Your Economy- Economic "Bloodbath"

The country tumbled deeper into recession and probably logged its worst economic performance in a quarter-century during the final three months of last year as battered consumers and businesses throttled back spending.

The U.S. economy is deteriorating at an alarming clip as the housing, credit and financial crises — the worst since the 1930s — feed on each other in a vicious cycle that has proven difficult for Washington policymakers to break.

The Commerce Department is set to release a report Friday expected to show the economy shrank at a pace of 5.4 percent in the October-December period, a much faster descent than the 0.5 percent decline logged in the prior quarter. If economists’ forecasts are correct, it would mark the weakest quarterly showing since an annualized drop of 6.4 percent in the first quarter of 1982, when the country was suffering through a severe recession.

“It was a bloodbath,” said Richard

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Black Money Experts Talks With Steve Harvey and Wendy Williams

Dr. Boyce Watkins
www.BoyceWatkins.com
Brought to you by the Great Black Speakers Bureau, the #1 Speakers Bureau in America.

Happy New Year Peeps!

OK, if you want to start the New Year off with a laugh, here is the video of Jesse Lee Peterson of Fox News thanking White people for slavery. What's really funny is that Jesse is being dead serious. I also want to share my support for the great Cynthia McKinney, whose boat was attacked as she worked hard to provide humanitarian support for suffering Palestinians during the unfortunate conflict in the Middle East. May this year bring peace to that region of the world.

I just wanted to reach out and inform the members of the YBW family that my wonderful publicist, Tarin Donatien, is now pushing me back out into the crazy New York media for a brief tour to start the year. Our goal is to make the world aware of our new financial fitness program at FinancialLipo.com, which will focus on helping people learn to manage their bill collectors, cut their debts legally, gain financial literacy and get their financial situation right for the New Year (the site will be launched on January 6). Sign up for our Money Advice Email list to get free money tips and to stay briefed on the issue. We are also going to discuss the new TV show I am working on with Dara Cook from BET/MTV called "Ying Yang", in which the goal is to discuss the Ying and the Yang of various controversial issues (i.e. is Hip Hop too sexist? Does a Black President necessarily help black people? Are men or women the primary cause for troubles in the Black family?). If you have ideas for good show topics, please fee
l free to share them with us.

Here's the break down:

On the morning of 1/8, I'll be on The Ed Lover Show in NYC. It's on Power 105.1, which I think is the #1 show in NYC. But Hot 97 is pretty strong, and so is WBLS. The New York Media market is pretty fierce.

I'll be on Hot 97 the following Sunday. Lisa Evers, the host of Street Soldiers, is one of my favorite people.

I'll be on The Morning Show with Mike and Juliet on the morning of the 9th at 9 am. The show is on National TV and probably comes on in your city. Here's a list of the affiliate cities.

Wendy Williams and I are going to be on the 9th at 4 pm. I love Wendy's show: she's crazy but professional. Our past appearances have always been pretty exciting.

Steve Harvey and I are going to talk money during the same week. The exact time has not been confirmed yet, but I'll let you know when that happens. I like Steve Harvey's show a lot. He is actually a funny dude in person.

Quick thoughts on the New Year and how to make it work for you:

1) There are 24 hours in a day, 168 hours in a week and 8,760 hours in a year. That is a lot of time to accomplish whatever goals you have for yourself. At the start of each year, I budget the 8,760 million "time dollars" I've been blessed with and figure out how I am going to make my life better. You'd be amazed at how much you can change your entire life in just one year of consistent focus. Most of us have so much BS around us that we lose our center and disconnect from our true purpose in life. Find your purpose right now, write it down and read that note every day.

2) No matter what your age, your life should ALWAYS be moving forward. You should always aim to get educated, pick up a new skill, overcome another weakness, etc. When a living thing stops growing, that is when the thing starts dying. The velocity and direction of an object means far more than its current position. In other words, where you are doesn't mean much of anything: it is where you are going that determines where you end up. We are all becoming SOMETHING, and it is our day to day actions that determine what that thing is. For example, someone who plays basketball every day is becoming a good basketball player, even if they are not very good right now. Someone who eats cupcakes all day is becoming overweight. Someone who studies every day is becoming a good student. Ask yourself honestly, "Based on my day to day actions, what am I becoming? Are my words in line with my activities or am I lying to myself?"

3) Remove the toxins from your life. Wasteful activities, negative people, bad relationships and ugly habits have no place in your existence. Start the process of extracting the negatives today to remove the weight that keeps you from being where you want to be. Either kill or redefine the relationships that stand as barriers between you and your destiny. It's scary and people might get angry, but you must do it right now. When people see that you are serious, they will move the hell out of your way.

4) Mistakes of our past can be the cancer that causes us to destroy our future. A young man at 28 years old told me that he was down on himself for never going to college. 10 years later, I saw the man and told him that if he'd started going to school the minute we'd had that conversation 10 years earlier, he would be a doctor by now. Mistakes of our past can be like a cancer in our foot. Rather than cutting off the foot and being healthy, we let that cancer spread to the rest of our body, killing us slowly. Sometimes, we are so angry at ourselves about the past that we throw away our future by remaining determined to drown in the depths of self-pity, laziness and low self-esteem. Learn to forgive yourself for mistakes and keep moving forward. Life is too short to waste time.

5) Only crazy people become Great Black Achievers. I say this because you must see the vision before anyone else does, and only crazy people see things that are not there. There was a time when a "nobody" named Barack Obama saw himself as President of the United States and people thought he was simply delusional. But had he not been able to see the vision clearly for himself, he would never have been able to paint the vision for the rest of the world and his confidence would have been swayed by those who truly felt that a Black man could not be President of the United States. See your vision, believe in that vision, craft that vision, have a strategy to live that vision. Then bust your butt to fulfill that vision with deliberate actions and daily activities that inch you closer to your objective. The bed called "Your Life" is made by your day to day actions and choices. Most of our existence is nothing more than a product of what we choose to do on a daily basis. Success DOES NOT happen by accident.

Here is a YBW Family Slogan we can use for this year: "Greatness is mine in 2009". Kill off the haters and give birth to your dreams. Always set goals. Inspire those around you with your courage. Set empowering examples for your children. When you shine your light the brightest, those around you find the light within themselves. Your destiny is to be outstanding.

God Bless,
Dr. Boyce
www.BoyceWatkins.com

Should The Government Be Trusted With Our Money

By Dr. Boyce Watkins
www.BoyceWatkins.com

Media reports show that many Americans are not quite sure of what to do with their money. Watching banks fail left and right, people are logically afraid of what might happen to their savings. This fear is justified, as we are seeing our accounts beaten and stomped by the global financial meltdown.

This grave concern is magnified by the fact that those we’ve trusted are the ones who’ve left us vulnerable. Our most cherished financial experts handled our retirement accounts like flashy vehicles on a Nascar speedway. Our elected officials allowed executives in the banking industry to run rampant like 3-year olds with dirty diapers. Then, when the crash came, a massive bailout package was created for those most responsible for the damage, while the rest of us were left holding the tax bill.

This begs the question: Why in the hell should we trust the government?

I recall that during the failure of Enron, one of the most respected companies in America at the time, the firm made several statements designed to create confidence in the company’s financial condition. Like captains of the Titanic, company leaders explained that there was nothing to worry about, even as they themselves were preparing their lifeboats. When the company failed, those who did not protect themselves reminded us of one grim and fundamental truth: when the “you know what” hits the fan, it’s every man for himself….and every woman too, in case you’re wondering.

In response to such sentiment, the American consumer has been working overtime to protect his/her resources: people have (against my advice) moved their money away from the frightening stock market, they are diversifying money into different banks, and some are taking their money out of banks altogether. All of these actions are occurring in spite of government calls for calm in a world on the verge of financial panic.

The honest to goodness truth is that I don’t blame Americans for being afraid. I don’t blame them for not trusting the government right now. Trust must be earned in any relationship, whether it is a tough marriage of the relationship between a government and its citizens. Our government must work to regain that trust through sound and efficient financial management. It will NOT regenerate the public trust through excessive spending on meaningless wars, selfish pork-filled bills being passed through Congress and budget deficits that strain the resources of Americans everywhere.

I can’t tell you if the government is lying to you, but I can tell you this: There was a time when government guarantees such as FDIC insurance were as pure as the driven snow. There was a time when the United States Federal Government had pockets and resources so deep that even God himself could be bailed out with our cash. The sad truth, however, is that no empire lasts forever, and there is destined to be a day in the future when we are no longer the unquestionable economic super power that we once were. A country that can’t even afford its social security obligations is hardly a nation that has risen beyond economic risk.

Another sad truth is that if the financial world really were coming to an end, the citizens would be the last to find out about any such crisis. We would, simultaneously, be the first ones asked to suffer the burden of irresponsible behavior by our leaders. If that doesn’t justify a bit of skepticism, I am not sure what does.

Dr. Boyce Watkins is a Finance Professor at Syracuse University. He does regular commentary in national media, including CNN, ESPN, CBS and BET. For more information, please visit www.BoyceWatkins.com.

Why the Government Does Not Want You To Panic During Financial Crisis

by Dr. Boyce Watkins
http://www.boycewatkins.com/

If you listen carefully to the words of Treasury Secretary Henry “Hank” Paulson and Ben “Big Ben” Bernanke (chairman of the Federal Reserve) you might notice a trend in their language. The word “confidence” is used a lot when they speak. Many of their monetary proposals are not necessarily valuable for their financial power, but also for their psychological power.

Some of you may wonder what confidence has to do with anything. After all, if you’re broke, confidence doesn’t exactly put money in your pocket. If you’re 100 pounds overweight, confidence won’t help you win the Olympic 100 meter dash. When you are flying on a crashing plane, confidence doesn’t keep the plane from slamming into the ground. But confidence is important to an economy, and one of the most significant drivers of economic growth. In fact, over confidence has driven US economic growth for the past 10 years. Here are some reasons that confidence matters in the minds of Hank and Big Ben:

1) Confident consumers spend money
If you think you might lose your job next year, are you going to max out your credit cards? I certainly hope not. If you are worried about being able to make ends meet, are you going to buy that big screen TV? Not unless you want your wife to leave you. So, even if it doesn’t hold any truth, the mere forecast of a weak economy is enough to make many Americans hold off on consumer spending, one of the great driving forces of the American financial system.

2) Confident companies invest money and hire workers
Investments involve risk. Your hunch may work out, and it may not. If you don’t believe the economy is getting better, you are not going to consider taking that risk. No one plans to go to the beach if the weather man says that it’s going to rain. When economic rain is in the forecast, companies pull out their umbrellas and hold off on new projects. This reduces the number of jobs in the economy, because nearly every job created in America is the result of someone making an investment.

3) Confident Americans do not take their money out of banks
In case you didn’t know, your bank does not have your money. Your money is part of a large base of financial capital that is loaned out to individuals and consumers seeking to get a good return on their investment. So, without investing, your bank would have no interest in paying you any interest at all. So if, say, 30% of all customers of the same bank decide to get their money out at the same time, the bank would have serious financial problems. It is a lack of confidence that could cause customers to “run” on their bank and take out their money.

4) Confident investors keep their money in the stock market
The stock market is a place where fortunes are made and lost. Some part of that fortune is psychological, given that no asset can have a value which exceeds that which someone is willing to pay for it. When investors lose confidence, they take their money out of the stock market, and reductions in demand for stocks lead to massive paper losses in the market. Additionally, most Americans are “momentum traders”, meaning that when the market goes up, they tend to buy more, and when it goes down, they tend to sell. History shows that it is actually the opposite approach that tends to work best.

5) Confident banks make loans
Banks have to keep a certain portion of their funds on hand at all times to meet federal requirements. If they are fearful that their customers might come and demand their cash, they hold onto their capital to ensure that it is available. If they are afraid that their borrowing customers will not be able to repay loans due to a weak economy, they also hold back on issuing new loans. The truth is that when economic forecasts are grim, conservative bankers become even more fearful than the rest of us.

The bottom line of this article is that confidence matters. So, the next time you hear Ben Bernanke give a speech, you can be confident that he is going to use language that makes you feel more secure. Whether you choose to believe those words is up to you.

Dr. Boyce Watkins is a Finance Professor at Syracuse University and author of “Financial Lovemaking 101: Merging Assets with Your Partner in Ways that Feel Good”. For more information, please visit http://boycewatikns.com/

"Black Financial Expert Boyce Watkins on Credit Reports"

By Dr. Boyce Watkins
http://www.drboycefinance.com/


Where do Credit Scores come from?

Unlike babies, credit scores do not come from a financial stork. There are 3 major credit bureaus in the United States: Experian, Trans Union and Equifax. Companies subscribe to their services to obtain information about you to decide if you are credit worthy or not. Under the old system, the credit scores ranged from 375 to 900. Under the new VantageScore system, they range from 501 to 990. The new system is more consistent among various credit bureaus, so you don’t end up with scores that go all over the place.

How can I get a copy of my report?

I personally go to a site called Myfico.com, where you can order reports from all 3 bureaus or just one. You can also go to freecreditreport.com (you know, the site with the really funny commercials). The law says that you are entitled to at least one free credit report every year. Also, if you are denied credit for any reason, you can write the bureaus, sending along a copy of the rejection letter, and request a copy of your credit report. If you choose to pay for your report, it will likely cost you about $8 dollars.


What factors go into calculating a credit score?

The factors that go into calculating a credit score are a little vague and it’s protected like the recipe for KFC chicken. While the formula is well-guarded, we do have some guidelines on what factors are theoretically used to determine whether or not someone should loan money to you.

The factors are broken into what they call “The Four C’s of Credit”: Character, collateral, capacity, capital and conditions.

Character is their way of trying to decide if you are a good person or not. I don’t agree with this, since having bad credit does not make you a bad person. It just makes you a person who does not have a good track record when it comes to borrowing money.

Capacity is represented mostly by your income level and how much money you’re expected to earn in the future.

Capital is noted by the amount of cash you have in reserves and other liquid assets at your disposal. If you have capital, that means you can withstand a short-term decline in income and still make payments.

Conditions are reflected by the environment in which you live. It might include the state of the economy, your line of work and other external factors that might impact your credit report. For example, during the liquidity crisis in America, conditions for lending are very, very bad.

Now you know where credit scores come from. You probably have more questions, since there is a lot of ground to cover. To get more information, please feel free to learn along with me and my students by visiting http://www.drboycefinance.com/.

Dr. Boyce Watkins is a Finance Professor at Syracuse University. He does regular commentary in national media, including CNN, ESPN, BET and CBS. For more information, please visit http://www.boycewatkins.com/