Born-Again Savers

March 14, 2009

Wednesday night’s Daily Show blast of Jim Cramer and CNBC exposed how so many of us were duped by frenetic Wall Streeters who parlayed our money into something worth half of what it was a year ago.

We listened to people no smarter than we who were tantalized with 30 percent returns and conveniently forgot to mention that there is a difference between Savings, and Investments.

Now that financial advisors have found Jesus, they’ve once again started preaching about that difference; but only because they’re jobless if they can’t obtain more of our money.  They need us to be reformed investors, and born-again savers.

american-savings-2

We have been repentant – kind of – and are saving again.  America’s savings rate grows with every recession, then plummets when the economy improves.   It has risen dramatically (see the little blip at the far right of the graph) after falling essentially to zero since 2005.  To ZERO.

Even in this worst of times we are not close to putting away enough of our income to avoid a cat food-based retirement.  The erosion of the Social Security net might persuade us to save more, you would think, but hi-def TVs and Starbucks are just too tempting.  We suck at saving but we’re great at believing our government will bail us out when the sky falls in 2020.

I still have many years before reaching retirement age and have a pretty good chance of getting there with enough savings to be comfortable.  I’m not so sure about my 64-year-old friend, who can no longer retire at the end of the year.

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So, What ARE the Fundamentals?

October 9, 2008

I have been intrigued by the use of the phrase “The fundamentals are strong”.  It’s been used often by the Bush Administration until recently, and just a few weeks ago by John McCain to indicate that our economy is still strong, without ever defining what the fundamentals are.  Ironically, the person who originally coined the equivalent phrase is none other than Herbert Hoover.  Whoa boy.

I don’t believe that the fundamentals have been strong for so time, but I wasn’t sure and so didn’t know whether or not to believe either the Bush Administration or John McCain.  So I dug back to my college economics texts to get an idea of what the economic fundamentals are.  To Samuelson, they include

  • Inflation (or consumer price index) – the lower, the better
  • Economic growth (or gross domestic product) – the greater, the better
  • Wages – Higher is better
  • Unemployment – the lower, the better
  • Industrial production – growth is good
  • Worker productivity – more is better
  • Balance of trade – Positive is good
  • Strength of the dollar – stronger is better

Respectively, in the past 12 months these indicators are up, flat, flat, up, down, up, negative, weaker.  Six of the eight are pointing in the wrong direction, one is neutral, and one (worker productivity) is positive.

I thought so.

The fundamentals are strong” might not be the wisest of political statements to make, in light of where the economy’s been going.  Nonetheless, the Presidential candidates might be better spending their time talking about it, since all the rest of us are.


BTEC 2008

June 20, 2008

BTECThe Buffalo Technology Enterpreneurs Conference is next Friday, June 27th at the Statler Ballroom.  If you have any interest in finding out why Buffalo will not become a deserted ghost town in another generation, show your face and talk to some of the technology companies that are springing up in the area.

Many of the startups with which I’m familiar became startups in spite of politics, state regulations and the upstate economy.  They did so because

  • Western New York is a great place to build relationships
  • Western New York is a great place to raise a family
  • Western New York is a great place to live.

With the death of heavy industry and the aging (and departure) of the blue-collar employees that grew up with it, the Buffalo area has been evolving into a more opportunistic community and the rapidity by which Buffalo’s small business community has quietly grown and diversified in the past decade is remarkable.  One obvious result is that recessionary impact is less today (and in 2001) than it was, say, in 1988-89.  A national downturn in specific market niches has less overall impact locally because our economy is no longer largely dependent on that single niche.  Manufacturing might have been the key to our greatness in the 50s and 60s, but dependence on it led to our downfall by the 80s.  The business elements that make up our local economy today are collectively much more immune to changes in business climate and more capable of turning on a dime with the inevitable economic swings.

For years our community has stubbornly clung to the 1950’s and far too many people – from political leaders to everyday Joes on the street – still resist the changes that will make this area great.  That attitude is slowly and finally giving way to understanding that entrepreneurial success is within anyone’s grasp.

So go to the show.  You’ll learn a lot about where we’re heading and how we’ll get there.


The Quiet Crisis

June 7, 2008

The National Science Foundation recently awarded $3 million over five years to a group of Upstate colleges, aimed at increasing the number of minority students in STEM degree programs.

STEM stands for Science, Technology, Engineering and Mathematics.  The NSF grants are in response to the so-called Quiet Crisis – the threat to the ability of the United States to innovate, due to looming shortage in the nation’s STEM workforce.  Shirley Ann Jackson, President of Rensselaer Polytechnic Institute, puts it in pretty plain English:

The crisis stems from the gap between the nation’s growing need for scientists, engineers, and other technically skilled workers, and its production of them. As the generation educated in the 1950s and 1960s prepares to retire, our colleges and universities are not graduating enough scientific and technical talent to step into research laboratories, software and other design centers, refineries, defense installations, science policy offices, manufacturing shop floors and high-tech startups.

We ignore this gap at our peril.

I know of no engineer that needs to retire at age 65 if he or she doesn’t want to.  Even in the Buffalo area, which does not have a significantly large high-tech workforce, the demand for good engineers and scientists outstrips the supply.  Companies like Moog struggle to fill job openings.  My own company has been challenged of late to find qualified candidates for the engineering job openings that we’ve posted.

Minorities in particular are underrepresented in STEM disciplines.  The NSF-funded program hopes to increase minority enrollment in the Upstate college consortium and provide additional support through scholarships, mentoring and research opportunities.

The U.S. cannot afford to become a technological backwater.