Where are we in 2009?

Each of us might ask where we are, financially speaking, in 2009? Here are a few observations primarily from the Statistical Abstract of the United States, unless otherwise noted:

It is estimated that in 2009 there may be as many as 1.4 million personal bankruptcies filed. However, in 2003 there were 1,650,279 personal bankruptcies filed.

Back in 1953, 31.1 percent of the U.S. population lived at or below 125% of the poverty level. By 2006 that number had dropped to 16.8 percent.

In constant 2006 U.S. dollars, the median income for all families in 1949 was $39,303. By 2006 the median income for all families had grown to $78,454.

Based on the value of the 1982 dollar, the value of that dollar had fallen by more than half by 2007.

Abortion is one of the most common medical procedures undergone by women aged 15–44 in the United States and in 2005 there were an estimated 1.2 million abortions performed in the United States. This number exceeds, by a large margin, the death rate from any other cause in the U.S.

From these, and many other statistics, we may better ask, where are morally in 2009?

My conclusion is that we are consistently better off today economically than ever before. Despite the hand wringing going on about our economy, however, there should be hand wringing going on about the morality of the country. We are in a terrible state morally and should we continue in our decline, we will ultimately lose our way financially also.

Remember the words of King Benjamin in the Book of Mormon: " And now, my sons, I would that ye should remember to search them diligently, that ye may profit thereby; and I would that ye should keep the commandments of God, that ye may prosper in the land according to the promises which the Lord made unto our fathers. Mosiah 1:7

A decline in literacy?

Historically, learning to read and write were considered the mark of education. How well are we doing in teaching our students to read? According to the U.S. Department of Education, literacy is defined "as the knowledge and skills needed by adults, in life and at work, to use information from various texts (e.g., news stories, editorials, manuals, brochures) in various formats (e.g., texts, maps, tables, charts, forms, time tables)" Unfortunately, there has been almost uniform steady decline in literacy rates for those 24 years of age and younger from 1992 to the most recent studies in 2003. Even among college students there has been a decline and there is even a decline among graduate students.

By definition in our modern society, we cannot be prepared if we do not know how to read.

Some of the results of the survey in 2003 are in the category of things I wish some one would pay me to find out. Like, "In 2003, adults with higher literacy levels were more likely to be employed full-time and less likely to be out of the labor force than adults with lower literacy levels. Adults with lower literacy levels also generally earned lower incomes."

Even if the differences in literacy levels are considered to be statistically insignificant, it is significant the we have made no progress in increasing literacy for many years. Additionally, adults in the U.S. were outperformed by adults in Norway, Bermuda, Canada, and Switzerland. Adults in Bermuda, Norway, and Canada had higher literacy scores than U.S. adults at both the high and low ends of the score distribution. The highest performers (the top 10 percent of adults) had literacy scores of 353 or higher in Bermuda, 348 or higher in Norway, and 344 or higher in Canada, compared with 333 or higher in the United States. The lowest performers (those in the bottom 10 percent) in Bermuda had literacy scores of 213 or lower, 233 or lower in Norway, and 209 or lower in Canada, compared with 201 or lower in the United States. The lowest performers in Switzerland also outperformed their U.S. counterparts in literacy, scoring 216 or lower.

One thing this study does show is that literacy is directly correlated to income levels.

Over the years I have encountered a significant number of adults that did not know how to read or whose reading skills were so low as to be embarrassing to the individual. Obviously, if you were illiterate you would not be reading this blog post, but if you know someone who is illiterate, the time to take action is now. There are many national, state and local organizations dedicated to helping adults learn to read. You might want to start with the Department of Labor, Adult Literacy and Education Initiative.

Where are we going with unemployment?

Wikipedia

Many people identify so completely with their work, losing a job is more than a disaster, it is a loss of identity. Statistics can identify that we have a problem with unemployment, but unless you are personally involved. Nationally, we see that in May, employment only increased in one state and decreased in 48 states and the District of Columbia. There was one state that had no change in the rate of unemployment. Michigan had the highest unemployment rate, 14.1 percent, while Nebraska and North Dakota had the lowest rates at 4.4 percent.

If you are unemployed, you are 100% unemployed, so the national and state percentages have little meaning to the individual.

It is unrealistic to compare jobless rates too far into the past, since many of the jobs measured today, did not even exist a few years ago. But even in recent years, the unemployment rate has been higher, for example, in December, 1982 it reached a high of 10.8 percent. There has also been a continued shift from farming and ranching to an almost entirely urban population trend. As with all statistics, if you look at a different source the numbers seem to change.

Again, viewing a related issue on a national level, I find it interesting that the last Federal Government budget surplus was during the Johnson presidency in 1969.

Although there seems to be a present consensus that the rising unemployment rate can be attributed to the economy, there are a lot of other factors, including the flight of jobs overseas, immigrant labor and the fact that many U.S. industries have not kept up with technological changes. However, it is important to remember Okun's Law which predicts a natural rate of unemployment.

Whatever the causes and whatever the national effects, the unemployed will continue to struggle with loss of income, loss of personal esteem and possible depression.

Next-- Where do we go for help to find a job?

Hospital Compare -- It makes a difference

Would you like to know if your hospital will give you the recommended treatment? Do you think your life might depend on it? Would you like to know about the performance of hospitals in your area? The U.S. Department of Health & Human Services has on online service called Hospital Compare. On the home page it states:

In this tool you will find information on how well hospitals care for patients with certain medical conditions or surgical procedures, and results from a survey of patients about the quality of care they received during a recent hospital stay. This information will help you compare the quality of care hospitals provide. Talk to your doctor about this information to help you, your family and your friends make your best hospital care decisions.

So, to get started, I clicked on search and compare. I put in my zip code and began to look a the ratings of nearby hospitals. I was asked to chose up to three hospitals to compare. I chose the three I had been to most frequently for friends and family members. Very interesting.

For example, here was one category: Percent of patients who got treatment at the right time (within 24 hours before or after their surgery) to help prevent blood clots after certain types of surgery. What do you think the percentages were? As a matter of fact the percentages went from a low of 69% to a high of only 81%. That means that almost twenty to thirty percent of all patients at those hospitals did not get the right treatment at the right time!!! Now you know, you might be in that thirty percent.

Here is another example: the Percent of Heart Failure Patients Given Discharge Instructions. In one hospital this figure was only 61%. Do I really want to go there if I have a heart attack?

Here's another good one, Percent of patients who reported that their room and bathroom were "Always" clean. What do you think this come out? a low of 60%. Yuck.

After looking at this Website, you just might decide to change hospitals.

Where you can save money

Most recommendations I have read about spending seem to vastly over estimate the percentage of income that should be spent on entertainment and hobbies. A recent study of the percentage of income spent by Americans on various categories does show some interesting facts:

The amount of money spent on housing, food and transportation rise dramatically with increased income. Obviously, taxes rise but the greatest increase is in financial payments such as private pension contributions and mortgage principal. People across the board purchase a large number of consumer items, such as microwaves, VCRs, cellphones, computers, color TVs, and air conditioning. Virtually everyone in America now has a telephone, a car, a radio (or six or seven), a refrigerator, a clothes washer and a dryer.

So, looking at these spending habits, how can someone best save money? Unless you fall in the lowest income level, it appears that there is a lot of money needlessly spent on food. Housing is one of the biggest expenses and is likely an area where some could save a lot of money, if they are willing to downsize. Transportation is also an area where significant cuts can be made. It is likely that as income rises people buy more expensive automobiles and spend more money on traveling. Both of these are areas that can be cut without a major adjustment in life style. None of the other areas of consumption including things like entertainment, health care, charitable contributions, education or apparel and services, seem to be areas where increases in income result in extraordinary increases in spending.

It is a fact of life that those who make more money spend more money. To increase savings and to cut expenditures, it is absolutely necessary to know how much is being spent and where. None of the decisions concerning decreased spending can be made without information on which to base decisions.

Is there a grain shortage?

Doing a Google search on "wheat shortage" will give you something to think about. But what do you need think? Is there a growing wheat shortage? What about the other grain products? In my last post I discussed the general market forces that influence commodity pricing. As an illustration, here is a quote from a commodities blogger back in June of 2008:

We mentioned in the spring that after the historic rise in wheat [Feb 8: Wheat is the new Corn], farmers would be planting a ton of this product in 2008 to take advantage of those prices, and moving away from corn. [Mar 31: USDA Crop Report] That's exactly how things played out [Apr 3: Corn Jumps to $6 - Start Stocking up on Soda Pop]... and wheat prices dipped (dipped is being kind, it's more like shellacked) on expectations of a huge crop later this year. Since both ETFs/ETNs above have wheat and soybeans in their holdings they have returned only 7-8% in the trailing 6 month period (mostly due to the pain from wheat since its spike). So 43%.... vs 7-8%. That makes a huge difference.With that said, wheat has been cut nearly in half from its "bubble" highs and really is it that hard to guess whats going to happen next spring?

So if you look closely at the results of your Google search, you will see that the myriad of articles on wheat shortages date from 2008 or before. If you keep looking you will not find anything on a current, that is, 2009 shortage. Why? Because as the trader pointed out, farmers reacted to the increased prices and planted more wheat. You can see another updated chart at the beginning of this post. The contract size for wheat is 5,000 bushels which is appx. 136 metric tons. The pricing unit is cents per bushel. The settlement procedure is physical delivery, (so unless you really want tons of wheat delivered to your door, you had better know what you are doing).

So, is there a current wheat shortage? The answer is a simple one -- No. Is wheat more expensive than it has been in the past? Probably yes depending on the time frame. Online sources for wheat are running about $40 to $50 a bucket. For us locally, Costco had wheat in 40 lb. buckets for $30.

It is easy to get caught up in reacting to problems that don't really exist. Take your time and search out the facts.

Where are the food shortages?

Where are the food shortages? How will shortages affect us in the near future? Is there a shortage of corn? wheat? any other food crops?

Most basic food items, such as corn, wheat, and soybeans are bought and sold as "commodities" on international commodity exchanges. The price paid on these commodity markets is subject to the same market forces that drive the other commodity markets, such as oil, cotton, gold and silver. Speculation in any one of these markets can drive prices up, over supply can drive prices down and a shortage of any of the commodities generally means the price will go up. Not only do the commodity exchanges (where commodities are bought and sold in very large amounts) sell actual products for delivery, they also sell contracts for delivery at various dates in the future. So, the price of future contracts gives an idea of where all of the buyers on the world markets think the price (supply, speculation, or shortages) will go.

That said, if you want to know if any product's price will either go up or down in the future, one major indication of the price can come from the commodities markets. The futures' price will also give you an idea of the trend of the prices into the future. However, just like any market, the price of the commodity might be going up at the same time the supply is increasing and also the opposite might be true. You can only get an accurate idea of the supply of any given commodity by studying the market over a long period of time.

Spot shortages, that is, shortages in any given locality, like India or Africa or China, do not indicate the overall supply of the specific commodity since spot shortages may be caused by very local conditions or even the lack of adequate transportation. Also, any time there is a shortage of a given commodity and a resultant price rise, there is a greater incentive for the producers to plant, harvest, pump or dig for the commodity and therefore the price will eventually go back to whatever level the market can support.

Just a note about items outside the commodities markets altogether. Although I mentioned oil as a commodity, it is actually not subject to the same market forces as other commodities since the producers can get together and agree to manipulate the price. Another example of a controlled commodity is diamonds, the supply is closely controlled by the biggest producers so that their are very few market swings.

OK, now we can look at the current market conditions for various commodities and see if there are any shortages or future shortages. Where are these markets? Everything is on the Internet.
For example, today gold is at $954.6 and ounce and is down $25.80 cents. The price is close to a ten year high. Crude oil was at $68.44 a barrel down $.37. Over the past five years, oil is at or below its average.

You can do the same thing for almost all food items. Here is one site, Agriculture Online. Let's look at wheat. At the beginning of this post there is the current chart for wheat. One thing you can see immediately is seasonal fluctuations. If you look at other futures prices, like for 2011 delivery, you will see a correlation with the prices of the most current chart. It appears that the price of wheat is rising, which could come from an increase in the price of oil or from any of a huge number of other possible reasons, none of which have anything to do with supply.

I will continue this discussion in a subsequent post.

A Meltdown or a slow decline?

There is always a background issue in all preparedness discussions; what happens if the whole society falls apart and we are left without water, electricity, and even toilet paper? This apocalyptic view of preparedness is a good bogey man, but almost entirely unproductive in facing the actual likely challenges of our modern society. What is entirely more likely to happen, is that very local circumstances will put you or your family under extreme stress. Although I do not discount the fact that the world will end some day, the end will not likely save us from having to survive in the short term.

What are the real circumstances that could put your family in extreme stress or danger? You may wish to analyze the possibilities. Is it weather related? Hurricanes? Tornadoes? Floods? Is the threat from economic issues? Layoff? Down turns in the economy? What about health issues? Heart attacks? Cancer? These types of threats to our family's survival are much more likely than a collapse of the entire society.

But because these real possibilities are less dramatic, they also are less persuasive in convincing us to be prepared. It is too easy to put off preparation when the threat is a layoff that may never come or a heart attack that can't happen to me.

Even though our neighborhood has not suffered a catastrophe from weather, civil unrest or war, we have had many lose their houses due to the economy. Which is worse, losing your home through foreclosure or having it blown away in a tornado? Think about it.

Now, what are you going to do about it?

Self-reliance can help survive tough times

A recent article in the Kansas City Star points out the fundamentals of surviving in hard times:

Plant a vegetable garden.

Store food and water.

Avoid debt.

Build up savings.

Does this sound familiar? It should. The Church of Jesus Christ of Latter-day Saints has been encouraging everyone to take these steps to self-reliance for years and years.

Quoting from the article;

“This lifestyle brings peace of mind.”

The Mormon church traces its principle of provident living to Jesus’ teachings on helping others and serving the poor.

“The idea is trying to live selflessly and think about other’s needs and being self-reliant and taking care of oneself, family and neighbors,”

I would ask a question to those who persecute religion and decry religion's involvement in the community and in the world; what are you doing to live selflessly and think about other’s needs and to be self-reliant?