Leading Rich

 source:Doug Mills/The New York Times

Another Obama candidate bites the dust - Senator Gregg Withdraws as Commerce Secratary Candidate

Here is the Republican New Hampshire Senator who was supposed to be part of the Obama Bi-Partisan cabinet.

I have been getting inundated by many people talking about 15 companies that may go down in 2009.  Do you happen to own any of these.  You should watch out and read on to Yahoo Finance article about “15 Companies That Might Not Survive 2009″.  These companies include:

• BearingPoint                Ticker BGPT; about 16,000 employees; down 21%
• Blockbuster                 Ticker BBI; about 60,000 employees; 57%
• Chrysler                       Privately owned; about 55,000 employees
• Claire’s Stores              Privately owned; about 18,000 employees
• Dollar Thrifty                Ticker DTG; about 7,000 employees; down 95%
• Krispy Kreme              Ticker KKD; about 4,000 employees; down 50%
• Landry’s Restaurants    Ticker LNY; about 17,000 employees; down 66%
• Loehmann’s Capital      Privately owned; about 1,500 employees
• Realogy Corp               Privately owned; about 13,000 employees
• Rite Aid                        Ticker RAD; about 100,000 employees; down 92%
• Sbarro                          Privately owned; about 5,500 employees
• Sirius Satellite Radio     Ticker SIRI about 1,000 employees; down 96%
• Six Flags                      Ticker SIX; about 30,000 employees; down 84%
• Station Casinos             Privately owned, about 14,000 employees
• Trump Ent. Resorts       Ticker TRMP; about 9,500 employees;  down 94%

Who do you think will survive?

The news on the street is that there is a compromise and the Senate is ready to vote on a smaller $780 Billion package for the American Recovery and Reinvestment Act of 2009 .  But I think this is hogwash.  So far no one has been able to compromise and get the American recovery on its way.  So the stock market ended up higher today, but in the end what do we have?  More Unemployment!!!  Did you check out the latest unemployment figures?

598,000 Jobs were lost in January.  So looking at the figures over 3 Million jobs have been lost since the recession started in December 2007.

When will it all end?  I think we have another year or two more to go in terms of hardship.  Could the new definition of depression mean 9% unemployment?  Already there are states that have higher unemployment rates than the national rate, such as California with 9.3% in December 2008.  In some parts of California there are rates as high as 10.4% for the Inland Empire.

source: Bureau of Labor Statistics

Are more people are unemployed now than in the depression.  Currently there are 11.6 million unemployed people in the United States from a labor pool of 153.7 million.  In 1933 24.9% of 11.4 million people were unemployed, that is 2.85 million people.  Right now the entire workforce from 1933 is unemployed.  I think we just may be in a depression.

Check back later as I will post the employment rates for 33 states during the weekend.

It has been a few days since I updated Leading Rich, but I am sure you have heard the latest and if you missed it, here it is again.

Bear Sterns stock price was nearly $160 per share last year, it was trading at $58 on Thursday March 13 then fell to $30 on Friday March 14, 2008 and over the weekend, JP Morgan Chase made a bid to purchase them for $2 per share.  From a valuation of $21 Billion Bear Sterns was dealt a blow on Sunday with a valuation of $230 Million.  With the backing of the Federal Reserve Bank of New York, JP Morgan received a guarantee of all mortgabe backed securities and also the very lucrative Manahattan Commercial Real Estate owned by the 85 year old firm that was the 5th largest investment bank in the US. 

What does this mean for you?

It means that the government bailed out the Rich and really don’t care for Americans who are hurting in this economic environment.  Will the Federal Reserve back my subprime mortgage with my Bank and bail me out - I think NOT!!!!!

Federal Reserve Largest Mortgage Holder

Now that the Bear Sterns deal is moving forward, the Federal Reserve will be the largest holder of mortgage debt.  They can sit on all this debt or properties for a long time, or until property values go up.  And where are they getting this money from… they are just going to print it.

How does this impact you?  It means that the real estate market may not corret appropriately, they will take their eye off the ball with the economy as they focus on their holdings and therefore impact your life by extending the economic hardships for years rather than months.

Federal Reserve Lower Fed Funds Rate by 3/4 point

Federal Reserve Lowers Rates - Great News - NOT!!!! If you have CD’s, then expect all your rates to fall for your savings.  You will now get 3% on your 1 year CD, when you were getting 5%.  And at the same time inflation is running at 4% plus.  So you will be losing 1% purchasing power on your money in 2008.  Most people will move their money to the Stock Market, but how can they do that when the stock market is falling.  Don’t look at todays $400 plus move on the Dow, for all of 2008, the market has been in a free fall.

It is time to hunker down and protect your assets.  Here are a few tips for 2008.

• Job Security - Solidify your position at your company.
  • Make sure that management sees the value of your contribution to the organization
  • Work smarter and stay later to show that you are committed to getting your job done when others are leaving to go home
  • Find new ways for your company to save money or incrase revenue in this economic downturn
• Protected Your Financial Assets
  • Make sure that your mortgage is solid and will not be subject to a rate adjustment
  • Refinance to protect your low interest rate
  • Clean up your dogs - Get rid of Stocks that have no future return - Remove the emotion of your holdings
  • Pay off credit card debt, banks may start raising rates even if you have a low promotional rate
• Get Control of your Budget
  • Manage your monthly budget and closely monitor spending
  • Don’t buy the Flat Screen TV with your tax rebate
  • Cut out luxuiries in your life - Get coffee at 7-Eleven rather than Starbucks
    • If you still need your Starbucks, get a small coffee and cut out the blended drinks and muffin

More tips to follow.  Remember that if you take care of your finances now so you can get ready to invest at the market bottom and really make out when the economy recovers.