Economic Data That Influence the Stock Market

In this post, I explain some of the commonly used economic indicators that can influence the general direction of the market. If you are new to investing, these indicators will enhance your knowledge and affect your investments. So the next time you hear these terms in the media or financial press, you can use the information in this article to evaluate their potential effect on the economy and ultimately your trading strategy.

Beige Book

Formally called as "Summary of Commentary on Current Economic Conditions" is published eight times a year less than 2 weeks prior to the FOMC meeting on Wednesdays at 2:00 pm ET. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district through reports from banks and branch directors and interviews with key businessmen, economists, and other sources. The Fed uses this report, along with other indicators, to determine interest rate policy at FOMC meetings.

If the Beige Book indicates inflationary pressure, the Fed may raise interest rates. Conversely, if it indicates recessionary conditions, the Fed may lower interest rates.

Source: Website listed below in the resource section.

Chicago Purchasing Managers Index (PMI)

Released on the last business day of the month at 10:00am ET. It's based on surveys of more than 200 purchasing managers regarding the manufacturing industry in the Chicago area whose distribution of manufacturing firms mirrors the national distribution.

Readings above 50 percent indicate an expanding factory sector, while below 50 indicates contraction.

Consumer Confidence Index

Published on last Tuesday of the month at 10:00 am ET for prior month data. It's a survey of about 5000 consumers about their attitudes concerning the present situation and expectations regarding economic conditions conducted.

This report can be helpful in determining the shifts in consumption patterns and giving us insights about the direction of the economy. This data can be revised monthly based on a more complete survey.

Consumer Price Index (CPI)

Released around 13th of the month at 8:30am ET for prior month. It measures the change in price of a representative basket of goods and services such as food, energy, housing, clothing, transportation, medical care, entertainment and education. Also known as the cost-of-living index.

The variance of CPI called "core CPI" which excludes food and energy prices is primarily used to gauge the underlying inflation trend. Inflationary pressure is generated when the core CPI posts larger-than-expected gains.

Source: Website listed below in the resource section.

Producer Price Index (PPI)

Released around 11th of each month at 8:30am ET for prior month data. The PPI measures the average price of a fixed basket of capital and consumer goods at the wholesale level.

Similar to CPI, there is a variance of PPI, called as "core PPI" which excludes the prices for food and energy to give a clearer picture of the underlying inflation trend. Inflationary pressure is generated when the core PPI posts larger-than-expected gains.

Source: Website listed below in the resource section.

Durable Goods Orders

Officially called as "Advance Report on Durable Goods Manufacturers' Shipments and Orders", released around 26th of the month at 8:30am ET.

This is government index that measures the dollar volume of orders, shipments and unfilled orders of durable goods. Durable goods are new or used items with normal life expectancy of 3 years or more.

This report gives information on the strength of demand for US manufactured durable goods in domestic and international markets. When the index is increasing, it indicates demand is growing, which will result in rising production and employment.

Employment Situation

Published on 1st Friday of the month at 8:30am ET for prior month data. This report lists the number of payroll jobs at all non-farm businesses and government agencies. The unemployment rate, average hourly and weekly earnings, and the length of the average workweek are also listed in this report. This report is the single most closely watched economic statistic as an indicator of economic activity. Therefore, it plays a big role in influencing the market psychology during the month.

Its obvious from the report that the greater the increase in employment, the faster the total economic growth. An increasing unemployment rate is associated with a contracting economy.

If the average earnings are rising sharply, it may be an indication of potential inflation.

Source: Website listed below in the resource section.

Existing Home Sales

Published on the 25th of the month at 10:00am ET for prior month data. This report measures the selling rate of pre-owned houses. Its considered a decent indicator of activity in the housing sector.

This provides a gauge of not only the demand for housing, but the economic momentum. The data is revised monthly for the preceding month. There can be annual revisions for the preceding 3 years.

Gross Domestic Product (GDP)

Released in 4th week of the month at 8:30am ET for prior quarter, with subsequent revisions released in the 2nd and 3rd month of the quarter. GDP measures the dollar value of all goods and services produced within the borders of the United States.

This is the most comprehensive measure of the performance of the US economy. A higher GDP growth leads to accelerating inflation, while the lower growth indicates a weak economy.

Source: Website listed below in the resource section.

Housing Starts and Building Permits

Released around 16th of the month at 8:30am ET for prior month data. It's a measure of the number of residential units on which construction has begun.

It can be helpful to predict the changes in GDP. While residential investments represents just 4% of the level of GDP, due to its volatility it frequently represents a much higher portion of changes in GDP over relatively short periods of time.

Initial Claims

Published on Thursday at 8:30am for week ended prior Saturday. It's a government index that tracks the number of people filing first-time claims for state unemployment insurance.

Investors use this indicator's 4-week moving average to predict trends in the labor market. A move of 30000 or more in claims shows a substantial change in job growth. The lower the number of claims, the stronger the job market and vice-versa.

ISM Manufacturing Index

Released on the 1st business day of the month at 10:00am ET for prior month data. It's based on surveys of 300 purchasing managers nationwide representing 20 industries regarding manufacturing activities. It covers data such as new orders, production, employment, inventories, delivery times, prices, export orders and import orders.

It's considered to be a major economic indicator of all manufacturing indices. Readings of 50% or above are typically associated with and expanding manufacturing sector and healthy economy, while below 50 are indications of contraction.

ISM Services Index

Also known as Non-Manufacturing ISM is published on 3rd business day of the month at 10:00am ET for prior month data. This index is based on a survey of about 370 purchasing executives in industries including finance, insurance, real-estate, communications and utilities. It reports on business activity in the service sector.

Readings above 50% indicate expansion in the service sector of the economy. While below 50% indicate contraction.

Retail Sales

Published around 12th of the month at 8:30am ET for the prior month data. This index measures the total sales of goods by all retail establishments in the US. These figures are in current dollars, that is, they are not adjusted for inflation. However, that data are adjusted for seasonal, holiday -differences between the months of the year.

This is considered the most timely indicator of broad consumer spending patterns. It gives a sense of the trends among different types of retailers.

For complete resource listing, visit our blog at Stock Trading Ideas.

Stock Trading Ideas

Resources:

Sorry for the inconvenience, as we cannot post more than 4 links in our article. Please visit our blog http://stock-trading-ideas.com and under "Trading Resources" section, you can get the appropriate websites for up-to-date economic data.

Pricing Your Home In An Adjusting Market

The real estate market over the last several years has progressed through a number of phases. There is no doubt that a price adjustment has taken place in the real estate market in the last few years. Newspapers across the country have reported price adjustments in the residential market that seem to be affecting the entire nation but more heavily the east and west coasts.

During the years leading up to the recent correction, many property owners recognized substantial unearned gains as their property values skyrocketed. If an owner invested in an average house in January 2002 they would have paid roughly $145,000. Over the years, that value would have increased to $151,000 by the end of that year, then to $167,000 in December of 2003, on to $208,000 to end 2004, and to $284,000 at the end of 2005. Eventually, the investment suffered a loss back to $268,000 during the correction in 2006.

Year

Month

Price

Annual Gain (Loss)

Total Gain (Loss) Annualized

2002

Jan

145,240

Dec

150,862

3.9%

3.87%

2003

Dec

167,048

10.7%

7.51%

2004

Dec

207,688

24.3%

14.33%

2005

Dec

284,108

36.8%

23.90%

2006

Dec

268,193

-5.6%

16.93%

On the whole, the investment is very sound and has dramatically outperformed a "typical" real estate market. For an individual who has purchased their primary residence and intends to live in it for some time, a small market correction such as this is not a factor. In fact, the investor who has owned an income producing property for some period of time has still gained an appreciable return on investment and likely has a low enough basis in the investment that rental income can cover costs. However, for an investor who acquired property at the market's peak that may not be the case.

The underlying data is shown with all monthly averages on the chart titled "Change in Market Conditions." This graph plots the average price of residential homes over time along with the number of transactions in any given month. There are a few areas of note to be identified. First, note the seasonality in the chart. Contrary to common belief, summer months are the peak sales period for our area. (See Mid Year Trends - Market History. Also, note the price stagnation and reduction in transactions at the end of 2004. This period coincides with four hurricanes striking Florida. During this period it was extremely difficult to close sales because of insurance requirements. Further, compare the number of sales in 2006 to the previous few years. Clearly there has been a reduction in investor activity. Finally, recognize the trend inherent in the price graph. The graph shows a rise from a steadily improving market to a period of extended hyper-growth, followed by a peak and ultimately a small decline.

Back to the example of the investor who acquired property at the market's peak. The investor will have a very high cost basis. Given the number of properties on the market, it would be extremely difficult for him or her to recognize a gain on the transaction. The "market conditions graph" highlights the advantages of long term investments.

Market Stages in our Recent HistoryOne of the most important factors to consider with any market is that they move through various stages. Whether an investor is considering stocks, housing, or widgets, there will be periods of growth, decline and flat markets. The ebbs and flows of the market create valleys and troughs that represent the best and worst of any market. Obviously it is always best to try to "buy low and sell high".

Over time, however, most markets in an expanding economy such as ours will move in an upward fashion. The long term investor is sure to reap the benefits of this overall growth. At the same time, there are instances where an investor would like to liquidate their capital for purposes of reinvesting elsewhere. The housing market is somewhat unique, also, because the vast majority of real property owners are not investors but are individuals who are using their investment for personal purposes. They live in them!

Because of this uniqueness, there are times when a property owner would like to sell and the current market state is irrelevant. By way of example, a young family may want to move to a larger house as their family expands; an empty-nest family may want to move to a smaller house to reduce expenses; a family may need to relocate to another area for career objectives or to be closer to extended family. In all of these cases, the value of the house may be a consideration but would probably not be the overriding factor. Rather, the sale of the house would be incidental to the reason for the lifestyle change.

In either case, when a real property owner would like to sell, they should be mindful of the current market conditions and take an approach to ensure that they can achieve their goals. Let's examine the market stages in further detail. We can use our recent history to see the various market stages. The graphs below are subsections of the more comprehensive graph shown above.

In any market stage, there are various pricing strategies available to us. It is important to review each of the stages and the pricing strategies in order to explore what works and what doesn't in each stage.

GrowthUsing the data from the chart above, we can focus on January 2002 to December of 2003 and add a trend analysis. The data clearly indicates that while there were fluctuations on a month to month basis, the overall gain in the marketplace was positive. This type of growth is expected in the real estate market and, everything else being stable, should continue at a reasonable rate.

Data from 2004 and 2005, however shows something more aggressive. Instead of the traditional growth cycle, the market entered into a period of hyper growth leading to a substantial increase in market activity as the prices spiraled upward. Investors clamored into the market in an attempt to improve properties and "flip" them so to new buyers at ever increasing prices. During this time, many strategies had to be changed in order to conduct a transaction. It was not uncommon for many buyers to make offers on the same home.

FlatA flat market occurs when the price is neither increasing nor decreasing. We entered a flat market during the middle of 2005 and continued in it though the middle of 2006. During this time property values on the whole did not change dramatically. While there were subtle adjustments, the overall market neither contracted nor expanded. In fact, this time was highlighted by a lack of concurrence on the part of buyers and sellers. On the whole, buyers were willing to pay far less than sellers were asking. The result was a dramatic reduction in transactions that is obvious in the above chart.

DeclineOver the past twelve months we have seen a period of moderate decline. As record numbers of sellers flooded the market in order to attempt to capture premium prices, buyers receded from the market. Ultimately, an excess of supply and lack of demand reduced prices. The market continues to have dramatically higher supply than we had seen in previous years although it appears to be declining both as new buyers enter into the market and as sellers recognize that they can not sell homes at the extreme prices that were being offered eighteen months ago

Pricing Strategies in Various Market CyclesWhen it is time to sell a property, each market cycle offers unique challenges. For purposes of this discussion, we will assume that a seller wishes to maximize the dollar volume of their investment while trying to move the property in a reasonable period of time. It should be made clear that property owners may have a wide variety of reasons for selling and each has its own merits.

Growth market in any market cycle, one of the challenges is to determine where the market will be tomorrow. When a seller is in a growth market, it is tempting to wait until the market reaches a peak in order to maximize our return. There are a few flaws with that strategy. First, the peak is difficult to detect. Even after we have crossed over it can be difficult to see that we have passed the mark. If we could see it coming as easily as on a historic graph things would be much simpler. Second, once we've reached the pinnacle, the buyers step away from the market and sellers step in. At that point, values are already starting to decline. Finally, if an investor needs capital, he or she must sell the property.

Given these issues, please review the simplified example above. If we believe that we are in a growth market, one strategy is to price slightly above what we believe to be market value. Market value can be determined by reviewing comparable, current sales or through an appraisal. In a growth market, we can price above the market value and wait for the market to "catch up". In theory the property will sell whenever the asking price (yellow) falls below market value (pink). In this example, it should sell at the intersection of the two lines.

The difference between an asking price and the current value should be determined based on a few factors. Primarily we should be concerned about our opinion of the market. The higher the asking price is above the market value, the greater the risk that the market may shift before reaching our price. Further, we should consider the amount of time that we have for a sale. The higher our asking price, the longer it will take for the market to recognize our price.

This strategy was widely used during the growth and hyper growth periods leading into 2005 but will not work in our current market.

Flat MarketA flat market brings one of the largest challenges. When we are in a flat market it is very hard to predict where we will be heading next and how long it will last. In a flat market there is the obvious danger that the market will begin to decline. In the example below, the market value of the property is represented by the pink line. Any asking price below that line should represent a sale. However, with no substantial change to market value, a list price above market value will not sell. In this case, our strategy of pricing slightly above market will fail and the property will not sell. In order to move a property during a flat market, the best strategy is to price as close to market value as possible.

Because the housing market allows for some give and take during the offer and counter offer process. An asking price very close to market value may generate buyers who are willing to offer the highest possible price. However, a flat market is often highlighted by reduced transactions (as is the case between late 2005 and mid 2006) meaning that market value is more elusive as there are fewer comparable sales.

Declining

A declining market represents the highest risk of all three market stages. First, let's review the common strategy of pricing just over market value in an attempt to generate the highest possible sale price. In the example below, the seller has prices slightly higher than market value. As is the case in the flat market, the asking price (yellow) will not fall below the market value (pink) and the property will not sell. However, in this case the outcome is even more severe. Not only is the property not likely to sell but the value is getting further and further from the ask price. While this is obvious when shown in graphical format, it is perhaps one of the most common tactics used in residential real estate today.

Chasing a Declining MarketAnother common mistake when pricing in a declining market is a strategy called "chasing the market". It is not uncommon to see a property whose price has been adjusted time and time again over a listing period but without ever reaching current market value. This strategy is used as sellers try to maximize their return while still generating a sale. Invariably, the result is a longer sale for less money. The property generates a lower sales price than if it had originally been offered at a more aggressive price or reduced once to consider market value. In addition, the strategy leaves the property on the market for a longer period of time which incurs, at a minimum, tax and insurance costs. It likely will also incur a myriad of other holding costs and increase marketing expenses. A recent review of a number of properties currently for sale in the multiple listing service showed that 49% had a price change of some sort. These sellers are likely chasing the market.

Pricing based on active properties. Current market value is best determined based on recent closed transactions. However, in a hyper growth market it is not uncommon to see sellers determine the sales price based on the current asking price of other, similar properties (active asking price). The fundamental flaw with the strategy is that the asking price only represents one side of the transaction. It does not represent a meeting of the minds of a buyer and seller but is rather what a seller would like to receive.

However, there is one instance where the active asking price can become a factor. The current ask price of similar properties on the market can be used as an absolute ceiling. Let's take a simple example in which there are 100 identical units in a condominium. Ten units were sold last month. There are ten more for sale. Each of the ten units that sold last month was sold at $500,000. It would seem reasonable that the market value of any unit in the building is $500,000. However, if the ten that are for sale this month have an asking price of $400,000 each, it is likely that the market has shifted since the previous units had the meeting of the minds between buyers and sellers. If a new unit were placed on the market with an asking price of anything over $400,000, the seller would be forced to wait until the ten new units were all sold before his would be sold. Obviously this is an overly simplistic example but it represents an important factor.

Cost based pricing. One of the most common approaches to determining the asking price for a piece of property is to analyze the costs associated with it. Let's take the following example:

Purchase Price 100,000

Taxes Paid

5,000

Insurance Paid

10,000

Closing Costs

5,000

Net

120,000

Sales Commission

8,400

Net Costs

128,400

A buyer purchases a piece of property for $100,000. The buyer holds the property and pays taxes, insurance, and other costs. The total net cost of the property is $120,000. To sell the property will require a real estate commission so the total sales price should be $128,400. Often, the seller will add in a little "wiggle room" and price it slightly higher.

Unfortunately, the market does not care about your costs. The market only cares what a reasonable price is for the property. If the property is worth $200,000, it will easily sell for $130,000. However, if the market is still flat, the property is likely still worth $100,000. This type of analysis has become more and more common with the creation of 100% financing and interest only loans. All too often a property owner has purchased a home based on a maximum amount that they can afford and has never been able to service the principle of the loan. Instead they pay only the interest due. In those scenarios, the current mortgage is likely the same as the original purchase price. In a declining market that means that the seller may have less equity in the property than they currently owe to the bank. Unfortunately, the cost basis is irrelevant to the market.

As an example I've used to clarify the weakness of cost based pricing, consider a call to your stock broker in which you say "Larry, please sell the 100 shares of XYZ that I bought last year fro $100 each. I'd like to cover your commission on the buy and sell side so let's sell them for $140 each."

Worse, consider if the shares are currently trading at $50. What is the broker going to tell you? Stocks, like anything in a free market can be sold only for a price that both the buyer and seller agree is reasonable. Attempting to sell at too high a price based on your needs simply does not work.

Summary

We've examined the various market cycles and have reviewed a number of strategies that are used and a series of common mistakes. The truth is that pricing in an adjusting or declining market is simply more difficult. It tends to include conversations that lead to anxiety. When the market is declining some people will lose money. Luckily, those that are in the market for a long period of time are often very secure. You need only to look at the gains that occurred prior to 2005 to see that there are earnings out there and plenty of them.

Given all of the information above, what is the best strategy associated with declining markets? First, consider your objectives. If you can wait for the long term, don't sell. However, if the decline lasts for longer than you expected, the long term may be a while. If you decide that you need to sell now, be aggressive. Think about an aggressive pricing model that will help your home to move quickly. Even in a declining market, properties are offered which generate excitement. These are the properties that will create a sale for the owner and will throw off cash.

Work with a professional to determine the current market conditions. Build a value model based on similar properties which have recently sold. When considering similar properties, find several and eliminate the highest and the lowest priced. For each recent sale, identify attributes of the property which could have positively or negatively affected the value and make adjustments accordingly to develop true comparable data. Use the aggregate of all of these sold properties to determine market value. Repeat the process to determine the adjusted asking price of those homes on the market now. Remember that the sold homes represent the market value unless the asking prices are lower in which case the market has shifted and the adjusted asking price may represent the market.

Using the lower of the two as market value, consider how much risk you are willing to take. If you are a risk averse person, chose a price considerably below this new market value. If you are risk inclined then consider pricing at the market value. Regardless of your risk profile, be ready to make adjustments as the market shifts.

John Adams is a native of the Daytona Beach Area and is a third generation real estate broker. His education includes a Bachelor's of Business Management degree from Florida State University and a Masters of Business Administration from The Kellogg School of Management at Northwestern University. Your Adams, Cameron & Co. sales consultant can help you with this process and can review the day to day activity in your market area to ensure that your property is in a position to move. For any questions, please contact the the http://www.adamscameron.com Daytona Beach Area's Largest Real Estate Company http://www.adamscameron.com

Post-Capitalistic Free Market Economy - How America Can Be Rescued (Part III)

After presenting the character of an individual in American society, as its first basic component, we now proceed with consideration of the other two namely private organizations and public institutions. Economic organizations are the subject of our main consideration. This is where the heart of problem rests as far as it relates to democracy and equality of opportunity. Under the domain of monopoly and oligopoly capitalism, which is the main feature of American economy, as concluded by one reliable study, a few thousand super rich (a little over 7,000) control or at least highly influence not only the economy of the country but also its essential political and social institutions such as media, education, and health care.

Control of information system is vital to the economic elite in order to control or influence public attitude about justification of capitalism as well as major domestic and foreign policies. Freedom of thought and speech is essential to a democratic system. There must be a free expression and competition of ideas and symbols. This essential freedom is guaranteed to Americans by the First Amendment to the U.S. Constitution.

In modern society the interchange of information and expression of ideas is to be achieved through the mass media. The American mass media constitutes of about 19,000 radio and television stations, 1,700 daily newspapers, 7,000 other newspapers, 9,000 periodicals, over 4,300 film producers and distributors, and 1,300 publishing companies. But, the elite, through a few business and financial firms controls the three major television and radio networks - ABC, NBC, CBS - and 34 subsidiary stations, 201 cable television systems, 62 major radio stations, 59 magazines, including Newsweek and Times, 58 major newspapers, including The New York Times, The Washington Post, The Wall Street Journal, and The Los Angeles Times, and 41 publishing companies. 75% of the stocks of the three major television networks, where the American public receives most of its information, are owned by five major banks.[1] According to another study, in the long run, the mass media cater to elite individuals and elite institutions upholding their actions and policies. [2] Besides the information system, the elite group, consisting only of 0.4% of one percent of households, controls the economy and government. This control is effectuated through the top one-fifth of the population who are the supporters of the elite family and its beneficiaries.

Consequently, the richest one-fifth of the population owns about 77% of all personally held wealth and have control over 97% of privately owned corporate stocks. Thus, the richest one-fifth has three times as much wealth as the remaining 80% of the population and full control of all major business and economic institutions. Through the control of the governmental process the elite rips off the American taxpayers by the means of government subsidies. Gaylord Shaw of the Associated Press has pointed out that private enterprise in America collects roughly $30 billions a year in government subsidies and subsidy-like aid, much of it hidden or disguised. A government-wide study, undertaken by the Associated Press, disclosed evidence that the total is at least $28 billion a year, and may run as high as $38 billion. [3]

The government's outstanding loans to private business- direct, guaranteed, and insured- came to about $250 billion in 1973, six times the outstanding credit advanced to business by all commercial banks. The figures may go much higher at the present. The big business gets the big bite mostly away from public attention. The exploitive benefits appropriated by the economic elite amounts to about $380 billion a year or an annual rip-off of $1,700 from every man, woman and child in the country.

The third component of a democratic society is its public institutions. The United States is praised and admired by the foreigners as well as most of its citizens for its political democracy. This perception is not the result of a true representative democracy but the effect of propaganda and conditioning of Americans through the mass media and educational systems influenced and controlled by the elite. A few who are expert in American political system and process and have impartially studied the system would find this claim of democracy far from the truth. They will attest that there is no democracy in the United States consciously supported by the majority of the voting population. The so called "democracy" is a facade, a pretentious process created by the elite to sustain its status as well as the stability for its capitalistic operation and maximization of profits.

To elaborate on this statement we may start, first, with the two major political parties which control all the national and state governments. Both parties are strong supporters of capitalism and are controlled by the capitalist elite. Apparent differences are only cosmetic. Through the control of state governments both parties together have been able to establish harsh conditions for development and success of any third party; and by establishment of single rather than proportional representation districts, they have been able to monopolize the electoral system excluding any hope of success for any minor third party. They can even act to outlaw a rising third party and officially destroy it. This is what exactly happened in the1920s when the Socialist Party developing strong, was able to capture the government of many cities and gain representation in state legislatures. The party was declared illegal, its leaders were arrested, its offices were destroyed and its funds in banks were frozen. It was not until the 1970s that under the Freedom of Information Act the party had access to government archives, sued the government and was granted damages.

Second, mainly because of the control of the two major parties by the elite and their commitment to the capitalistic economic system, people have moved away from these parties ever increasing the size of independent voters, doubling its size during the last 30 years. Presently, more than one-third of the eligible voters consider themselves as independent and the electoral success of any of the two major parties depends on each party's ability to attract more independent voter. Neither of the two parties has a long range objective and philosophically both are strongly capitalistic oriented. For this reason there is no ideological loyalty to the party, only 5% of the membership take active part in party operation, and members of one party voting for the candidate of another during different elections in not unusual.

Third, whether a party member or not, masses of voters do not bother to participate in the elections- about 52% in presidential, 30-40% in congressional, and 10-30% in local elections. The result has become the takeover of the electoral system and ensuing governmental functions by the elite and major interest groups supporting it. In actual sense, in the United States we do not have majority representation either at the national or state level.

Candidates are selected by a small minority of the eligible voters. For example, if a presidential candidate received 54% of popular vote, when only 52% of the eligible voters actually voted, he becomes elected by only 28.6% of the total eligible voters. He represents a small minority and not the majority of the voting population. In 1980 Reagan received 51.6 % of the popular vote where only 54% of the eligible population voted. It was proper to assume that he received only 27% votes of the total eligible voters. For his second term, he received 59% of the popular vote amounting only to 29% of the total voting population. For the same token, in the 1988 election Bush received 54% or 27% of the total voting population. In 2000 and 2004 elections Bush received 25% and 26% of the total eligible voters respectively. The situation is more tragic in the case of congressional members and local officials.

Fourth, constitutionally, states have control over the electoral process including those pertaining to the national offices. Therefore, states are where nearly all antidemocratic activities rest. Financing the elections, particularly the campaign expenditures by the candidates is mainly controlled by the elite through direct or institutional contributions. In general this is handled by each party in a way that ordinarily over 95% of the House representatives and 86% of senators are continually reelected. Nearly all of them serve the elite family. At the time of any social unrest this Congress passes appropriate welfare legislation by which a few billion dollars is distributed among the poor and lower working class or small farm operators in order to quiet down the situation and maintain stability for the proper operation of the elite institutions. Another serious problem relates to the process of voter registration which is more or less, and at times highly corrupt, in favor of one party or the other. The money for such programs, presently amounting to hundreds of billions of dollars, does not come out from the elite pocket but mainly from those of the middle and working class in the form of additional taxation. Many rich people, thanks to laws passed to protect their income, either don't pay any tax or pay a very nominal amount compared to the size of their annual income. To show just an example, according to an Internal Revenue Service report, of 529,460 couples and individuals who reported total annual income above $200,000 on their tax returns, 595 paid no taxes while their income averaged $600,000and two out of every three had capital gains averaging 490,000. Another 33,805 having incomes over $200,000 paid only 15% tax, typically less than a middle class family, and 3,000 paid less than 10%.[4]

Another serious electoral problem relates to the process of voter registration in each state which is regularly abused in some states and manipulated in favor of one party or another. During a presidential elections this abuse is estimated to be in excess of two million votes. For example, the studies show that in 2000 presidential elections in florida alone, tens of thousands of Afro-American voters, 90% of them expected to vote Democrat, were deprived from voting through registration abuses.[5]

With all these factual observations, one can easily conclude that there is no real democracy in the United States, at the national level in particular. The effect of such lack of democracy has placed the nation in over six trillion dollars in debt the major beneficiary of which has been as always the economic elite. Over $250 billion a year is paid in interest on this debt by taxpayers money. Realistically speaking, the U.S. President and Congress are both strong supporters and protectors of the economic elite and major interest groups which contribute to their electoral campaigns. The U.S. foreign policies are not based on international law or mutual respect to sovereignty of other nations, but to protect the U.S. capitalistic interests abroad. Any system not sympathetic to capitalistic values is not considered democratic. Such countries are considered not friendly to American policies, therefore, subject to pressure and regime change. For example, U.S. seceded Panama territory from Colombia in 1903 to build the Canal because of the Colombian government's rejection of the project. It has controlled the politics and economy of the country since. When General Noriega disobeyed, Panama was invaded in December 1989 and an "appropriate" obedient government was installed. Noriega, the head of a foreign country was captured, brought to the United States, tried, convicted and jailed. Granada was invaded in October 1983 to oust a Marxist oriented socialist government. An acceptable government was established under the U.S. occupation. Dominican Republic was invaded in April 1965. It was also occupied from 1916 to 1924. Troops were sent to Mexico in April 1914 to block arms shipments to Mexican revolutionaries. They stayed in Mexico for eight months. Haiti was invaded in 1915 and it remained under occupation til 1934. U.S. Marines were sent to Nicaragua in 1912 to protect the friendly government. Some Marines stayed there for 13 years. They were sent again in 1927 and stayed til 1933 when Samosa was established as the ruler. The Samosa family ruled until the Sandinista revolution in1979. U.S. troops landed in Honduras in three separate occasions, between 1912 and 1926, to protect American business interests. Starting in 1980 U.S. troops were regularly stationed in Honduras in order to protect Contra rebellion forces and impose pressure on Nicaraguan Sandinista government. Between 1898 and 1921 Marines were landed in Cuba on four occasion and remained there for a total of 12 years. U.S. established its present naval base at Guantanamo Bay in 1903. In early 1970s Chile democratically elected a Marxist government and chose Dr. Allende as President. This tended to destroy the U.S. government's theory of associating Marxism with dictatorship which was the basis of the Cold War policies. The Chilean government had to be overthrown. It was done by the CIA and millions of American taxpayers money in 1973.

These are just some regional examples. The U.S. has followed the same lawless and often utterly brutal and destructive foreign policy, causing thousands of death and distraction of properties, through overt and covert actions in other parts of the world particularly in the Far East and the Middle East, anytime the U.S. elite had substantial economic and ideological interest. For example, the U.S. government efforts, in 1960s, to change the Marxist oriented socialist government of Indonesia, ruled since 1945 by Sukarno, and establish a new friendly system under the rule of Suharto caused a genocide by the new government of over 800,000 mostly innocent lives of men women and children. In just a few months in 1965 more than 200,000 people allegedly associated with Communist Party were slaughtered.[6] Since 2001, tens of thousands have died in Afghanistan War and, according to new estimates, over one million have been killed in war in Iraq, over 95% innocent men, women and children, and 4.5 million have been displaced one half of them escaping to the neighboring countries and the rest becoming refugees in their own land.

Some decades ago the great American Philosopher John Dewey described the American system as follows: "the reactionaries are in possession of force, in not only the army and police, but in the press and the schools. The only reason they do not advocate the use of force is the fact that they are already in possession of it, so their policy is to cover up its insistence with idealistic phrases- of which their present use of individual initiative and liberty is a striking example.... It is absurd to conceive liberty as that of the business entrepreneur and ignore the imminent regimentation to which workers are subjugated, intellectual as well as manual workers.[7] The American political system is not democratic in a true sense. Democracy is used carefully and skillfully as a facade to cover the ills of capitalism and actual control of the system by a very small elite.

References:

1. James Burns et al, Government by the Poeple, 14th ed. Englewood Cliffs, N.J.: Prentice-Hall, 1990, p. 279.

2. Ibid., p. 302

3. United Press International, "Tax breaks Cost Treasury $44 Billion," Wisconsin state Journal, June 5, 1971, Sec. 1, p. 3.

4. Associated Press, Washington, D.C., "Tax Dodge. Some still Don't pay U.S.," Wisconsin State Journal, Sunday, October, 1989, p. 6A.

5. For a detailed documentation see Reza Rezazadeh Electronic Electoral System: Simple, Abuse Free, Voter Friendly, Xilibris, 2002, Chapter 2.

6. World Book, 2001, vol. 10, p. 238.

7. John Dewey, "The Future of Liberalism," The Journal of Philosophy, vol.32, no. 9, April 25, 1935.

Dr. Reza Rezazadeh

1080 Eastman Street, Platteville, WI 53818

Phone: (608)348-7064

Professor Emeritus at the University of Wisconsin System,and a Fulbright scholar, a multi-disciplinary, multi-cultural, and multi-lingual scholar with background in Mechanical Engineering (B.S.M.E.), Continental and Islamic Law (Licenciate), J.D. in American Jurisprudenxce, LL.M. in International Law and International Economics, Ph.D. in Political Science, Economics and Administration, and Doctor of the Science of Law (S.J.D.) the highest law degree offered in U.S. Fluent in five languages: English, French, Spanish, Persian, Azeri-Turkish. Elementary knowledge of Arabic, Urdu, Russian and Italian. Patented inventions; an artist, a poet (oil and pastel), a musician (violin), with over 35 years of academic background in teaching, reseasrch and administration, research and cultural studies in many countries in Europe including USSR, Middle East, Central Asia, Northe africa, Central and South America. Author of 8 books and many scholarly articles listed in his website http://www.democracywhere.com

Understanding Fannie Mae, Freddie Mac, and the Housing Market

In order to understand the relations between the Government Sponsored Enterprises and the Housing Market, it may be best to start with a little review of Fannie Mae and Freddie Mac's historical background. It all started when Franklin D. Roosevelt's New Deal came into effect. The federal government established the Federal National Mortgage Association, better known as Fannie Mae, in order to help reform the financial system during the Great Depression. 

Fannie Mae's purchasing authority began with the Federal Housing Administration's (FHA's) insured mortgages. In 1944, it expanded to include loans guaranteed by the Veteran's Administration (VA).   In 1968, the Vietnam War caused a strain in the national budget, which forced former president Lyndon B. Johnson to sign an amendment to Fannie Mae's Charter Act. This new Act was to free up space in the government's national budget by turning Fannie Mae into a private, shareholder-owned company. However, Fannie Mae was and is still currently a government sponsored enterprise (GSE). This means that Fannie Mae has the benefits of being privately owned, publicly traded, and operated by shareholders while also having the benefits of tax exemption and government support.   

In 1970, the Federal Home Loan Mortgage Corporation (Freddie Mac) was established to control any further monopolization exercised by Fannie Mae. In the same year, Washington authorized the two GSEs to purchase conventional loans, which is currently comprised of prime and subprime loans. Prime mortgages are designed for borrowers with good credit who typically receive lower interest rates and more affordable mortgage options. Subprime mortgages are typically offered to borrowers who have low credit scores and/or fit into the lower income bracket.   Fannie Mae and Freddie Mac were designed to open opportunities for homeownership. Therefore, they need to produce the business necessary to make homeownership affordable for borrowers. These two GSEs are not lending institutions and therefore do not lend money to borrowers directly. Instead, they provide funds to the lenders through their secondary market functions. The secondary market constitutes some of the highest buying authority with purchases being exchanged between lenders, banks, and savings institutions.   

Foreign investors have helped Fannie Mae and Freddie Mac receive the necessary funds for the U.S. Housing Market in exchange for the guarantee that the principal and interest will be paid back regardless of borrower defaults. The added comfort for foreign investors came from the government backing that these two GSEs have. Fannie Mae and Freddie Mac have written guidelines that set the limit for conforming loans. These guidelines are set to minimize the credit risk of borrowers, who go through a series of paperwork and qualification process in order to determine their likelihood of mortgage default.     

How do Fannie Mae and Freddie Mac make money? They charge lenders who in turn charge the borrowers a guarantee fee on loans that it has securitized into mortgage-backed security bonds. In addition, Fannie Mae and Freddie Mac profit from the difference between the interest rate they charge the homeowners and the rate their investors charge them.   

Subprime lending turned into an avenue of increased possibilities for the two GSEs. Higher risk borrowers meant higher rates charged. The higher the rates charged the less likely the borrowers were able to qualify. Therefore, programs that increased the borrower's ability to qualify became more available. Such programs include adjustable rate mortgages, balloon mortgages, interest only, and increased amortization periods. The increased available programs produced more competition between the mortgage giants. In the 1990s, the two GSEs began their participation into subprime lending with A minus bond purchases. Over time, the competition within the subprime mortgages that were offered to high risk borrowers caused an increase in home values, which in turn caused an increase in equity available to borrowers. This led to equity liquidation, which provided temporary available funds for homeowners. Many high risk borrowers accepted adjustable or negatively amortizing programs in order for them to qualify for their mortgages. These programs made it temporarily affordable for borrowers to pay their mortgages.   However, after a certain period of time (typically three to five years), the mortgage programs that were accepted by these borrowers forced them to find an alternative to their mortgage term as their mortgage's adjustable rate caused their payments to increase.  

Today, subprime lending is almost nonexistent. Lesser programs have become available to borrowers who have had their equity reduced and debts increased. Increased delinquencies have caused lending institutions along with other mortgage giants to tighten their guidelines and minimize programs that were once created to increase homeownership across the country.    

The GSE bonds backed with subprime loans may appear to be causing quite a stir, not only in domestic markets, but in foreign markets as well. As of the end of March, approximately $1.5 trillion in securities were held by foreign investors. There is speculation that the GSEs might be asking the U.S. government for additional help in the matter. Will the government come through for these two companies? What will the additional costs be to taxpayers? How will Americans cope with higher consumer prices and less income due to higher taxes? Is it possible for the government to help both the GSEs and their digressing economy?        

Karlyn Katigbak has had years of experience working in different arenas of the mortgage industry from real estate and mortgage sales to processing, underwriting, and making due diligence decisions in the secondary market. She is currently one of the owners of a company that specializes in helping with the rehabilitation of properties during our current foreclosure crisis. In addition, Karlyn spend a lot of her free time helping borrowers find an alternative to foreclosure [http://www.myloannegotiator.net/] as well as finding homes for investors and future homeowners.

Karlyn invites you to please comment on her blog found in http://loanmods.blogspot.com/

More on Bootstrap Marketing - One More Way to Launch Your Product in a Tight Market

Every business, organization and individual I know has been impacted in some way, almost always negatively, by the current economic downturn. The ripple effects of slow sales, shrinking home equity, foreclosures and job downsizing has been pervasive. Governments are experiencing record dips in tax revenues. Church and charity donations are logically imploding as citizens attempt to shore up their personal finances and survive the fiscal carnage taking place all around them.

As job losses occur, and I believe more startling, many of these jobs will not be replaced when the economy returns to a more normal footing, my marketing consulting firm is approached with a slew of new business opportunities being presented by fired and laid off workers. Many are former middle managers who have been terminated and received some type of severance package. Their goal is often to leverage this small purse into a business opportunity.

Some have panic in their eyes as they try to find an alternative way to make a living. Some are simply unrealistic. Many think they will need to fund their start-up with an investment round from angel investors. Most have never tried to launch a product before so the process is obviously daunting. The advice we seem to provide most regularly is this: slow down, vet your business plan again and be realistic in the assumptions you are constructing your enterprise around.

The universal issue that confronts entrepreneurs, and always has, is funding. If you have no available funds, cannot put any sweat in the game, or expect to use OPM (Other Peoples Money) in lieu of your own, stop now. There are Angel Investors who invest in early stage startups, however, they are rare, highly targeted and exceedingly choosy as they have a virtually unlimited supply of opportunities available. Most investors use the old three F adage for launch funds: "this type of start up money comes from Friends, Family or Fools".

So what can the newly driven entrepreneur do to launch a product in a competitive market with only a small amount of working capital on hand.

We typically attempt to customize a strategy including guerrilla and bootstrapping marketing. There is no single definition or road map for this type of market penetration strategy. Much like guerrilla warfare, which is free flowing and conducted based on terrain, climate, force size and enemy disposition, new products should take the approach that there is a chink in market armor, discover it and fill the niche.

Almost always a bootstrap marketing campaign starts at the local level. Every entrepreneur wants to see their product on every store shelf in America from the get go. However, the capital requirements required to support national distribution is huge. By working the home turf the product can be nurtured, tested, seasoned and most importantly proven. The most important day in any new businesses life is the day a re-order is placed. This confirms the first stage of market acceptance.

Here is a simple example of bootstrapping a product that we have utilized numerous times to successfully get a line of product in front of consumers:

Let's assume you have a gourmet food product that you are keen to get to market. Utilize the services of local private packer and build a minimal inventory.

Be sure to make sure that the packer signs a secrecy agreement that protects your recipe. Make sure that the label meets all government requirements.

Produce a short film production (DVD) with voice over, music optional. Modern recording equipment makes this process virtually zero cost. Shoot the piece (video loop) at home, or on a picnic table and in the lab/commissary of the private packer. Detail the product, how you developed the product, have on air quotes for attribution from friends and others that love the product and possibly show the lab work being done to safely produce the item in a government licensed facility.

If you live in a town that has five malls or lifestyle shopping centers, choose the property that has demographics most likely to appeal to consumers of the type of product you are selling. Then negotiate with property management to rent a cart or kiosk on a monthly basis. January through September you will pay a basic rent. October through December, the holiday season, your rate will soar, but so will sales.

Typically shopping centers are open about 70 hours per week. The cart can be manned by you, family members or hired students with a minimal salary and a commission incentive. The stand can be inexpensively merchandised with point of purchase display, signs and a television running the DVD video loop. Demonstration of the product will enable consumers to experience the features and benefits of your product. If the product is a food product, you will want to sample the product, for instance.

Once sales commence, and proof of product performance is confirmed, the kiosk can be replicated in nearby malls and ultimately in proximate cities. Typically, we plan sales models to enable the expansion of the cart or mall kiosk to additional locations utilizing the profit from the alpha location.

The bootstrap path described above is just one way to launch a consumer product without the benefit of a funding round or a rich Aunt Bertha available to write a big check. Most people do not have rich friends or family to reach out too for investment. The venture capital process is slow, daunting and fraught with tons of competition chasing precious few dollars. Nevertheless, successful entrepreneurs find a way and bootstrapping is often the most available method of getting a product to market.

We have used variants of bootstrapping many times to benefit clients seeking to overcome launch hurdles. Flea markets, consignment, advertorial, local management of national chains, targeted direct response and many more avenues can be crafted to fit the bootstrap model. Most new entrepreneurs have been lead to believe that a heavy capital investment is essential to insure marketing success. Experienced entrepreneurs know otherwise. They know that there are many other, usually more attainable, ways to achieve their goals.

Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.

After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.

Geoff Ficke and his consulting firm, Duquesa Marketing, Inc. (http://www.duquesamarketing.com) has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, capital formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Miami University, Oxford, Ohio.

Sobriety and a Niche Market

"The worst thing about some men is that when they are not drunk they are sober."

William Butler Yeats

Sobriety is a good niche market with estimates from various US National and World agencies stating that roughly 10% of the worlds population is affected by the disease of addictive personality.

Subsequent articles to this will concentrate mostly on the alcoholism, however, the physical maladies of the brain and the emotional affect on the psyche will be similar among addicts, regardless of the substance they use. Drugs, (prescribed or street), food, sex, gambling, codependency,shopping and numerous other obsessive compulsive behaviors can be identified and treated in a similar manner as alcoholism.

As a niche market it is, however, not a lucrative money maker, because the drunk spent all his money on booze. Although the previous statement was intended to be funny, the sad but more realistic reason for the limited market is the social stigma that is still associated with one being an alcoholic Another reason insurance companies and other agencies are unwilling to spend money on qualified treatment has been the limited success rate of treatment. Claims of success in excess of 5% are usually qualified with a disclaimer. The illusion that one is spending good money on a bad person is tacitly real. Sometimes the affected family, employer, or the courts,find resources to finance treatment for the sick and suffering.

The drunk seldom suffers, until he tries to sober up.

One of the greatest travesties in the United States of America is that Insurance Companies are allowed to dictate to the treatment community how long treatment will be and what treatment will

consist of. The concept of the 28 day treatment regime has been dictated by the Insurance companies and has absolutely no relevance to the need of the individual patient. If a patient needs a longer exposure to primary treatment and possibly extended treatment, they are rarely covered for the additional expenses.

One of the more successful programs to relieve the alcoholic of his physical and mental dependency is (AA) Alcoholic Anonymous. The basis for the AA program is a belief in a spiritual condition produced by the individuals understanding of a Higher Power. As soon as the insurance companies see or hear of anything that is not a medical/drug treatment program they are adamant about providing treatment. To bring a God into the realm of personal well being is not politically correct nor does it warrant the expenditure of their monies. The concept of insurance is a very vague and mysterious market, and when it concerns a drunk you can be assured that cost of treatment is limited to doctors and drugs. However, every life has a value and unless one tries to help, no one will know who may or may not benefit from treatment. Just like the disease of diabetes an alcoholic has a brain physiology that has been altered. Once altered the brain can never be returned to what may be considered normal. The analogy that is the most common to explain this phenomenon is:" you can make a cucumber into a pickle, but once a pickle always a pickle."

A recent TV campaign from a California rehab, owned by a man who wrote a book, are absolutely silly.

Anyone claiming a cure, is not in their right mind, nor their left mind. The man should be taken off the air for spamming. Great marketing, and sure to believe, he'll make money. Insurance companies support his program because it is medically ascribed to. He avoids false advertising suspicion by making no claims to percentage of treatment success.

Today's economic conditions are only going to feed the fires of abuse, and subsequent need for treatments. Stress and sudden changes in life styles can be devastating to the average person. Should that person have an addictive personality, the need to stop the depressing feelings of guilt, shame and failure will almost surely lead to substance or behavioral abuses.

If the drunk is not willing to change, someone is wasting their money.

(Please feel free to contact me, should you have a questions or suggestion.)

Happiness is helping someone help themselves.

Iris and ME (Michael Erb)

Iris and ME (Michael Erb).
Spring Hill, FL, United States
Two nice old folks just hanging out, not hurting a bug or anything larger. I'm a former school teacher with a very broad background. I was a jack of all trades and a master of none. However, the years have been kind to me and I have been able to master a few skills. Actually the skills I enjoy the most are God given talents that I now use to help others.

The Gift That Keeps On Giving - A Money Market Savings Account

An absolutely safe way to store $100,000 of your Money in the bank, that pays a nice yield is in a Money Market

Savings Account, also known as a Money Market Deposit Account. They are insured up to $100,0000 (if

a retirement account, up to $250.000) by Federal Deposit Insurance Corporation if in a bank, and if in a Credit

Union by National Credit Union Share Insurance Fund. With a spouse you can also have a joint account also

insured.

With your Money Market Savings Account or Money Market Account, there is a minimum balance, but the money

market account pays about twice the interest rate that a Passbook Savings Account or a Statement Savings Account

pays. The rates are set by the bank or credit union to reflect the directions of overall interest rates and can change

on a daily basis although most banks change only weekly. The money market savings account has advantages

of liquidity, security, and accessibility. You don't have to worry about the vagaries of the stock market,

about price/earnings of different companies, about income statements, and balance sheets. No second guessing

is required - Should I have gone to large income producing stocks, or small-cap stock, or midsize-cap stocks,

should I invest internationally, or domestically? Or should just go gamble a lot of loot on Junk Bonds.

Unlike the other money making funds of stocks, bonds, or mutual funds which invest in stocks, bonds, commercial

paper, REITs ( Real Estate Investment Trusts) mortgages, Treasury Bills or Corporate Bonds, you can be assured

if you have the protection in knowing if you should need the money in the bank, it will be there. If you have more to

invest than the insured amount you can open up new accounts at other banks or credit unions. which are then

insured up to $100,000 or if a retirement account up to $250,000.

In fact, you may wish to consider a credit union. Credit unions are groups of people with some common bond

who form a cooperative. They may work at the same company or belong to the same branch of the military, or

take part as members of the same church or religious community. Since the members are the owners, the

profits come to them. Often Credit Unions offer beneficial compounding and a good rate of return on your

money, than other banking institutions. The more often interest is compounded, the faster the interest grows.

You may wish to consider using one of the large online banks and make deposits in you Money Market Savings

Account through cyberspace. You can find online banks advertised on various money and financial

websites.

After you build up a nice, safe nest egg, and if you have a tolerance for risk and you want your money to work

for you in more diversified ways; you may wish to put your money on Wall Street by starting some money

making funds, the most common of which are mutual funds. They are made up of all combinations of stocks,

treasury bills, commercial paper, junk bonds, Fannie Maes, etc., and you can choose between investing

in managed funds wihch usually have a large management fee or an index fund wich is indexed according

to the S&P or NASDAQ or some other index, which often perform well and have low management fees.

My name is August and I am a baby boomer. I've been retired for 4 years. I enjoy gardening, reading, and studying investments and finance. Please visit my website, Money Saving and Funds and my blog, Money Market Savings Account

7 Steps To Determining The Market Value Of Your Business

I help business owners improve, turnaround, sell, or even buy a business. Among the most common questions I get asked is this: How do you determine the market value of a business?

Here are-pretty much in order--7 basic steps for how a business is valued.

1. Black Ink

What is the net income of the company? This one will surprise no one. We are talking about pre-tax profit here. In the last analysis, we are in business to make a buck. Hence, the blacker the bottom line, the greater the value of a business.

Be careful here. Make certain your accountant (even if that's you or a family member) constructs a profit and loss statement that shows the true profitability of your company. By that I mean one that includes only expenses that are absolutely tied to the business. Most businesses are rife with what I call "gray expenses." Gray expenses are those that may be accepted by the IRS but are not necessarily critical to the business in question. Traveling, entertainment, even medical and insurance expenses can be gray. Get those out.

Does an unprofitable business have no value Not necessarily. I can tell you as one who does turnarounds, that if there is evident potential for turning it around it may have real value. Besides that, there is the Hardware Store, our next point.

2. The Hardware Store

The printing industry is capital-intensive. Heavy equipment dollars need to be spent to make your operation competitive

That hardware (and not so hard-ware) has value. It is called tangible assets. Value the equipment at cost and add that to the valuation. A buyer wants a turn-key operation, not just a profitable enterprise grinding away with equipment in disrepair and needing replacement.

There are businesses that are currently not profitable but not due to any recession, but rather to recent equipment acquisition. Such businesses may become profitable once the sales and marketing capitalizes on the efficiencies of that equipment.

3. Service with a Smile

The more a business depends on the quality of its service the better. The reason is that service is far less costly to a company than constant equipment upgrades.

Now I understand niche printing and all the rest. But if you have a unique mousetrap, chances are it won't be long before your competitors find the right cheese to make a similar one.

If you can bullet-proof your service and show that the income flows heavily from that service you have a stronger company.

4. Rain Coat

Insurance companies, huge tax firms, funeral homes, even large pest control companies are raincoat clients. They do business no matter the economic weather. People need to be insured in every economy, the tax man comes annually recession or not, termites don't knock off during economic downturns, and people keep dying in good times and bad.

This is more a matter of degree than kind. In other words, companies are more or less affected by the economy. The point is this: the more accounts you can get that hold up in good and bad times the stronger you are.

4. Goliath is not Your Friend

The broader the base the better.

I once had an east coast printing client, let's call him Harry. He was swimming in wealth because he had a contract with a national company based in NYC. They placed the orders, he produced them, and the cash register sounded like the Mormon Tabernacle Choir.

Until that national Goliath opted to redo the contract. That's right. Year after year, as Harry's costs went up, Goliath wanted better pricing. Sound familiar? Of course it does. Harry wound up selling his company under duress.

The broader the base, and the less dependent on Goliaths the better.

5. Up, Down, or Sideways

Are sales increasing, stable, or decreasing? More particularly, how much are they increasing or decreasing or how long have they been flat-lining?

This is a complex issue. Sales may be driven the economic conditions, internal issues at the company, seasonality, or any of a variety of other factors. The point is this. Is the arrow pointing upward or at least straight out or not. If not, can this be turned around?

6. Instant Coffee

Believe it or not, coffee was not always instant and fast-food restaurants did not exist.

We are less patient now-with everything.

What does this have to do with the market value of a business? Just this. Smart valuators look at a business and ask themselves: Could a new owner walk in and run this business the day he or she took over? This involves the key personnel, the hardware store, and how well organized the operation is.

The closer the answer is to being truly turn-key, the better the business.

7. Do You Have Tenure?

Professors and Supreme Court justices are pretty much the only people in this country that get tenure-lifetime job security.

Printers surely don't. But the older and more established the company the better.

This one doesn't rank very high, because clients often could care less about how "Graybeard Service has been meeting the needs of our metropolitan area for the last 14 billion years," but it does speak to company visibility in the marketplace and, as such, merits note.

Disclaimers

Remember, this is just a start, my friend. Every business is unique and so one size doesn't fit all. Moreover, there a variety of multipliers used to arrive at a dollars and cents value of a company. These change regularly and are affected by region, type of company, the economy, whatever.

This grid, however, is pretty solid. The last 7 businesses I valued drew buyer interest almost immediately because of they did nicely on these 7 steps.

Do you have a question for Dr. David? First, visit his website: Businessbuysellnow.com [http://businessbuysellnow.com/]. Call him directly at 702-354-7000 or email him drdc25@yahoo.com

Regulation In Irish Market At Last

It is close to legendary at this stage that regulation in the Irish overseas property industry (as well as most others) is, to put it mildly, almost non-existent. With this in mind it is good to report that the days of an unregulated property industry here are, very likely, nearing their end. This is due to the formal launch of the National Property Services Regulatory Authority (NPSRA). The decision to establish the Authority arose following the commissioning by the Minister for Justice, Equality and Law Reform of the Auctioneering/Estate Agency Review Group in 2004 to examine the licensing and regulatory requirements for Property Services Providers (PSP).

It is currently very early days in the process and before the Authority can engage in the licensing and regulation of PSP's it will be necessary for new legislation to be introduced to empower it to undertake such functions. On 21st December 2006 the Government approved proposals for legislation to establish the NPSRA. The Bill is expected to be published in final form in the near future and should become law later this year.

The NPSRA heralds the dawn of a new regulatory environment, one which is currently unmatched anywhere else in the world. Tom Lynch, Chief Executive Designate of the authority, says that it will have significant powers and will change completely the previous regime of unregulated property sale, lease and management in this country.

Lynch says that the Authority is has drafted a code of practice for auctioneers and estate agents and is currently drafting one for management agents to set standards of ethical behaviour and details of how property service providers should deal with each other, their clients and the public. It should be noted that, while the code is voluntary at present, once the Authority is initiated on a statutory basis, which should be later this year, it will have the power to make the code a legally binding instrument.

One of the cornerstones of the powers vested in the Authority will be the requirement for all practitioners in the industry to acquire a licence. This will not, as is currently the case for Irish auctioneers, be a foregone conclusion. It will, according to Lynch, involve a requirement to furnish business, personal and Garda references along with proof of appropriate qualifications and training where applicable. Applicants will also be obliged to carry Professional Indemnity (PI) Insurance to cover issues of incompetence and their licence fee will include a compulsory donation to a compensation fund which is to be set up to cover acts of dishonesty. Those selling overseas property in Ireland, no matter where they are incorporated, will be required to have an Irish client bank account to hold deposits taken from Irish customers.

It is intended that the functions of the Regulatory Authority will, in addition to a licensing function, include an investigative function supported by a range of sanctions, ranging from the issuing of a reprimand or caution to suspension of a PSP's licence for a period or complete revocation. The Authority will also have extensive investigative and enforcement powers in relation to the standards which will have to be adhered to in the provision of property services.

The main functions of the new Authority will be:

* To operate a comprehensive licensing system covering all providers of property services, i.e. auctioneers, estate agents and property management agents. This extended system will replace the current licensing system for auctioneers and house agents;

* To set and enforce standards for the grant of licences (e.g. educational/training standards; levels of professional indemnity insurance) as well as standards to be observed in the provision of property services by licensees;

* To establish and administer a system of investigation and adjudication of complaints relating to the provision of property services;

* To promote increased consumer protection and public awareness (where appropriate in liaison and co-operation with other statutory bodies and with relevant professional and consumer bodies) of property services in general and the cost to consumers, risks and benefits associated with the provision of those services;

* To establish, maintain and administer a compensation fund to compensate parties who lose money as a direct consequence of the dishonesty of a licensee.

Legislation will extend to those selling overseas property in Ireland. Foreign PSP's who come to Ireland to sell overseas property, for example via exhibitions or seminars, will also be covered. It should be noted, however, that a PSP resident outside Ireland and selling into Ireland, for example those contacted by Irish buyers via the internet or through adverts in foreign newspapers, cannot be covered because they are not within Irish legal jurisdiction.

Any person who holds a licence from a comparable regulatory authority in another EU Member State and who provides a property service in Ireland will be subject to the Authority's complaints procedure and to sanctions for infringements of the legislation. This would mean that recognition of that particular licence could be withdrawn (the equivalent of revocation of the NPSRA licence) or withdrawn for a period (the equivalent of suspension). Any person from outside the EU who wishes to provide a property service in Ireland will be required to be licensed by the Authority.

The Implementation Group has also established and published, for the first time, a public register of licensed Auctioneers and House Agents on its website. This register will be added to on an ongoing basis and will, once the new legislation is in place, include management agents. Lynch has also intimated that there may well be different licences for disparate operators such as those selling retail property, commercial property, management companies, etc.

Regulation will not only include a licensing requirement, but also scrutiny by the Authority during the course of complaint investigations, audits or general inspections. The Authority will have power to sanction a licensee up to and including the suspension or revocation of a licence. The Authority will be given significant powers, without referral to a court of law, in addition to the ability to prosecute a licensee which may result in fines, imprisonment or both. Lynch says that his officers will be given the authority to enter and inspect premises or exhibitions to ensure that the principals are licensed and acting in accordance with its code of practice. In order to obtain a licence there will also be a requirement to produce financial records and a tax clearance certificate. Where a person suffers loss due to the dishonesty of a licensee the Authority may award compensation from a fund which will be set up from fees compulsorily paid by licensees.

Lynch says that, at the start it is very likely that the authority will enact a 'grandfather clause' to allow those who have been in the business for a long period of time, but with no formal qualifications, to be licensed. It is likely that these licensees will, however, be required to undertake continuous professional development courses as a condition of their being granted a licence.

In the interim, and even when the NPSRA is in full operation, there are other avenues of action open to those who may have spotted irregularities in the marketing, promotional material or adverts of a company. You don't have to wait until someone is caught out by something you feel may be misleading or fraudulent. If you see a company advertising something which you know, or feel may be, irregular in any way, you have the option of reporting them to the Advertising Standards Authority of Ireland (ASAI) who will investigate complaints concerning advertisements that may be considered to be in breach of its Code, a copy of which is available on its website. You also have this option with foreign media via the European Advertising Standards Alliance (EASA). The NPSRA, once fully operational, will also have a function in monitoring advertising in the property industry.

If you feel your consumer rights have been breached you could also consider contacting the National Consumer Agency (NCA) which has been set up to represent the voice of the consumer, enforce consumer legislation and defend consumer interests at the highest levels of national and local decision-making. The NCA works with businesses to help them comply with regulatory obligations and encourage best practice as regards consumer rights.

For this and more similar informational advisory articles on the Irish overseas property industry visit www.OverseasCafe.com.

To see comment on the new authority and see what others are saying about it visit our blog.

Contacts:

National Property Services Regulatory Authority - www.npsra.ie

Financial Services Ombudsman - www.financialombudsman.ie

National Consumer Agency - www.nca.ie

Diarmaid Condon is an independent overseas property consultant with significant agency experience. He can be contacted via his website at www.diarmaidcondon.com.

The Hillary Clinton Stock Market and Economy - Three Areas to Consider

I would like to remind the reader of the last time in our country's history when taxes, unemployment, and inflation were extraordinarily high: the late 1970's during the Carter presidency. Inflation was raging and interest rates were in double digits. Many consumers in our economy today do not have vivid memories of that time.

Yet after the 1970's inflationary spiral was broken, at the expense of a severe recession with extremely high unemployment - we have since enjoyed over twenty years of a fundamentally good stock market and economy.

But what if today's relatively good stock market and jobs creating economy were to change? I must admit, I am of the opinion that the winds of inflation may be building a momentum again after all these years of disinflation. I agree with Alan Greenspan's opinion in a CNBC interview that we no longer have the luxury of implementing easy monetary policy, as we did after the technology and stock price bubble deflated after 2000, when deflation was actually a threat.

We have an important election in 2008 that may determine the course of the stock market and the economy in a manner not seen since the late 1970's. Hillary Clinton is the current favorite to win the Democratic nomination - and she is running a liberal, progressive campaign. The Democratic nominee, whoever he or she may be, may win the White House.

There are three areas to consider with respect to why the stock market could decline into a bear market should the economically liberal platform be enacted.

The first proposal of the Clinton campaign that would be anathema to the stock market is the planned redistribution of wealth. Giuliani, in a CNBC interview, actually called this plan an entitlement program for the middle class. This would be in the form of a tax-the-rich-and-give-the-funds-to-the-middle-class policy. This sounds good in theory, but this action would not create a penny of additional wealth or a single new job in our country. The policy simply takes away from one group to give to another more favored group of people. Such a policy could even lower the amount of wealth in our country, as those businesses that are creating jobs might make less money - especially small businesses that may have to lay off workers because their taxes are higher. The economy, and consequently the stock market, could suffer.

To give an example in industry of a possible redistribution policy, an obvious target of the Clinton campaign has been the almost universally hated oil and gas industry, which the Senator believes makes too much money. In fact, I saw an excerpt of a Clinton speech on TV that the senator wanted to "take that money" and I suppose give it to a more favored group of people or industry. This action would amount to an expropriation of assets and would reduce employment in the oil industry. The stock market could react badly to that.

I would like to point out that there have been times in the history of the oil and gas industry during which these companies have been in a depression - but they were not bailed out. But even such a hated industry as the oil and gas industry is capable of creative movement. Fortune magazine reports that Royal Dutch Petroleum has been investing heavily for years in scientific research to produce oil from shale in America. Fortune reports that there is a potential production of 300,000 barrels a day - and it would be profitable at $30 per barrel. They further report that Royal Dutch's technology is supposed to be way ahead of their competitors, with the company holding some 200 patents.

Royal Dutch seems to think those years of heavy investment in research and development will pay off in the near-term horizon. They would also plan to build the first new refinery in the U.S. in decades. Heavy taxes on this industry could discourage new investments such as the Royal Dutch project. The end result would be more energy dependence.

The second idea of the Clinton campaign that would hurt the stock market and the economy is the re-regulation and regulation for the first time of major industries in our economy. If an unfettered industry is seen as making too much money, then it might be a target for being regulated, which inherently makes the industry less creative, vibrant, profitable and flexible (with concurrent less ability to withstand economic shocks and adapt to changing economic conditions).

Alan Greenspan, in a speech reported on CNBC, attributed the flexibility of our economy as one reason why we have not had such deep recessions in recent years. While one sector of the economy is under water, other sectors can pick up the slack and prevent a recession from becoming damaging. But, if employees are tied by regulation to industries that are no longer competitive, then the overall economy would be hurt - those workers would not be retrained for the emerging new industries of the future. The economy would be more rigid by definition and we might experience a declining standard of living as older regulated industries would not make it in the global economy and become obsolete. Like it or not, our capitalist economy works best as a self-correcting mechanism, with new industries supplanting the old.

An industry which could suffer a decline in employment and innovation because of regulation is also a target for criticism: the drug and medical devices companies. We all remember Senator Clinton's early 1990's health care plan, crafted behind the scenes, which really would have been "government run healthcare." The Senator never apologized for that failed attempt at healthcare nationalization, but even now blames her former opposition. The healthcare sector in the stock market at that time fell out of bed while the Clinton plan was being propagated. If nationalized medicine were to become a threat again, that poor action in the stock market could be repeated. So far, the Senator's "American Health Choices Plan," as smoothly explained on the Clinton campaign website, seems on the surface pretty innocuous. But it also would be extremely expensive, perhaps tempting Clinton (if she were elected) to revive her previous ill-considered plan.

I believe that there must be a way to insure the uninsured for hospital stays, doctor visits, pharmaceuticals, etc. without uprooting the entire system. I think one question that is not being discussed is whether a Clinton administration would propose to control drug prices. We have had experience with price controls under President Nixon, and it just produced shortages of goods. There could be shortages of essential medicines if price controls on drugs make it less profitable to invest in the research it takes to develop and produce them. A less profitable atmosphere for the drug industry means fewer drug companies and fewer drugs being invented. Why should entrepreneurs launch new drug companies pioneering new science when their prices are to be controlled and profits regulated?

The fact is that the pharmaceutical industry is not the problem - they are the solution. A pharmaceutical company might spend one billion dollars and two decades developing an important drug that can save lives and keep people from costly stays in the hospital. If artificial controls are placed on the drug's price, then it actually may not be profitable for the company to develop new drugs in the future. They could fire researchers and other employees to cut costs. Since over 90% of all new pharmaceuticals are developed in the US, health care costs would likely go up as new cost saving cures would not be developed.

Drug companies have invented life saving medicines that have kept tens of millions of people out of costly hospital stays, and saved and extended many lives. I believe these drugs are an extremely cost-effective solution to illness and disease - and I do believe all private insurance should cover prescription drugs liberally.

The third area of a possible Clinton presidency about which one must be concerned if you are a stock market investor or simply a taxpayer, is free trade. An open trade system has allowed our country to prosper in the last two decades. Granted, currency manipulation on the part of a trading partner (such as China) is not free trade - but most of our trading partners and the newly emerging eastern European economies are adopting lower taxes and free market policies. It is a shame that the liberal wing of the Democratic Party has not received that message and is indicating a path for this country that may bring our economy and our stock market back to the past economic policies of the 1970's.

The outcome of the 2008 presidential election will do much to determine the outlook for the economy and the stock market in the next several years. Regardless of who wins, the second year of the presidential term is usually poor for the stock market, as the policy makers make the economy take its medicine early on in the term.

The Federal Reserve, in its current easing mode, should encourage the stock market until the months before the election, when it will be clearer who the victor will be. At that time, the stock market's future direction will be determined by the degree of wisdom of the victor's economic policies, and, of course, Federal Reserve policy.

I was first exposed to financial markets when I started reading the stock quotes out of the newspaper to my businessman grandfather, who was legally blind, when I was about ten. I remember Papa always told me: "Buy Triple A" (the best stocks). Later, I studied economics at both Vassar College and Columbia University, where I became intrigued by the link between psychology and economic theory. My current e-book, A Way to Wealth - the Art of Investing in Common Stocks, is available at my website, http://www.ReiznersWay.com.

This article contains the opinions and ideas of its author and is designed to provide useful information to the reader on the subject matter covered. The author may or may not have current positions in the investments mentioned in this work, and the author may from time to time make investments in a manner that is not described here. Past performance is no guarantee or prediction of future results and any investments made, based on the opinions and ideas contained in this work, may or may not be successful. The strategies contained herein may not be suitable for every situation, and the author is not engaged in rendering legal, accounting, investment advisory or other professional services.

Post-capitalistic Free Market Society, How Can US Be Rescued (Part V) - Economy, Work and Retirement

Here is how a technological democratic society operates. We will be looking into the application of equality of opportunity in four areas of capital, labor, state and technology. This is the heart of democracy, because, there cannot be any kind of real democracy without having economic democracy.

A. Capital

To democratize the ownership of capital, the principle of equality of opportunity prohibits unjust enrichment. It simply means that no person receives property without giving in return a comparable compensation. This is known as the principle of unjust enrichment. Its application establishes the property ownership and relationship in a democratic society with the following consequences:

1. Inheritance. Inheritance is the highest cause of inequality of opportunity. It leads to class stratification. It is the first factor in creating an unjust society. Since anything received through inheritance is free and without comparable compensation, it amounts to an unjust enrichment. If it elevates the opportunity of the beneficiaries to the extent that it creates unequal opportunities, it cannot be allowed under the principle of equality of opportunity. The proceeds from inheritance go into the Public Consumption Fund, a public organization, to be spent in providing vital services to society such as education and health care. The result is that as the rich individuals die, their wealth, to the extent allowed by the principle of equality of opportunity, is transferred to this organization and used for public good. Gradually wealthy families, which enjoyed a very high opportunity under capitalism, disappear while their riches are used to enrich and enlighten the masses as a whole. In a span of a few decades, society ceases to have any super rich. The ruling capitalist elite dies and with it disappears its dominating economic and political powers.

Fortunately, the U.S. Constitution embodies the concept of equality of opportunity. It only needs to be specified to apply to economic and social aspects of life. The process of transition will be peaceful. It requires Congress to propose a proper amendment to the U.S. Constitution clarifying the application of equality of opportunity to economic, political an social aspects of life. Since the amendment, if ratified, would prohibit inheritance, for the stage of transition, Congress should specify a figure for maximum inheritance such as $5 million. This will insure the ratification of the amendment since only 0.7percent of population has wealth in excess of this amount. The result will be equalization of the wealth within the limit of $5 million. Decades later when minimum national inheritance level will increase disparity will be negligible or may be readjusted then to guarantee full equality of opportunity. [1]

2. Profits. As presented before, as globalization progresses, free trade market economy causes the kind of keen competition that continually cuts down the profit margin leading to its virtual elimination.[2] The profit motive remains still there but rarely materialized. At this stage, estimated to materialize in four to five decades, the society's levers of power- the multinational corporations, the military and their politician and bureaucrat supporters and collaborators- are eliminated from power status. By the coordinated efforts of local groups all over the country, equality of opportunity prevails, the economy and social structure are reconstructed for efficiency and justice. The production in a cooperative way focuses primarily on people's primary needs. Every able person participates whether in neighborhoods, communities or work places. People work for a few hours a day having ample time free for leisure, art, music and other creative work and enjoyment.

3. Labor. Regarding labor and workforce, there is a very basic distinction between capitalism and technological democracy. Under capitalism, the capitalist controls land, capital and technology, and employs labor from the market. Under technodemocratic economy, the workers own and control the capital and all other means of production. The principle of equality of opportunity controls the process of ownership of capital and prescribes its democratization. It materializes the total private ownership of the means of production and distribution to the extent never achieved before. It prescribes that the ownership of capital be gradually and systematically transferred from the capitalist to the workers. For clarification, it must be noted that the term worker in this concept embodies any person working for the capitalist from top management and professionals down to the unskilled workers. Under this concept, while each worker receives a regular wage, he is also given a certain specified amount of shares of the firm where he works. Thus from the time he receives his first pay, he starts to become a part owner of the firm. As the years pass, the worker continues to accumulate capital and increase his share of ownership. As the big capitalists die, their share of stocks revert to the Public Consumption Fund and from there is placed in the stock market for sale. These shares are purchased by different institutions, public institutions in particular, and gradually transferred to the workers including public employees along with their monthly pay. Some is also purchased by individual. [3]

After four or five decades, the capitalist class as we know today, disappears and the ownership as well as control of capital and production firms become wholly transferred to a new capitalist class the same as the working class. From there on as the retired workers die, their share of stocks go to the Public Consumption Fund and placed in stock market and finally purchased by different institutions and gradually transferred to the new generation of workers along with their pay. For the shares that each worker owns, he receives dividend which continues to increase as he continues to accumulate more and more stocks. Each worker is entitled to full benefit of ownership of his stocks except that they are not transferable to others but can be exchanged with other non-transferable stocks of other institutions on the stock market for the purpose of diversification of their ownership. This non-transferability of the stocks is prescribed by the principle of equality of opportunity and, as it will be presented later on, income from these stocks takes the place of social security and old age benefits for the owner during the retirement period since under technological democracy there are no public welfare programs such as social security, medicare or food-stamps or else. Health care and education are the only programs available free for all, funded by the Public Consumption Fund and not the government.

4. Position Classification. Position classification is a technology developed for organizing, classification and equalization of similar positions. It describes the responsibilities of each position and corresponding financial compensation range. Under this technology, positions are classified vertically as well as horizontally. This system is applied nationally and universally to all available positions. Horizontal positions are those requiring similar levels of skills to carry out job requirements. However, these positions may not be similar in the kind of functions and skills they require. For example, medical doctors, lawyers, and top administrators all require a high level of professional skill, while functionally they are quite different from one another. They may be placed horizontally in one category and entitled to the same range of compensation. The same applies to clerical or other class of worker. Vertical positions are classified from the lowest to the highest.

Technology of position classification was created primarily for the purpose of increasing and controlling productivity as well as providing equitable pay systems, similar pays for similar jobs. This technology is not new; it has been used in every industrialized society by its public sector and by all major, medium size and some small private institutions. However, each institution has its own independent position classification and corresponding pay system. The national government, each state government, major city governments and giant corporations each has a position classification of its own. There is no uniformity among these systems and there are injustices. Furthermore, a great variety of small businesses do not have a classification system yet these are the institutions employing the majority of the working class people who are not subject to any standard of pay and are generally exploited. Under technological democracy all these systems are brought under one umbrella with the same standards of positions and corresponding pay system. However, such a monumental classification is not done in detail by a central office. This would be an impossible task. The national government through the Position Classification and Pay Commission, a branch of the National Economic Council, establishes a general classification of positions, a system somehow similar to the present national classification. Then it requires each institution , private or public, large or small, to establish its own position classification and pay system within the framework established by the national classification and pay system. A copy of this classification by each firm is entered in Technodem website available to everyone including every employee in the institution. The Technodem will check this classification against the national system and will inform the institution about discrepancies for correction, if any. This classification is put into operation by the corresponding institution until it is objected by the Technodem or the regional classification council.[4]

The systems are reviewed each year by each institution as new technologies develop, certain positions are abandoned, new positions are created or functions of some positions are modified or changed. Position classification under one national model system has several benefits.

1. It harmonizes and standardizes all available positions, private or public.

2. It equalizes the pay system, similar pay for similar jobs, regardless of race, color, sex or whether a worker is a union member,

3. It eliminates the union bargaining and thus eliminate unionization for economic purposes.

4. It simplifies position and pay classification at the institutional level following a standardized and updated national model.

5. It democratizes the work system by providing equality of opportunity in similar positions with similar pay.

6. It allows regional agencies, through Technodem technology, to supervise the proper and uniform application of national standards.

7. It allows discretion in each institution to proceed with its own position and pay classification.

8. It gives each employee an opportunity to evaluate his position requirement and pay level in comparison with the national standards and, in the case of discrepancy, petition first his institution and then file his petition with the Technodem which will examine the complaint instantaneously and respond to it. If the institution did not resolve the issue according to the Technodem advice, he then can petition the regional classification council which will usually go along with the Technodem finding. By this way position classification in each institution is scrutinized by its employees and brought to the level prescribed by the national standards.

5. Shared Opportunity and Full Employment. This is a very important principle of democratic employment opportunity. The application of the principle of equality of opportunity requires that those having a higher level of employment opportunity share it with those lacking such opportunity at the same position level. This refers in particular to unemployed workers seeking employment. Of course, at every skill level, those employed have a higher opportunity than those unemployed. The principle of shared opportunity is employed to equalize the situation. It requires that those who have employment, in order to provide for equality of opportunity, forgo a small part of their employment opportunity by giving up a small part of their work, say one hour per week, and thus provide employment opportunity for their unemployed fellows.

For example, if there is a 100 million work force and each worker gives up one hour of his weekly work, nationwide 100 million work-hours amounting to 2.5 million full time positions will become available to those unemployed or new comers. [5] It needs to be noticed that unemployment in technological democracy has a different character. Everyone starts working part-time when he reaches 15 years of age and completes his professional or technical education while working. So work under technological democracy has a transitory character and is an individual right. Sharing opportunities provides for continuous employment, causing stability in the market and thus eliminates a major cause of recession by providing job security for working years. The inflationary process will also be prevented since there will be no monopoly firms, no price increase to maximize profits. Giant corporations will automatically divided into many smaller firms, and competition in the market will be tense, more realistic and free. This decentralization and dispersal will take place because once workers receive controlling shares of a giant firm they will tend to eliminate the superstructure of the corporate bureaucracy which did not produce anything and had also lost its unproductive use. Then, workers' desire to have voice in the production process will tend toward dismantling the giant corporation into smaller entities in which the policy-makers will be directly attached to the operation of production and each worker can feel his voice and power over his institution. The same will happen to the branches or affiliated firms abroad. They would want to be independent especially when the superstructure in domestic country becomes abolished. Thus the era of giant multinational corporations will become history as a stage of transition from monopolistic international capitalism to competitive technodemocratic economy. The old motto that "small is beautiful, controllable, more democratic," will become materialized.

6. Old Age Benefits: Unlike the welfare programs instituted under the existing capitalistic and socialistic systems, there will be no retirement or general welfare programs under the technological democracy. First, each individual will start part time work at the age of fifteen. His income from the work will be sufficient to pay for his living expenditures, since he will have no education expenses because it will be free for everyone at all levels. By the age 21 he will finish his college education (exceeding in value over an M.A. degree at the present) and will be employed full time. Each individual will be required to work for at least 30 years in order to provide a sustained and sufficient income for his old age period. It is estimated that if each worker receive the company stock equal to 25% of his pay, after 30 years, when he retires at the age 52, he will accumulate enough capital from the stocks and their accumulated returns to receive an income of around $30,000 to live modestly but comfortably considering that health care and education will be free and individual taxes will be very small. Most of taxes will be collected from production firms. However, while the individual retires from the official workforce, he does not retire personally. Being only 52 years old he has many years of active life to contribute and be productive in social, political and economic fields. These could be either voluntary or income producing. This retirement after 30 years of service is mandatory in order to maintain equality of opportunity in workplace, and in no way deprives individuals from pursuing productive activities of their liking. It has also several important benefits: first, it provides vacancies to new workers entering the market, second, provides the retired workers with many years enjoyable and intellectually productive life; third, provides for participation in the political process where required qualifications for election is high and the service is temporary. At retirement, each individual would possess knowledge in humanities and social sciences far above the present Ph.D. level as a result of over thirty years of continuous graduate education, making him highly qualified to hold public or elective offices. Beside this, every person has also over Ph.D. level knowledge in his technical or professional field.[6]

Thus this required retirement is technical rather than real. The individual who is highly educated and experienced at this stage of life, may get engaged in many different kinds of work such as art, music, creative writing, counseling, political or economic activities individually or in partnership with other retired persons. Since top policy making positions in regional and national government are temporary with four to six year terms, it will be an excellent opportunity for the post-retirement life. Under technological democracy the individual worker is made responsible to hold and take care of his own retirement stocks. That is why the stocks he receives monthly from his firm are non-transferable, while he can exercise all other benefits of ownership including annual returns from them during his lifetime. Particularly, that working people would be hesitant to run for political offices since this would interrupt their working process and financially have negative effect on their future promotions as well as their retirement benefits.

.

References:

1.Reza Rezazadeh, Technological Democracy: A Humanistic philosophy of the Future Society, 1990, pp. 192-194

2. ----------------, "Globalization and the End of Capitalism," http://www.democracywhere.com also in http://www.ezinearticles.com

3.----------------, Technological Democracy, opp. cited, pp.194-198

4.----------------, Technodemocratic Economic Theory: From Capitalism and Socialism to Democracy, 1991, pp. 184-186. http://www.democracywhere.com

5.Ibid., pp.186-188, 205, 235.

6. Ibid., pp. 188-190, 219.

Dr. Reza Rezazadeh

1080 Eastman Street, Platteville, WI 53818

Phone: (608)348-7064

Professor Emeritus at the University of Wisconsin System,and a Fulbright scholar, a multi-disciplinary, multi-cultural, and multi-lingual scholar with background in Mechanical Engineering (B.S.M.E.), Continental and Islamic Law (Licenciate), J.D. in American Jurisprudenxce, LL.M. in International Law and International Economics, Ph.D. in Political Science, Economics and Administration, and Doctor of the Science of Law (S.J.D.) the highest law degree offered in U.S. Fluent in five languages: English, French, Spanish, Persian, Azeri-Turkish. Elementary knowledge of Arabic, Urdu, Russian and Italian. Patented inventions; an artist, a poet (oil and pastel), a musician (violin), with over 35 years of academic background in teaching, reseasrch and administration, research and cultural studies in many countries in Europe including USSR, Middle East, Central Asia, Northe africa, Central and South America. Author of 8 books and many scholarly articles listed in his website http://www.democracywhere.com