Ah, a man who thinks as I do.

Dee

Philadelphia, PA (Really Bensalem)

Hi Harvey,

Let me see if I can help.....

Housing has continued to boom even though many have been worried about the bubble bursting...it hasn't. Sales are rising to 8.05 million. Retail sales growth is expected to rise to 5.5%. Inflation is dropping....According to Washington Kiplinger "July job numbers are stonger than expected. Jobs are up and continuing to rise due to employers economic optimism." They expect 2005 to be the biggest job gain year since 1999. An estimated gain of 2.3 million jobs. In My opinion, more jobs means more expendable income for both individuals and companies. Interest rates are going up meaning that the economy is doing well and they have to reel it in to keep inflation from becoming a problem.

I feel like the economy is holding it's own in spite of the high fuel prices which I honestly didn't expect when I realized we were in for high prices for the long haul....

Our business is based on sales to automotive hobbists. You would think that the fuel costs would stop them from their activities. Although our sales are off a bit, it's not off as bad as I would have expected, and our profits have actually improved.

Invest in refineries ;) 

Feeling any better?

Dee,

Here too.

Dave

You bet. If he had not given all of our customers a tax cut last year we would have lost even more sales and had even less money to spend ourselves. We could be in far worse shape than we are.
I do not know about the rest of you but I do not qualify as rich by very many standards but I got a tax cut and that money was a part of what I used to start this business.

James,

Rich is a relative term. On another forum I got into an argument with someone who made $400+K a year who claimed that his income didn't qualify him to be called rich. Poor guy couldn't make ends meet. I feel his pain!!

Dave,

In the last presidential election we were told that we were rich if as a family of 4 our income exeeded $60,000. I intrepret that from the retoric about the "tax cut for the rich" of which I got a fairly good sized piece. In fact if you look at the numbers, almost everyone - at least those who pay taxes - got a tax cut so we are all rich!

Now where did I park my Jag?

Harvey - I don't think I can counter your argument.

Prices for goods are increasing at a faster pace than wages. Our insurance premiums for everything from business insurance, auto, home and health insurance has gone out of site. I am cancelling my health insurance ($350 a month on my husband's policy through his work) and changing to a Health Savings Plan with a high deductible in order to be able to continue some kind of coverage.

Yesterday, I paid $37.50 for a 1/4 tank of gas. Last year, in checking my record book, I paid $12.20 for the same amount. Our gas here in OR is amoung the highest in the nation, except for CA I believe. We're at $2.59 a gallon (today - tomorrow it will go up)in my area, $2.76 in the southern part of the state and $2.40 in the Portland area. Ouch.

I literally can't afford to buy a piece of property in my town to build a building - prices are through the roof and if you aren't a developer, you can't even find a piece of property to buy. Our town has the lowest rate of properties for sale and the prices are astounding. Completely out of reach for the average business owner. I've found government grants and loan programs slanted towards favoring the non-profit organizations, and was even told by a city rep that I would be at the bottom of a long list because I was a privately owned business and non-profits would get a $250,000.00 grant before I would. This I just could not understand, as don't I bring tax dollars to the table???

And although we are busy here at work, I am not hiring to replace a worker who is leaving. Like you, I expect the economy to tank here in the next year or so.

With all the brilliant people in our country, why can we not get back on track and get some of these problems figured out? Beyond the fact that a few are getting very rich off the backs of many, surely we can turn this around. Insurance reform needs to be at the top of the list, with alternative fuel sources for our cars a high second. Although many would like us to all ride bikes everywhere (highly promoted in my area), that's not going to happen 100%. People like the freedom of having their own car. And transporting large goods on a bike just doesn't work:) I'm not sure how I would transport a load of 8' wood fence posts on my bike and then ride 20 miles home from the farm store. And what about when winter comes - am I suppose to ride my bike in the slashing rain and wind too?

I wish I could figure out a way to do without all that is going skyhigh - insurance, drugs, gas - opt out of the whole situation. But that isn't realistic, so what alternatives are there out there?

Cindy M

Brian,
Have you noticed how many large corporations are laying off large numbers of well paid highly skilled workers? Where will these people find jobs? Large corporations may be posting profits but they are doing it with much less staff. There was an article in our local paper saying that donations to charities from corporations and people making over 100,000.00 are down 40% this year.

While I won't go into the political issues surrounding Iraq I do know that we can't afford to layout that kind of money for years to come and not see a ripple effect across the board.

Dee

Philadelphia, PA (Really Bensalem)

Good economic times, the 60's & 70's. A one worker family could afford a small house and still have some money left. You could actually have a savings account that grew. Taxes were far lower, Social Security taxes were far less than they are now. It was not used to balance the budget or pay for Medicaid.

I started engraving 20 years ago, Christmas sales have dropped dollar-wise about 10% a year, even with a much larger selection of products. I am talking about gross sales, not net. Rents have gone up greatly, in addition to all other costs.

As far as half full/empty. I get excited when sales go up 10% in a month over last year. Even though last year was stinko. But in the overall, I am a realist. I try to see what is really happening, rather than what I would like to be happening.

Refineries being the bottleneck is bogus when oil is $66 a barrel compared to what it used to be.

Trickle down theory is the dumbest theory that has been perpetrated on the public that I have ever heard. If there is more profit, it is skimmed by attempting to pay the least required to still produce. A little trickles down, the rest goes upward. Start it at the bottom and it is proved to trickle up.

Philadelphia, PA (Really Bensalem)

Harvey's Tips Page When you finally understand it completely... it changes.

"The bill provides $14.5 billion in tax breaks and potentially billions more in loan guarantees and other subsidies to big oil to encourage oil and gas drilling, improve natural gas and electric transmission lines, build new nuclear power reactors and expand renewable energy sources, especially construction of wind turbines."

Who (what people) is going to do the drilling, improve the transmission lines and build the new reactors and other new sources? Last I checked with my friends in the construction industry the only time anyone in a suit shows up on a construction site they are there to look around not to work. Those construction guys going to work and getting paid and then paying taxes and buying stuff (food, cars, houses etc.) mean the businesses that sell those things will be busier and will need more help and will hire more people - after using all their currently available capacity. Those people will pay taxes and on and on.

Yes there is a need for changes in the insurance industry but an undeniable part of the problem is the fact that I can go to the doctor and he can run all sorts of tests and do all kinds of examinations even if they are not needed just to cover his .... with his malpractice insurer and I will pay $25 plus my deductible. My insurance company pays the rest. Is the solution to this socialized medicine (shudddder) or more out of pocket expenses for routine medical care combined with catastrophic coverage? I don’t know - I’m just an rookie engraver.

Trickle down does work. It worked when President Kennedy cut taxes in the sixties. It worked when President Reagan cut taxes in the eighties and it is working now with President Bush’s tax cuts today. I go back to what I said earlier about those tax cuts gave me the money to go into this business last year. How much worse off would we be with even higher taxes than we already have? If you want the price of oil to go back down stop the speculators from running up the price.

“The rich and the oil companies do NOT pay what you and I pay in taxes (as a percentage of income).”

You are absolutely right. Eighty percent of the taxes paid to the federal government are paid by the top twenty percent of all taxpayers. The top fifty percent of all taxpayers pay 96.03% of the income taxes. Source: The IRS. Get rid of the high tax rates and the rich invest more into capital investments and people get jobs. Raise taxes and they hide the money in tax shelters and loopholes.

How about a flat tax with no deductions? Say 17% of all income with no deductions - across the board starting at an income level of say $20,000?

Whow it sure is high up here on my soapbox.

It's funny that this conversation showed up here because we've been having the same conversation at our house and trying to prepare the best we can for what is to come. It is not a matter of "the roof is falling" type of panic, but more a thoughtful look at what is going on in our country and planning for when the bubble bursts. Things simply can't continue along in the manner it has.

Some practical things we are doing at our house:
converting to solar power and solar hot water at our house.
Growing our own food as much as possible and preserving what we can.
Using human power instead of gas powered tools when possible, driving much less, planning our errands, car pooling when possible, streamlining all purchases (in the past I might go to three or different stores to pick up items where I liked one brand over another - now I find a brand that will work at the one store I'm shopping at), buying nothing extra, taking care to stay as healthy as possible, buying no junk food, cancelling subscriptions to the paper and unnecessary magazines and little changes like getting updated insurance quotes and changing to a Health Savings account instead of reg. insurance.

At work I'm:
running audits on phone services, long distance and cell phones to make sure I'm getting the best value. Buying bulk print cartridges to save money, not replacing aging equipment yet - making do with what I've already got and maintaining it, disposing of excess inventory, making sure my clients know what services we offer and encouraging them to add to what they usually order from us, increasing our community visibility by attending networking opportunities, packing my lunch, saving junk fax paper and printing my orders on the back of these pages, using fans instead of turning on the a/c, ship through USPS for non-urgent packages, and just being conscience of little things I, as one person, can do to save money.

Here in OR, minimum wage is $7.25 per hour. I always thought min. wage was suppose to be a training wage - what happened to that thought? Now people seem to think they should be able to live and live well on min. wage.
My first "real" job at 15 - $1.00 hr. at a hamburger stand. I didn't expect to buy a house on that money or even rent an apartment and pay real bills. I did pay for college and clothes on it though.

I'd like to change the world, and I support change, but until those in charge turn things around I feel I can only change my immediate surroundings. To not acknowledge that Big Oil rules this country would be to fool yourself. Until that changes, we can either get involved in the political arena and try to change it that way, or do the best we can on our own.
Cindy M

Couldn't have said it better myself James.

Brian.

To all those of you who have generalized "somethings gotta give" at some point, or "the bubble has to burst" at some point..... why?

What are you basing it on? Example: the housing market is good to "hot" in virtually every market throughout the U.S. Why? Because of demand. Demand is not drying up. Ability to qualify for financing based on overheated prices, maybe, but "demand" is ever-increasing. Why?

Because people want to locate somewhere in the U.S.; they want to be here. Whether they are Hispanic, Asian or European or whatever. Inmigration is outpacing available housing.

If people cannot qualify for financing, and if that single factor slows demand, then prices will fall. Possibly to more realistic prices.

But demand will continue. So, why the "something's gotta give" attitude? Because nothing lasts forever? Okaaaay!!??.......

Fortunately, there's more to why things are the way they are (good and bad) than just "something's gotta give" or "the bubble has to burst sometime". You can choose to be a boat adrift on the river, or you can put a damn motor on it and control your course.
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As for us.....rates were down. So, we refinanced our home and took the money and 1) invested in new "money-making" equipment (capital spending), 2) paid off all of our credit card debt (high/exhorbitant interest rates) and 3) paid cash for a new Honda (40 MPG).

Oh yea, almost forgot...business is good....and getting better. It's not only how you look at the glass, it's also about what you DO with the glass.

How's that for pontificating? Now, you people down there....start rowing..."ramming speed"!!