2012 Predictions In Review

With just a few days left in 2012, I think it’s appropriate to check on the list of 7 predictions which I had made at the beginning of the year.  Let’s see how everything turned out:

  1. President Obama will get re-elected – Got it right – I knew without a doubt that Obama would get elected when Romney’s video explaining what he thought of ‘the 47%’ was released.  It proves that Romney, and really the Republican party, is very much out of touch with the voters.  I don’t know that they have a consolidated message and even when they do, they have done a very poor job at translating that into a message that the voters respond to.  This win wasn’t so much a victory for Obama as it was a fear of Romney. 
  2. A downturn on strategic defaults and underwater mortgages – Got it right – I figured that the housing market had hit bottom.  Last year it seemed that while things weren’t on the upswing just yet, we had leveled off.  This year did see an actual upswing in most areas of the country, and part of that included less strategic defaults and less underwater mortgages.  I guess if home values rise, this naturally brings people at or above the ‘underwater’ line, which would give people less reason to walk away. I’m very happy to see this and I hope that the housing recovery market is sustained moving forward!
  3. The Eurozone crisis will not be solved but will get less attention – Got it right – Was anything really accomplished in the European crisis?  Not really.  I think they did kick the can down the road a bit, but as far as actually solving anything, I don’t think that happened to any real degree.  However, the markets and the economy really didn’t react in much of a negative fashion.  There was a couple of months in the middle part of the year where the market did have some rough weeks, and they were tied to the European problems, but that was shrugged off relatively quickly and I don’t think it played much of a factor overall.
  4. Blackberry will be history (or RIM will be out of business) – Not so much – Blackberry is still around, and I’ve heard that the next release (Blackberry 10) is thought to be very well designed, and if it is received well, could put Blackberry back on the map.  I personally don’t see much hope here.  In the consumer electronics market, more often than not when customers abandon a particular company to the degree that has taken place with RIM, it’s pretty hard to convince them to come back.  The only big exception in history that I see here is Apple, but I’ve seen Apple, and I’m sorry RIM, you are no Apple.
  5. Apple will either provide a dividend or make a big purchase – Got it right – Apple instituted a dividend for the first time in 2012.   No big purchases, but since it was an either/or type of statement, I got it right.  The stock for Apple has been on somewhat of a roller coaster ride, rising all the way to $700 per share and dropping down to the low $500’s.  I think investors are finally starting to realize that while Apple is a great company that makes wildly popular products, the amount of growth potential may be slowing.  Wall Street investors live and die by growth, so the perception that Apple may have finally hit a ceiling could make for a bumpy ride moving forward.
  6. Unemployment will fall, the economy will improve,businesses will get better, but consumer spending will lag – Got it right – The economy has definitely continued to improve, and business profits have improved, but not to the robust levels that would indicate a long term healthy economy.
  7. Oprah will lose her network – Not so much – She still has her TV network, but the fact that I had to look this up to see where this stood, well it’s still not doing so well.  I know Oprah said that she wanted to put more of her ‘presence’ into the network this year, and I’m guessing she did that, but to what degree this matters, I really do wonder.  Before she shut down her talk show, you used to hear about Oprah in some fashion all the time.  Her opinion and voice was right up there in the cultural fabric.  Now, I think her voice has lost a lot of luster, so while she still has her ‘own’ network for now, I clearly think it’s been a disaster.

Five out of seven, or just over a 70% ‘success’ rate was how it worked out for my predictions.  That’s not too bad!

How did 2012 turn out for you personally and how did things around the world play out from what you had thought would happen in 2012?

What topics do you think I should predict for 2013?

Slow Economic Growth Doesn’t Surprise Me, Nor Does It Concern Me

The economy has been recovering from the lows in 2008 and 2009.  Few would argue this.

Unemployment rates were well over 10% at the time.

Housing prices were continuing to fall.  Mortgage foreclosures were on the rise and getting worse by the month.  Salaries were flat or falling.

For awhile, the stock market was in a free fall.

It’s gotten better.  Unemployment is around 8%, a modest improvement.

Housing prices in most metropolitan areas have started to rise, or at the very worse, have flattened.  Companies, for the first time in a few years, reported that they were planning on increases wages.

Some people don’t think this enough.

Recovery is typically defined when we get back to 6-7% unemployment, and the growth in spending is at a faster rate than what we’re currently seeing.  I’ve seen some articles written where the slow path to recovery seems to indicate that we aren’t really even recovering, and that we could slip back into a recession at any point.  I think this fear has a lot to do with the skittishness on Wall Street.

Quite honestly, I don’t believe any of this is really true.

When you look at the fundamentals of what led to the Great Recession, I truly believe it was in the works for 20 years.  Maybe I’m jaded because that’s right around the age that I was old enough to understand and start paying attention to the economy and global events, and there’s one that sticks out in my mind:


That’s right, the good old North American Free Trade Agreement.  Essentially opening up our borders to Canada, and more importantly, Mexico.

I remember when I first heard about NAFTA and what it was going to do I thought to myself “That sounds like jobs might go away.  I wonder how that’s going to work.”

Well, they told us that it would work by not just taking jobs away, but re-creating them in other areas as the global economy expanded.

Uh-huh, sure, I thought.  It didn’t make a lot of sense to me, and I don’t think what they promised would happen actually happened.

Except for the jobs leaving part.  That did happen.

Unfortunately, it didn’t mean that we formed a bunch of new jobs.  It didn’t mean that the economies of other countries that got those jobs created net new jobs elsewhere, or if it did, that they necessarily were created here.

Long and short, we lost a lot of manufacturing jobs and that…

Wait, let me stop because there’s more to it than just that.  After NAFTA, many plants and various other manufacturing activities shut down.  That affected the people that worked there, but it also affected a lot of other businesses.  The ripple effect of a plant closing means that anybody else working to support that plant also lost their job, and so on down the line.  A plant could have had 500 workers, but in the end, 1,000 people (or more) could have been without a job when those jobs got ‘outsourced’.   So this job loss was not such a small thing, and even if we became more technically savvy, there just wasn’t enough jobs (or skill for those displaced workers) to get those 1,000 jobs back.

But back to my point,

We lost a lot of manufacturing jobs and they weren’t coming back.  We also got a lot better at things that we were doing, so the manufacturing jobs we kept, as well as jobs in all sorts of industries, became less plentiful because we could use technology to find ways of doing more with less people.

Usually a great thing, but not if you’re the people that were no longer needed.

In the end, all of this technology and all this improvement led to a gradual erosion of our job market and our economy.

However, we were able to hide it for about 15 years or so.

We hid it by slowly increasing government spending.  They put some of those people back to work.

We hid it by a tech bubble in the late 1990’s, where wealth was created overnight.

When that didn’t stick, we moved on to real estate.  Values skyrocketed and people pulled cash out of thin air.

All of this worked to hide the fact that we had a lot more people around that didn’t have as much to do.

Eventually, the bottom fell out, and for the first time in almost two decades, we’re having to deal with the repercussions of all this.

We can’t have the government hire our way out.

We can’t use the stock market or the real estate market as our way out.

We aren’t going to suddenly re-discover our way back to the top of manufacturing.

In other words, this recovery is going to have to be based on something real.

And after essentially twenty years of hiding the fact that the economy has been slowing, it’s going to take time.

A lot of time.

Anybody hoping for a quick fix is hoping that we create a new bubble, because from the way I see it, a real recovery is going to take a long time.

I don’t think we have to consider a slow recovery any sort of lost period.  Some will say that if it takes ten years to recover, that would be a lost decade.

I respectfully disagree.

I would call that a rediscovery decade.

Because what that would mean, if we did it correctly, is that we re-built a true economic foundation.  The foundations which we’ve been trying to build on for most of my adult life have been weak and non-existent.  I would love, for the first time as an adult, to see an economy built on real fundamentals, not built on a bubble.

And if it takes time to get there, that’s fine.  Because if we take the time to let the economy build itself the right way, it will not crumble so easily and we will not have the problems that come about virtually overnight as we’ve seen during the last couple downturns.

Slow and steady growth might not be sexy.  It might not look great on paper for the people who look only at six or twelve month charts, but if you want an economy that we can truly believe in again, you have to give it time.

For the sake of the next twenty years, please, no more quick fixes.

What do you think about the economic recovery?  Are you satisfied with the slower pace, thinking that this could mean it’s being handled properly, or are there ways to make it happen faster without creating another bubble?

The Economy Must Be Improving

Without looking at any numbers or statistics, I can tell that the economy must be getting better.


Because good coupon deals are getting harder to come by.

We like to eat out.  We use a variety of sources, including the Entertainment Book, Restaurant.com, and coupons in the local papers to find deals.

Here are a few things I’ve noticed lately:

  • Recently, my wife and I were going to go to a local Mexican restaurant, and use an Entertainment coupon that we’ve used every year.  It was a buy-one-get-one special up to $8 off.  Saving $8 was a good deal, but when I went to grab the coupon, this year they had added ‘with the purchase of two beverages’.  Typically, we just get water when we go out, and with even a diet Coke being $2.50 these days, that would net to a ‘savings’ of $3.  Not such a great deal after all.  We ended up finding a different Mexican restaurant with a coupon that didn’t have this restriction.  But I’m seeing more and more of this popping up.
  • Many restaurants that participate in Restaurant.com offer $10 or $25 gift certificates for purchase on the popular site.  Even with Little Boy Beagle, many times buying $25 worth of food and drinks is too much, so we typically look for $10 certificates.  More and more, though, the $10 options specify that they’re for ‘Lunch Only’.  We like going out for dinner, so these too have been harder to come by.
  • Many coupons in local papers have gone from buy-one-get-one-free to buy-one-get-one-half-off.

Coupons haven’t disappeared, but it’s apparent that they are getting less generous.  I have no problems with this.  If a business is seeing an uptick in sales, the pressure lessens for them to get people in the door at reduced rates.  Still, as someone who loves saving money and makes no apologies for it, I have definitely noticed this trend increase over the past few months.

I Just Don’t Buy This So-Called Recovery

Do you really think we’re in a recovery with headlines like this (from Business Insider):

“Nokia beat estimates on profit, announced plans to lay off 1,800 employees.”

How can we possibly be in an economic recovery when jobs are still being lost?  I’ve been watching earnings reports for the last couple of quarters, and by and large they’ve been pretty good.  Normally, after a recession, that’s sign for optimism.

However, what I’m seeing more often than not is that the earnings are increasing not because of increased sales but because of decreased costs.  Where are those cost reductions often coming from?

That’s right, labor costs.

It’s great that companies are making money, but if job losses are still occurring, eventually people won’t be able to buy their products because of, you know, having lost their job and all.

Until the headline above start turning into:

“Company Such and Such beats estimates on profits and announces plans to hire 1,800 workers”

I’m going to continue being skeptical that we’re in an actual economic recovery.

One Family Struggles With Unemployment…And I Don’t Feel Bad For Them!

My wife gets together with a group of new moms on a somewhat regular basis.  It’s always fun to hear the stories about what’s going on with the moms, the other kids, and the families.

As soon as I heard the latest story, I knew I had to share this with my readers!  It involves unemployment, bad judgment, questionable decisions, and financial impact….a personal finance bloggers dream!

One of the fellow mom’s, similar to Mrs. Beagle, had worked up until her son was born.  Also like Mrs. Beagle, she was planning to quit her job (she was an elementary school teacher) and stay at home to take care of the baby.  However, before she had a chance to quit, she got laid off.

This meant that she qualified for unemployment.

She’s collected unemployment for over a year, even making mention a couple of months ago how they would be continuing to collect since the government had extended the length of time one could collect.

Can you see why in the title I don’t feel bad for them?

Continuing the story, they kept up with cashing the unemployment checks, integrating the money into their household budget.  Her husband has a decent salary, and the salary plus the unemployment check allowed them to pay the bills.

Hopefully, it’s getting even more clear why this story ends up with no sympathy on my part!

Had everything continued, she would have been able to collect unemployment until spring of 2011.  But, fate intervened!


She got ‘called back’ to work in her teaching job!

Since she and her husband had decided that they had no intention of her working full time, she turned the job offer down.  This got reported back to the unemployment office and this meant that she was no longer eligible, as one of the stipulations is that you have to be looking for work and accept work.

Suddenly, the checks stopped coming a lot sooner than they had anticipated.

Now, they are panicking.  They are trying to find her part time work as their budget just doesn’t have the flexibility for this ‘drop’ in income. I’m not sure even a budget helper tool could help them now!

I’ll keep you posted on the story as it unfolds, but here are the takeaways so far and why I don’t feel bad for them in the least:

  1. Technically, she shouldn’t have been collecting unemployment in the first place.  Unemployment is to carry you through between jobs.  Since she had no intention of working, she really shouldn’t have been collecting anything.  Now, I’m not going to lie, when we were preparing for my wife to quit, I joked that it would be ideal if she got laid off first so that she could get unemployment, but it was just that, a passing thought.  Had it actually worked out, I’m not sure that we would have been able to look into the mirror knowing that we would be gaming the system, especially knowing that this was coming from our spiraling-out-of-control national debt.
  2. Putting that aside, they never should have ‘spent’ that money.  Even if, in some world, they could justify collecting that money, it should not have been integrated into their household budget.  They knew it was going to run out at some point, right?  Then why on God’s green earth would they ever count on that money being there?  Before my wife quit her job, we had adjusted our entire household budget so that her income was no longer required to cover our monthly costs.  At the very least, they should have done the same thing and banked that money or applied it as ‘extra’ payments to debt, retirement, college fund, savings, or anything else that they could have safely removed paying towards once the well ran dry.

So, as you can see, there are bad choices and moral dilemmas that are in play here, and combined, leads me to have no sympathy for their current situation.  By no means am I rooting for them to get into serious trouble, but I do hope that they are forced into making some tough decisions and setting things up the way that they should have been set up a long time ago.