While this problem seems complicated, there is really an easy solution.  No broker or agent can solve this problem.  They needed someone who was not tied to one company or selling only one product to help bring a customized solution to the table.

I’m looking at a recent business week article and it says,

“The U.S. economy is in such bad shape that the loss of (just) a quarter-million jobs in July was greeted as good news.  Long-term unemployment and foreclosures continue to mount in the worst economic downturn since the 1930s.  Health care costs are out of control.  An aging population around the globe is driving government spending through the roof.  And scientists say we need an expensive crash program to fight global warming or we’ll incinerate ourselves.  It’s little wonder that despite some positive news lately, the daily Gallup Poll on U.S. economic conditions as of Aug.11 found that 53% of Americans think the U.S. economic outlook is getting worse … vs. a purely defensive posture – knees pulled to chest, hands on head – remember this:  Just as people become overly exuberant in good times, they tend to get too pessimistic in bad times.  While the economy remains deep in a hole, and could indeed get worse, the truth is that nobody really knows what will happen next.  Prudence demands that you prepare yourself for all possible outcomes, including some highly positive ones.”

Our thoughts are that it will continue to get worse.  It is easy to make the assumption that since people get “over exuberant in good times” that they also are “too pessimistic in bad times.”  It is simple, the majority of people and their outlook on life doesn’t change while in good or bad times.  The people who thought the economy would continue to soar during the up times are the same people who think “…the real estate market is already on the upswing (at least in my area) and I’ll be able to sell my house by next year for a profit.”  On the other hand, the people who warned against the bursting of the bubble in 2007 are the same people who are still saying it is getting worse.

If you have been following us at any length you probably know that our firm subscribes to the Black Swan philosophy.  Click here to request your free copy and read more about it.  It will explain a lot about what has happened with our economy and why it is not coming back any time soon.

We recently put out a whitepaper speaking on some key insights into the current political debacle surrounding health care reform.  Go here to request your free copy. 

Here is a passage from the whitepaper:

When/if the Sen. Finance version is announced, do NOT get bogged in the little details in the legislation.  (The media & special interests will go nuts on the minutia as if each is a major issue.)  Instead, focus on a few big factors, such as if it proposes a public plan paying uncompetitive low prices.  If it does not (and all signs have been that it will not), and if whatever they propose (such as public co-ops) do not provide a probable path to a government sponsored take-over of the health coverage market, then Congress has a probably-unsolvable deadlock, and major Health Reform legislation will be finished for now.

So, while the Senate Finance Committee is the key factor in the first weeks of September, there is growing impatience (jealousy? resentment?) by other members of Congress who feel like bit actors in a sideshow.  Some may try to break away and push through their own versions.  However, anything less than a very balanced proposal will simply create greater internal political obstacles.

Here is an exerpt from our latest article, “Where is the evidence?” Written by one of our staff, she details her reading of Nassim Taleb’s philosophies on our recent economic slowdown.

“Taleb’s writings introduce ideas that challenge the traditions of risk management and talks about the extremes society faces because of these traditional thought processes. He talks about the propensity of people to believe in scientific evidence versus obvious flaws which is a risk level that is doomed for failure. He believes it is idiotic that we manage our lives by such a lack of evidence. He points out how all airplane passengers are subject to passing through checkpoints, except there is zero evidence that these passengers are carrying weapons. However, if there were no checkpoints at all, there is a very high probability that a plane will be destroyed thanks to some terrorist. Now it seems how clear it should have been that financial collapse was certain for the global economy without the necessary checkpoints.”

To read the entire article, click here to request it.

Here is an excerpt from our experts article coming out this Friday in the Birmingham Business Journal:

According to the Rockefeller Institute of Government, state tax collections fell by nearly 12% in the first quarter of 2009, with 45 states reporting declines—and early indications for April and May show an overall decline of nearly 20% for total taxes. These budget shortfalls will add increased pressures to the employment picture at the worst possible time.

It is human nature to inherently be optimistic. However, this game of perception versus reality can result in a very harmful outcome for consumers, investors, and companies alike. If the bursting of the housing and credit bubbles have taught us anything, it is wise to manage expectations in a realistic fashion, be conservative by planning for the worst case scenario, and not allow the masses to alter one’s convictions.

Health Reform Update

Things that seem simple and well intentioned usually are not. For example, earlier this year in the Stimulus bill, the ARRA COBRA subsidy turned out to have incredibly complex rules and grossly unfair impacts. We work closely and constructively with the regulatory agencies that do a very professional job. So, the aspects that anger voters are not the fault of the regulators. We have to explain to workers and families that the wording is what Congress passed and intended.

Health reform legislation is loaded with pitfalls that will lead to unintended consequences. As you know, not reading bills has become a political lightning rod this year, so for the good of the nation and the good of the citizens, reading the bills carefully, and taking responsibility for the end-effect is extremely important. My message today is constructive and not partisan or political. Avoid the problems and anger now. Don't vote for the political sake of voting now and paying the political price later.

Excerpt from our latest Article "Jobs and Money":

It was uncovered this past weekend by a guy named Chris Mortenson that the past auction of $28 Billion in 7-year Treasuries had a twist to it... A large chunk was purchased by Primary Dealers to the tune of $10 Billion worth of the auction, and then, very quietly, without fanfare, and right under the noses of the currency traders and media that are supposed to be following up on this stuff... The Fed bought it all back from the Primary Dealers... That's Quantitative Easing folks, they monetized the debt, and with all the fanfare of being more transparent, they did it under the dark of night in a back alley...

Shame, Shame, Shame! Is this not a sad state of affairs, that not only did the Fed HAVE to monetize the debt, they did so in a way to manipulate the markets, and pull the wool over the eyes of the public! Would this have been a "failed auction" if the Fed hadn't worked out this deal with the Primary Dealers? I think so! And the Fed, dealt a blow to currency holders by pulling off this shell game! And the calls for the current administration to be transparent, along with the Fed... All comes back to haunt them...

So... I hope the major media picks this story up... I know for a fact that some of them read the Pfennig, and laugh at my claims of market manipulation... Let them all laugh, one day they will be crying... I shake my head in disgust... Oh, and for all you who think I'm trying to tell you something that isn't true... I've got facts, so don't even think about calling me out on this! OK... Enough of that! OH! I see that Paul Krugman thinks that Big Ben Bernanke should be approved for another term as Fed Chairman... If I were Big Ben, I don't know how I would take that...

Hmmm... I better think about that one! Of course, if I had any say in the matter, I would fire them all! Anyone that had anything to do with the bailouts, stimulus, brokering banks and broker deals, deciding who remains open and who closes their doors... Fire them all I say! I won't even go down the road regarding the politicians... Data this week will include the Trade Deficit, Productivity, Unit Labor Costs, Monthly Budget statement, which ought to be something to see... We'll also see Retail Sales, which you would think would be better, but given the Chain Store retailers report last week, Retail Sales would certainly be a question mark...

Nassim Taleb is a philosopher who believes that there is an extraordinary gap between what experts say and the reality of what happens in the context of life. On a recent blog-roll he delves into the many contradictions that afflict the public’s understanding of consequences involving risk as well as the estimations of it.

By provoking readers to re-assess their core beliefs, Taleb is able to draw correlations between life events such as the current economic downturn and the failure of standard predictors to intervene, forecast, prevent or even relieve some the consequences of this global crisis. Taleb wants his readers to understand the level of risk they are taking on and how it will impact their lives individually. The repeating theme throughout much of his work is that “we can’t predict rare events but we can live to be protected from them.”

To read the entire article, click here and request it.

The Best Preparation

A question Hal Shepherd of the Kennion Group responded to was:

What should a business owner or HR manager do between now and when the Obama healthcare changes occur?

Hal responded that he believes employers should spend time reviewing their total compensation packages. The Kennion Group assists many clients with taking a look at their total compensation packages and helping the client to define a budget for salaries as well as a benefits budget. It can be easy for employers to lose site of the fact that employees are the ones that make money for the company. By investing the right dollars in your employees, the additional profits will help to reward these employees appropriately.

Some of the changes that have been discussed with Obama’s plan have included benefits packages that are awarded to employees based on length of service and performance, and do not require a one-program-for-all mindset that is currently in place.

The Kennion Group will put out articles and reports periodically to give employers and HR managers more insight into how to better manage their benefits program.

To read the entire article, click here and request it.