The Famous/Infamous JF (Jim) Straw July E Letter - Here for your reading pleasure...
 

Greetings,

Jim has Granted Permission to reprint his Recent July 2008 E-Letter Editorial. Here it is in all its Glory. Enjoy...

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Greetings & Salutations:

The biggest questions on the minds of Americans today are, “What is going to happen to our economy?" "Will we have a depression?" "How can I survive?”

It has been my opinion for the past 10 years that we are long overdue for a full scale economic depression. But, it will be completely different from the depression predicted by my contemporaries.

We have already seen a stock market crash in 1987 bigger than the one that preceded the depression of the 1930s. – And, we have already had more bank and S&L failures (percentage wise) than back then, too.

The rate of bankruptcies has grown from tens of thousands to hundreds of thousands each year – now, over a million bankruptcies each year - with the biggest percentage of bankruptcies in the higher income brackets.

Employee lay-offs, plant closings, and business failures have increased exponentially over the past 5 years. And, for the first time in our history, the unemployment rate among white-collar executives is higher (percentage wise) than among blue-collar workers.

All of these facts lead me to sincerely believe that ...


But ...


Simply because ...


There are simply too many white-collar workers, bureaucrats, and unnecessary people doing unnecessary paper-shuffling busy work. They consume far more than they are capable of producing. – These are the people who will be out of work, on the bread lines, during the next depression ... NOT the blue-collar workers.

As an illustration: Before I had money enough to pay someone to sweep the floors, I did it myself (still do; on occasion). – That is the essence of the difference between the White Collar workers of the 1930s and those of today.

Because there were few business schools before the depression of the 1930s, the vast majority of White Collar workers came up through the Blue Collar ranks. Then, when the economy got tough, Blue Collar workers were let-go and the White Collar workers stepped from behind their desks and filled those jobs. After all, they were the most experienced and best qualified to hold those productive jobs.

Today, the vast majority of White Collar workers are schooled in the arts and sciences of business. They have studied management, economics, political science, marketing, production, contract negotiation, and employee supervision. But, they have never done the jobs they manage and supervise.

It is one thing to tell an employee, “this needs to be milled another one-thousandth of an inch,” and quite another to say, “here, let me show you how to mill this to specifications” (and do it).

As the next depression deepens, it will become necessary (as it was in the 1930s) for businesses to “chop heads” to reduce overhead costs. This time, however, it will be White Collar heads that roll because they are the least experienced and the poorest qualified to “produce” the many goods and services required by our society.

Contrary to the allegations made by a Japanese official, the Blue Collar workers in the U.S. are not lazy and ignorant. They are the victims of the emotional rhetoric of the lazy and ignorant “book learned” White Collar segment of our society. When the Blue Collar workers find that their knee-jerk reactions to that emotional rhetoric has been overcome by reality, they will return to producing more than they consume.

Lest you begin to condemn me as a book burner, consider this ... a Blue Collar worker, upon entering the White Collar world, will by necessity read books in order to learn about doing the things he/she does not know how to do. On the other hand, a “book learned” White Collar worker will rarely, if ever, go out on the shop floor and learn how to do the jobs being directed. – My point is that “book learning” is an absolute necessity, it has, however, become an end unto itself. Therefore, I do not condemn book learning, I simply consider it to be a “starting place” not an “ending place.”

Blue-collar workers may be laid-off; the plants they work-for may be closed – but – they will find work because they have historically produced more than they have consumed. They will take jobs at lower wages, without many of the now customary benefits, in order to produce the goods and provide the services needed. And, because of the reduced costs to produce those goods and services, the prices will fall proportionately.

Businesses that will survive and prosper during the next depression will be those businesses that eliminate top-heavy management positions (its already happening) and reduce their debt to a minimum (also happening).

Why? – Because, contrary to the economic manipulators in our government ...


Even if the “prime rate” goes to 2%, blue-collar workers won’t be borrowing. Neither will wise and prudent businesses. The only people vying for those low-interest loans will be the out-of-work white-collar segment of our society – trying to borrow their way out of debt.

Blue-collar workers will – as they have historically – only “borrow” for purchases of major necessities. Instead of spending their hard earned dollars on frills & fancies, they will save their money for that proverbial rainy day.

Beyond that, during the next depression, there will be ...


Why? – Because the banks in this country have already been frightened into tightening their belts. – Go to your local bank and count the number of empty desks in the area where the junior vice-presidents used to be. – And, with more low-cost blue-collar savings money coming into their hands, they are shoring-up their shaky liquidity and reserves – PLUS – with the relaxation of some of the more outdated banking regulations, the banks are now in a position to put their depositors’ monies in higher yielding equity positions.

Because of that, during the next depression, there will be ...


In 1987 – when the stock market did crash – most of the trading activity was in the hands of individual investors. Today, most of the trading is in the hands of professional traders ... managed accounts, mutual funds, institutional investors ... with less likelihood of the major sell-offs that cause market crashes.

But, during the next depression, there will be ...


>From the F.D.I.C., on down, you can expect Insurance Company after Insurance Company to fail.

Why? – Because the biggest buyers of insurance are the white-collar segments of our society (individual & corporate). They have, for too many years, been laying-off their major liabilities to insurance underwriters. – As this white-collar segment loses jobs and default on their insurance premium payments, more and more insurance companies will suffer a cash crunch.

When that happens, insurance claims that have usually been paid from current premiums collected, will have to be paid from reserves. Then, when the reserves are gone, it will be time to start dipping into assets ... selling at pennies on the dollar in order to meet claims payments.

Of course, as the insurance companies fail, there will be more white-collar unemployed. That will only deepen the white-collar depression.

So ... to survive and prosper during the next depression ...


Put aside some money in a savings account with a smaller, local area bank. – Stay away from regional or statewide banks. Preferable is a State chartered bank instead of a National bank and – if you can find one – a bank that is NOT F.D.I.C. insured. You won’t make a bundle in interest, but your savings will be safer.

Quit borrowing money, or buying on credit, except for major necessities. Even if the prime rates goes to 2%, stay away from unnecessary credit.

Invest in the stock market. – Buy stock in companies that produce goods or provide needed services. Put some money in a managed account or mutual fund and learn to trade stock profitably for your own portfolio.

Send your kids to Trade School instead of College. Let them learn welding instead of economics. They will have jobs when the economists are in the bread lines.


Those who consume more than they produce will suffer the fate of the proverbial grasshopper ... and ... the hardest hit will be government employees at all levels – city, county, state and federal. – It couldn’t happen to a more deserving bunch of economic parasites.

The “economic parasites” to whom I refer are ... holders of positions in redundant and outdated government agencies, bureaus, and commissions; some of which have survived since the early 1900s without any useful purpose today ... redundant government employees; unnecessary people who are employed for the sole purpose of maintaining the use of budgeted funds (then can’t be fired without an act of God) ... and those persons who perpetuate those unnecessary, outdated and redundant offices and jobs.

I know. I know. What I am saying goes against everything my contemporaries are preaching ... and ... I know I’m going to catch thunder from some of them – BUT ...

Here's how to make yourself depression proof ...

http://www.businesslyceum.com/DepressionProof.html

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Agree? Disagree? or Just a comment? Leave it here.

Michael Ross

Re: The Famous/Infamous JF (Jim) Straw July E Letter - Here for your reading pleasure...
 

This sounds like there will be plenty of work for the 20 Million Mexicans now in the country...and growing daily.

Don Alm

Free Report Reveals, "How To Stop Refunds, Cold!"
http://www.midasreports.com/stoprefundscold

We're getting hit by a "QUADRUPLE-WHAMMY"...
 

Thanks Michael for sharing that!

First, Jim Straw is without a doubt an amazing guy with incredible insight. When he says something, I listen! He has the years of success and wisdom to back it up...

I had never heard that take on the recession/depression before...

I think there are multiple reasons for the current economic situation...

First, here's a quote from a post I made back in 2001...


You can read the whole post at http://www.sowpub.com/forum/showthread.php?p=4189

I don't take credit for the prediction - it comes from Harry S. Dent, and is based on demographic data. But it's amazing how accurate it is.

This suggests the downturn is due to the aging population. As boomers reach retirement age, most have less money to spend, so fewer products are sold. That means companies make less money, and therefore stock market valuations go down...

BUT... Something I didn't see, is that this is not the only trend hurting us. There are multiple trends.

The high price of fuel/gasoline/petrol I think is something completely separate. The reasons are...

• Fewer sources of oil, as many oil fields are producing less than they used to, and fewer new sources are being found. Reduced supply drives up price (economics 101).
• Greater demand for oil, from fast-growing countries like China and India, whose economies need energy to power the growth. Greater demand drives up price (economics 101).
• Threat of wars in the near future in the Middle East, causing speculators to believe prices will go up dramatically, since war in the Middle East threatens to greatly diminish supply even more. They're speculating that prices will go even HIGHER than now. So, they're buying up futures, expecting to sell later at a profit. This increased demand for oil futures drives the price of futures up, which affects the current price.

A rising price of oil has a tendency to raise prices for everything else, because the cost of transport goes up. So any product which is transported - which is almost everything - has higher transport costs which need to be paid.

There's a THIRD trend too... Higher prices of food (mostly corn in the USA, though other crops elsewhere). This is partly due to higher oil prices, but partly due to the push for biofuels.

Some countries legislate a certain percentage of fuels sold must be biofuels. Biofuels, at present, are fuels produced from foods - such as corn, sugar cane, etc. That means increased demand for corn (for example), since it's now needed to make fuel. However, increased demand drives the price up - so the price of corn goes up. This holds for many other foods too.

And... there's a FOURTH reason too (for Americans in particular). That's the weakening US dollar in comparison to other world currencies. That makes all imported products more expensive for Americans.

(The exception may be imports from China, because China ties its currency, the yuan, to the US dollar. So the cost of Chinese imports should stay the same for Americans.)

By the way, there's a "silver lining" to this fourth trend, which is that American products are cheaper to everone else, which should help drive up American exports. So, in the USA, now is probably a good time to get into exporting!

So, as far as I see it, we're getting hit with a "QUADRUPLE-WHAMMY". Long-time Sowpub visitors knew about the first one (at least those who were reading in the early days, when we discussed it).

I think the second was also predictable from any war in the Middle East that threatens the oil supply - though commentators say the biggest latest increases are due to speculators, who are banking on the price getting even higher, since they expect another war.

The third trend was a surprise to me!

The fourth trend - a weakening US dollar - many people had predicted for a while. However, it has a "silver lining" for Americans who get into exporting, since American exports will probably go up as a result.

It's best to know what to expect, then prepare for it!

Dien

Re: The Famous/Infamous JF (Jim) Straw July E Letter - Here for your reading pleasure
 

Definitely all kinds of ideas with Unlimited opportunities in Jim's Excellent newsletter...

Talking about Mexico...

A friend with family in Mexico gave us an update on their Gas prices and some food for thought...

Time for some Holidays and maybe getting into the Modified Fuel Tank business... :)

Cheaper Gas in Mexico Has Americans Flocking for Half-Off Fuel
http://abcnews.go.com/Business/PainA...5276948&page=1

U.S Drivers Adding Modified Fuel Tanks to Save Hundreds Filling Up in Mexico
http://www.fox6.com/mostpopular/stor...c-27fb2ec4ee0f

Pump piracy? Mexico’s lower prices may trigger illegal transport of gasoline
http://www.themonitor.com/articles/f.../gas_tank.html

Phil

Maybe it's a "QUINTUPLE-WHAMMY", since I forgot...
 

Maybe it's a "QUINTUPLE-WHAMMY", since I forgot about the whole subprime mortgage crisis... (My brother Thomas pointed out to me that I left this out.)

You can read more more about it here - http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

Essentially, it's not "one" thing that's happening, but multiple crises happening simultaneously. It's good to know what's happening, what to expect, and prepare accordingly...

- Dien

Ya GOTTA read this....
 

A nun was driving some patients from the hospital to her church when she ran out of gas. She walks to a gas station a block away and the clerk says he doesn't have anything to pour the gas into.

The nun goes back to her van and gets a bedpan. Fills it up and brings it back to her van and proceeds to pour the gas into the tank.

At this time, two guys are walking by, sees the nun pouring gas from the bedpan into her van....and one says to the other;

"If that van starts....I'm going to Church for the rest of my life!"

Don Alm

Free Report Reveals, How To Stop Refunds, Cold!
http://www.midasreports.com/stoprefundscold

Even though people KNow, they don't Prepare
 

Dien,

Thanks for sharing the Reasons.

For how and why the current oil fiasco isn't so cut and dried as Economics 101, read my post in the Oil thread http://www.sowpub.com/forum/showthre...1671#post21671

As I wrote elsewhere a few years ago... the housing mess was caused by the Clinton/Greanspan monetary policies.

My Predictions were... the GOP would lose both Houses of parliament (it happened). The housing market would collapse and whomever won in 2004 would be out in 2008 (which is why it pained me to suggest to let the Dems to win in 2004 so the mess would happen on their watch - and Labor let win in Australia so they'd be one term deals as well).

Now. Despite all this foreknowledge... we are now in a bit of a mess. BUT, it is not global per se. As various Sectors in the market experience growth and some cities are booming.

My biggest frustration is the insane rush into Man Made Climate Change ruin. With Pollies and the media talking about it as if we All agree and it's a foregone conclusion Man has made this climate change in the last few decades. With New "Green" taxes being applied to Stop Global Warming - even our leader has toyed with adding a Tax to petrol to help Fight it. How these funds will Fight anything is never asked or mentioned.

In short, my frustration at this Tool of Control being used.

It's like, people in a few hundred years time will look back at the actions of those of today and think them loonies for the way they carry on - just as we think people of the Middle Ages had some whacked out beliefs.

Michael Ross

Re: The Famous/Infamous JF (Jim) Straw July E Letter - Here for your reading pleasure...
 

Jim also has the answer buy his product but I can't afford it, right now.

How without Jim's product do we prepare for it?. It probably is not easy. Stock market goes down prices to up. This is not how a recession or depression works. Prices are suppose to go down. You expain it to me. I can't

I now that Guru Jay Abraham said you have to advertise during a recession. I don't double that but people do have to money to buy do they? Some of rich have money. I am not doing to bad right now but who know about the future and I have no doubt that Jim may be absolutely right. I know what the House market did to the lumber industry and the plumbing industry and other industries. Lay off will do even more when unemploment runs out and they can't find jobs or maybe far less paying jobs they can find? There is still a problem if find far less paying jobs when you have a big mortgage and insurance costs. And the employment situation does not look very good right now for the white collar people of many industries.

Great one Don!
 

Thanks Don... Great joke!

My fiancee loved it too. :)

Cheers, Dien

We're headed for the twilight zone
 

Scroll down to the comment about 'silent weapon'... an excellent
post on herds and how this mess evolved.
https://www.blogger.com/comment.g?bl...94691218347 5


then flip back to the main blog; read, learn and enjoy

http://hypertiger.blogspot.com/