts.

3. Start a frequent buyers program and give those members special deals in appreciation for their loyalty. This will also allow you to keep your business name in front of these customers.

4. Join Network groups on the Internet. Network groups offer the potential to open new doors to new markets and keep your business name out there with little to no costs.

5. Start or continue to be involved in community or charity work. This will give your business name more exposure and offer opportunities to receive some free press. People always want to do business with businesses that give back.

6. Holiday gift giving. When most businesses are cutting back on gift giving to customers, now is your chance to step-up with a unique corporate gift. Consider giving custom sandals with your business name or logo printed on the flip flops. It’s an inexpensive gift and very unique - and it’s the thought that counts.

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By Glen Luckman
February 17, 2009

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Current Issues with the Global Economy

By: dane

Though the housing bubble deflated about two years ago, its true effects are only now beginning to emerge. In late 2006, when the economy first began to show signs of weakness in the housing market, most economists predicted that a recession was very unlikely, and that any downturn in real estate prices would be localized and mild. In reality, a global downturn is now a real threat, with the final price of the credit crunch projected to exceed $1 trillion dollars.

Not only have falling house prices in the US spread to other markets abroad, they have contributed to massive losses in other areas of lending such as credit cards, and the financial industry, which is now reeling from the US government bailout of Bear Stearns. What does this mean for emerging economies like China and India? In the short term, volatility seems to be the order of the day, with India’s fledgling exchanges rocked by jittery investors. Until financial centers and investors can regain confidence, market conditions will be exaggerated. Early trading also plays a psychological role for investors, as news developments impact Asia before Wall Street opens.

The US and the UK both face difficult home pricing corrections which will continue to hamper growth. Most homeowners expect, if not to make a profit, not to sell their houses at a loss, which is a difficult pill to swallow. And if they can’t sell their homes for what they think they’re worth, then waiting it out contributes to prices falling, thus exacerbating the problem.

While government intervention has been exceptionally forthcoming in efforts to preserve confidence in financial markets, less attention has been given to homeowners who are being foreclosed on over the next year, which is only so low because of robust growth in Asia.

Another prospect which looms over every government is the specter of inflation, which threatens to overtake the slumping economy as the number one priority for the Federal Reserve and other central banks, who have had to take extreme action to prevent further liquidity losses. The Fed has sold off over $100 billion in auctions and lowered interest rates five times in an attempt to lower mortgage interest rates, but confidence will remain shaky until the full extent of investment bank’s sub-prime exposure is realized.

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By Glen Luckman
February 7, 2009

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The Role of Fear in This Faltering Economy

By: Danna Schneider

Our economy is definitely going through some “tough times”, as our President George Bush recently confirmed in a speech regarding the floundering economy of today.

A combination of factors have created a very volatile stock market, housing market, increasing inflation and cost of living, and a faltering job market, but one key component of a failing economy plays an intangible role in facilitating and perpetuating economic instability.

That component is human fear. We can’t help it, we’ve evolved with fear as one of our main emotions, and the media and our surroundings have only helped it along by declaring “the sky if falling” with it’s seemingly nonstop doomsday headlines.

Heck, you can’t read your email without seeing the headlines on the side declaring that we are headed for worse times before they get better, costs are skyrocketing, foreclosures are at an all time high, gas prices are astronomical, and basically that everything is working against us right now.

The sky looks very dim indeed if you tune in to the nightly news or happen to be bombarded with all this fearful journalism every day on the internet, which is an increasingly popular portal for getting the news. So, has the media played a part in our faltering economy, or is it really a combination of unfortunate factors, seemingly brought on by events beyond our control?

Well, most people feel the media is partly responsible for making things worse. Take the stock market for example. Fear is the stock market’s worst enemy. When consumer confidence in the economy is low and there are other headlines that are less than favorable in the financial, retail, and last but not least, housing sectors, the stock market suffers dramatic volatility.

In fact, one of the hardest hit in the subprime and credit fiasco, whom also was recently bailed out by the federal government and JP Morgan, another financial heavy, Bear Stearns, acknowledges that fear is it’s worst enemy. They insist that their financials are still intact, but rumors that were rampant about the company’s imminent collapse forced shares down to their lowest levels in almost eleven years.

Many financial institutions are experiencing nosedives in their stock prices, and have also slashed dividends to preserve working capital, a move that is said to create a domino effect in the banking industry where other banks follow suit. This only forces prices lower on stocks, and makes it harder for them, and consequently, the market, to recover.

Most financial analysts agree now that we are in a recession, but some are still reluctant to call that card, saying that a recession may still be averted, and that we are merely in an economic downturn. I for one, believe we are smack in the middle of a recession, and I believe that part of the reason for that is the fear that is being spread about the dire straits the US economy is in, and the sense of hopelessness conveyed by these doomsday headlines.

Fear perpetuates a sense of helplessness and “waiting it out”, as well as inspires investors to back their money out of stocks and other investments, and put them into cash accounts, which only puts us further into recession. For those that have iron stomachs, it’s actually a great time to be an investor, as there are some good, solid companies selling for well below their book values and their true worth right now.

That’s not to say there also aren’t a lot of stinkers too, but if you practice due diligence in researching their individual financials and balance sheets, you may be sitting pretty when this recession is over and the consumer confidence that is so key to a healthy economy has returned.

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By Glen Luckman
February 5, 2009

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How we can understand, what takes place in economy?

By: Alex Sam

The economists use special economic datas to trace, to forecast and to analyse variations in economy in general and in its separate branches. From different economic datas published by state and other establishments, the economists are interested theme, which one mirror current or future state of economy. These reports are called as economic parameters, because they image state of economy. They can help to the manager to administer the company in changed conditions.

Where it is possible to receive economic datas? Except for specialized sources, you can find them and their analysis in business press, specially in the national daily business newspapers. In this publication we shall consider following key economic parameters:

* Level of economic growth vs. Price and inflation

* Interest rates vs. Unemployment

* Construction and sale of housing accommodation vs. Retail trade and sale of new automobiles

The largest parameter: a level of economic growth. This basic parameter mirrors percent (interest) of growth of all economy considered. Itself it is defined as out-to-out of economy. The given parameter consists of following summands: consumer spendings, investments, expenditures on public account and net export (export a minus import).

It is published monthly. But, unfortunately, it revise later. The difference between primal and final significances can reach one - two percents of interests for a parameter, the average significance constitutes which one approximately three percents of interests.

Consider deviations from this three-percentage level and find a trend. The trend is a most relevant element If there is a reduction of economic growth within several months or quarters, that, probably, the conditions of existence of many kinds of business become more difficult. During decrease of growth the buyers spend less, hence, companies do make the same. The companies do not wish to make and to accrue at themselves production, which one does not find sales, and reduce production. If you have noticed, that your business reduces revolutions, would be excellent idea to trace conduct of your buyers and schedules of sales, and, probably, you should reduce production, purchases of raw material and amount accepted on operation. Do not run into a panic, but be specially close during such slowing down.

If the economic growth is speeded up, the consumers begin to spend many money. The people feel confidently on the jobs and want to commit more purchases and to use the credit. At such times majority of firms attempt. To forge iron, while is hot , extracting advantages from the created conditions. As well as during slowing down of economic growth rate, you should supervise of conduct of your clients and trace sales. Escape excessive deploying of activity, engaging too plenties of the workers etc.

Posted in Glen Luckman Economic Issues, Glen Luckman Economy. Tagged with .

By Glen Luckman
January 26, 2009

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Glen Luckman Changing Economy

The Economy is Changing - Are You?

By Dennis Kelley

I recently read a story about a washing machine manufacturer in China. This Chinese company had produced a washing machine they were proud of and it was getting great reviews. However, they were starting to get complaints from some of their rural customers about the drain becoming clogged. After some investigation, they determined that some of these rural customers were using the washing machine to wash potatoes. Of course, this was not what the machine was designed to do. The manufacturer could have simply said this was the customer’s problem because they were using the machine improperly. Instead, they decided to add a vegetable-wash cycle to the machine. This is true innovation and clearly demonstrates their desire to be customer centric.

Being able to innovate in business is clearly one of the key areas of entrepreneurship. However, the idea of needing to innovate to succeed can be a little scary at times. Many people don’t believe that they are creative enough to do this well. Nothing could be further from the truth. You don’t need to be a creative genius to bring innovation to your business. However, innovation is the way businesses grow and change so you must pay attention to it. As the old saying goes, ‘You are either growing or dying, there is no such thing as standing still.”

Embracing change should be a way of life. While most people do not like to change, it is essential in business. You must constantly adjust the way you look at your business, your market and your competition. It is also extremely important to understand your customer and what changes are occurring with your target customer. By looking at each of these segments of your business, you will be able to determine where you need to innovate.

Innovation does not always need to be as radical as the example above. However, what the example does illustrate is how important it is to stay in touch with what is going on in your market and be willing to adapt to meet the changing needs of the market. In our current economic environment, this is especially true. As you look at your business, think about all the areas where innovation is appropriate. In fact, you could argue that every area of your business needs to be examined routinely for possible innovation.

Here are four areas to take a close look at right now. Ask yourself how these areas of your business are positioned today to handle the changing business climate. Be honest with yourself and ask others for their opinions. Talk to your employees, your customers, your business network and your mentors. Then decide what needs to change and start making the adjustments to keep you poised for success.

Marketing message - take a look at the message your marketing delivers. What are you saying to your prospects and customers? What about the positioning of the message? Is it speaking to people in a way that will attract them in the current climate? Is the message and offer you are giving meeting their needs today and is it persuasive enough to convince them to spend their precious dollars on it? Right now is a time when you may need to modify the way you deliver your message. Quality and value are always important in your message, but how you deliver it may need to change. Innovate the message based on what is important to your customers and prospects today. If you look closely, you will see this happening in many marketing and advertising campaigns for some of the largest and most successful companies in our economy.

Sales scripts - review your sales scripts and determine what you are saying and how it fits into the current environment. This includes your phone scripts, in-person sales scripts and your on-line sales scripts. Are you addressing people’s needs and concerns and showing them why your product is a good investment? Are the objections you get today the same as before and should you address them the same way? If you have salespeople, don’t assume they will modify their approach automatically. Pull the team together and conduct some brainstorming and training. How they approach prospects may need to become more creative right now as people become more cautious. Be proactive, not reactive in your sales process.

Product offerings - does your product line address today’s issues? Should you add a product or service to increase the value to deal with new issues your prospects face? Should you package products together to offer greater value? Can you modify a product or service to better position it within your market? Like the Chinese washing machine manufacturer - do your customers use your products in ways you didn’t expect and can you innovate to meet their needs? Can you offer different payment terms or methods of payment to make buying the product easier and more attractive?

Operational efficiency - take a look at how you make and deliver your product. Where and how can you improve this process to make it more efficient? Can you cut costs or improve quality? Should you outsource specific pieces of the business or conversely, should you bring more of it in-house.? Are there systems you can incorporate into the business that will increase capacity or lower costs? Take a look at every operational aspect of your business and question it all. You will be surprised at the improvements you can make.

Glen Luckman Changing Economy

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By Glen Luckman
January 25, 2009

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You Can Profit From the Current Economy

Jay Wagner

The current economy is in bad shape – at least that’s what all of the pundits tell us. The conventional wisdom in times like these is to put stop loss orders on everything, put everything you can into blue chips, or settle for the safe, low returns of Treasury securities.

I’m here to tell you that the conventional wisdom is foolish.

In the first place, the conventional wisdom is contradictory. You can’t have automatic trades to comply with stop loss orders going on constantly and maintain major holdings in blue chips. Even the blue chips – maybe especially the blue chips – are subject to market volatility. When the economy is bad, inflation becomes a major concern, and the market starts requiring a higher return on investment. At the same time, the bad economy drives sales downward, reducing corporate incomes and, by extension, return on stockholders’ investment. The result is market dissonance that exacerbates existing market volatility. The general trend is for prices to go down, and the easier a security is to trade the more precipitous its price decline tends to be. This is simply a function of supply and demand: more people want out than in, so supply exceeds demand and prices drop.

Supply and demand also accounts for what happens with bonds, notes, and commercial paper. In a difficult economy, fixed income securities are less appealing because of inflation concerns. Here again, people trying to get out of fixed income securities outnumber those trying to get in, so prices go down and both current yield and yield to maturity go up. At the same time, new debt issues of any kind are almost impossible to sell, and, with the rest of the credit market similarly tightened, companies are unable to borrow necessary cash at reasonable rates, forcing them to offer their debt placements at rather deep discounts. The bottom line is, they must raise cash to weather the economic storm, and they will pay handsomely to get it.

You’re seeing it today on every news channel: the prices of securities are declining virtually across the board. Your broker may be telling you to cover everything with stop loss orders and trade, trade, trade. That may be a case of your broker subscribing to the conventional foolishness, or it may be a case of your broker trying to protect his income: after all, commissions come from trades, and your broker lives on commissions. The question I have to ask is why would you want to sell now? It makes about as much sense as buying merchandise at Nieman Marcus to resell at Wal Mart. This is not, I repeat not, the time to sell. The economy is on an express elevator to the bargain basement, to be sure, but history tells us that when it comes to the stock market, what goes down must come up. Knowing that, this is the time to get in on the bargains. That “next Microsoft” that everyone is looking for might be trading for far less than its legitimate value right under your nose right now!

Growing up in Kansas, I was acquainted with a man who had amassed vast holdings of farm and ranch land. He was an eighth grade dropout, and I often wondered how he came to be so wealthy, so I finally asked. “Son,” he said, “Most of my land was bought back during the dust bowl, when farmers and ranchers were selling off their land or bankers were foreclosing and then trying to get what cash they could from the deal. I was just a farmhand back then, but I had a little money saved up, and when land dropped below twenty-five cents an acre I started buying. As the economy started to pick up, I used that land to borrow against and buy more land. By the time the drought was over, I owned almost ten sections [note: there are 640 acres in a section] and hadn’t spent $1,000 to get it.” At the time that we had that conversation (about 1972), his $1,000 investment made between 1930 and 1939 was worth over $3 million, an annualized return on investment of around 25%.

Do you have “a little money saved up” that could be used to pick up the bargains available in the current markets? My friend knew that the drought that caused the dust bowl wouldn’t last forever, and he made a fortune from other people’s panic. Investors are in a panic now, but if you’re smart their panic is your opportunity.

Investments to Avoid

In a struggling economy, investors tend to make the same mistakes over and over, and those mistakes take two forms: running for “safe harbor” and becoming extremely active traders in anything that is going up.

The safe harbor crowd always runs to one of two places, blue chip stocks and Treasury securities. As we have already discussed, blue chips are probably the roughest safe harbor you can go to, rather akin to anchoring in Galveston Bay during Hurricane Ike. Market volatility tends to have a more pronounced effect on blue chips: add the fact that blue chip companies like General Motors, General Electric, and AIG are all fighting for life right now and a run for the blue chips is borrowing trouble rather than escaping it.

Treasury issues are, without a doubt, safe. After all, if the Treasury defaults the money is meaningless anyway. The problem is, this is a “safe” harbor full of purchasing power pirates. The return on Treasury securities rarely keeps pace with inflation in an economic downturn, so while your safe harbor investment may be earning you a return in nominal dollar terms, in real dollar terms you’re losing purchasing power. It doesn’t do much good to earn 3% on your money if prices are going up an average of 6%.

Sadly, many investors who don’t run for safe harbor become speculators, moving money constantly into anything that is going up at the moment. Since most of the market is going down, this all too often drives them to the derivatives market, especially in today’s economy where oil futures have, at times, exceeded $140 per barrel. The problem is, if you’re short at $120 per barrel and the spot market on the settlement date is $140 per barrel, you’ll have to either lose money on an offsetting long position, sell your short at a loss, or have 1,000 barrels of crude setting around that you can part with. On the other hand, if you have a long position for $140 and the spot price is $120, you get to lose money going short or selling the long position at a loss, or you get to take delivery of 1,000 barrels of crude that you’ll lose $20,000 selling on the spot market if you can’t store it and wait.

Some investments, especially derivatives, will go into bubble mode early in an economic downturn, but don’t let that fool you into entering the bubble with them. As any kid who ever chewed bubble gum or blew soap bubbles can tell you, bubbles burst. If your money is in the bubble when it bursts, you can wave goodbye to it as it is scattered on the winds of economic caprice.

Investments to Make

Some companies and industries have proven themselves to be amazingly resilient. Like everything else, their securities are or soon will be selling at bargain basement prices, and if they appear to be struggling the discounts may be extra deep. Do your homework, make sure that they are positioned to bounce back, but if they are, buy while the price is low.

The current debacle started with a meltdown in the sub-prime mortgage market. The result is a large number of foreclosures, with lenders ending up holding real estate when they need cash. As a result, real estate prices are falling, so if you can, this is a good time to buy real estate or invest in companies that are investing in real estate. The prices will go back up, just as they did for my friend who invested in farm and ranch land during the dust bowl.

Many brokers and analysts have an innate fear of high yield (so called “junk”) bonds. Admittedly, some high yields have gone under and become no yields, but as a rule the returns have been in line with the risks, and sometimes a little higher. During an economic downturn, there tend to be two types of high yield bonds on the market: those with something behind them and those with nothing behind them. The former are usually issued by companies that want the capital to invest while the market is down, generally in either income real estate or leveraged buyouts. These tend to be pretty good bets for a sizeable profit in a relatively short period of time, and they offer your investment some diversification while providing at least partial collateral from the assets they invest your money into. The latter are usually issued by companies that are cash strapped and have credit problems, and they’re offering them to raise working capital: as a rule, they’re a bad investment and far more likely to default than the secured high yields.

The best bargains, however, may be in small cap (so called “penny”) stocks, initial public offerings (IPOs), and various kinds of notes, especially those backed with some kind of collateral. Some of these securities (especially the notes) can have some pretty creative terms, but if you understand the terms they can be a good, and often high yield, investment.

However, He Said . . .

While you’re doing all of this bargain basement buying, it doesn’t hurt to put a few safeguards into your portfolio. These can take several forms, as you’ll see.

After spending the first part of this article giving you all of the reasons to avoid the rush to blue chips and Treasury securities, I now need to backtrack just a bit. I’m not going into the famous politician’s gambit that “I was against it before I was for it.” I’m still adamantly opposed to loading your portfolio with volatile blue chips and low yield Treasuries, but having a portion of your portfolio in these securities isn’t a bad thing. The blue chips may recover a little more quickly than the market at large, and the Treasury issues will at least provide a good final position in the event of a major, long-term depression.

There are, of course, other ways to protect your portfolio. As you know, I’m against riding bubbles, especially in the derivatives markets. However, derivatives can be used to hedge your positions. Worried that a rise in interest rates will devalue that investment in mortgage notes? Just hedge the position with Treasury note or Treasury bond futures. For example, one long 10 year Treasury note contract can effectively insure one $100,000 10 year mortgage against excessive value loss due to rising interest rates. This doesn’t tie the two inextricably together, but as 10 years Treasury note rates rise toward the level of the long position, its value increases to cover the value lost by the mortgage note.

Another thing that can help your portfolio is investment grade bonds, especially if they can be converted to common stock. The conversion capability tends to buoy the price some, and the bond income can provide money to cover short-term losses in other areas or help your income weather the economic storm.

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By Glen Luckman
December 28, 2008

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Outsourcing: Its Effects on the U.s Economy and Leadership

Stephen Harvey Jr.

Outsourcing or off sourcing is a new trend among companies that operate and facilitate operations out of the United States. These companies use outsourcing as a way to cut costs and use cheaper labor by subcontracting to foreign companies or setting up offices in foreign countries. This takes away much needed jobs from the American economy. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of labor, capital, technology and resources.  . Business segments typically outsourced include information technology, human resources, facilities and real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, customer services, market research, manufacturing and engineering.

Outsourcing is not the only way that companies cut costs though. The other way that these companies shift jobs away is by becoming offshore companies. Offshore Outsourcing is when a company takes its business to another country and sets up operations outside its main office. The companies choose to move certain aspects of their business to developing countries where wages and labor are cheaper.  Many of these Outsourced and offshore jobs go to young people in those developing countries who look for placement in their country’s job sector. For Example, Dell Computers is based, owned and operated in the U.S but will choose to outsource jobs and create offshore jobs in its customer service and call center departments. This allows Dell to get more “bank for their buck” by eliminating the wage restrictions of the U.S and hiring cheaper labor.  This move cuts costs to the company while still addressing the needs of the consumer.

As the outsourcing and offshore job practices are becoming more common among these large corporations and conglomerates that reside in the United States, the United States economy is suffering and beginning to feel the effect behind the corporations’ cost cutting maneuvers. Instead of those same jobs being offered to the American public, they are quickly shifted to a developing country in need of a new job market. Places such as India and England are now benefiting from these corporations’ decisions to move elsewhere in search of cheaper labor.

On the other hand, it is a common rule of business to attempt to keep costs at a minimum and all the while to raise capital. It allows for the company to grow at a more rapid rate.   When companies keep labor costs down, they are able to use the additional resources in the operating budget.

Offshore jobs and outsourcing can also be detrimental to the economy that gets involved with such practices because the outsourcing can be in flux unless kept to a strict contract or agreement. Moreover, a company can decide to move to another developing country at any time and set up business and resources for even cheaper labor and training.

Off-shoring is not popular among the private sector because it takes jobs away from the American People.  While Americans fight to maintain and keep jobs, it is also up to the Government to make sure that these companies don’t take their business elsewhere in search of cheaper labor and lighter labor regulations. Many business people might dispute this but I believe that the government must regulate these companies in order for our economy to thrive. If the government doesn’t determine fair labor practices than companies would be able to set any standard they want for their employees.  It all revolves back into the economy which allows for more jobs to be created instead of being placed elsewhere.  It is the job of the Government to make sure the economy is steady for the livelihood of the country. If there is no governing board or regulations to oversee company’s business practices then there would be no success in the economy. Every company would possibly be monopolies and set standards way above and or below means. The companies that base operations out of off-shore locations do not worry about labor regulation or practices. This allows the companies to overlook the integrity and policies of the company in favor of profits. For Example, the Great Depression that plagued the United States during the latter part of the 1920’s and early 1930’s was brought along by the reckless judgment of companies and investors.  Companies were allowing money to be poured into stocks of companies and precious metals. Then, when companies pulled their interest in those stocks and precious metals the stock market crashed causing consumers and companies to lose vast amounts of money.   The government had to step in and make sure that this never happened to the American economy. The government setup regulatory institutions such as the Securities Exchange Commission (SEC act of 1934) to make sure the public interest were protected.

Is the outsourcing of jobs the cause to blame for our slow economy? You cannot say for sure but it has something to do with it. When there are fewer jobs for the American people, there is less money being spent on goods, services, and items that fuel the American economy.  These multinational corporations also impact the offshore locations where they set up operations. Companies such as Dell and Microsoft use off shoring and outsourcing to cut the costs but they pump money back into those countries allowing the countries’ people to spend the money they earn on the products and services the companies provide. Outsourcing and off-shoring can be a way of companies and corporations’ to expand their capital and revenue.  If done correctly, outsourcing can be a benefit.  However, Outsourcing especially to other countries can hurt the American economy and the American people.

This year is a pivotal year to the livelihood of a World Power and Economic Power, which is the United States. There has been a lull over the economy for the last eight years with the Nation’s overwhelming aptitude for taking on debts as result of funding downtrodden wars. The year 2008 marks a race for a new face in the oval office. With this being an election year, there are two candidates vying for the position: Barack Obama (democrat) and John McCain (republican). These two opponents are ready to tackle the nation’s economic problems head on, albeit in different ways. Obama feels that we should rebuild the nation from the ground up, meaning from infrastructure (highways, roads, airports etc.) to the oval office. Obama has already put his plans in motion by introducing the Patriot Employer Act of 2007 to provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the US; maintain their corporate headquarters in America; pay decent wages; prepare workers for retirement; provide health insurance; and support employees who serve in the military.

Posted in Glen Luckman, Glen Luckman Economy. Tagged with .

By Glen Luckman
December 27, 2008

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Top Strategies to Survive a Bad Economy

By Frank Ramsey

No matter how rich a person or a country is, there will always be tough times. In these tough times when the economy is in bad shape surviving a bad economy is a must for everybody. This will not only help themselves to adjust to the current situation but this is also one way of contributing to the overall survival. The following strategies no matter how simple they might be can somehow help a person to survive the downscaling economy.

On transportation:

- It is best to carpool more often. Make it a habit between you and a coworker to take turns in carpooling to the office. This is a good way of minimizing both your expenses in gasoline. If there are more than two of you living in your neighborhood much better, the more the merrier.

- Instead of buying new cars, old used ones. In these tough times, new cars are not a necessity. But still, you need a means of transportation. What best way to save up but to buy old cars and save up some money? When you buy used cars, it would costs you a lot cheaper.

- Put together different errands in one trip. Try to get all of the things you need to do in one trip or on your trip home. This lessens the number of trip you need to make and you can avoid from driving back and forth.

- Take up a hobby and ride a bike. If you live close to stores malls or places you usually go to, ride a bike instead of driving you car. It’s god exercise and it’s good for your health.

- Wash your car yourself. This one is a no-brainer, why spend on something you can do yourself. That’s right, you can do this yourself. Imagine the cost savings that you’ll be making. It’s not much on its own but it’s a lot altogether.

On eating:

- Eat like you’re on a diet. Try and eat off your kids plate sometimes, this will make you eat in smaller portions and you would even notice. This one works if you don’t go for seconds.

- Bottled water alternative. Tap water is the ultimate cheap fix. Try comparing an ounce of bottled water and an ounce of tap I’m sure you’ll see the difference.

- Less meat more savings. Imagine not having meat during the working week and having it on weekends instead. It will definitely cost you less than your usual tab.

On personal shopping:

- Generic is good. Brand loyalty is a thing of the past especially if it cost you a lot. More than anything else the generic substitutes allows you to have options.

- Be a bargain hunter. Despite the downscale, people would still always buy personal items for themselves. Getting good items while surviving a bad economy can be done by buying bargain stuff. Don’t just be contented with the low price the stores have, try and look around if there’s anything better.

Posted in Glen Luckman Economy. Tagged with .

By Glen Luckman
December 25, 2008

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