These days, we’re all facing unemployment, whether or not we’re working. That’s because as unemployment rises, as layoffs continue and as prospects for a “jobless recovery” escalate, losing a job is top-of-the mind, if not all-consuming and all-encompassing.

Even the top workplace performers see the statistics and government reports. Since the current U.S. recession began in December 2007, almost seven million jobs have been lost, more than 1.4 million of them among professionals. The Labor Department says total employment is now at its lowest level since August 2004.

All this leads to the question: What can I do to make my job more secure? What skills, attitudes, and attributes should I have to make it less likely that my name will be on my company’s next list of those to lay off?

Some of these survival tactics consist of so-called “soft” skills – attitudes and relationships – while some skills involve more-measurable tasks. Some of these soft skills may sound obvious, but for many workers, developing them will lead to real, meaningful personal change. The long-time worker who gets through the day with his head down and nose to the grindstone, just like the colleague who gets through the day with a constant stream of humor and jokes, will learn that they need to add new tactics to their personal skill-set arsenal.

That’s because a vital key to keeping your job in these down times is visibility – but only positive visibility, and especially positive visibility that has a tangible connection with measurable results.

Boosting Your Value By Boosting Your Profile

Raise your profile within the company by doing things you haven’t done, things that may seem peripheral to the business but are key to the office. Remember, the office is a social community that’s within the business, and it works, or doesn’t work, just like any other social grouping. It may not be fair, but the odd man – the worker who goes straight home rather than socializing with co-workers – may end up being the odd man out.

Because the office is a social entity, you’ll have to develop a unique standing within it to increase your chances of survival as the entity shrinks through layoffs. This entails building what experts are referring to as a “personal brand,” creating an array of strengths and attributes that are unique to you. This doesn’t mean that you should be the only one to wear a bow-tie or that you should wear a yellow dress every day; it does mean that you have enough to offer the bosses that you will be remembered when the time comes.

Workers can raise their profiles when they make the effort to join special committees or even help organize a company-wide social engagement. This can consist of doing something as simple as getting your department co-workers to all go out to lunch together to actually intramural athletic events.

“Conventional wisdom may say that you should keep your head down, especially during an economic downturn,” says Meredith Haberfeld, an executive coach who operates out of New York.

However, the reality is that visibility is all-important, she said. But only good visibility. The worst form of visibility – complaining and criticizing – is all but a guarantee of a bad personal outcome, Haberfeld said. Avoid gallows humor (quipping “you want fries with that?” to an executive), or out-loud cynicism (asking, tongue-in-cheek, “hey, boss, you here to fire me?”).

Almost any form of gossiping is poison, and the high-maintenance employee is the endangered employee, says employment counselorSusan Heathfield.

Author and career coach Alexandra Levit told Money magazine that you should avoid guilt by association, just as you should seek approval by association: Don’t hang out with the down crowd  (the “Debbie Downers,” she calls them), and do hang out with the people the bosses (genuinely) like.

The next step toward visibility is upward, rather than outward – making sure that your bosses actually know what you’re doing for the company. This, according to Haberfield, comes down – very simply – to blowing your own horn. After all, if you don’t do it, chances are that no one else will, and chances are very good that someone else will try and take credit for your successes.

If you had a successful sales campaign, let the bosses know. If you’ve been able to show how work now being done by expensive consultants could be done in-house – and for a lot less money – let them know.

“My suggestion is that you work your tail off to be visible about the results you’re producing” says Haberfeld.

And don’t just assume that the numbers speak for themselves. If you’ve developed a new technique in your last sales campaign, tell the bosses. And tell them in writing: a casual remark in the elevator really won’t do. The ‘invisible guy’ is the first guy to go, says Stephen Viscusi, author of‘Bulletproof Your Job: Four Simple Strategies to Ride Out the Rough Times and Come Out on Top at Work.’

Stepping across boundaries rather than building them is the right approach. If you’re in public relations, but you have a sales lead, share it with sales – and make sure they don’t take credit for it. If there’s a big project that you’ve managed to avoid every time it comes up, change that. Write this year’s annual “Year in Review,” even if you are certain that no one reads it.

Needed New Skills to Seek Out

Being the invaluable, irreplaceable employee no longer means hoarding expertise in just one area. Indeed, that’s just won’t work in today’s environment.

What will work is new skills. Here are some ways to develop them:

• Mentor Your Way to Success: Seek a mentor within your organization. Or, better yet, be one. If you’re low down on the totem pole, seek the advice and counsel of someone higher up; and vice versa, Ana Dutra, chief executive officer of Korn/Ferry International’s (NYSE: KFY) Leadership Development Group, recently told The Harvard Business Review. Getting a mentor is an effective way to gain new skills – while also boosting your visibility to higher-ups: “How do I do this in Power Point?” soon leads to “Teach me how to do that neat thing you do, that Dreamweaver thing.” And that leads to a new skill set. All of these techniques come close to bootlicking; it all depends on how you do it. Some experts such as Viscusi advocate taking this a step farther by sharing your personal travails with the boss. This may seem like a risky strategy, and would depend on the personalities involved. But if you’re learning new skills from a company elder, you’re doing good for them as well as for yourself.

• Embrace ‘Social Media’: Many companies have been slow to embrace the tools and services of MySpace.com, Facebook Inc.,LinkedIn Corp., and the like, while their employees have jumped in. Become your company’s “go-to” for new media; even if it’s an unofficial position, it’ll increase your perceived importance within your organization, and if you handle it correctly it will also build your network of allies. (One key point: Whatever you do, don’t spend your office time on Facebook unless it’s officially sanctioned and everyone knows it!).

• Stay Ahead of the Pack: Keep up with developments in your field. This is different than acquiring new skills; this is going to professional societies and finding out what will be happening in the next few months or years – and being ready for these new trends. In fact, you can even position yourself as the “informed source” inside your group by letting folks know just what’s beyond the horizon in your business – again, creating for yourself a position of perceived value.

• Volunteering: Some experts recommend volunteering outside of the workplace as a job-preservation skill. It can expose you to new ways to use your skills. For instance, an executive from a communications firm volunteers and finds a new type of audience to write for and helps her firm expand into seeking non-profit clients. Volunteering can also be a way to increase public awareness of the company’s name and brand.

• Seek Certifications: There are other technical skills that can (and should) be acquired formally, through a professional certification. Remember, you don’t need to go through a lengthy, costly certification process to learn important job skills such as becoming an Excel pro. You can learn through a mentor but you can also learn through expert user groups that meet regularly; you can even take a course at the local community college. Look, too, at low-cost seminars that many professional groups hold.

[Editor’s Note: In future installments in this series, Money Morningwill look at such jobless recovery topics as executing the perfect job interview, managing your finances, planning for retirement, and the most promising sectors for the future. The first installment outlined an entire career-survival plan for those who’ve lost their jobs. And a sidebar to this story, which appears elsewhere in today’s issue of Money Morning, talks about how employees can use new certifications to bolster their value. To read that story,please click here.

Source: How to Keep Your Job in a Jobless Recovery ]]> http://www.contrarianprofits.com/articles/how-to-keep-your-job-in-a-jobless-recovery/19103/feed 0 http://www.contrarianprofits.com/articles/the-four-secrets-to-career-success-in-a-jobless-recovery/18226 http://www.contrarianprofits.com/articles/the-four-secrets-to-career-success-in-a-jobless-recovery/18226#comments Tue, 23 Jun 2009 14:58:47 +0000 Money Morning Staff http://www.contrarianprofits.com/?p=18226 For the millions of Americans right now looking for a job, the latest batch of employment statistics paint a rather grim picture.  As bleak as this all may sound, jobseekers (both employed and unemployed) shouldn’t be deterred: With a sound strategy, and four simple secrets, it’s still possible to survive – and even thrive – in a jobless recovery.

After all, just consider that:

• The U.S. unemployment rate just spiked to 9.4% for May, up from 8.6% in April, meaning the nation’s jobless rate is now at its highest level in more than 25 years.
• Throw in the fact that the current jobless rate does not include people who have taken part-time jobs below their skill levels to make ends meet (a little-referred-to situation…

February brought a comprehensive stimulus package, a blueprint for a complete budget overhaul, and several bailout plans. At some point, these ideas by the smartest men/women the country has to offer have got to start working (don’t they?). Analysts will be working overtime as data from housing, manufacturing, and labor is set to be reported.  Bear in mind, in January, the unemployment rate soared to 7.6% and 600,000 jobs were lost from the economy. With companies announcing major layoffs each day, The National Association now predicts the jobless rate to peak at nine percent this year (though the pessimists actually believe that number to be low).  Heck, maybe even a positive revision or two are in the cards?

Market Matters

In his first address to Congress last Tuesday night, U.S. President Barack Obama tried to find the middle ground between fear and optimism as he outlined the severe global economic challenges being faced today, while vowing to lead the nation into recovery.

While the talk was “generally” well-received (at least, by his fans), President Obama followed up with a budget blueprint (rather a national healthcare plan) that proposed some significant tax hikes on upper-income folks and on many businesses. Early prognostications claim that Big Oil and Big Pharma will be particularly hard hit, though Congress will have some say in the ultimate spending and tax moves. Then again, with the budget quickly ballooning to unfathomable levels, here’s hoping Obama can meet his ambitious goal of halving the deficit within five years.

Financial institutions were in the news again, as the Federal Deposit Insurance Corp. (FDIC) reported that domestic banks lost more than $26 billion in the fourth quarter and more than doubled their loan loss reserves from the prior year.  JP Morgan Chase & Co. (JPM) slashed its dividend by almost 90% to 5 cents a share and announced cutbacks of 12,000 jobs as it incorporates Washington Mutual into its mix.  Fannie Mae (FNM) reported a $25 billion quarterly loss and has its hands out for another government handout.  Likewise, American International Group Inc. (AIG) signaled a need for more bailout funds as it contemplates breaking itself into four separate entities: Asian ops, international life insurance, U.S. insurance, toxic assets (any interested parties for this unit?).  Citigroup Inc. (C) took a step closer to nationalization as the government and some private investors agreed to convert preferred stock into common stock, leaving taxpayers with a stake of just under 40% in the one-time financial behemoth.

Meanwhile, the government announced some details of “stress tests” that will be used to measure how banks needing additional capital assistance would hold up during “baseline” and “extreme” economic conditions.

In other corporate news, the tech sector is officially out of favor as two consulting firms downwardly revised sales forecasts on expectations that consumers and businesses will resist any major expenditures in the dire economy.  Microsoft Inc. (MSFT) issued a poor outlook for the rest of the year, but hinted that another deal for Yahoo! Inc. (YHOO) may be in the works.  Dell Inc. (DELL) reported a dismal quarter on slumping sales, as revenue came in below expectations.

Traders welcomed news that shrinking crude-oil supplies (due to cuts by the Organization of the Petroleum Exporting Countries [OPEC]) may be reaching equilibrium, thanks to lower demand due to the slow economy and oil prices expected to climb above the $44-a-barrel level.

Worries of a U.S. “Lost Decade” – which Money Morning warned investors about all the way back in July – hit Wall Street as equity indexes fell to their lowest levels in 12 years amid concerns that the recession will get much worse before it gets better.

February was the worst month for the Dow Jones Industrial Average since 1933.  While U.S. Federal Reserve Chairman Ben S. Bernanke attempted to calm the markets with optimistic rhetoric that the downturn might end this year, investors did not find his message very convincing.  Every slight rebound was short-lived, as investors tried to make heads or tails about Citi’s ongoing concerns, President Obama’s budget, and the horrid economic data (see below).  So much for those 60-odd standing ovations the nation’s new president received during his speech to the joint session of Congress.

Economically Speaking

With Obama stealing much of the limelight, Fed Chair Bernanke attempted to insert himself into the latest debate by issuing a few key policy talks of his own.  He told Congress that the recession should end in 2009 and next year should be one of recovery (of course, he also mentioned some substantial risks to his forecasts).  Bernanke then tried to quell the ongoing bank rumors by claiming that “nationalization misses the point” and such moves “would be disruptive to the markets.” Finally, he attempted to calm the growing concerns that the exploding deficit and expanding money supply will lead to skyrocketing inflation in the years to come.  Bernanke remains confident that the Fed can act quickly to avoid any significant threats of price pressures when the recovery eventually emerges.

When the government initially reported that U.S. gross domestic product (GDP) contracted by 3.8% in the fourth quarter, some economists raised eyebrows and predicted a revision in the later releases.  And a revision is what they got.  Now the Commerce Department claims that the American economy shrank by 6.2% in the last quarter of 2008, the worst setback since 1982, and a far weaker showing that anyone expected.

Elsewhere, existing home sales plummeted to their lowest level in almost 12 years, and new home sales plunged to their worst showing ever reported.  Consumer confidence also experienced a record-setting down month in January, as individuals remained fearful for their jobs and hesitant to hit the malls – or even the Wal-Mart Stores Inc. (WMT) for anything, but the bare essentials.

Weekly Economic Calendar

Source: Record Job Losses to Continue

During a credit deflation, things get cheaper. Without lines of credit, people can’t bid things up and prices fall to their “cash on hand” level. Given a long enough time, things settle out and prices relative to wages actually become attractive. But it’s a long and bumpy ride from here to there. The trick is to maintain roughly the same level of income as others take wage cuts or lose their jobs entirely. Add this to the general lack of credit and you find that the cost of living drops dramatically. You might have felt poor a couple of years ago when you earned $50,000 per year, but if you can hold onto that income, why, in the next couple of years you could feel positively wealthy!

The holding on part is where it gets a little tricky.

It’s tricky because when credit evaporates, less goods and services can be bought. A lot of jobs providing those goods and services become unnecessary. Layoffs become all the rage. You wind up with a lot of formerly employed people with no jobs and no money and no attractive prospects. Doesn’t seem fair, but that’s what happens when hopes and livelihoods get propped up on the shifting sand of credit expansion.

When credit vanishes, actual cash becomes king. Promises to pay take a back seat to actual ability to pay. Exactly what are we calling “cash”, though? God and the free markets like gold and silver because they’re relatively rare, easily divisible, and it’s very difficult to control their supply, and hence innately honest. Governments prefer colorful bits of paper that they issue precisely because they can print up as many as they need.

While credit isn’t wealth, neither is money. Money is just a commodity we use to represent and exchange wealth. It’s rather vital to have a measuring tool that resists stretching and deformation or else you get into all sorts of trouble. Gold and silver tend to resist stretching; paper money begs for it.

During the last really big credit bust in this country cash was very strictly tied to gold and silver. The exchange rates were fixed; you got one ounce of gold for a twenty-dollar bill (plus 67 pennies). Fifty-four cents got you an ounce of silver. So when the credit bubble popped and prices slumped, they did so in terms of a dollar that was a reliable proxy for gold and silver. How things have changed!

First FDR devalued the dollar and a little later Nixon killed it. The currency we have today is a hoax wrapped in a lie. It isn’t tied to anything. The old dollar was a certificate that could be exchanged for a very specific amount of gold. The one we’ve had since 1971 is a promise from the U.S. government…and little paper promises from governments have a dismal history.

You may have noticed that during our recent gargantuan credit bust people again ran to the dollar. They expressed a very strong preference for greenbacks over…well, just about everything else in the wide world. But running to the dollar for shelter these days is like seeking protection from the man who is shooting at you…or running from the doorway of a burning building to the second floor.

During the last depression, the dollar’s tie to gold limited the ability of our communist dictator to goose the money supply. Roosevelt had to coerce the citizenry to give him their gold under pain of imprisonment so he could allow for some easing of the dollar’s value. This time around, FDR II can just have central banks conjure more up as much cash as deemed necessary out of nothingness because the dollar isn’t tied to gold anymore.

Inflation is a slow burn on its default setting, which governments enjoy so much. It’s why they insist on monopolizing currency in the first place. But let inflation go on long enough and the currency becomes worthless. Sometimes events conspire to accelerate the race to worthlessness. Wars, laughably unpayable national debt, financial panics…that sort of thing.

The government would prefer an endless boom, even though such a thing—like individual biological immortality or perpetual motion — just isn’t possible. The central bank gets things started by expanding credit. Good times ensue. Everyone is employed and everyone lives beyond their means and bids up the prices of assets with money they don’t really have. This can’t go on forever (and never does!), but governments hate to see the ravages of the inevitable contraction after their artificially-induced boom. States love for their citizens to be blissfully distracted with fantasy, especially the really unsustainable sort.

So what is a government to do when it wants people to spend and they just refuse? When the rubes refuse to play ball and insist on hanging on to their savings, all you have to do is make saving less attractive than spending. Increase the money supply…make the money people hold less valuable…encourage them to get rid of it. Set the currency ablaze and ferret the consumers out.

Around these parts, we subscribe to the view that savings are essential for capital investment, but politicians side with Keynes on this and believe savings are for suckers; debt is where it’s at. And if private debt has brought the population to its knees, then the obvious answer is a dollop of public debt to kill their currency and finish them off!

It’s not just the amount of dollars that the central bank produces, however; it’s the amount that actually gets circulated and the speed at which it moves through the economy. When the general populace senses that the dollars they’re holding are losing value (because the central bank is accelerating the increase in supply), they try very hard to get rid of them as quickly as possible. They trade them for things that will hold their value.

The real trouble with hyperinflation isn’t that it devalues the currency, however; it’s that it devalues souls. It leads people astray. It removes the moral stops. It changes all sense of proportion. Like a sadistic, juvenile prankster, government spikes the punch with a little quantitative easing and before you know it all bets are off. People drunkenly succumb to the baser instincts they normally keep in check. The thin layer of restraint provided by the neo-cortex is broken and all sorts of reptilian longings are indulged…and consequences be damned.

Trying to invest and plan for the future under a fiat currency regime is like trying to be witty and convincing while drunk. Inevitably the wrong things are said and done because perception and judgment are hopelessly warped.

During a hyperinflation, the majority of the population who counted on the scrip they were forced to deal with and save can only feel angry desperation as all their savings turn to ashes practically overnight. The reward for personal thrift coupled with trust in the largest institution around—the state—is loss and future uncertainty. Under such conditions, societies tend to come apart fairly rapidly. Crime rises as savings and incomes disappear. Ethnic tensions may mount. There is a bull market in internal strife and personal misery.

People generally rather consume than produce or delay gratification. This is why the masses can be lied to with paper. But the universe is a weighing machine, not a voting booth. Wishes don’t trump reality. And disaster must befall those who expect something for nothing. We here in the Whiskey Room like to point the finger at governments, but we also have to acknowledge that thing in human nature that allows governments to exist in the first place and to flourish.

For the past decade in the U.S. easy credit — pretend money — led people to put their houses up as collateral on debts that could only be paid back if real estate prices kept getting propped up by more easy credit. Then they used this debt to finance vacations and trips to big retails chains to buy things that would not be used to produce or store wealth. And this was just an expansion of credit!

When the actual money supply expands in order to ease debt repayments…well, all sorts of screwy things happen. That’s what generally spurs the vulgar expansion of the money supply: the political desire to ease massive debt repayment, both public and private…that and war. When you see a nation living beyond its means, watch out; its currency will be thrown under the bus when the bill comes due.

Destroying the currency, however, means that the debts really weren’t repaid…because they were paid back with dollars that aren’t worth the value of those that were initially borrowed. It’s a big swindle and everyone involved knows it. But it goes on anyway with all the nasty consequences you’d expect from such massive debauchery, delusion and theft.

The list of countries that have suffered the ravages of paper money hyperinflation is pretty darned long…and ironically it starts with the very first country to give paper money a try, long, long ago. China’s Yuan Dynasty’s little experiment with paper money ended badly. In fact, it helped end the Yuan Dynasty.

For the first time in history, currencies everywhere are merely paper…including the world’s reserve currency. The potential…the inevitability…of a worldwide bonfire of these little paper vanities staggers the imagination. The conflagration will be mesmerizing in its size and intensity. You may even find yourself enjoying the view…if you make it a point to be standing far enough away not to be consumed.

Source:  The Joys of Hyperinflation

Multiply this by millions of permanent layoffs, bankruptcies, shut downs, going out of businesses, chains closing for good, autos down the tubes, housing starts virtually zero, and sales almost the same, and what do you get?  The Toyota effect, multiplied many times over. 2.5 Million jobs were lost in 2008.

You get millions out of a job, millions behind in their mortgage and credit card payments, millions with homes worth less than is owed on them, and the chain reaction follows.  The more layoffs there are, the more store closings and bankruptcies there will be, and resultant layoffs and increasing of all of the above.  In other words, thanks to the welfare state, which wasn’t in existence in the 1930’s depression, credit cards which weren’t in existence in the 1930’s depression, and un-backed dollars, which were backed in the 1930’s depression, and no money down home purchases and ARM mortgages, which weren’t possible in the 1930’s depression, the conditions currently extant can and probably will make this depression far more severe than the 1930’s depression.  The facts say it will be far worse.

Unfortunately, you haven’t seen anything yet.

Carburetors

For over 75 years, cars, trucks, planes, and everything powered with gasoline engines, used carburetors to mix air and gas to feed into the engine’s intake manifold.  They worked well, but on occasion, they became ‘flooded,’ and the engine wouldn’t run.  (Modern, fuel injected engines can’t be ‘flooded.’)  Carburetors had two things on them which caused ‘flooding.’  (1) The accelerator pump, and (2) The choke.  On cold mornings, often the choke, which restricts the flow of air, might make the mixture too rich, and cause the ‘flooding,’ or often in hot weather, too much gas pedal pumping would inject too much raw gas into the engine, ‘flooding’ it, and causing it not to run.  Both things, which caused the ‘flooding,’ and engines not running, were TOO MUCH GAS.

The solution was to stop the flooding by depressing the accelerator all the way to the floor, and crank the engine till the excess gas was used up, or open the choke and wait for it to evaporate.  Gasoline engine technology is not the point here.  The point is this:  What got us into this economic mess?  TOO MUCH MONEY INSERTED INTO AN ECONOMY by the Federal Reserve.  Just like the engine being flooded with too much gas, the solution is to cut off the gas.

The Federal Reserve under Alan Greenspan flooded America with easy money, easy mortgages, and easy credit.  The result was bad credit, bad mortgages, and everything being over-priced.  Pouring more gas into a flooded carburetor guaranteed the problem would be made much worse.  Cutting off the gas would be the solution.  Pouring $2 trillion, and god only knows how much more into the economy, is like pouring gas into a flooded carburetor.  It will only make matters worse.  Obama says he has consulted 20 of America’s best, most respected economists, and they say pour more gas (printing press dollars) into the flooded carburetor (economy), and the engine of America will start.  NUTS!  I wish Obama had called me.

The same exact thing was tried in the 1930’s, with huge government spending, and it took WW II to get us out of the depression.  We’re already in two wars, and I certainly wouldn’t want us in a third one.  How about this as a cure for the current depression?

(1) Get us OUT of both wars we’re now in, and bring home all the troops.  Let ‘em solve their own problems over there.  We’ve got huge ones here, and can no longer concern ourselves with theirs.  This will save hundreds of billions a year, if not well over a trillion.

(2) Disband most federal bureaucracies, especially the Federal Reserve, and do it Quickly.  The DOT, DOE, HUD–and the list is long–serve no useful purpose.  The Department of Education educates no one, the Department of Transportation transports no one, etc.  This will save hundreds of billions a year.

(3) Revert to the Constitution, which gives government no authorization to subsidize anything.  This will put an end to all federal welfare, and save hundreds of billions a year.

(4)  Get out of the UN, NATO, and any and all foreign entanglements, at a savings of more hundreds of billions, and get the UN out of America.  Declare unconditional neutrality, and send no money or advice overseas at any time, or for any reason.

(5)  Close our borders with Mexico, and see to it that they stay closed 100%.  More savings.

(6) As illegals come up for police stops, free medical care, welfare, school enrollment etc., which are in the hundreds of thousands each year, instantly send them home.

(7) Renounce NAFTA, and all laws which encourage, tax wise, the building of plants off-shore, and resulting layoffs here.  With the budget balanced, and no more Federal Reserve, recovery would be pretty quick.

Today, every single state is in terrible economic condition because of layoffs, bankruptcies, and low tax collections.  They have to balance their budgets.  The D.C. Gang doesn’t, and can print and print and print, which they are doing, and will continue to do with nary a smidgen of responsibility.  We all pay for their lack of responsibility with every single dollar we own being reduced in purchasing power.

I can go on and on, but the point is this:  The ones who harm us the most–other than the Congress who has gotten us into this with a hundred years of bad legislation–are bureaucrats, welfare recipients, and illegals, who would be out of work, and that’s great!  Let D.C. turn itself into a ghost town, full of worthless, out of work ex-bureaucrats.  Maybe they’d burn the place down and we could start over.  Let the illegals go home by themselves, or by force when they are picked up.  If states want to subsidize the poor, or illegal, they can, but not the federal government.  All of these ideas would actually balance the budget, and make America strong again.  None of these ideas have a Chinaman’s chance in hell of coming to pass.  Not a single one.  Obama will print up another trillion dollars in un-backed scrip, and we’ll have hyper-inflation, except in housing, because that has yet to reach bottom.

To fix a flooded engine, you cut off the gas.  To fix an economy flooded with paper money, you cut off the paper money, not print trillions more!  The economy is in such a sorry state, flooded with fake money, that the fed interest is close to zero.  They’ll pay you NOTHING to store your scrip for you.  Wise people have taken their scrip, and turned it into precious metals, which will always have value in any currency, or all by itself.  An economy such as ours, which has been flooded with unbacked scrip, and ceased to run, as in a flooded engine, has to get itself out of the mess by ceasing the printing of scrip.

It will be very painful to millions of people who have not been acting wisely, or who have been depending on Uncle Sam for their sustenance.  The pain of this depression is unimaginable today.  We’re only at the very beginning of it.  The only sensible way to get out of it, is to let it run its course, and at rock bottom, the economy will begin to rise like the Phoenix Bird.

If my ideas ever came into being, there would be wholesale riots by those cut off, and many millions would die.  Wonderful!  We are flooded with not only too much scrip, backed by nothing, but too much human trash, who have been flooded with handouts from the public treasury. Millions actually believe that government owes them a living, which is gross error, and extremely costly. They, like the scrip, are basically worthless, and they must be gotten rid of to make our economy healthy again.  How to do it?  I give up, or at least won’t write about it.

Source: Basic Economics

“Psst…we’re breaking out of this joint…Saturday night…pass it on….”

Yes, dear reader…we’re breaking out… We’re not going to let these prison bars stop us. A whole generation of American investors is being fattened for slaughter…we’re not going to be among them.

Let’s look at yesterday’s headlines just to see what is going on.

The Dow rose 62 points yesterday. Oil held steady at $48. Gold went up $8. Yields are rising…but you still get paid nothing when you lend money to the U.S. government.

The economic news tells us that things are getting worse. Alcoa said it will lay off 13,500 workers. But all across the country, businesses are either laying off old workers or not hiring new ones. Most of the joblessness never makes the news – until it is already painful to the fellows without jobs. Small businesses don’t announce layoffs. Nor do they send out a press release when they decide not to hire a new kid at the carwash.

After the worst car sales in half a century, Toyota says it is shutting down its plant for 11 days.

And a figure out yesterday tells us that consumer bankruptcies rose 33% last year. But the crash came late in 2008; job cuts didn’t really begin until the last quarter. People didn’t have a chance to get their paperwork together. This year, the bankruptcy numbers should really soar.

Most likely, Americans are still in the dark about what is going on. Heck…their leaders are driving without headlights…why shouldn’t the lumpen too? People don’t seem too sore about what happened to them in ‘08. They’re still hopeful that a new administration will find a way to fix things. Yes, they’re planning on cutting back spending and saving money…but they have no idea how their attempts at thrift – magnified by millions of other citizens – will affect the economy.

Levy Forecasts, which was generally right about the financial crash, now says the “damage to the economy will rapidly accelerate the financial crisis.” In other words, the financial crash is causing an economic crash…which will cause a worse financial crash.

Profits are made at the margin. Most sales merely cover costs. It’s the marginal extra buyer – preferably the one who spends his savings, rather his salary – that provides business with profits. On a macro level, salaries are a cost to business. When a man spends his salary, business is merely getting back the money it paid out in labor costs. But when a man spends savings, the money falls to the bottom line as profit.

Who is going to spend savings in ‘09? Who is going to spend at all? That’s why business profits are going to fall harder than most people suspect. Unemployment is going up more than most people expect. And stocks are going down more than most people expect.

Barron’s survey of Wall Street’s “top strategists” tells us that the consensus among these fellows is that stock prices will go up 18% in 2009. But these are the same strategists who thought stock prices were going up in 2008 too – instead of crashing 35% – 40%.

Here at The Daily Reckoning, we’re with the Levy bros. Our guess is that stocks will rally…and then crash again, ending the year below where they began it.

There is no doubt that the U.S. economy has entered a major downturn…probably a generational slump, in which the errors of an entire generation will be corrected.

What do we mean by that? Well, since the early days of the first Reagan Administration Americans have been building fences, to keep themselves confined, and forging chains, to wrap around their own ankles. They built cars and houses that demanded more energy – when energy was becoming more expensive. They became accustomed to lifestyles that cost about 10% more than they earned. They began to think that houses and stocks would go up every year…and that foreigners would lend them money forever. Well…you know what happened. Every link was heated white hot in the furnace of mass delusion and hammered on the anvil of wishful thinking – while public officials urged them on!

Now, the whole country drags around these heavy chains of debt…private debt in all its forms – mortgages, student loans, credit cards, home equity lines, commercial loans, private equity finance, bridge loans, road loans, ditch loans. Last year, all of a sudden, this debt got so heavy, the poor debtors started to pitch over. Lenders looked around and worried, not about the return on their money, but the return OF their money. In many cases, it didn’t look like they’d get it back. That is what caused the ‘credit crisis’ – lenders closed their wallets to all borrowers – save one, the only borrower who was 100% sure to pay you back the money when you needed it, the U.S. government. As a result, bonds and gold were the only two major asset classes to go up last year. People bought government bonds to protect against the implosion of private debt. And they bought gold to protect against government bonds.

We recall Nassim Taleb’s turkeys. Until Thanksgiving, he says, the turkey lives well. Everyday, the food arrives. Everyday, he gets bigger and fatter. Then, one day, just before the third Thursday in November, when Americans celebrate their traditional Thanksgiving dinner…with no warning, comes the knife…the crash…the collapse…the discontinuity…the 7 sigma event in the turkey’s life that changes everything.

“That’s why we need to study history,” says Elizabeth, who is working on a master’s degree in 18th century French history at the Sorbonne. “If the turkeys had studied history, they might been warned. In early November, they might have started whispering to each other in the yard: ‘it’s a set-up…we’re all going to be sent to the ovens…break-out planned for tomorrow at dinner…pass it on.’ Then, while a few birds got into a squawk to provide a diversion, the others might have rushed the gate. Instead, they didn’t know what was coming and took it in the neck.”

There are plenty of histories of finance – oral and written. But investors pay no attention. One generation of turkeys learns. The next forgets. One makes money; the next loses it. Every generation has to get its own neck chopped in its own way.

*** With so many citizens groaning and collapsing under the weight of so much debt, it is entirely foreseeable that the feds should pretend to come to their aid. Today’s news tells us that Barack Obama’s rescue mission will bring about $770 billion of cash with it. This comes on top of other rescue missions mounted by the Bush Administration and the Federal Reserve. Altogether, the total cost of these mercy efforts is into the trillions.

In fact, this morning, the Congressional Budget Office has reported that the U.S. government will run a budget deficit of $1.2 trillion in 2009…and that’s not taking into account the stimulus programs.

We have explained why bailouts don’t work. You can’t solve a problem caused by too much debt by adding more debt. The ‘hair of the dog’ technique won’t work – not even if you throw in the whole pooch. But it will have an effect – it will increase the weight of debt to the whole society. The forges are hot again…the hammers are clanging…the smithies are sweaty; now they’re building new chains of debt – public debt. They’re putting up a chain-link fence around the entire United States…and shackling every citizen to a monumental ball. Next year alone, the U.S. federal deficit will go to $1.5 trillion to $2 trillion – or about $20,000 for every family in the country. Over the course of the slump, the total could run to $100,000 per family. This extra public debt is the only sure outcome of the bailout projects.

How will Americans possibly carry so much public debt – along with their already bone-crushing private debt – without collapsing? Who would lend these sub-prime borrowers so much money in the first place?

Give us 24 hours and we’ll have answers to those questions…and give you our break-out plan too. The rest of the turkeys may get the axe…but we’re headed over the fence. We’ve got wings, remember….

*** A dear reader writes: “I respectfully disagree with your assumption regarding the ‘bounce.’ One of the goals of the Bush Administration is to have significant government ‘equity’ presence in Wall Street. This is called ‘Privatization’ when it applies to Social Security – but whatever the Government ‘privatizes’ but retains a hand in, it really ’socializes.’

“Sufficient ‘equity’ has been poured into NYSE stocks, that the Government can manipulate the Dow (DJIA) much more than it could five years ago.

“As most people find the DJIA and the American economy synonymous, a slow and gentle rise in the Dow is cheering to many. So it is done.

“The Hunts attempted the same thing, with vastly different purpose, with the silver market some 30 years ago. They tried to corner it – and lost. The price went up – but they couldn’t get enough of a controlling share to ‘own’ the market, so they were left with vast holdings of massively overpriced silver.

“(I suspect that the fluctuations in oil prices may have been something similar, just from the pattern – but that’s sheer speculation.)

“We (the taxpayer) are gathering a massive market portfolio of overpriced equities. Like dime stocks, we can drive the price up; but it is so volatile, we cannot sell it all at the higher price – and that would crash the market soundly.

“Our acceleration into Market Socialism is another version of what Governments habitually do – play shell games with values, in order to reap profits. I’m sure that the Soviet Union allowed a little stock market to run here or there, eh? The NYSE is Uncle’s pet now, and it is on strings. Never mind that it is dead. It can still dance.”

*** England isn’t so merry these days. First, it is cold – temperatures fell to minus 10 centigrade, according to that reliable source of meteorological intelligence – the Sun. We knew it was cold because the Sun girl on page 3 had goose bumps all over her naked body. But at least she wasn’t sick with the flu. A record 2.4 million workers called in sick yesterday in England – one out of 12 staff was out. Another two million stayed at home because they don’t have jobs to go to. The financial storm that hit Britain last year continues to send waves over the island’s gunwhales. Big retailer Marks & Spencer said it is cutting 1,700 jobs today. And the firm founded by Josiah Wedgewood 250 years ago went bust. UK stocks are down about 40%. Houses are going down fast too. Unemployment is going up. And Britain’s most profitable industry – finance has gone into a slump. Apparently, half the country is either out of work, down with the flu, recovering from the flu, or pretending to have it so they don’t have to go to work.

Source: It’s the Economy, Stupid

But US investors shrugged off the employment news. The rally continued…it has gone on for a month. The Dow rose again yesterday; this time it was up 298 points to 8,934. If the rally retraces 50% of the losses, it will make it all the way to 11,000. So, this trend probably has a way to go.

Oil rose too – back up to $43. And gold shot up $17 to $769.

Commodities, stocks, precious metals – almost everything was up yesterday.

One important exception: treasury bonds. The yield on ten-year T-notes rose to 2.76%…leading Bloomberg to report:

“Treasuries fall as US to sell more securities than expected.”

Watch those Treasury yields. Along with the dollar they are going to tell the tale of the NEXT big bubble – the LAST big bubble of the whole Bubble Epoque – a bubble in public debt.

All over the world, the feds are desperately trying to inflate their currencies. People want money. People need money. And they need to spend money.

From the US this morning comes news that a record one in ten homeowners is either in arrears on his mortgage or already in foreclosure. And everyday brings more dudes without paychecks. With no savings…and no jobs…people are squeezed hard. They can’t spend; they can’t even keep up with their mortgage payments.

So, the simpleton feds are giving people more cash and credit.

As everyone knows, what got them in trouble in the boom years was spending and borrowing. So what do the feds do? They borrow and spend more! Altogether, they’re putting up more than $10 trillion to try to reflate the world economy.

Where do they get that kind of money? First, they borrow it. Then, they print it. So far, borrowing has been easy. Because, while asset prices are falling, investors lend to government in order to protect their money. And with consumers not spending, prices fall – so there is no consumer price inflation to worry about.

In fact, food and energy – key components of consumer prices, though not of the core CPI – are actually falling. And when prices fall, consumers have an incentive NOT to spend, because they will be able to get what they want at lower prices in the future. That’s when a recession gets to be serious; it’s what happened in Japan. And there’s not much the feds can do about it, because they can’t push their lending rates below zero. So, the feds are sweating deflation – not inflation. They want to avoid it in the worst possible way.

What’s the worst possible way to avoid deflation? Print money. ‘Governments can always avoid deflation,’ says Ben Bernanke — but only if they’re reckless enough to risk runaway inflation. ‘And you can really make a mess of things,’ Gideon Gono might add, if he had any idea of what he was doing to Zimbabwe.

And it can happen suddenly. There are huge piles of cash – in T-bills, in money-market funds, in foreign central vaults waiting out the crisis. At present, the owners of this cash are more worried about deflation than inflation. But at some point – maybe in 2009…probably in 2010 – that will change. Borrowing and lending money will prove ineffective. Real inflation – otherwise known as the kind of money that comes from trees – will be the only option left. Eventually, the feds will get the hang of it…inflation will soar…investors will dump dollars and T-bonds…and the last bubble, in government debt, will blow up.

*** Our world tour continues. We’ve left the smells of Mumbai – spice, sweat and smoke – for the clean comforts of Melbourne, Australia.

But everywhere we go, there we are. We carry our doom and gloom with us, along with our toothbrush.

“Australia is no different,” says a colleague. “People lent money too freely and spent it too readily. House prices soared. Debt went a little crazy. But Australia is more like South Africa than like India. It’s a resource economy…so we went bust later…when the commodity bubble blew up. And when we went bust, we went bust hard. These commodity producers are down even more than the Nasdaq or the Dow. And now unemployment is rising. It was as high as 15% in the early ‘90s, the last time there was a slump in Oz.”

But don’t worry, dear reader. The feds “Down Under” are taking action. They’ve promised to send out a check – to qualifying parents – for $1,000 per child. Senior citizens will get $1,400.

Why the giveaways? Don’t be so thick, dear reader; it’s the worldwide financial crisis. The feds can get away with anything.

Sending out checks is a simple way of “reliquifying” the economy. Especially if you send the checks to poor people. They spend the money.

“TVs and hookers,” says Dan Denning. “They’re both bound to go up…”

Sending money to people probably works better than bailing out Wall Street. If what you’re trying to do is to encourage people to spend, the best thing to do is to put as much money in as many hands as possible. If the government wanted, it could send everyone a $10,000 check…or even a $100,000 check. Of course, the bigger the check, the more obvious the scam.

Nobody bothers to think about it – especially not in a crisis – but if they spared a minute to reflect on it, they would notice that it is nothing more than fraud and grand larceny. In order to put money in some people’s hands, they have to take it out of other people’s pockets. Or, just print it up. Either way, resources are stolen and redistributed. The rightful owners of the money get less of what they wanted. The beneficiaries – whether they are Wall Street’s insiders…or single mothers in the Outback – get more.

*** Sign of the time: a headline on the web this morning: “How to look gorgeous – on the cheap!”

Source: Hey Dude, Where’s My Job?