The government is lying to you…

Posted by Eric LeRiche | August 6, 2010 .

Jobs, The Government’s Lies, and What You Should Do

HOW LONG ARE THEY PLANNING TO LIE TO US?

This week, CNBC carried a story that the private sector created 42,000 jobs in July, and that layoff activity slowed as well, creating a “slightly more optimistic picture” of the national employment trend.

Sorry, I’m not jumping on that bandwagon!

How does that fit with the fact that planned future layoffs rose 6% to 41,676 in July, from the previous month? Going forward, this effectively wipes out whatever jobs were recently created.

Now today (I’m writing this on Thursday), we see that there was an unexpected rise above expectations in new claims for unemployment benefits last week, along with the four week average of claims as well.

Here’s another s–t–r–e–t–c–h from your “everything is rosy” financial media:

Planned layoffs are lower than a year ago.

Even if that’s true, it’s only because the workforce is that much smaller these days.

As soon as you pare down to a skeleton staff and also the employees who remain are doing double the usual workload, you can’t cut much much more of your payroll without severe productivity declines, losing market share to your competitors, and perhaps even heading out of the door!

“I’m bone tired, boss, how about hiring some more help?”

A nation with a bad unemployment rate of 9.5% continues to search for answers, although the government’s only solution is to extend unemployment benefits once again and then some more!

Furthermore, last month there were an additional 2.6 million individuals who were not counted in the unemployed totals because “they had not searched for work within the four weeks preceding the latest survey” (Bureau of Labor Statistics).<br>

Add those individuals into the soup and the “true” unemployment number is well into double digits. Some have estimated it to become as high as 17% nationwide!

Incidentally, what happened to all of the “green” jobs?

One of the most afected groups among the 17% is the Baby Boomers (born 1946-1964). Faced with plummeting home values, ever shrinking 401k and IRA accounts, massive layoffs and hourly cutbacks, that’s a group that won’t be retiring anytime soon.

Five million new jobs had been expected to be created for younger workers by 2018, when Infant Boomers reach normal retirement age, but the way things look now, younger workers should not anticipate that these jobs will be there for them.

Older Baby Boomers who lose their jobs are also unable to get new jobs as rapidly as the younger workers.

What company wants to hire a 60 yr old who formerly earned $100,000, when there is an eager 30 or 40 year old who will do the exact same job for $60,000 a yr?

Furthermore, investing (or especially short phrase trading with their savings) can be risky for individuals about to enter their “golden” years, because if they suffer significant losses, they lack the time required to earn the cash back.

Yet what sort of work await the older Infant Boomers who do find work? In their senior years, will they be forced to stand on their feet all day to make nine bucks an hour?

“When is lunch already? My bunions are killing me…”

I’m sorry to paint such a bleak picture, folks. I know some of you are thinking, “there has to be a way out of this cunumdrum, and also the creation of some thing more appealing!”

And YES, there is. It’s called entrepreneurship.

By definition, an entrepreneur is one who owns or manages a business enterprise, and who, by some risk and initiative, attempts to create a profit for themselves.

Unable to find work in their field, or forced to operate for a fraction of previous earnings, I predict that we will see a huge mass of Infant Boomers striking out on their own in small companies, pc related enterprises (ebay, craigslist, blogging, etc), inventing, as well as performing consulting work.

Additionally, former hobbies, abilities, and crafts that were once put about the back burner for lack of time, will awaken to bloom in new self-employed ventures, like tulips in April.

Woodworking, catering, clown parties, pet sitting, handyman, music lessons, and interior decorating will rule the day in a tsunami of new careers begun on low risk, low money shoestrings by this group.

The generation that came of age during the 1960′s and 70′s will find that they can no longer depend on an incompetent Congress for solutions, or American corporations that have either downsized or shipped thousands of decent work overseas.

Self-reliance and abject creativity will rule the day, because the spirit to be their own boss and to produce something of value nevertheless lives in the hearts of most Americans

And what of Generation X (born 1964-1981)?

Generation X, the subsequent generation in line, may discover employment a little easier to acquire than the Boomers more than the subsequent decade, but it will be no picnic for them either.

If you’re among individuals within Generation X, you can no longer depend on having a pension, nor social security, to become there for you in retirement.

Even if social security nevertheless exists, the minimum age to receive it is likely to increase to 70 or older by the time you retire.

For this generation, the best answer is to invest heavily NOW, both in your self (e.g. education, work abilities), and in numerous assets, such as ETFs and real estate.

For example, Jimmy Rogers, one of the world’s leading investors, continues to advise individuals with a long term horizon to go long on commodities, and even to think about taking up farming!

Rogers feels that food costs are going to rise dramatically in long term many years, and that individuals who invest in farm land, or commodity ETFs, will clearly benefit from that rise.

He says that the sharp rise in the price of wheat in July, with prices in Europe hitting two year highs, indicates that shortages are most likely on the horizon.

So farm, people, farm!

A brand new generation of farmers might prosper in America…

And that leads me to my other favorite investment, long term real estate investing.

It is time to stop crying over 2006, and the speculators who bought at the peak of prices and interest rates, only to go belly up, unable to cash flow even on 30 year mortgages.

That was your Father’s real estate!

This really is the dawning of a new era, 1 in which individuals who are now suffering post traumatic stress disorder from their bad investments, and those unscathed but now paralyzed with fear, have created the ultimate perfect storm of opportunity for the subsequent generation of astute investors.

An article in Barron’s this past week, called “Renter Nation”, outlines the exact same scenario that I’ve been documenting here for that past number of months.

“Renter Nation” says that a decrease in house ownership within the 35-49 population will continue for many years, having a simultaneous increase in the number of renters under 35.

Actually, by 2015, the % of individuals who own a house will have lost at least 5% from the peak in 2004.

A five percent reduction might not seem like a lot, but that amounts to 6.5 million people going from owning to renting. Yes, I know, some will temporarily live together or move back in with mom and dad, but for how long?

Folks, this will lead to a real boom in demand for the rental market.

Couple that with historically low interest rates, and foreclosures that can be bought at 1995 prices, and you’ve got a formula for money flowing properties on 15 yr mortgages.

That means that even a 40 yr old who invests in real estate now may have paid off properties generating a monthly stream of income from age 55, throughout the rest of their life.

Even better, I am personally mentoring investors in their mid 20′s right now who may have paid off actual estate by age 40!

Now those are the kind of American entrepreneurs that we have to lead this country back to economic greatness.

So forget the Pollyanna spin on work reports, and the government’s green jobs that aren’t coming. Pull your self up by the bootstraps and start a business, grow some corn, or purchase a handful of rental properties.

If you don’t take control of your own future, who will?!

With all of the uncertainties in our economy, there is still 1 certainty you can bank on …

Fifteen years from now, you will be Fifteen years older.

When that day arrives, will you have attained real wealth, or just be dependent upon the kindness of Uncle Sam?!