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Two Economic Camps

by Ken Vincent, Featured Contributor

THERE ARE, and probably always have been, two economic camps. There is the Pollyanna group . Those are the economists, analysts elected officials, investment professionals, professors, and other “experts” that see only blue skies, fair sailing, and roses ahead. This is the camp that would have you plunge into the stock market, buy collectibles, or commodities and that 60 inch flat screen TV, because they just have to be undervalued and bound to go up in value. While they agree that there could be rain on the horizon, they are certain that it will be only a brief shower and then all will be well again.

Divided America USA-partisanThen there is the Doom and Gloom camp. This group is made up of the same mix of “experts” as the Pollyanna group. However, as their name implies, they see only the certainty of economic disaster looming. They predict, in spite of momentary spikes, that there will be a complete economic melt down and sooner rather than later. Their advice is to hoard your cash and hunker down.

Which group is right? Well, both of them. How can that be you ask? Simply because so long as there is no specific time frame designated the economy will certainly go up and it will certainly go down. Interestingly enough both groups come to their definitive conclusions often quoting the same statistical data, just with a different setting or spin. So how do you know in which camp you should pitch your economic tent?

Well, there is an old rule in detective work…”follow the money”. Okay, the economists, professors and the like are not likely to tell you specifics of what they are doing with their money. But, there are other indicators like these:

It is a hard fact that the statistics we are fed by the government are not just inaccurate, but are total nonsense. The unemployment rate for example is not 5.8% but more likely 11%;

The US economy is 70% consumer based, not production based. Thus the huge trade deficit which continues to drain our economic wealth;

Our government is huge and growing at an unprecedented rate;

Technology and competition from low wage countries continue to drain jobs out of the US;

An increase in the minimum wage, no matter what we are told, will do nothing to add to job growth and little of nothing to our consumer driven economy;

Companies are holding trillions of dollars in cash and liquid securities, over half of it off shore. Why off shore? They can’t bring it into the US because we have the highest corporate tax rate in the world. They are using some of the cash to expand over seas, increase dividends and to buy back stock; and

Wealthy individuals and trusts are also hording cash instead of investing it in expanding or creating companies. They are just too uncertain as to where our government is headed with taxes, regulations, and mandates like Obamacare.

So, where is your economic tent pitched? Are you considering moving it? It is worth noting that a record number of individuals (as well as companies) are pulling up their tent stakes and taking them off shore.


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Ken Vincent
Ken Vincenthttp://sbpra.com/KennethVincent/
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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