Since black Monday when the market lost over 500 points and again Wednesday when it lost over 450 points, everyone knew it was waiting to happen. The reality of corporate America’s collapse is nothing new and has been manifesting itself over the last few years. Every bit of news about the credit and home mortgage fiasco has been mounting and it should not be a surprise. What does surprise me is the quickness that the Federal Reserve has come in to shore up some of these institutions. I realize that AIG had to be saved because Bank of America’s acquisition of Merrill Lynch might have faltered because of the extensive assets that Bank of America had in AIG. In my opinion the Federal Reserve is acting too quickly which is causing investors which were skittish already to be more apprehensive. It’s like catching a cold on an airplane. If you are sneezing and coughing, most people before they exit will feel they have caught it as well. Look to see less federal bailouts in the coming days. My investment guru, first advised me to turn everything to a cash situation and wait it out, but after reading much lately, I have decided to increase my percentage of interest only portfolio by ten percent and keep a balanced portfolio for the rest, leaning to more large cap stocks and fewer small cap. Every investor must however weigh in regarding their own circumstances. This is not meant to be a financial blog just an observation into the health of the nation and because it affects all Floridians.
What this has to do with property taxes and insurance is hard to relate. Unfortunately the problem sits out there and gets worse. Our leaders usually ignore the problem until the bottom falls out and when it does, panic sets in and decisions then become more unreliable. With the consumer confidence level so low, it will be hard to jump start our local economy. It was assumed that the housing industry was just starting to find a bottom, but that bottom may have dropped again. Since 2/3 of all GDP is dependent upon consumer spending, it is imperative to make this group feel good. People will spend money if they feel that their finances and jobs are secure. New home mortgages would occur if conditions improve both nationally and locally, but unfortunately this will not happen in the short term.
Florida still has an obligation this next session to take a lead in the nation by reforming the property tax situation and to further crack down on the greed by property insurers. Doing so would mean a healthier Florida when the tide does turn.
If there is one thing I can say to the average investor, it is to TRUST the system. It does have a check and balance system in place but it relies heavily with the American public. The other option is not pretty. Do what you must to protect your assets but believe in the system. It may not be without pain, but we have to be able to write down this sub prime mortgage mess before we have a better tomorrow.
This just in, It appears that the government will provide for an entitiy similar to the Resolution Trust Administration that disposed of assets from the S&L bank failures from the eighties. If and when this is in place, it would alleviate the pressures from the bottom lines of companies. Unfortunately not from the taxpayers. Stay Tuned.
David R. Simpson
September 13, 2008
Editorial
Yesterday Jabil announces 120 workers will be laid off, today the company firms up plans for their 34.4 million dollar economic incentive deal with Florida, county and city leaders. They promise to hire 858 jobs and build it headquarters in St. Petersburg, and yet it seems suspect. Ever since Jabil announced it was going to relocate, the city mayor and officials have been tripping over their shoelaces to do whatever was needed to keep this company in St. Petersburg. Can Jabil be trusted however to keep up their end of the bargain? They already reneged on a deal in 2001 that was to have added 1,150 jobs, how can we be sure they will not again. The City says their incentives will be based on their performance to build its headquarters as well as jobs added, but the city portion of 12.7 million is earmarked for road and utility improvements and grants. I ask the city, Will this infrastructure be paid for and in place before a facility is even built? The economy has not been kind to anyone this year, how can it be so for Jabil. Is this layoff only the first of many that might be outsourced to another country?
Yesterday Jabil announces 120 workers will be laid off, today the company firms up plans for their 34.4 million dollar economic incentive deal with Florida, county and city leaders. They promise to hire 858 jobs and build it headquarters in St. Petersburg, and yet it seems suspect. Ever since Jabil announced it was going to relocate, the city mayor and officials have been tripping over their shoelaces to do whatever was needed to keep this company in St. Petersburg. Can Jabil be trusted however to keep up their end of the bargain? They already reneged on a deal in 2001 that was to have added 1,150 jobs, how can we be sure they will not again. The City says their incentives will be based on their performance to build its headquarters as well as jobs added, but the city portion of 12.7 million is earmarked for road and utility improvements and grants. I ask the city, Will this infrastructure be paid for and in place before a facility is even built? The economy has not been kind to anyone this year, how can it be so for Jabil. Is this layoff only the first of many that might be outsourced to another country?