Saturday, May 28, 2011

Housing recovery still not happening

Funny how long it has been since the talking heads on Bloomberg and MSNBC, CNBC have been touting that the housing bottom had already happened.  A 12% drop in sales this spring according to data from NAR (national association of realtors) would prove otherwise. 

Evidently people don't realize just how screwed up the banking systems and housing markets have become in recent years.  There is no recovery in jobs or in the economy if they housing market stays in it's current state.  How can all of the housing related jobs, (IE construction, real estate, mortgage banking, insurance, inspections, Title, gardening, etc etc,) ever be replaced without a housing recovery?  They obviously can't be replaced. 
The latest fraud and scam by the government is that an over inflated and manipulated stock market is a leading indicator of a recovery.  This couldn't be farther from the truth.  Profits being had by companies are not due to any growth in employment or from real revenue.  They are from cutting jobs and cutting cost dramatically during the recession.  There is no "NEW NORMAL" unless you want to accept that 90 % employment is the way of the future.  When I hear people say unemployment isn't so bad because 91% of the population that wants to be employed is employed and that is enough to sustain the economy I want to throw something at my television. 

Here is a better way to look at the current situation.  The Best analogy is created if we think of anyone running a business or the financial success of a company. 
If  a business does 90% of sales this year compared to last year they will be in deep financial trouble most likely.  If a small business owner does not earn 10% of their expected revenue they could be running at a loss.  Just as we work several months a year to get in the green with our tax situation, businesses often have to do a large percentage of business over the course of a year before they have earned enough to finally see some profit.  The profit might be the last 10% that they are not producing. 

The stock market success is based on the large companies squeezing expenses more and more.  Many companies will exploit employees or sales people as much as possible by baiting them into believing false profit potential.  You often see this in franchise opportunities or private business sales, and even in general sales jobs. 

If the current owners or managers have moved up through the ranks they often fail to move into reality of the times.  They will continually compare the profit margins and expenses 20 years ago while estimating profits in today's economy.  Typical but idiot none the less.  The stock market is reflecting the squeeze on everyone except the large corporations.  The fantasy that yesterdays profit margin all you need in today's world to get ahead ignorant.  Most often managers who were sales people at one time, are the most ignorant and arrogant of the lot. 
Their ego gets in the way of their ability to see the impossibility for a business to thrive on the same profit margin from 20 years ago.  Blindly calling for everyone to do as they did, much like the pied piper leading the rats to their death, many managers will look for those followers willing to do everything for a ridiculously low income, while following the manager to the cliff.  Of course the manager will step aside and milk every last penny from your pocket (if you let them, of course) before a business fails. 

The arrogance and ignorance of the previous sales star turned manager is apparent to many but there are always more rats to take advantage of in order to keep the manager in the fantasy land.  After driving most off the cliff, the manager will continue their delusional thinking and blame the current sales person or franchisee by saying that they couldn't cut it or that they were making a mistake for not taking more business  at what amounts to zero profit. 

The other great manager is the engineer who becomes manger.  Another usual bust in the managerial department but not until they have pillaged many underlings.  The cloud of arrogance permeates most companies that allow individuals to move up the rants internally.  It is rare that an internally promoted employee will look to new or existing employees for insight or to be promoted to higher level positions. 

All of these things are especially true when the economy is not expanding.  It all causes a drag on the economy, the middle class to be milked to the max and for them to have live on less while corporate America enjoys a wind fall. 

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