Your GM Warranty - Dealers Disappear

July 13, 2009
Your GM Warranty - Dealers Disappear
Economic News and Information for Consumers

Concerned about your GM auto warranty?  You should be but not because the warranty is no longer good.

GM warranties have been backed by the government so they will continue to be good.  They also survived through bankruptcy so no problem there.  The bigger issue is where you’ll have your car or truck serviced because many dealerships will be closing their doors forever.

Where you purchased your GM vehicle may not exist in a year so you’ll need to pick up and drive farther.  If you’re in a population dense area like Los Angeles, this is probably not a problem for you.  It’s more those in remote areas where you could be forced to drive many more miles than your accustomed to.  Ask your local dealer if they made the cut and hopefully they’ll be forthright with you.  Remember, your warranty is still good.

GM emerges from bankruptcy this week, hopefully as a leaner more competitive company though it will take many years to assess this financial move and whether or not it helped.  In theory, it should.

This debacle started with $4 gas last Summer, which crushed GM’s truck sales, then came the recession and credit markets ceasing to a halt.  This was the final blow to GM that saw their sales slide worse than at any time in the company’s history.  GM was also removed from the DOW but is applying soon to re-enter.

If you like GM vehicles, now might be the time to get a new one.  Deals are abundant and credit has begun to ease.

Oil Prices Drop With Consumer Sentiment

July 10, 2009
Oil Prices Drop With Consumer Sentiment
Economic News and Information for Consumers

64.6, that’s the consumer sentiment reading that comes from Reuters and University of Michigan Survey.  This is down from 70.8 in June.

This reading basically tells us that consumers don’t feel very good about spending money.  If consumers don’t feel like opening their wallets, retail tanks.  This results in more job losses and the snowball effect goes on.

Oil, which was making a rebound last month has suddenly fallen to about $60 per barrel.  The only reason for the increase last month was speculation (and greed), that the economy was going to improve.  The market is supposed to be a forward-looking entity so any positive news can drive oil prices up.

The thought is that if the economy is improving, more people and industry will increase their use of oil/gas. For now, there are no signs of recovery so oil continues to drop.

When will we see recovery in retail and the general economy?  The housing debacle started this mess so it’s also the way out.  Unfortunately, the housing market has been bogged down with lengthy moratoriums designed to keep people in their homes.  This has done little more than to stall any recovery.  We have people still living in homes they cannot afford, not making payments and contributing little to any recovery.  If you can live for free, would you?

The next part of the problem has been the TARP money that banks received earlier in the year.  These funds were basically free to banks, with the intention that banks would loan out the money and ease credit markets.  This didn’t happen.  Instead, banks have held this free cash along with their foreclosed homes.  They use the foreclosed homes as write-offs until the TARP money runs out, which should be around the end of this year.

If you’re looking for a home, remember that over 70% of the inventory has been held back.  When this inventory is eventually released, prices will continue to drop.

State Jobless Claims Drop, But…

July 9, 2009
State Jobless Claims Drop, But…
Economic News and Information for Consumers

Jobless claims unexpectedly dropped for the period by about 50,000.  This is the first time claims have gone under 600,000 for months.  The stock market took the news lightly for a couple of reasons.

First, there is still significant unemployment so a drop of 50,000 may sound good but people are still losing their jobs, homes, cars and savings.

Second, continuing claims are still growing and quickly approaching seven million unemployed or almost 10% unemployment.  This number is much higher in specific hard-hit states like California, Nevada and Florida.  Even this number is likely higher because many people have gone off unemployment and found part-time work.  Some analysts believe it could be as high as 16%.

Last, the 4th of July weekend probably affected the actual numbers because government offices were closed in observance of the holiday.  We won’t really know the true impact for another week or two.

Regardless of the numbers, the market is reacting cautiously to any optimism because none of it has really panned out.  For a brief time we had oil quickly approaching $75 per barrel.  This was solely based on optimism that the economy was improving.  Now speculators are less sure of themselves so the price has dropped below $60 per barrel.

Housing is still a big problem.  Foreclosures are increasing as rates reset and people lose their jobs.  But even with this, available homes for sale is decreasing due to moratoriums and other hold-back reasons.  This stall is effectively slowing down any type of economic recovery.

It’s likely that banks have decided to hold onto their free TARP money and repossessed homes.  Only when the money runs out will they place the properties on the market.   It’s a good business decision for the banks but it’s not good for the economy.

Google’s New Operating System To Change Economy

July 8, 2009
Google’s New Operating System To Change Economy
Economic News and Information for Consumers

Google released today that they will be launching a new operating system in 2010, initially for smaller notebooks but undoubtedly the spread will be rapid.

If you’re not completely familiar with operating systems, you’re not alone.  Most people don’t think about them much but every time Microsoft comes out with a new one the “must haves” run out and make the purchase.  Of course it’s the last release that really gave Microsoft a black eye.

Windows Vista was an absolute mess from the very beginning.  Problems cleared up later with patches and other fixes but the early releases were devastating with frequent crashes, lost information and extremely slow start-up times.  Plus the system really wasn’t all that intuitive and that’s coming from an early Vista user.

In later machines the problem was fixed but the damage had already been done.  Microsoft did research to bolster support for Vista but that fell dead too, so they moved on to Windows 7, which is due for release very soon.

Of course many are so upset with Microsoft they might just wait to see what Google does and that could be a devastating blow for Microsoft’s bottom line.

We’ve always envisioned Google as being something between Microsoft and Apple, maybe they’ll be the one to ultimately win this battle given operating systems really aren’t all that important anymore.  Downloading the application from Google might just be the thing to do.

If you’re already a gmail, analytics, feedburner user then you’re probably very excited about the prospect of Google’s new operation system.  The only fallback of course is that Google will be tracking some of your data so they can somehow make revenue from it.  Does this bother you?  Not me, I could have used Microsoft’s Outlook for email but was an early adopter of Gmail.  I could care less about the small text ads at the top because I ignore them anyway.

Check back in 2010 and get ready for the Google OS.

California In Serious Trouble With IOU’s

July 7, 2009
California In Serious Trouble With IOU’s
Economic News and Information for Consumers

California has struggled financially for many years but 2009 could be the worst one yet, at least until 2010 rolls around.

It may be hard to believe but the state has still not approved a budget for this year.  What’s the problem?  There are too many expensive programs that Californians voted in and not enough money to pay for them.  Some of those in charge believe that raising taxes is the answer but reality tells us that we can’t get water from a rock.

California has much higher unemployment than the rest of the country, with housing that has been absolutely crushed over the last year.  For you optimists, there is no end in sight, no improvement in retail and jobs continue to wither away.

Given California is unable to pay its bills, it has begun to issue IOU’s to those servicing the state.  Many of these IOU’s have gone to the “big banks” that have been providing funds to the state for certain projects and cash flow needs.  But now, banks have said enough is enough.  As of Friday, IOU’s from the state will no longer be accepted effectively stopping necessary cash flow for California.  Can you blame the banks?  We can’t because the possibility of getting their money back is becoming more and more slim.

One analyst believes this could be the beginning of a collapse for the state yet we’re not sure what a collapse looks like.  It’s very possible that programs will simply shut down without notice, which is really dependant on what the state decides to pay and what they decide to let sit until it dies.

We probably won’t know the real effect of this debacle for months but those wanting payment on their IOU’s will feel it immediately.

Gas Prices Slide > 5 Week Low

July 6, 2009
Gas Prices Slide > 5 Week Low
Economic News and Information for Consumers

This Summer might just not match up to last like we thought.  We saw prices last year get well over $4/gallon.  This sudden rise was the catalyst to ruin the  auto industry and throw consumers into a tailspin where they no longer wanted to drive or purchase anything retail unless it was absolutely necessary, like food and that’s about it.

This year the traders somehow believed that we were out of the woods with the current recession.  We’re not sure what data they were looking at because unemployment will undoubtedly break 10% nationwide, the big auto makers have gone bankrupt, foreclosures are rapidly increasing even with moratoriums coming in and out and the risks of war is ever-growing with North Korea’s growing defiance of the world community.

For a while, prices went up bringing gas to over $3 per gallon but the speculators no longer have the rosy picture they did just a month ago.  In fact, they now believe any recovery is far off much like billionaire Buffet said in the last couple of weeks, basically mentioning that there are absolutely no signs of recovery. He should know because the businesses he owns are tied directly to the consumer.

Finally prices are beginning to reflect where the economy is.  However, we believe fuel should be under $2 consistently, mortgage rates should fall to 4% or lower and banks should finally release homes that have been sitting in their inventory for many months.  It’s the true solution to solving our economic woes.

$1000 Fine For No Health Insurance

July 2, 2009
$1000 Fine For No Health Insurance
Economic News and Information for Consumers

If we think of auto insurance and how that works in the U.S., consider that health insurance could soon be the same way.

In California if you drive without auto insurance or sufficient insurance (meaning you’re from another state but your limits are not to California standards),  you’ll be hit with some massive fines but probably not as much as you’d be hit with if you opted out of health insurance.

Senate Democrats have unveiled a new bill that will do just that.  If you don’t have affordable insurance, you’ll be hit with the fine.  The goal of course is to raise approximately $36 billion over the next 10 years, not to necessarily help people find insurance that works for their budget.

Of course the first question we ask is if people can’t afford health insurance, how can they afford to pay the massive fine?  Apparently the government says they will provide subsidies to the poor and middle-class, but those who don’t sign up will still be hit with the fine regardless of financial position.

The plan started in Massachusetts and now has gained traction in the Senate.

Obama’s health care plan looks to create health plans for 50 million Americans who are not currently covered.  The cost of the plan and how it will be paid for has not yet been established.

How do you feel about the possibility of fines for not having health insurance?  Sound off below:

Inflation > The effect it will have on You

June 29, 2009
Inflation > The effect it will have on You
Economic News and Information for Consumers

It’s hard to pin down exactly how much the government has thrown out over the last year in terms of spending. It all depends on when you start counting, regardless, the amounts are so significant that the thought of inflation has entered the mind of every responsible economist.  It IS going to happen, how could it not.

If we go back to the years of the Carter administration, think about interest rates then.  Can you imagine having a mortgage rate that high today?  Rates have already begun to rise, which has hammered the somewhat recovering housing market.  If rates go even higher, which they will, we can all plan on many more foreclosures and further losses in equity to current home owners.

Inflation essentially degrades the value of the dollar, it takes more money to buy things.  You’ll see gas, retail items, homes etc. all go up in price quite rapidly.

What’s the cure for really bad inflation?  A good old fashioned recession just like the one we’re in today but if we have another one to cure hyper-inflation we could all be in very big trouble.  Many economists have warned of this “double dip” recession for months and it looks like we’re on our way.

If you’re in the market to buy a home, this could be the prime opportunity.  One thing you need to take advantage of now is the interest rates that are still low by historical standards.  Furthermore there’s a nice government tax incentive to buy before the end of the year if you’re a first time home buyer.

There are still some bright spots to the economy but they are few and far between.  Take good care of your money, invest wisely and buy a home now if you’re in the market to do so.

Robo Auto Warranty Call Founders Jailed > Finally

June 15, 2007
Robo Auto Warranty Call Founders Jailed > Finally
Economic News and Information for Consumers

Robo auto warranty calls have got to be the most irritating of all time.  I have received dozens of these calls on all 3 of my phone lines including two cell phones.

Here’s how it works.  Robo calls work off of an automated system where there is no rhyme or reason to the numbers selected.  In fact, apparently the robo callers even called 911operators.  When you receive one of these calls, it will warn you that your warranty is about to expire and that you need to press 1 to extend the warranty or you could be open to large repair costs.

The robo caller has no idea if you actually have a warranty, let alone one that is about to expire.  Instead of filtering who would actually be a reliable client, the system has randomly called over a billion numbers, quantity not quality.

The result for these criminals has been over $10,000,000 in sales.  Fortunately they won’t see any of it as they’re currently being prosecuted.  Their names are:

• Christopher D. Cowart, 47, of Fort Lauderdale, Fla
• James A. Dunne, 36, of Daytona Beach, Fla.
• Maureen E. Dunne
• Damian P. Kohlfeld, 35, of Valparaiso, Ind.

Americans Lose $1.33 Trillion In Net Worth

June 11, 2009
Americans Lose $1.33 Trillion In Net Worth
Economic News and Information For Consumers

The recession had done some serious damage to Americans’ net worth, primarily stock portfolios and equity in homes.  This drop is for the first three months of 2009 only.

Stocks have been getting hit now for months.  The DOW, once at a high over 14,000 has been climbing slowly to reach its current level of 8800, we have a long way to go.  Basically, many people that had money invested in stocks saw it cut in about half while other stocks have gone under completely.  The recent rally is due in part to the rising cost of oil, which will likely push gas prices over $4/gallon once again for Summer. This buy-up is extremely pre-mature and could impact any economic recovery.

Housing prices are down 30%+ nationwide, 50% in some very hard hit areas like Las Vegas and sections of California.  There are many more people affected by this decline than that of the stock market, meaning a loss of stocks can be dealt with but losing your home to foreclosure can be far more difficult.

Those homeowners that have been able to keep their homes have lost a significant amount of equity with the majority of homeowners under water.

When will this end?

The Obama administration has said that the recession will end this year but what that really means is that we’ll have growth in Gross Domestic Product (GDP).  It does not mean that unemployment will suddenly decrease.  In fact, we’re looking at continued unemployment through part of next year likely to reach over 10% very soon.

An increase in net worth will continue to be a function of stock values (though many have jumped ship on their stocks), and home values.  The stock market recovers more quickly and goes up and down based on economic and other news while housing prices will take years to recover.  In fact, we’re looking at about 2012 for all of the bad loans to worth their way through the system.

Next Page »