the road to prosperity what we need to do cogent strategies asa j. beck, cpa president, cogent...

The Road to Prosperity

What We Need to Do

CogentStrategies

Asa J. Beck, CPAPresident, Cogent Strategies, LLC

Member of Policy Committee, Coalition for a Prosperous America

Asa Beck, Data, and Actions to Take

Cogent Strategies, LLC www.cogentstrategies.com

•CPA, Consultant, Contract CFO•BS Accounting, MS Finance, taught

university level finance•Member Financial Executives

International•Here to inform and motivate to Action•Goal is to show you how to be

prosperous and improve the economy for everyone

•I am here to tell you what actions will do that

What is Happening in the Economy?


•The economy is in a slow uneven recovery

•Banks are improving, but many struggle

•Full time employment is growing slowly

•There will be low growth this quarter•The trade deficit is rising again•The federal deficit is out of control•The dollar is better than Euro, but

weak•Interest rates must rise soon•We can take steps to return to

prosperity

Five Things to Remember! Cogent Strategies, LLC www.cogentstrategies.com

•Have or create a cash reserve•Be cash flow positive•Spend your money close to home, very

close•Federal spending must be fixed quickly•It is all about the industrial base

improving to create jobs and fund government

The Banking System Cogent Strategies, LLC www.cogentstrategies.com

Data is from the Federal Reserve http://www.federalreserve.gov/releases/h8/data.htm

0

2000

4000

6000

8000

10000

12000

14000

Total Assets

Loans (Exclud-ing Banks)

Residual (Equity)

Cash Assets

Select Bank Data, All Banks, January 2007 to November 2011 in Billions

Condition of Creditors Improves Cogent Strategies, LLC www.cogentstrategies.com

Charge offs total 1.53% and Delinquencies are 5.61% overall. Data is from the Federal Reserve http://www.federalreserve.gov/releases/chargeoff/

Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Aug-09 Mar-10 Aug-10 Feb-11 Aug-110

2

4

6

8

10

12

Charge Offs RE LoansCharge off All LoansDelinquencies RE LoansDelinquencies All Loans

Percentage of Loans Charged Off or Delinquent, All Banks, Not Seasonally Adjusted, September 2005 to Sept 2011

FDIC Bank Profits Cogent Strategies, LLC www.cogentstrategies.com

Data is from FDIC http://www.fdic.gov/news/news/press

Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12

-50

-40

-30

-20

-10

0

10

20

30

40

50

FDIC Bank Profits in Billions of Dollars

FDIC Bank Profits

FDIC Troubled Banks and Fund Balance


Data is from FDIC http://www2.fdic.gov/qbp/qbpSelect.asp?menuItem=QBP

Dec-05 Apr-07 Sep-08 Jan-10 Jun-11

-200

0

200

400

600

800

1000

FDIC Troubled Banks CountFDIC As-sets of Troubled Banks $B

FDIC Fund Balance $B

The Trouble With FDIC and the Intitutions Insured, Total of 7,437 Institu-tions

Economic Factors Cogent Strategies, LLC www.cogentstrategies.com

Source : Bureau of Labor Statistics, Current Population Survey http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref3

Unemployment is a lagging indicator it is currently 8.5%

http://www.bls.gov/

Economic Factors – U6 Unemployment


Source : Bureau of Labor Statistics http://www.bls.gov/webapps/legacy/cpsatab15.htm

This measure includes those who have not looked for work in last four weeks and those that have part time jobs for economic reasons Dec. 2011 15.2% Measured as it was in 1994 the U6 would be 22% www.shadowstats.com

http://www.bls.gov/

Economic Factors – Manuf. Employment


Source : Bureau of Labor Statistics http://www.bls.gov/iag/tgs/iag31-33.htm

Manufacturing employment has fallen 5.325M jobs in 11 years, but is beginning to rise. The total is 11,790,000 at the end of December

http://www.bls.gov/

Economic Factors – Total Employment



Total full time employment has not gone down as much this winter as last

May-05 Oct-06 Feb-08 Jul-09 Nov-10 Apr-12 Aug-13100000

105000

110000

115000

120000

125000 Full Time Employment, not seasonally adjusted

Full Time Employment

http://www.bls.gov/

Economic Factors – Employment % of Pop



This looks similar to the full time employment curve and shows new normal

May-05 Oct-06 Feb-08 Jul-09 Nov-10 Apr-12 Aug-1332.00%

33.00%

34.00%

35.00%

36.00%

37.00%

38.00%

39.00%

40.00%

41.00%

42.00%

Percent of Population Employed Full Time January 2007 to Devember 2011

Percent of Population Employed

http://www.bls.gov/

Economic Factors – How Many Jobs Cogent Strategies, LLC www.cogentstrategies.com

•7.992 M full time jobs lost since Dec of 2007•Not all jobs are equal•Manufacturing Jobs tend to pay better•They also create two support jobs for each one•Replacing the 5.325 M manufacturing jobs lost would create 15.925 M•This replaces the jobs lost and more•Restoring the United States industrial base is the Road to Prosperity

http://www.bls.gov/

Economic Factors - GDP Cogent Strategies, LLC

www.cogentstrategies.com

Source : Bureau of Economic Analysis http://www.bea.gov/national/index.htm#gdp

GDP is finally higher than it was at the start of the recession

Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-1111,000.0

11,500.0

12,000.0

12,500.0

13,000.0

13,500.0

Real GDP

Real GDP, Seasonally Adjusted 1st Q 2000 to 3rd Q 2011

http://www.bea.gov/national/index.htm

http://www.bea.gov/national/index.htm

http://www.bls.gov/

Economic Factors – New Home Sales


Source : US Census Bureau http://www.census.gov/const/soldreg.pdf

New home sales are at near record low levels

Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-110

200

400

600

800

1000

1200

1400

1600

Seasonally Adjusted New Home Sales Annual Rate of Sale

http://www.bls.gov/

Economic Factors - Manufacturing Cogent Strategies, LLC

www.cogentstrategies.com

Source : US Census Bureau http://www.census.gov/cgi-bin/briefroom/BriefRm

Manufacturing is recovering and it underpins the improvement

Jan-07 Aug-07 Feb-08 Sep-08 Mar-09 Oct-09 May-10 Nov-10 Jun-11350

450

550

650

750

850

950

InventoriesShipmentsUnfilled Orders

Census Bureau Data on Manufacturers' Orders, Inventories, and Shipments January 2007 to November 2011

http://www.bls.gov/

What Can We Do – Cash and Profits

• Have a cash reserve• If you don’t have one, create one• Hold cash for when interest rates rise• Conserve capital and contain costs• Your business needs to be positive cash flow• Be sure you make a profit• You have survived now prosper

http://www.bls.gov/

So What Can We Do - Measure Cogent Strategies, LLC www.cogentstrategies.com

Understand your business.• Assess what your customers truly value• Make a new plan based on today’s reality• How are you better than your competition• Have Key Performance Indicators (KPIs)• Measure & adjust, then do it again

http://www.bls.gov/

• “Do what you should have been doing all along”• Be sure you hold on to your best people

• Train or coach those who are good• Consolidate positions or replace others

• Perform for the short-term, plan for the long-term• Be part of the recovery

Improve your team

• Provides free professional services in law, accounting, management, and Sales/Marketing

• Maximum of three hours for each company from each person in a two month period

• Can help businesses that need a little guidance

• It is their way of giving back to the community• www.denverbusinessadvisors.com• Details are listed on the web site

Denver Business Advisors

http://www.denverbusinessadvisors.com/

Trade and Industrial Base are Key Cogent Strategies, LLC www.cogentstrategies.com

Source :http://www.mbginfosvcs.com/

http://www.bls.gov/

We Must Make More of What We Use


From international Monetary fund 1980 to 2008 http://en.wikipedia.org/wiki/File:Cumulative_Current_Account_Balance.png

http://www.bls.gov/

Trade Balance by Country Cogent Strategies, LLC www.cogentstrategies.com

From United States International Trade Commission http://dataweb.usitc.gov/scripts/cy_m3_run.asp

Country Imports Exports Balance

Millions of Dollars 2010

China $295,544.5 $65,123.9 ($230,420.6)

Mexico$176,308.

7$105,717.

7($70,591.0

)

Canada $224,584.1 $171,695.2 ($52,888.8)

Japan $96,001.8 $47074.3 ($48,927.5)

Germany $69,790.0 $40,229.1 ($29,560.9)

Ireland $28,101.8 $6,969.3 ($21,132.5)

Venezuela $27,339.4 $8,621.5 ($18,717.9)

Nigeria $19,474.0 $3,602.3($15,871.7

)

Italy $26,232.2 $11,202.3($15,029.9

)

Malaysia $23,252.0 $8,911.8($14,340.1

)

Country Imports Exports Balance

Millions of Dollars 2010

Netherlands $15,819.6 $29,168.9 $13,349.3

Hong Kong $3,534.7 $15,219.5 $11,684.7

Australia $7,997.8 $18,243.7 $10,245.9

United Arab Em $1,514.9 $11,154.4 $9,639.5

Belgium $13,736.1 $19,406.8 $5,670.8

Singapore $15,587.9 $19,923.6 $4,335.8

Panama $296.0 $4,063.2 $3,767.2

Turkey $3,648.8 $6,897.9 $3,249.1

Egypt $2,077.7 $5,215.6 $3,137.9

Chile $6,047.2 $8,693.5 $2,646.3

http://www.bls.gov/

Spend Money Domestically Cogent Strategies, LLC www.cogentstrategies.com

With Weakening Dollar Buy Close to Home• It is not easy, but usually you can• Think of your spending like votes• Japan, Germany, & UK Manufacture, why• Citizens buy in their own self interest

• Food, meat, produce, and dairy• Automobiles, computers, & yard equipment

• As dollar weakens, imports will cost more• The challenge, 90% of spending on USA

http://www.bls.gov/

A Humorous Note Cogent Strategies, LLC www.cogentstrategies.com

http://www.bls.gov/

Our Borrowing is Out of Control Cogent Strategies, LLC www.cogentstrategies.com

Source : White House Office of Management and Budget http://www.whitehouse.gov/omb/budget/Historicals/ US Census Bureau, Foreign Trade Division http://www.census.gov/foreign-trade/statistics/historical/gands.txt

Estimates for 2011 are from the Office of Management and Budget

19601970

19801990

20002010

(300,000)

200,000

700,000

1,200,000

1,700,000

2,200,000 Trade and Federal Budget Deficits 1960 through

2011

Trade DeficitFederal DeficitCombined Deficits

Years from 1960 through 2011

Mil

lions

of

Doll

ars

http://www.whitehouse.gov/omb/budget/Historicals/

http://www.census.gov/foreign-trade/statistics/historical/gands.txt

http://www.bls.gov/

Our Federal Debt is Greater than GDP


Total debt is from the US Treasury http://www.treasurydirect.gov/accessibility.htm

Nov-93

Nov-94

Nov-95

Nov-96

Nov-97

Nov-98

Nov-99

Nov-00

Nov-01

Nov-02

Nov-03

Nov-04

Nov-05

Nov-06

Nov-07

Nov-08

Nov-09

Nov-10

Nov-11

Nov-12

Nov-13

0.00

2,000,000,000,000.00

4,000,000,000,000.00

6,000,000,000,000.00

8,000,000,000,000.00

10,000,000,000,000.00

12,000,000,000,000.00

14,000,000,000,000.00

16,000,000,000,000.00

Federal Debt

Federal Debt

http://www.bls.gov/

Federal Reserve Manipulation Cogent Strategies, LLC www.cogentstrategies.com


Jan-00 Jan-01 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-110

1

2

3

4

5

6

7 Actual Average Interest Rate on Interest Bearing Federal Debt

Actual Interest R...

http://www.bls.gov/

Interest Expense is Artificially Low Cogent Strategies, LLC www.cogentstrategies.com


Jan-00 May-01 Oct-02 Feb-04 Jun-05 Nov-06 Mar-08 Aug-09 Dec-10 20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

ActualAverage RateAt 7%

Interest Per month on Actual National Debt January 2000 to December 2011 with Actual and Alternate Rates

Average rate is from Jan 2000 to Dec 2007 at 5.272%http://www.treasurydirect.gov/NP/NPGateway

http://www.bls.gov/

Government Policies Impacting Economy


• Demand 90% of our tax money be spent here

• Be active and help drive change• Countries continue to manipulate their

currencies, seek correction HR 639• Border adjustable Value Added Taxes add to

the challenge and can be fixed• Imports need to be held to same standards

of quality and safety as domestic companies• Push back on anything that will raise

expenses or increase debt

http://www.bls.gov/

US Dollar Will Continue to Weaken Cogent Strategies, LLC www.cogentstrategies.com

Source : US Federal Reserve http://www.federalreserve.gov/releases/h10/Summary/

The value of the US Dollar will continue to fall in relation to other currencies due to are large deficits making imports more expensive and domestic products more competitive over time. This helps domestic producersOnly the hard fall of the Euro has helped this over the last few months.

Mar-00 Jul-01 Dec-02 Apr-04 Sep-05 Jan-07 Jun-08 Oct-09 Feb-1190

95

100

105

110

115

120

125

130

Broad Foreign Exhange Rate, Trade Weighted August 2000 to December 2011

http://www.bls.gov/

Dollar Weakening Requires Change


• Find a domestic source for products• If they are too expensive buy a little now• Bring any off shoring of jobs back home• Labor is more than just rate it is units too• Getting ahead on labor while unemployment

is high will be viewed later as a smart move• Buy from a US company if you can, but at

least buy US made products

http://www.bls.gov/

Summary

•Have or create a cash reserve•Be cash flow positive•Spend your money close to home, very close•The challenge 90% of spending on USA•Federal spending must be fixed quickly•Be vocal with your representatives•It is all about the industrial base improving to

create jobs and fund government•Help me spread the word to others


• Questions and Answers• www.cogentstrategies.com• Contact information:

Asa J. Beck, PresidentCogent Strategies, [email protected]

See links on our site for American Products


http://www.cogentstrategies.com/

mailto:[email protected]

the road to prosperity what we need to do cogent strategies asa j. beck, cpa president, cogent...

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