Are you a procrastinator or a "prioritzor?"

Photo by Magnet.me on Unsplash

Maybe you’ve never had a job interview before. Maybe you’ve had many of them. Some questions will be invariably easier to answer than others.

 

But one question you need to be ready for is this one: “What is your greatest weakness?”

 

I’ve been interviewed many times and I’ve had to interview potential employees many times.

 

When this question is asked, it is painful (and sometimes humorous) to watch some of the potential job candidates squirm in their seats as they struggle to find an answer to their “greatest weakness.”

 

Sometimes, I’ve had potential candidates be bold enough to state that, “I can’t think of any area for improvement,” or even “I have no weaknesses that I can think of.”

 

Guess what?

 

They weren’t hired.

 

Their huge ego or their lack of introspection was obviously an area of weakness. Maybe both.

 

Even if the candidates were all-stars in each and every area of their job function, there has to be at least one area that isn’t as good as the others. Everyone can improve. Everyone should strive for perfection. If you aren’t perfect, then there is still room to grow and improve.

 

If you are perfect, then why are you in a job interview in the first place?

 

If we don’t have the ability to honestly self-evaluate our current abilities, then we won’t know what areas of our life (personal or professional) need improvement.

 

I don’t want to hire an employee that isn’t willing to admit areas of weakness and improve on them, and neither does your potential employer.

 

Admittedly, we don’t want to bring up all of our skeletons during our initial job interview. But we must be prepared to have a satisfactory answer for this question.

 

While many of my friends and colleagues would be quick to identify many of my areas of weakness, years ago I came up with my standard my standard “go-to” answer during a job interview:

 

“I am deadline driven.”

 

I have always been deadline-driven. If you want something done by the 15th of the month, don’t expect me to provide it to you on the 10th. If you want it on the 10th — you need to tell me that up front. I will do whatever it takes to meet the deadline, but don’t expect it any earlier.

 

My wife always tells me that my weakness is because I procrastinate.

 

I will tell you it is because I prioritize.

 

I try to fit as much as I possibly can into both my personal and work lives. When she tells me that she wants me to paint the kitchen, I let her know that I will “get to it.” Of course, I never do.

 

Why?

 

Because she hasn’t given me a deadline.

 

So — am I a procrastinator or a “prioritzor?” The truth is that I am neither a procrastinator nor a “prioritizor.” While some people may be true procrastinators, I am not one of them.

 

There have been many times in my life that I fell victim to the Student Syndrome — a term that refers to “planned” procrastination, but I don’t think I am a victim of this today.

 

I remember back in college I was certainly guilty of falling prey to the Student Syndrome. I would wait until the last possible moment to start a research a paper and then pull an all-nighter to get it completed and turned into my professor. Why did I put it off for so long? I had other, non-important but far more enjoyable things to do, like football games, basketball games, socializing and watching TV.

 

While I may not be guilty of the Student Syndrome now, I am certainly guilty of falling victim to Parkinson’s Law.

 

Parkinson’s Law is generally expressed as the phrase “Work expands so as to fill the time available for its completion.”

 

If I have a deadline to complete something in 4 weeks, it will be done in 4 weeks.

 

If I have the same task but only given two weeks to complete it, it will generally be done in two weeks. Nothing has changed but the deadline.

 

To meet the condensed deadline, I have to prioritize. What can I put off in order to make certain that I can get the other assigned task done within 2-weeks time? If I have excess time, I will try fit in something that is a higher priority and finish the task later. Or I may have to delay other non-pressing tasks (like painting the kitchen) in order to meet the 2-week deadline. Either way, I have to prioritize.

 

You may look at the terms Parkinson’s Law and Student Syndrome as being the same thing.

 

I do not.

 

With Student Syndrome, you intentionally put something off because you just don’t want to do it. With Parkinson’s Law, you continue to do the amount of work that is required so that it is still accomplished within the given time period.

 

Keep in mind that Parkinson’s Law, or the phrase, “Work expands so as to fill the time available for its completion” can be a double-edged sword for employers.

 

Some employers may give highly-motivated and highly-productive team members a shorter time period to compete their tasks knowing full well that the employee will do whatever they have to do in order to meet that deadline.

 

Other employers — one’s that are not familiar with Parkinson’s Law — may give too much time between assigning the task and the deadline for completion. What happens in this case? All too often, work will “expand” so that it takes the entire allotted time. (We will sometimes refer to this a “billing-and-chilling” in my industry.) They employee could finish quicker, but they drag their feet, don’t work as hard as they should, and bill the company unnecessarily while “taking it easy.”

 

It is important for an employer to set reasonable deadlines and expectations so that employees don’t get abused by Parkinson’s Law (being assigned too much work in a short period of time) and so they don’t abuse the company by Parkinson’s Law (dragging their feet so that the employee is unproductive and doesn’t get the work accomplished until the required deadline.)

 

Employers that understand Parkinson’s Law should establish reasonable time expectations for the actual work that needs to be accomplished — not too much and not too little. It needs to be just right to maintain optimum productivity.

 

So, there you have it.

 

I am neither a procrastinator or a “prioritizor.”

 

I guess I am a “Parkinsonian” — guilty of falling victim to Parkinson’s Law.

 

Regardless, I am still deadline-driven, and some employers may view this as an area of weakness.

 

Now, time for some introspection:

 

What is your greatest area of weakness? How will you respond during a job interview?

Updated: TOP 11 Pointers for Successfully Completing College!

“Where’s my syllabus to guide me through life?”
– Megan McCafferty

1. On the first day of class, the instructor will give you something called a "syllabus." 

Do NOT throw this away. (I did my first semester and learned this the hard way). 

This is NOT high school and the instructors will NOT constantly remind you about upcoming assignments, due dates, quizzes and tests. If it is in the syllabus, it is due and expected on the date of the syllabus. Don't lose it. Don’t expect professors to accept “late” work for half-credit. 

You aren’t in high school anymore. 

“I used to keep my college roommate from reading my personal mail by hiding it in her textbooks.”
- Joan Walsh Anglund

2. Text books – even digital ones - are expensive. 

Someone may try to steal them. Write your name on the same page number of all your books. (I always put my name on Page 77 – my old high school football jersey number.) If you think someone has your book, you can help prove it by asking them to go to your page number.

“If You Aren't Taking Notes, You Aren't Learning”
– Ben Casnocha

3. Take notes. Detailed. Lengthy. Copious.

Most high school kids never learn how to take notes. Write down whatever the professor says. Odds are, they will verbally review what is important to THEM. Remember, you're not in high school anymore. Many professors have egos the size of Montana. Most of them don't care what is in the text book - they will test you on what THEY think is important. This means that you could read the entire textbook and never be tested on a single word in that text book. (Of course, this will vary subject-to-subject, but take great notes in every class.)

You have to take great notes. And then, before taking a test, review your notes and then review them some more. 

“Old professors never die, they just lose their faculties.”
- Stephen Fry

4. Professors love getting to know the students. 

At least once or twice a semester, stay after to ask a question even if you have to make one up. 

Some may call this "brown-nosing." (Call it “networking” if that term is more appealing to you.) 

Whatever you call it, I call it a smart move to help get the professor on your side and to take an interest in you. Show up at least one time a semester to the professor's office hours and ask a question. Let them know you are interested in the subject and care about your grade and performance. This will in turn help them take a greater personal interest in helping you achieve success. 

“You want to see an angry person? Let me hear a cell phone go off.”– Jim Lehrer

5. As you enter your class or lecture hall, turn the phone OFF!

If a professor catches you looking down at your phone, texting, emailing, reading, etc., I can assure you the thought in the Prof's mind will NOT be a positive one. And trust me, Profs are people too. Just like high school teachers, they enjoy seeing students they like and hard-working students succeed. By the same token, it doesn't bother them one bit when they see a lazy kid or a kid that plays on their phone during class stumble and fall. 

Turn OFF the phone. Don't be tempted.

“The worst comes first. Do that thing you've been needing to do. Then do it again tomorrow. If you take just one step toward your big goals every day, you'll realize those goals weren't really far away.”
– Benjamin Hardy, PhD

6. I hated college my first year. 

I was taking all these “stupid” classes that had nothing to do with my major. For me, it seemed like a waste of time and money. And before I had a chance to take classes that were interesting and dealt with my major, I had already blown off enough classes that my GPA was substantially lower than where I wanted it. 

DON'T blow off any class, regardless of how ridiculous you think it is.

"Don't join an easy crowd; you won't grow. Go where the expectations and the demands to perform are high."- Jim Rohn

7. Find people in your major and stick to them like glue. 

Go to class with them. Study with them. Hang out with them. They become great friends, great study partners, and eventually you can all network together and help get each other jobs. 

DON'T hang out constantly with someone taking an easier major than you. All they will do is help encourage you to watch tv, play video games, go to the gym, or do anything but spending time studying. 

Friends in your major will study with you - and encourage you.

“Idle hands are the devil's workshop.”

8. Do what works best for you, but take enough courses to keep you focused and busy.

12 credit hours per semester is generally considered full-time. 

I always found that the MORE credits I took, the more I was focused on college and the more I enjoyed it. During my least favorite semester, I only took 14 credits. The extra time was spent playing racquetball, watching TV, and engaging in activities that only made me focus less and less on my courses. This was also the semester that I had my lowest GPA. During my favorite semester, I took 21 hours, and had one of my highest GPAs. 

“Always make your future bigger than your past.” 
– Dan Sullivan

9. Many people will tell you that college is the "Best 4 years of your life." Don't believe it. 

Was it fun? Yes - certainly at times. But college is supposed to be there to prepare you for a bigger and brighter future. It is a tool to help you become successful out in the real world. There are bigger and better things for you after college, so use your time in college to become well-rounded and prepared for becoming a successful, contributing member of our society.

“We are kept from our goal not by obstacles but by a clear path to a lesser goal.” 
—Robert Brault

10. Ideally, you already know exactly what you want to study and will stick to it once you start at college. That is certainly the best thing to do financially. 

Anytime you switch majors, you can lose credits for classes that you've already taken. Anytime you switch schools you can lose even more credits. Losing credits means paying more money and spending more time to regain those lost credits. 

The cheapest and quickest way to get through college is to stick with the original plan. Depending on what you study, you may have a “tough” major. It can be very tempting to look toward an easier major, take life easy, hang out with your friends and “enjoy” your remaining years at college. But taking the easier road during these 4 years may cost you a life of happiness in the career that you really wanted to enter. 

Don’t let the present desire for an easier schedule cost you a career of happiness. 

“Other things being equal, it is better to be smart than to be stupid.”
- Carl Sagan

11. And last, but not least, if you ever have to decide between two majors that you have equal interest in, equal passion in, and you could see yourself in that career for the rest of your life....all things being equal, choose the one in which you could earn the most amount of money!!! 

Money doesn't buy happiness, but it does buy a house, a car, a boat, and can pay off college loans.

I wish you the best of success in college! Take these pointers or leave them - these are just my thoughts - Clark's Thoughts.

Top 10 Pointers for Successfully Completing College

For everyone going to college for the first time, here are 10 of my suggestions to help you make it through. Take them or leave them...Consider this my graduation gift to you!

1. The first day of class, the instructor will give you something called a "syllabus." Do NOT throw this away. (I did my first semester and learned the hard way). This is NOT high school and the instructors will NOT constantly remind you. If it is in the syllabus, it is due and expected on the date of the syllabus. Don't lose it.

2. Nursing books (and all books for that matter) are expensive. Someone may try to steal them. Write your name on the same page number of all your books. (I always put my name on Page 77. If you think someone has your book, you can help prove it by asking them to go to your page number.)

3. Take notes. Most high school kids don't know how to take notes. Write down whatever the professor says. Odds are, they will verbally review what is important to THEM. Remember, you're not in high school anymore. Professors have egos the size of Montana. Most of them don't care what is in the text book - they will test you on what THEY think is important. Which means that you could read the entire textbook and never be tested on a single word in that text book. You have to take great notes. Detailed. Lengthy. And then before a test, review your notes and review them some more. (Of course, this will vary subject-to-subject, but take great notes in every class.)

4. Professors love getting to know the students. At least once or twice a semester, stay after to ask a question even if you have to make one up. Some call this "brown-nosing." I call it a smart move to help get the Professor on your side. Show up at least one time a semester to the professor's office hours and ask a question. Let them know you are interested in the subject and care about your grade and performance.

5. I didn't have a cell phone back in those days, but as you enter your class or lecture, turn the stupid phone OFF! If a Prof catches you looking down at your phone, texting, emailing, reading, etc. I can assure you the thought in the Prof's mind will NOT be a positive one. And trust me, Profs are people too. Just like high school teachers, they like to see kids they like and kids they view as hard workers succeed. By the same token, it doesn't bother them one bit when they see a lazy kid or a kid that plays on their phone during class stumble and fall. Turn OFF the phone. Don't be tempted.

6. I hated college my first year. I'm taking all these stupid classes that had nothing to do with my major. It was a waste of time and money. And before I had a chance to take classes that dealt with my major, I had already blew off enough classes that my GPA was below where I wanted it to be. DON'T blow off any class, regardless of how ridiculous you think it is.

7. Find people in your major and stick to them like glue. Go to class with them. Study with them. Hang out with them. They become great friends, great study partners, and eventually you can all network together and help get each other jobs. DON'T hang out constantly with someone taking an easier major than you. All they will do is help encourage you to watch tv, play video games, go to the gym, or do anything but spending time studying. Friends in your major will study with you - and encourage you.

8. In the olden days, 12 credit hours was considered "full-time." Idle hands are the devil's workshop. I always found that the MORE credits I took, the more I was focused on college and the more I enjoyed it. During my least favorite semester, I took 14 credits. During my favorite semester, I took 21. Do what works best for you, but take enough to keep you focused and busy.

9. Remember, many will tell you that college is the "best 4 years of your life." Don't believe it. Was it fun? Yes - certainly at times. But college is supposed to be there to prepare you for a better and brighter future. It is a tool to help you become successful out in the real world. There are things after college, so use your time in college to become well-rounded and prepared for becoming a successful, contributing member of our society.

10. Hopefully you know exactly what you want to study and will stick to it once you start your classes. That is the easiest and best thing to do. Anytime you switch majors, you can lose credits for classes that you've already taken. Anytime you switch schools you can lose even more credits. And last, but not least, if you ever have to decide between two majors that you have equal interest in, equal passion in, and you could see yourself in that career for the rest of your life....all things being equal, choose the one in which you could earn the most amount of money!!! Money doesn't buy happiness, but it does buy a house, a car, a boat, and can pay off college loans.

Take these pointers or leave them - these are just my thoughts - Clark's Thoughts.

Haiti Update #4

January 20, 2010 - 2:12 PM

I saw a lot, heard a lot, and felt a lot while in Haiti. Many people have asked
me for specifics, but they are way too many to put in an email. Some want to
hear all the gore - they want to hear about the bodies, the smells, and the
like. Others want to hear about resiliency - how the Haitians are coping. I
heard today on the radio, "International rescue agencies have been responsible
for rescuing the lives of 172 Haitians." While that is all well and good, the
news media is failing to report that Haitians without shoes and million dollar
high tech equipment have probably managed to pull out 50 times that number. It
is too bad we don't have near as many doctors and nurses coming to Haiti as we
do news media.

There were two gardeners, both growing precious vegetables, and a drought came.
It was bad. The plants needed water now, or bad things would soon happen. The
nearest water hole was over a mile away, and neither gardener had a vehicle. The
first gardener grabbed two pails of water, filled them up, put them in the
wheelbarrow and away he went to make the mile long trek to water his garden. The
second gardener told him that two buckets would not save his acre-size garden.
No, the second gardener was a lot smarter. He called all of his friends. One of
his friends had a large water tank on a truck and trailer. The thought was to
fill up that tank, and water his entire garden at once. People came from miles
around to help. They camped out on the side of the river anxious to help, ready
to do anything, but the second gardener was just way too disorganized. The truck
arrived with the tank on it a day late. 5 of the neighbors, all self proclaimed
engineers,
argued about how best to get the water into the tank for another two days. 2
scientists showed up, trying to explain that the water from the river was just
too bad and wouldn't supply the garden with the right nutrients. No, the water
needed to be treated first before it could be put into the water tank. 3 more
days passed, while the first gardener - the one with only 2 small buckets, was
now on his 20th trip to and from the garden.

This is exactly what is going on in Haiti right now, I am sorry to say. The only
organizations we saw helping in Haiti over the first couple of days were small
organizations - ones like CSI - that could make an immediate difference. There
were literally thousands of people from all over the world with all kinds of
supplies camped out at the PAP airport. At first it was very refreshing to see
them! "Thanks goodness! The cavalry has arrived!" would be a logical thought.
But as the day went on, we slowly realized that the vast majority of these
people, who were all very anxious to help, were just hanging around their
campsite. Why? They were waiting on direction. Taxpayer dollars hard at work.
But in all fairness, how do you get a collective group of internationals to work
together? The Germans can't tell the French what to do, and India would never
let Pakistan tell them what to do. The Poles won't listen to the Czechs, and so
on. They were all simply
waiting for direction, and that came first hand from the Portuguese contingent
that we spoke with. I did see the US Military, the Russians, the Germans, and
the Swiss out on the street doing rescue operations, but maybe that is because
they weren't sitting back waiting to be told what to do.

A doctor from Philly came in last week and worked at a PAP hospital all day
long. When he came back to our clinic, he told us how bad and how unorganized
everything was. He said (and we have witnesses to verify this) that by 11:00 PM
he was running the hospital. He was telling Haitian and other international
staff what to do to run the hospital. He also complimented CSI in such a way
that I could never have been more proud of our team. We were fast enough and
agile enough to do work immediately to help the Haitians. That is what it is all
about. There is no bureaucracy. No red tape. We just do what we need to in order
to get the job done, and do it fast. And because of our structure, many Haitians
are receiving the relief that other organizations are still only planning on
giving.

For all you NASCAR fans out there, and my father-in-law will love to hear this,
I am now a die-hard Jeff Gordon fan. I've never been much into NASCAR, but I
have always cheered on Ryan Newman since he was a Purdue grad. Now it is the #24
car. Hendricks Motor Sports donated three planes, their staff, the pilots, and
all the fuel to fly missionaries, orphans, Americans, and Haitians, to and from
PAP at no cost. They have been doing this now for 5 days, and will probably keep
doing this for a few more. Yesterday, 35 of us flew home at Jeff's expense.
Other organizations could have done this. Other organizations were much more
capable. But Hendricks stepped up to the plate and got it done. (I am guessing
other organizations are still trying to get their plan together???)

Not trying to sound sarcastic, but a little water would go a long way right now.
"The smallest deed is bigger than the grandest intention."

Most of the Haitians coming to the hospitals with injuries now are simply too
late. Gang greene is there, and it isn't going away. And all this time there are
thousands of people wanting to help, but don't know how.

There are some other organizations out there besides CSI that have done a
tremendous job. I have been very impressed! I was especially impressed with one
missionary group. Everywhere I went, they had someone from that group there. It
wasn't until the last day that I realized that group has their own media wing.
The people I ran in to were taking pics with orphans, showing doctors doing
amputations, etc. The majority was publicity. My heart sank.

Still, all in all, what I am most happy with is the behavior of the Haitian
people. They are the true heroes in this. They were the first on the scene. They
are the ones singing worship songs all hours of the day. They are the ones
praising God for all of His blessings. They are the ones still working hard to
dig out their loved ones with picks, and hammers, and hands. And they are the
ones that could care less about the media. They just want their life back.

Please continue to pray for Haiti, for the CSI missionaries, and for the many
other small organizations out there that are actually doing some good work. Go
#24!

Jon

Haiti Update #3

Monday, January 18, 2010 - 6:20 PM

Sorry I didn't get the chance to write yesterday.

Everything is going as good as one could expect. Last night there was about 1/3
less Haitians camped out on our street. That could be good or bad. A lot of them
are heading to the provinces to live with extended family. That is good. A lot
of them are moving back into the ravine and that is clearly not safe. Every time
I look, there is another house down back there. And if the right one would fall,
it could easily take out 3-4 more. Tim Heath has a good camera, and took
pictures of a family hanging their laundry out on a line. They were on the
rooftop, and the roof is leaning at a 35 degree angle!!

Many of the Haitians living on our street were using the restroom in part of our
neighbors property. Several would use a shovel and cover it up, but others
weren't. We dug a hole for them and Tim built them a privy. They seem to
appreciate it!

As bad as everything is here - there are still bodies on the street, some
buildings have a smell emanating from them, and many, many homes have been
destroyed - the Haitians in our area are doing what they can as fast as they can
to have life return to normal or near-normal. The Haitians are a proud people,
and very clean. Every morning, by 6 at the latest, the Haitians that we gave
permission to live on CSI property are up sweeping the driveway, sidewalks, etc.
Cleaning every little thing they can, even though there is a block wall laying
in the yard. They all take baths the moment they have some water. Where do they
go? Right over on our property. We keep telling the Heaths that they are running
a day spa. It doesn't matter who is watching - they just want to be clean. They
also brush their teeth as frequently as possible. The street vendors are out
selling whatever they can, and traffic is moving, even though gas is $12 a
gallon now, but the problem
is finding it. I saw a line at the station that had at least 200 Haitians in
it, standing single file, each trying to fill up their little gas can. Stations
close down early every day, and cars park their for the night so they are first
in line. But, life is going forward.

Today we secured 100 bags of Portland cement, and we were busy picking them up
and delivering them to the orphanage. We also picked up a doctor from Philly who
has been on many CSI med teams in the past. Tony worked at a hospital downtown
for 24 hours as said it was a madhouse. For many patients that he saw, there was
literally nothing he could do. They would be dead and stacked up within a couple
of days. Gang green set in on many patients, and so there was a doc there with a
bone saw. The only problem is there will be no doctors or nurses there to care
for them after the surgery. They will still get infections, and most of them
will die as well.

Still, with all the sadness, there is joy. There is hope. As I walk the streets
and make eye contact with the Haitians, the moment I say, "Bon jo" or "Bon swa"
or "Commo ye?" the Haitians immediately light up, smile ear to ear, and wonder
what in the world this "Blanc" with the ugly yellow hair and ugly blue eyes is
doing in Haiti. But there is no doubt they appreciate what we are doing here.
The kids especially love to see us, and I had the chance to throw a football
with several of them today. Playing a modified game of keep-a-way, the kids were
entertained for quite some time, and if nothing else, it took their mind away
from all the death and destruction if only for a brief period.

Everyone wants to know about security guards. Do we have them? Is it safe?
Because of our reputation in the community, the Haitians themselves are our
security guards. Tuesday night, after the quake, a Haitan went to our gate and
tried to break in. He starting yelling and pulling the doors. The other Haitians
quickly grabbed him and took care of the problem. Just like the Haitians who
helped to rebuild the wall at the clinic, we take care of them, so they take
care of us. Having an armed guard could potentially send the wrong signals. That
is not what our ministry in Haiti is about.

If all goes well, I will be flying back to the States tomorrow. I should make it
back to Indiana late tomorrow night or early Wednesday.

Please keep praying for Haiti, and also pray for our missionaries down here.
With all the money going to relief, it is also important that the missionaries
still get support or there will be no way to provide them with the relief.
Specifically, I'd like to ask everyone to consider sending support to Tim and
Carol Heath. They are doing a fabulous job in Haiti, but are in need of both
your spiritual and financial support.

Jon

Haiti Update #2

Saturday, January 16, 2010 - 9:05 PM

It was a rough day at the office. We decided to begin moving all of our CSI
operations on a permanent basis out to Croix de Bouquets. That is an area right
outside PAP that was also hit very hard, but it is where the clinic and
orphanage are. The orphanage may or may not be salvageable, but there is room to
build another brick building to hold the girls. The 20 girls, their Haitian
nannys and the directors are all living in a 3 bedroom apartment right now...

More importantly, however, is that the clinic and orphanage have a well. That
means fresh water, and that is hard to come by right now. The Guesthouse in PAP
is about to fall down at any minute. It could be 2 years, or it could be 2 hours
- no one knows, but it can not be used. We emptied out all the stuff we could,
going in 2 at a time, keeping watch for tremors and helicopters - both tend to
shake the building causing more damage. Everything is out now that has any
importance - no one will be going back in. It is just too dangerous, but CSI and
the Bensons lost a lot of memories in that building. We are guessing it will
cost around $300K to rebuild, but that is pre-earthquake money. Hard to tell how
much it will cost now. A tremor came by and shook everything. I told someone
that it was a "big" tremor. The missionaries all reminded me that it was nothing
compared to 4:58 PM on Tuesday.

Outside the Guesthouse are even more people than last night. There were probably
500 on the street by 3:00, and there are many more than that on the street now.
Nearly every inch of pavement is covered with blankets spread and kids fast
asleep. At 4:30 this morning came a bunch of singing from the street - the
Haitians decided to have a worship service. Clapping, singing, etc. I recognized
the word "Jezi" and at least knew it was Christian worship.

We built a "house" today for our chief mason. He is a 58 year old that runs the
brick laying crews for CSI. Anytime something needs to get built, he does it.
His home was at the epicenter, and lost one of his kids in the quake. His house
now consists of a canvas roof, a blue tarp on one end for privacy, and a few
cushions of a sofa that will no longer be used. You can not believe how grateful
he and his family is for these accommodations!! Greg Benson has a picture of
this on his facebook page. Maybe we can get it moved to the CSI Ministries
Facebook page tomorrow.

On of our Haitians had to run downtown to try to find out if one of our
employees was alive or dead. When he came back, he told us how bad it was. Piles
of bodies are everywhere. People are just stacking them up. There is nothing
else to do with them. There are tire fires everywhere - it is hot enough to
burn the bodies and smelly enough to help cover up the stink. Fan Fan - the
Haitian - said that bodies are swelling up, creating even more problems. Don't
worry - we are not going to the downtown area, although we have also seen
bodies, and there are plenty of tires burning in the Ravine - right behind our
house.

Cathie Benson made a birthday cake for me tonight which was very nice, and we
all agreed that this would be a birthday I would never forget.

The most positive thing that I can say about the entire experience is that it is
amazing how happy the Haitians are. The ones that we see by our house - the ones
that previously lived in the Ravine - are used to next to nothing. Now that they
still find themselves in that predicament, they are dealing with it very well.
We will greet them, shake their hands, they smile and gives us the one-two
English words in English that they know, and I respond with my 1-2 words of
Creole. Still, they smile, and that it a sign that some of them still have some
hope.

Looking forward to seeing everyone soon.

Jon

Donate: www.csiministries.org

Haiti Update #1

I know that this is slightly out of date, but I went to Haiti immediately following the earthquake with CSI Ministries. It took two full days to get there, and I tried to send several updates back to the States while I was there. Although the posts may be out of date, I am putting on the blog just to remember the feelings, the emotions, and the struggles. Now, only a few short months after the devastation, the media has already forgotten about the entire episode.

I will put all of the posts up on Clark's Thoughts.

Below is #1. Please enjoy, and please pray for the people and the country of Haiti.



Friday, January 15, 2010 7:45 PM

Finally arrived in PAP after a long journey. Spent last night in the Turks and
Caicos Islands in Provo. The Rotary picked us all up at the airport and divided
us up in their homes, then took us to a restaurant and bought everyone's dinner.
(There were about 25 of us on the MFI flight). Special thanks to the Rotary for
helping us out.

Landed this morning in Cap Haiten. That was frustrating because we weren't sure
how or when we would get to PAP. Several people made several calls to
connections and we were finally allowed to land the DC3 at the smaller airport.
They made a special exception for us since we were human aid, but otherwise the
DC3 is too large to land there, and PAP was for military flights only.

Toby Banks and Roberta Anderson picked us up and took us to the clinic. That is
where most people are staying right now. The orphanage is out of commission, and
so is the guesthouse. We are at the guesthouse now, but sitting outside and will
stay across the street at the Mesmin house. After 5 pm, you can drive anywhere.
People literally line the streets and sleep on the road. They have nowhere else
to go. You get in by 5, or you don't get in, and you can't leave once your
there.

We saw tons of buildings collapsed, and more are collapsing every day with
follow-up tremors on already weakened structures. We saw several bodies on the
roadside, and at one place they were burning them by tossing tires on top. And
keep in mind, we are not downtown where everything is much, much worse.

The saddest story I have heard to date is a mother that was collecting urine
from her male children in a bottle and then using it to bath them. They were
dirty and bloody, and there was nothing else to use to clean them up. They have
no water and no food, and not much hope.

A real tear jerker was hearing that the clinic wall fell down. The Haitians
nearby, who had lost there homes, several lost the lives of family members, but
several of them showed up to the clinic. Not to loot and plunder, but to help
rebuild the wall. They know what the clinic means to the community. Maybe there
is some hope after all.

I'm sure some of you are tired of hearing about Haiti. But the story comes to
mind right now of the boy on the beach with 100,000 starfish that were washed up
on the shore. The boy picked them up one at a time and tossed them into the
ocean. A guy walked up and told him that he could never make a difference -
there are just too many. The boy said, "I made a difference for that one, didn't
I?"

Please keep praying for Haiti and our missionaries serving faithfully here.

Jon

The Lost Decade?

“When I was growing up we had to walk 5-miles uphill both ways to get to school.”

“Yeah, well we were so poor I had to step in dog doo just to keep my feet warm in the winter.”

“Yeah, well….”


We often romanticize the past. Especially concerning how bad things were. I know that our football practices were MUCH tougher than the practices are nowadays. I know that we were much poorer when we were kids than my children are today. School was tougher. Life was tougher. Everyone has it much easier today.

I am rich. In fact, I am very rich. According to Richard Stearns in "The Hole in Our Gospel", if you make more than $25,000 a year, you are richer than 90 percent of the world’s population, and thankfully, I am one of those.

In terms of family, I am also very “rich.” I have a great wife, two great children, and a wonderful extended family. My family frequently watches The Walton’s on DVD, and John Boy often speaks of his family being “rich” because they had each other, but little of anything else. Of course, that depression-era TV show was made long after the depression ended, and there is, no doubt, some “Hollywoodization” of exactly how bad the depression was. Now, I am not at all trying to make light of what they did or didn’t have, I am just demonstrating that we all tend to romanticize the past – for the better or for the worse.

That said, I am not sure why I should be so rich. We just experienced the “worst” decade economically in America in 70 years. The Washington Post ran a graph with data created by Agora Financial that demonstrated the percentage change in GDP and the percentage change in household net worth by the decade dating back to the 1940's, and the change was made with inflation-adjusted dollars, so we are comparing apples-to-apples, at least to the best of our ability.

In the 1940’s, the change in GDP was 72.0%, and that was the best year on the graph. The worst decade? You guessed it – the 2000’s. Our decade’s percent change in GDP was only 17.8% - far worse than any of the previous 6 decades that we have data for.

If that doesn’t paint the picture enough for you, how about this statistic: In the 2000’s, household net worth decreased by 4%!! The average household began Jan. 1. 2000 with 4% more wealth than they ended with on Dec. 31, 2009!! Yikes!

To put this in perspective, during the 60’s households increased their wealth by 44%, in the 70’s by 28%, in the 80’s by 42%, and in the 90’s by 58%!!! (No data reported for the 50’s.)

So, here we are – just now finishing the worst decade in the last 70 years, and I am going to begin to romanticize. “The 2000’s were SO bad, that I went to Europe on vacation at least 6 times, we bought a big screen television, we bought two new cars, built a pole barn, and we remodeled our kitchen.” Now, I am not saying that we shouldn’t have been more frugal; I am not saying that we didn’t make some poor financial decisions. What I am saying is even as bad as it was, things were still not as bad as that romanticized “ideal” we all have in our heads about how bad things really could become.

It does demonstrate, however, how much our lives have improved over the last half-century. I am sure the poor in the 1950’s had it worse than the poor in the 2000’s. I hope in another 50 years that I can look back and say – truthfully – that the “2000’s were SO bad, that I was only allowed to travel to Europe 6 times.” That would be very nice, indeed!

Let’s all take a step back and think about how blessed we really are compared to the other 90% of the world that does not make $25,000 a year. Yes, the 2000’s were bad for investors, homeowners, and many, many people in the job market. But were they really that bad? Take a look around. There are many more out there far worse off than we are now. If you don’t believe me, travel to Haiti, Jamaica, the Dominican Republic, or Belize. Equally important – travel to the “bad side of town” in your nearest big city, go to Appalachia, or spend some time down on the still hurricane-ridden Gulf Coast.

I guess the 2000’s weren’t really that bad at all – at least not for my “rich” family. I hope I can keep this in perspective as I grow older, and maybe you will want to, as well.

Of course these are just my thoughts – Clark’s Thoughts.

www.clarksthoughts.com

Proud to be a Hoosier

At no point in recent memory have I been more proud to be born and raised a Hoosier. No, not a graduate of Indiana University, but to be a resident of the great State of Indiana, one of the last remaining bastions of common sense in this country we call the United States of America.
Political convenience is being placed ahead of common sense and rules, laws, and ordinances that have existed for centuries. Common sense and tradition are being hurriedly tossed to the wind. To what do I refer? I am referring to the recent lawsuit filed by no other than Indiana’s State Treasurer to stop the bankruptcy fire sale of Chrysler to Fiat.

I have intentionally avoided writing anything about the automotive industry on my blog site. My father-in-law retired from GM, my grandpa, uncle, and cousin all retired from Chrysler, and many, many friends and clients are either employed or retired from Delphi, Delco, GM, Chrysler, or work in auto sales. The automotive industry has been a staple in Indiana for decades, but for many Hoosiers it is a love-hate relationship with the carmakers. Employees, retirees and their families all love the industry; others blame the UAW for the current automotive crisis and are more than willing to say that "they are getting what they deserve." Knowing that I would receive hate mail or fan mail from one side or the other, regardless of what I would write, I have tried to avoid the situation altogether.

However, this article, while dealing indirectly with the automotive industry, deals directly with the property rights and legal rights of every American citizen. Why does real estate in the US cost more than like properties in most other areas of the world? Because we have a long-standing tradition of actually recognizing the legal owner. Anyone that buys a piece of property knows that our government will not just arbitrarily come in and take our property away. That is, until recently…..

There is a pecking order in the structure of capital. A company could issue common stock, preferred stock, senior debt and junior debt. If a company were to go belly-up, the long-standing rule is that senior debt holders could seize any assets that have been pledged as a security, and then sell them to satisfy claims. If any value remains in the company, holders of senior debt are then paid. Junior creditors are next in line, followed by preferred shareholders, and common shareholders are last in line, getting paid only if everyone else has been paid back first. For example, let’s say you have a first mortgage and a second mortgage. If you had to declare bankruptcy, the first mortgage would be paid back from the sale of your property before the second mortgage would get a single penny. And, all things being equal, the interest rate you pay on a first is generally less than you pay on a second. Why? Just like most securities, the more perceived risk, the higher the expected return. A first mortgage (being senior debt) has less perceived risk than a second mortgage (junior debt).

And so it was with Chrysler. They had senior creditors and junior creditors. The senior creditors should be the first to be paid back in a bankruptcy. And this is where the State of Indiana comes into play. The Indiana State Teachers Retirement Fund, Indiana State Police Pension Trust, and Indiana Major Movers Construction Fund represent approximately 100,000 civil servants, police officers, school teachers and their families. These three funds were senior creditors to Chrysler, investing millions of dollars, receiving less interest in return than junior creditors, and are now being told that they will not be paid back before junior debtors; in fact, it is just the opposite!

Now that Chrysler has filed for bankruptcy, Indiana and other secured creditors are being told that they will get roughly 30 cents on the dollar. But the UAW, an unsecured junior creditor, will get approximately fifty cents on the dollar. Doesn’t quite sound equitable, does it? Would it be fair for your second mortgage or home equity line to be paid back before your first mortgage? No. Common sense tells us that this is wrong. So why was it just Indiana making a fuss?

Turns out the major holders of secured senior debt to Chrysler were none other than the big banks – you know, those same big banks that received billions of dollars in TARP money. The President has already demonstrated that he IS the CEO of every firm receiving federal aid: remember, the President fired the CEO of General Motors not long ago, and the CEO’s of the banks would like to remain in their positions. So the big "I took the TARP money" banks reluctantly agreed not to fight for more than 30 cents on the dollar for their secured debt.

The powers that be in Washington knew that with the banks out of the way, they could brush away any investors – including the State of Indiana – that would try to hold out for what is rightfully theirs. What truly amazes me is that the Supreme Court agreed to the sale, and effectively slapped Indiana – and all secured creditors throughout the United States – in the face. This decision will change the way that companies will issue debt in the future, and it will change they way that foreign investors view the United States indefinitely. From now on, there may be better places to invest – countries that have more solid property rights and contract rights than we do.

The President helped out the UAW at the expense of other unions, such as the Indiana State Teacher’s Association. But what has he done to capitalism as a whole? Why would anyone be willing to accept a lower yield as a "secured" debt holder, after the junior creditors with Chrysler were paid back before the senior creditors? Why become a bond holder at all? How will future companies raise capital?

My hat goes off to State Treasurer Richard Mourdock for displaying common sense. He lost the battle, but hopefully common sense will eventually win the war.

Of course these are just my thoughts – Clark’s Thoughts.

It's a gas!

I am not an energy expert. I have no training in the subject, and I have never been involved in any industry that has had to worry about carbon emissions. There are many more people in our community better suited to write a column on this topic than I am, but since most Hoosiers, as well as the majority of Americans, are nearly as clueless as I am on the subject, I decided to look into it a little bit in hopes of gaining a better understanding.

HR 2454, the American Clean Energy and Security Act, sets the groundwork for a "cap and trade" system when dealing with carbon emissions. What exactly is cap and trade?
Each individual company will have a limit on the amount of carbon it can emit into the atmosphere. The company would have to have a permit for every ton of carbon dioxide it emits. The permits then serve to limit, or cap, the greenhouse gas pollution that the company is permitted to emit.

Keep in mind that a company will have to pay for these permits. The government may dictate how many permits a company can purchase, and then it is up to that company to either make sure they comply with not emitting more carbon than the permits allow, or buy purchasing additional permits from other companies that reduced their emissions quicker than anticipated. This is where the "trade" comes into play.

For some companies, it will be easy to reduce their amount of emissions and sell their extra permits to companies that are less fortunate. Other companies, in other industries, will be forced to purchase those permits at market price or face hefty fines.

Why does the government want to issue a cap and trade program? Maybe they really want to reduce the amount of greenhouse gasses, but my guess is they are really looking for an income stream. Each year the companies must purchase the permits. Each year the government rakes in some extra cash.

About two weeks ago, the Governor of Indiana, Mitch Daniels, wrote an outstanding Op-Ed in the Wall Street Journal. (May 15, 2009 – "Indiana Says ‘No Thanks’ to Cap and Trade") Regardless of your politics, I think that Mitch did an outstanding job in the letter, and if you are interested in this subject, I would recommend that you look it up on the internet.

Mitch believes that passage of this bill, a bill that would penalize some of our alternative energy initiatives in Indiana, would do little more than to double electric bills in our state. Not only does Mitch argue that Indiana would lose plenty of jobs because of this system, but a study by Buckley and Mityakov show that estimates of job losses attributable to cap-and-trade range in the hundreds of thousands, with the price for electricity, natural gas, and gasoline also increasing exponentially. Mitch goes on to call this an "imperialistic" bill, with states like California, Massachusetts and New York reaping the benefits of these new taxes at our expense.

I know that this discussion on cap and trade may seem one-sided, and I am as much in favor as being green as the next guy, but Indiana has been a frontrunner in biodiesel, ethanol (take CIE in Marion for instance), and clean coal technology. We are working for a greener world. Why should we be penalized for our efforts?

One final quote from Mitch on this topic, and again, I would encourage you to read the May 15, 2009 article:

"And for what? No honest estimate pretends to suggest that a U.S. cap-and-trade regime will move the world’s thermometer by so much as a tenth of a degree a half century from now. My fellow citizens are being ordered to accept impoverishment for a policy that won’t save a single polar bear."

Those are not my thoughts; they are Mitch’s. But from what little I do understand on this subject, I would tend to agree with him.

www.clarksthoughts.com

Robbing Peter to Pay Paul

Raising taxes of any kind is not a good move for a politician. Politicians fear that if they vote for tax increases, then they will not get reelected. The problem is, sometimes they really do need to raise taxes. In today’s demographic shift, in my opinion, there is only one direction for taxes to go, and that direction is up!

Let’s look at it this way: When JFK was in office, the highest marginal tax bracket was at 90%. Ninety percent!! Can you imagine? Can you imagine that for every dollar you earned, you only brought home ten cents? But here comes the Baby Boom. A huge mass of Americans all entering the workforce at once. As more and more Baby Boomers entered the work force, there were more and more people paying taxes. The more taxes they paid, the lower the top marginal tax bracket could go. Today, the highest bracket is right around 35% - quite a huge difference than it was during JFK’s tenure.

Now we have to realize what is happening. The Baby Boomers, as big of a blessing as they once were, are now entering into retirement. They are earning less money per year. They are paying fewer taxes than they did during their working years. Now what happens? We have a deficit. Our government is used to operating on "x" dollars, indexed for inflation of, of course, and now the Baby Boomers are being replaced by younger workers, earning lower wages than the Boomers were getting, and obviously paying less taxes than the Boomers were paying in recent years. "Houston, we have a problem!"

I believe wholeheartedly that no matter who became President, taxes would have to head north. But politicians on both sides of the fence are scared to death of raising two types of taxes: income and property taxes. They know that by raising either of these taxes, they will face a tough time getting reelected. But they need tax revenue. How can they get it? My belief is that we are seeing a huge trend toward consumption taxes.

A consumption tax is simply a tax based on the good or service that you purchase. Some consumption taxes are also called "sinners taxes" – taxes on alcohol and tobacco, for example. But there are other types: the City of Marion just recently began giving a surcharge on trash disposal. The counties surrounding Indianapolis face additional taxes when dining out. Citizens of Indiana already pay a pretty hefty bill when getting license plates.

In the future I can see more taxes for utilities, gas, license plates, trash, water, cell phones, internet access, retail sales tax, restaurants, etc. They will raise whatever they can to help prevent raising income and property taxes, since those are such critical issues. But call it what you want, disguise it however you want, a tax is a tax. Whether they put it on income or property, we are still paying it. They will be robbing Peter to pay Paul, so to speak.

One form of consumption tax that I think we will see eventually is that for Police services. It only makes sense that we will eventually be charged. When an ambulance shows up at your house, who pays for that service? We do. Some of us have insurance, some of us don’t. But we pay. What will happen when the municipalities start charging to send officers to your door? Maybe everyone gets one free visit. But think about it – the third time the officer has to come to a home because of a domestic violence dispute - that costs the taxpayers money. Why shouldn’t the disputing couple have to pay for that visit? Why should the taxpayers have to pay for the firemen to rescue a cat out of a tree?

In no way do I want you to think that I support consumption taxes; in no way do I want you to think that we should have to pay to call out the local sheriff. But I do think fees like this will be heading our way. It is a growing trend that we will unfortunately see more and more of, not just at the federal level, but state and local municipalities, as well.

Of course, these are just my thoughts, Clark's Thoughts.

www.clarksthoughts.com

The Oracle of Omaha

I just returned from the Annual Berkshire Hathaway shareholders meeting. This year witnessed a record attendance – approximately 35,000 people from around the globe flocked to Omaha, Nebraska to have the opportunity to hear some words of wisdom from the "Oracle of Omaha," Warren Buffett, and his partner and long-time sidekick Charlie Munger.

In case you are not familiar with Warren, Warren is the world’s wealthiest person. Depending on the quarter, he is neck-and-neck with Bill Gates and Mexican telecommunications giant, Carlos Slim Helu, but as of last year, I believe Warren was still in first place. How did he get there? Hard work making money, and then working hard to make his money work for him.

One of the best Buffett books that I have read, and I am by no means a Buffett expert, was the The Snowball: Warren Buffett and the Business of Life by Alice Schroeder, published last year. The Snowball explains how Buffett was an entrepreneur at an extremely young age, and as he accumulated assets, the book details how he gradually invested his money, and other people’s money, to propel him to the wealthiest human on the planet.

Warren is undoubtedly the most famous investor in the world, and plenty of people flocked to see him last weekend. At one point during the conference, I was within a few feet of multiple billionaires, including Bill Gates, Charlie Munger, and himself, Warren Buffet. At one point in time, I literally bumped into Warren. What do you say when you have about 1/10th of a second to have a conversation with the world’s wealthiest person? In a blink of an eye, I knew exactly what to say. "Hi, Warren!" I said gleefully as he passed by. "Hi, how are you doing?" he responded with a smile, and hurried through the crowd to take his seat.

Not much, I know, but it was the extent of my conversation with Warren, nonetheless. But soon the shareholders Q&A meeting would get started, and I would have the opportunity to hear some valuable insight from this brilliant investor.

This year, three journalists would ask questions that were chose from thousands of different shareholders, and some shareholders present were selected from a lottery system to ask the questions. Both Warren and Charlie are known for their words of wisdom. During the meeting, Warren would routinely take 5 minutes to answer a 1-minute question, and Charlie, who always batted second, would take 1 minute to answer a 10-minute question.

All sorts of questions were asked of the two, from the economy to any other question regarding Berkshire Hathaway’s holdings or operations. Buffett, who is a well known Democrat, and Munger, who is a Republican, both had the same view from the measures the government has taken recently to stimulate the economy: What they did wasn’t perfect, but it beat doing nothing.

When asked about Government Bonds, Buffett was clear that fixed income investors were going to lose purchasing power over time. Munger was a little more direct, saying that one "should become a brain surgeon and invest in Coca-Cola rather than government bonds."

On Inflation: "The best protection against inflation is your own earnings power," according to Buffet. In other words, excel in your chosen career path. Be the best you can be, and you will be able to earn more and more. The second best protection against inflation is the "earnings power of a wonderful business," especially ones that do not require heavy capital outlay.

Buffett and Munger mentioned several times that it is important to have emotional stability when being an investor, and slammed investors and analysts that try to "outsmart" the system. According to Buffett, "it is much better to have an IQ of 130, than to think you have an IQ of 160, when it is only 150." High IQ’s can get you into trouble. "Investing is simple, but it isn’t easy." You don’t have to be a brain surgeon to make money in the market.

Over the years, there have been thousands of words of wisdom from Buffett, 78, and Munger, 85. "You should invest in a business that even a fool can run, because someday a fool will," and two rules, "#1. Never lose money. #2. Never forget rule No. 1," both attributed to Buffett. Munger’s wisdom is equally revered: "Bull markets go to people’s heads. If you’re a duck on a pond, and it’s rising due to a downpour, you start going up in the world. But you think it’s you, not the pond, "and "People calculate too much and think too little."

Whether or not you like Warren Buffett and Charlie Munger or their politics, there is no doubt they will go down as two of the absolute best investors this world has ever known. Of course these are just my thoughts – Clark’s Thoughts.

My Two Greatest Fears

Contrary to popular belief, heights are not one of my two greatest fears, although I am not too fond of heights, either. I used to quip that I am so scared of heights that if I was any taller than 5’ 8", I would walk around scared all day. But as much as I dislike heights, there are two things that concern me even more – Taxation and Inflation.

Why are we concerned so much with taxation? In a nutshell – demographics. I don’t want this to be a political blog – not in the least. But obviously there are political forces out there that can influence in our economy. At the present moment, we have Oval Office intent on spending our way out of a recession. To date, we have lent, spent, or promised roughly $13 Trillion. Folks, this money must be paid back at some point in time. Whether or not some of the TARP funds get returned; whether or not some of the taxpayer dollars get paid back; this money has to be returned.

Noticed I mentioned the word demographics, and then criticized the current administration. But I honestly believe that no matter which political party that took office, taxes would have to eventually increase. When JFK was in office, the top marginal tax bracket was around 90%. As more and more Baby Boomers entered the work force, guess what? Taxes came down. The larger the workforce, the more tax revenue. The higher these Boomers moved up in seniority, the more taxes they paid. But unfortunately, the reverse is also true. The smaller the workforce or the lower the average salary, the lower the tax revenue. As Boomers retire, new employees replace them at the bottom of the pay scale. The current top marginal tax bracket is around 35%. And herein lies the problem. For the first time in our nation’s history, we are witnessing a smaller generation follow the current one. According to the H.S. Dent foundation, we have .95 "Echo Boomers" for every Baby Boomer. This is a huge problem.

Just think about it. For every high school that we once had, we only need .95 of them. For every car, we only need .95 of them. And to really bring it home, for every house, we only need .95 of them. That means that for every 1,000 houses owned by Baby Boomers, roughly 50 of them will not be needed. But it also means that for every person on Social Security, we have fewer active workers. For every person on Medicare, we have fewer people paying into the system. And right now, we have a huge problem with Medicare. According to CNBC, Medicare will be bankrupt in 10 years. Now that is a problem!

It doesn’t matter who won the election – taxes can only go one in direction. Want to solve the Medicare crisis? Want to solve the Social Security problem? I can think of only three possibilities, and none of them are good. 1) Raise Taxes. Obviously, current workers would not be in favor of this. 2) Lower Benefits. Obviously, current retirees will not be in favor of this. 3). Do a combination of numbers 1 and 2. Obviously, no one will like this, but it may be the most rational answer.

Now for the second fear: inflation. We are printing tons of cash right now. All things being equal, from an economic standpoint, this should cause inflation. But we are also witnessing a switch to a wants-based economy, as shared in a previous post. As we move to a wants-based economy, we are starting to see demand for some goods decrease, which can have the impression of deflation. But we can also clearly see demand for other goods and services which have the clear impression of inflation. Think about our current environment: many have seen their retirement accounts go down in value, their homes go down in value, and their vehicles go down in value. But take a trip to the grocery store, buy groceries and diapers, or take a trip to the doctor and tell me there is no inflation….

As more and more money gets printed, as more and more money gets promised, there is little doubt that inflation will be heading our direction. The question is: when? Every economist knows that as the Fed lowers interest rates, the value of the dollar should decline. If the value of the dollar declines, the amount of goods that we can purchase also should decline, thus we would experience inflation. But if the entire world cuts rates, then the dollar would not decline as rapidly as one would expect. At some point in time, however, the chickens will come home to roost, the Fed will have to raise rates to help fend off inflation, and many people hiding in fixed income investments will eventually lose purchasing power.

Taxation and Inflation will be heading our way….the big question is how soon?

Of course these are just my thoughts, Clark’s Thoughts.

The TARP is a TRAP

I really, truly, don’t want this be a political blog, but sometimes it is impossible to separate politics from the economy, especially when rules made in Washington impact the economies of Wall Street and Main Street so much.

Whether or not we should have ever created the TARP, whether or not we should have ever bailed out AIG or any other bank or auto industry, that is all now irrelevant. The fact of the matter is that we did, and the question is, "How do we go forward?"

I think it is interesting to note that TARP, when rearranged, spells "trap," and many banks and financial institutions are finding that out the hard way. Several institutions took the "trap" money, and then Washington created some ex post facto regulations for the recipients of the trap money. And I am not just referring to the "excessive" bonuses that were paid out by AIG. Once an institution took the trap money, they became at the mercy of government intervention and regulation. Should they be able to continue to advertise on television? Should they be able to sponsor golf outings? Should they continue with holding national conferences or conventions? Should they continue to operate as usual, or better yet, should they convene to determine how they should change their business model? Yet, any little expense became an issue with the media, the politicians, and the taxpayers.

Why? Essentially it is because we now have an ownership stake in the company. Like it or not, the taxpayers now have a say-so in institutions that went into the trap, and there is speculation that the taxpayer money will soon be converted from preferred shares into common stock, which would truly give us ownership. We now have voting rights!!!

This now presents a new problem. Taxpayers own companies they never wanted to own in the first place - Banks. Who wants to own a share of a bank that needed to accept the trap money to begin with? But we do. And we own lots of shares. And why do we buy shares? In theory, you would only go long with one anticipation: to make money. And in theory, the more money a company makes per share, the higher the stock price should go. Right? Don’t you think the politicians know this as well? Don’t bet on it.

This week, the President has started a crusade to eliminate the "excesses" in the credit card industry. Lawmakers have expressed concern at certain credit card practices. Maybe they will reduce the rate of interest that a bank can charge. Maybe they will reduce the fees for late payments. While many may applaud Washington’s efforts, keep in mind that credit cards and banks are not philanthropic institutions. They have to make a buck to stay in business, too, and with credit card defaults at all time highs, the efforts in Washington may just lead to another bailout – this time, the bailout of the credit card industry.

This is a major note of concern: First, we use taxpayer money to take ownership stakes in banks we didn’t want to own anyway, and now, Washington is trying to limit the profit that those banks can make…. So how is the taxpayer ever going to get the money back?


It makes you wonder who really got "trapped" – the banks or the taxpayers? Or both?

Of course, these are just my thoughts - Clark's Thoughts.

www.clarksthoughts.com

Welcome to the Wants-Based Economy!

You would have to have been living in a cave to think that we were not going to have negative earnings reports. It will be ugly, potentially very ugly, but there aren’t many people out there who aren’t expecting that to happen, and that being said there may be relatively few suprises.
The last several quarters have brutalized companies that missed earnings expectations, but the markets have not dramatically rewarded companies that beat expectations. As a result, you will begin to see fewer and fewer companies that will be willing to offer guidance.

Consumer spending drives the economy. The problem is that the big spenders – the people with the most discretionary income – are Baby Boomers, and those Baby Boomers have now moved into a "wants-based" ecomomy instead of a needs based. When they had kids at home, they had very predictible spending patterns. The kids needed a new ipod, they needed new clothes, they needed a car when they turned driving age. But now those kids are out of the house, and many are out of college. Their parents can now spend their money any way they want – thus, they are in a wants-based ecomony.

Think about it for a second. The aging Baby Boomer doesn’t need to buy a toaster, a microwave, or a host of other itmes found at your local retailer. They already have an established home. They don’t need a bed, loveseat, or lawn mower. They already own the stuff they need. Now that junior is out of the house, his parents can buy the stuff they want.

The way this impacts the earnings season is that creating the earnings estimates becomes progressively more difficult – a high school kid may go to Best Buy every week and buy a new cd or a video game. A Baby Boomer with discretionary income may go to Best Buy this quarter and buy a new flat screen television, but that doesn’t mean they will be back next quarter. Unpredictible spending makes for more uncertainty in the marketplace. The expenditures have gone from small but expected to large and unpredictable.

Look for the cream rise to the top over time, as early as this quarter. Expect businesses within similar segments to have vastly different numbers. Just because Best Buy does well, does not mean that Circuit City or other type retailers should do well. Just because Lowes has a good quarter, doesn’t mean that Home Depot will. In the past, there were enough consumers to make the entire sector look good. Now that the majority of consumers with discretionary income are in a wants-based environment, and add to that fact that many consumers scared to death to spend their money, expect for the top businesses in each sector to start to shine, as the weaker ones begin to show their faults. Of course those are just my thoughts....Clark's Thoughts.

www.clarksthoughts.com

Staying up with the Lingo

Staying up with the Lingo – The Second Derivative

Have you ever noticed that any time a group of people get together with the same interests, a new language evolves? They create their own jargon, their own slang, their own lingo. Sometimes it goes to the point of what outsiders would call, "excess." Occasionally the lingo gets used often enough to spread to the "civilian" world. I have a friend who will routinely ask me for my 10-20, and will conclude the conversation with a "10-4, over and out."

Educators have "educationese." In Indiana they have PL221, NCLB, TRF, SST, and 504 plans.

The military uses terms like Squid, Jarhead, Wingnut, Grunt, ASVAB, AWOL, GI, and ROTC to name just a few.

If you have teenagers at home, you may have heard or read the terms LOL, OMG, OXOXOX, W8, AFAIK, and BRB,

The financial services world can be every bit as confusing. 401K, 403(b), 457, IRA, Roth IRA, SEP, SIMPLE, 1035 and 1031. You can’t watch CNBC for too awful long before you hear economic terms like leading, lagging, contango, stochastic indicators, moving averages, and so on. But, like everything else, the jargon is always evolving.

The new "in" word happens to be a math term. Now, I am not a mathematician. MA 223 at Purdue just about put me over the edge. But I do know that math terms are routinely used in our industry, and rightfully so. Technical traders rely on math computations to plan their daily trades. Math is essential for fundamentalists when calculating P/E ratios and dividend discount models.

But recently economists have been utilizing a calculus term to help find a glimmer of hope in a topsy-turvy world. The "second derivative", as it is being called, is, as one would assume, a movement of a second order. What does that mean in plain English? Instead of the absolute change in a number, it is the rate of change of a variable. Got it? If so, then you had more fun in MA 223 than I!

More simply put, it is the rate of change in deterioration. In today's economic context, we can look at economic variables such as unemployment. For instance, if employment numbers continue to worsen, but worsen by a smaller margin than the previous month, than we have improvement in the "second derivative."

Is this a good thing? Of course. Presumably, the second derivatives must all improve before we have positive change in the "first derivative" (the leading and lagging indicators). But call it improvement in the second derivative or not, the fact remains that things are still bad. The importance in the stock market is that the market moves very quickly in front of actual changes in the economy. So many highly paid individuals are looking at anything resembling "second derivative improvement". Little doubt exists that these types of "improvements" have helped fuel the nice run the markets have had over the past several weeks.

You can impress your friends by using the term when talking about a cigarette smoker. Is he still smoking? Yes, but if he has cut back on the number of cigarettes each day, then there has been improvement on the second derivative. But the fact remains that he is still smoking and still harming his body.

I am just glad that there has been improvement in my second derivative of personal pizza consumption during the last year…..

www.clarksthoughts.com

Social Changes?

Last week ended the best 4-week rally for the Dow Jones Industrial Average and the S&P 500 since 1933, and it saw the best 4-week rally on the NASDAQ in history. But all good things must unfortunately come to an end, and Tuesday evening, the earnings season officially began with Alcoa kicking things off. It is interesting to note that Alcoa was off 2% during the intraday trade. That is before they even made an earnings announcement. The fact of the matter is that in recent quarters companies have been brutalized for missing earnings expectations, and their stock prices have not been dramatically rewarded for beating the earnings estimates. One trend that we believe we will continue to see is that companies will become less and less willing to offer guidance. Why should they? If they miss, they look bad, and if they hit, they aren’t rewarded. Perhaps it is far better to offer no guidance in the future and just report their earnings.

We know that we are facing a high unemployment rate right now, and we know that families all over the United States are feeling the effects. Recent reports indicate that 1 in 10 Americans are receiving food stamps. This is an ugly statistic. The big question is why? Unemployment? Recession? Maybe. But perhaps it is a change of attitude in general. Perhaps one big reason for the increase in food stamps is that they are becoming more socially acceptable, and there is less of a negative stigma for recipients, whereas at one point in time it may have been a pride factor to have not accepted the welfare. There used to be a social stigma associated with food stamps - not that I am opposed to helping people who need it, and with the high unemployment I have no doubt that many more people need it today than in recent years, but in days gone by I know many people personally who would have used government assistance as the absolute last resort., and not one of the first.

Another noticeable difference today is that the social changes we are witnessing are not just with the individual. The FED tried to do whatever they could to reduce the stigma attached to using the Fed’s lending facility. They readily encouraged the use of TARP funds for the big banks. And now, some of the banks that took the taxpayers money are being rewarded for their fiscal irresponsibility. Warren Buffett, an investing icon, was quoted (very correctly, I am afraid), as saying: "At the moment, it is much better to be a financial cripple with a government guarantee than a Gibraltar without one." In his letter to shareholders he points out that companies that received bailout funds (like Citigroup, Bank of America, Freddie and Fannie) are paying lower interest rates on bonds than Buffett’s own company. Why should a company that needed to rely on taxpayers, a company that couldn’t make it on its own, pay lower interest rates on bonds?
I must say that I was proud to hear that Old National Bank, an Indiana-based company, was one of the first four banks to pay back the TARP funds. On March 31, 4 Regional banks returned a total of $338 Million. Obviously, this was a good sign for those banks and good for the tax payers.

But will the Fed try to limit these paybacks? One concern with the TARP paybacks is that it will damage confidence in banks that cannot pay back the money. In other words, the FED is concerned that if healthy banks pay back their bailout money, there may be concerns about banks that don’t pay theirs back. It makes us wonder if the "big boys" will be scorned (or even prevented) from being able to pay back the TARP funds early.

It seems to us that the government and the FED are doing what they can to promote the social change. It seems like they almost want us to rely on government welfare….of course those are just my thoughts – Clark’s Thoughts.

www.clarksthoughts.com

The Credit Crunch = 1 Year's GDP

It was a beautiful month for the indices – the S&P 500 gained 9% for March, the Dow had its best percentage month since October of 2002, and the NASDAQ had its best March ever. Unfortunately, January and February were two horrible months in the equity market, and on a year-to-date basis, the S&P 500 and the Dow Jones Industrial Average are still both off more than ten percent.

This last week brought forth many news items, and many stories that we won’t dwell on so we don’t beat a dead horse, such as the AIG "Bonusgate" and the ousting of GM CEO Rick Wagoner. Whether or not GM and Chrysler will be forced in to a structured bankruptcy remains to be seen, but the rhetoric used this week by both the CEO’s of the auto manufactures and that of the President would lead one to believe that bankruptcy is a high probability.

One headline that the mass media will probably not be too keen on reporting is the sheer dollar amount that the United States has already committed to get us out of the Credit Crunch. According to recent figures from Seeking Alpha, we have lent, spent, or committed to $12.8 Trillion in rescue and stimulus packages so far. This figure includes the Stimulus Packages (both Round 1 and Round 2), the TARP, the TALF, and every other promise from the Fed and the Treasury. Just a few years ago, the notion that we would have a $200 Billion deficit scared nearly everyone. At the G-20 meeting, we committed about $100 Billion more to go to the IMF. Today, we are looking at a debt of $12.9 Trillion. Our entire GDP is roughly $14 Trillion. Essentially, we have just committed a year’s worth of American productivity in an attempt to get out of this crisis.

Now, I know that some of the promises are tied up into possibilities of a potential return for the taxpayers, and in some cases, we actually believe that the taxpayers can make some money. But, as one of my favorite economists Brian Wesbury pointed out, in February, the government said that the $787 Billion stimulus was spent to create 3.5 million jobs. That means we are creating one new job for every $225,000 that is spent – and that is assuming that 3.5 million jobs truly do get created! Either way, that is money that will have to be paid back over time, and one more reason that we believe tax rates will only be heading one direction over the long-term.

www.clarksthoughts.com

What can the G-20 really accomplish?

The G20 is meeting this week in London to see what they can collectively do to help solve the global crisis. You may be wondering, "Exactly who, or what, is the G20?"

The G-20 is a group of 20 countries formed in 1999 for cooperation and consultation on matters pertaining to the international financial system. Specifically the countries on the G-20 are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States. The 20th member is the European Union, which is represented by the rotating Council presidency and the European Central Bank. In addition to these countries, representatives from the International Monetary Fund, the World Bank, and the International Monetary and Financial Committee will be there, and this year, the Netherlands and Spain have also been invited.

Just what exactly do they think they can accomplish? That is hard to tell, since there are so many countries represented from across the spectrum. The US, UK, and Japan have been encouraging stimulus spending as a potential to help curb the global crisis. Russia and China are calling for a new global currency, and they will more than likely expect the IMF to come up with that currency. The European Central Bank, unlike the central banks in the US and the UK, can not buy debt directly from a member state, although it can purchase the debt on a secondary market. The economic slowdown in Germany is hurting all of Europe, and the perpetual loudmouths in France have already threatened to walk out of the G-20 summit if things don’t go to their liking.

No matter what can get accomplished at the G-20, assuming anything will truly be accomplished, one thing is for certain: this is not a group of buddy-buddies. I am not going to refer to any particular country as the "Evil Empire," but we all know that Russia, China, and Saudi Arabia are looking out for their own interests, which most assuredly, are not typically ours. Mexico just put tariffs on 89 US imports after the US broke part of the NAFTA agreement with Mexico. France, although recently on fairly decent terms with Germany, has not always been the closest of allies with her neighbors. If memory serves me correctly, Germany invaded France in 1871, WWI, and WWII, and there may have been several border skirmishes between 1871 and WWI that I am forgetting.

The fact of the matter is, even though we have one global crisis, I doubt that a collective group of global leaders can get us out of this mess, especially in a 2-day meeting that begins on April Fool’s day…..

Keep a close watch on your "small" accounts

When most people think about retirement, they tend to dwell on their larger assets. It is fun to sit back and think about what the future will hold when you are starting out with a lot of assets or a nice-sized pension. All too often people seem to "skip" over some other key assets, such as an older 401K or 403B from a previous employer that has just been sitting there – rusting away like an old vehicle set out behind someone’s barn. I am always amazed at the number of people that tend to ignore smaller investments, and "put them out to pasture." When asked why the individual hasn’t done anything with the old investment, results like, "Oh, it’s no big deal. It is just a small amount of money," are fairly common. Many people think that a $3-4000 account is not worth the hassle, or it is just "play" money.

But the money didn’t get there on its own. One of two things had to happen to get the qualified account built up. Either the employer contributed money into the account on your behalf (in lieu of a higher salary, of course!), or you contributed to the account on your own. Either way, it cost you something. Don’t treat it as "no big deal." A properly managed account can add up to a considerable amount over several years.

What should you do with a smaller account? First, consider all of your options. In some cases, you can consolidate accounts. This is generally viewed as being a sound thing to do. Secondly, you can start to manage the account yourself, or have a financial professional do it for you.
Depending on how long you have had these smaller accounts, you might have other options to consider as well, such as rolling them into an IRA, and possibly converting the IRA into a Roth. By now you should know that we like the Roth IRA option. Pay your taxes now and get them over with. Which way are taxes heading? No one knows for sure, no one has that proverbial "crystal ball." But according to the latest reports, our government has already committed $12.7 Trillion to help get us out of the Credit Crunch. At some point in time it will have to be paid back…