~*Revealing and Getting Rid of Scams | Creating Honest Sustainable Wealth | Offering Happiness, Safety and Legitimacy*~

Saturday, 28 January 2012

Tax Deductions: Enjoy Them While You Can

By Andrea Coombes

Two-thirds of U.S. taxpayers claim the standard deduction, but if ever there was a time to make the most of valuable tax deductions and credits, it might be now, before it’s too late.

Given the general tenor in Washington these days, there’s no telling which tax breaks will survive and which will disappear.

Already some tax perks are gone. Remember Schedule L? On that now-defunct form, taxpayers could claim above-the-line deductions (that is, no itemizing necessary) for certain disaster losses, sales taxes paid for the purchase of a new car, and a limited amount of property taxes. Those benefits are not available on your 2011 return.

And the tax credit for homeowners who make energy-efficient improvements? That’s worth just $500 in 2011, down from $1,500 in previous years — and it’s a lifetime total so if you claimed it before, there’s a good chance you’ve wrung that tax break dry. Tax mines that could blow up your return

“Over the last couple of years we’ve lost a few credits and deductions,” said Mark Luscombe, principal tax analyst with CCH Inc., a Riverwoods, Ill.-based tax publisher and a unit of Wolters Kluwer.

That makes doing your taxes “maybe a little bit simpler,” he said, but “those deductions were all saving someone some money probably.”

And the outlook for other tax breaks is far from certain. The so-called tax extenders — a group of tax breaks that Congress generally renews each year — expired at the end of 2011. That includes, among other things, a provision for older Americans to make a tax-free IRA distribution to a charity, a deduction for college tuition and a deduction for state and local sales taxes.

Will they, or won’t they?

It’s not the first time the tax extenders have expired. In the past, lawmakers renewed them and other tax breaks retroactively. But, while lawmakers eventually may extend some or all of these perks, it’s no sure thing in the current political climate.

And that means a lot of tax uncertainty ahead.

For instance, businesses enjoyed a bonus depreciation perk on 100% of the cost of qualified property in 2011; in 2012, that’s down to 50% and it’s unclear whether the more generous allowance will be resurrected. Similarly, small businesses enjoyed a $500,000 limit for expensing business assets under Code Section 179 in 2011; that drops to $125,000 in 2012 and will fall to $25,000 in 2013 if Congress doesn’t act, according to CCH Inc.

Paying for college costs? The American opportunity credit is worth up to $2,500 (and up to $1,000 of that is refundable) for certain higher-education expenses, but under current law it’s not available after 2012. In 2013, that credit goes back to being the Hope credit, worth up to $1,500, nonrefundable.

And consider the tax credit for adopting a child. It’s a refundable credit worth more than $13,000 in 2010 and 2011. In 2012, the credit is down to $12,650 and nonrefundable. In 2013, it’s slated to disappear (a much smaller credit will remain available for adoptions of special-needs children).

Of course, the Bush-era income-tax rates, set to expire at the end of 2012, would affect the broadest swath of taxpayers. If lawmakers don’t act, the top income-tax rate rises to 39.6% from 35% now, the other tax brackets inch higher and the lowest tax rate becomes 15%, from 10% now.

Will Congress bring back any of these tax breaks? That’s tough to say in the current climate of gridlock and lawmakers’ focus on deficit reduction.

“Given the repeal of the estate tax, it wouldn’t surprise me” if lawmakers let the Bush-era tax cuts and other tax breaks lapse, said Jack Nuckolls, the San Francisco-based national director of private client tax services at accounting firm BDO.

He’s referring to the fact that Congress allowed the estate tax to expire in 2010 for one year — a situation that stunned many tax professionals, many of whom expected lawmakers to reinstate the estate tax for that year retroactively. (Eventually, the Tax Relief Act, passed late in 2010, gave estates the option of paying the estate tax or avoiding the estate tax but facing less-generous cost-basis rules for heirs.)

Still, absent an overhaul of the entire tax code — where tax breaks are eliminated and tax rates are reduced, which is much desired by some lawmakers but difficult to attain — some say Congress is likely to extend many of the most popular tax breaks.

“The basic approach of the Republicans is ‘no tax increases,’ and eliminating a tax break without reducing tax rates looks to them like a tax increase,” Luscombe said. And Democrats “might like phase-outs for the wealthy but they want tax breaks generally for the middle-class and poorer people.”

Whatever lawmakers end up doing, Nuckolls said, don’t expect much tax-law legislation before the election in November.

Take advantage of those deductions

So, what’s a taxpayer to do? Planning ahead for your 2012 tax return is no easy task, though some planners say pulling income into this year may make sense, particularly for high-income taxpayers, in case higher tax rates do kick in next year.

High-income taxpayers also face a limit on itemized deductions that’s slated to kick in again next year — that would suggest maximizing deductions as much as possible this year.

At this point in time, of course, it’s near-impossible to change your 2011 tax situation, though you do have until April 17 to make a 2011 IRA contribution.

But one big decision taxpayers still must make — and many may be getting it wrong is whether or not to itemize.
It’s time to make the most of valuable tax deductions and credits, before it’s too late.

Just one-third of tax returns claimed itemized deductions in 2009, according to CCH. Certainly, taking the standard deduction — worth $5,800 for single filers on 2011 returns, up from $5,700 a year earlier (double that if you’re married-filing-jointly) — is a good call for many taxpayers. And it’s much easier than tracking receipts and calculating your tax breaks. But at least one study found that many people who take the standard deduction are overpaying taxes.

As many as 2.2 million tax returns claimed the standard deduction when itemizing would have reduced their tax bill, according to a 2002 report, based on 1998 data, by the U.S. Government Accountability Office, the investigative arm of Congress. Taxpayers overpaid by an estimated $945 million, with about 24% of those taxpayers overpaying by more than $500 each and 76% overpaying by $500 or less. GAO report

Meanwhile, other data show that taxpayers are claiming hefty sums, and likely reducing their tax bills substantially. For instance, for people with adjusted gross income of $50,000 to $100,000, the average deduction claimed for interest paid is $10,133; for taxes paid, $6,247; and for charitable contributions, $2,775, according to CCH Inc., based on 2009 data. (The figures are the average for the taxpayers in that income group who claim the deduction.)

Among taxpayers with adjusted gross income of $250,000 or more, the average deduction claimed for interest is $25,527; for taxes paid, $48,317; and for charitable contributions, $18,488.

Next time you start up your tax software or get out your tax forms, make sure you run the numbers to see whether itemizing makes sense for you.

Andrea Coombes is MarketWatch's personal finance editor, based in San Francisco.

9 Things You Should Know About Your Credit Card Receipt

By Melody Warnick

You may know them as those annoying scraps of paper that litter your purse or flutter from your wallet at inopportune moments, but receipts for credit card transactions are actually worth paying attention to.

Here's what you probably didn't know about them, but should:

Receipts are more secure than you think ... Unless a merchant made a big mistake, you won't see your whole credit card number on a receipt. That's because the federal Fair and Accurate Credit Transactions Act -- an amendment to the Fair Credit Reporting Act that took effect in 2006 -- legislated that for better financial security, only the last four or five digits of your card number can appear. That's why you see something like XXX-XXXX-1234 instead. Your card expiration date can't show either.

... but receipts aren't totally thief-proof. Your truncated card number isn't enough to steal, but those digits "should still be treated as sensitive, confidential information," says Jamie May, chief investigator at AllClear ID, an identity protection company. Scam artists who get their hands on even part of your card number can use it to phish for the whole number by posing as your credit card issuer or utility company over the phone. "Your card company will never call you and ask you to give them your whole card number," May says. "A good rule of thumb is to hang up and call them back at a number you know is theirs."

Receipt numbers aren't just gobbledygook. Besides the recognizable parts of your receipt, like your truncated card number and the date, are a slew of mysterious numbers. They're not alien communications; they're codes that identify the store to the company that processes their credit card payments -- for instance, a merchant ID number, an approval code, a reference sequencing number and sometimes a terminal number to identify which cash register took the payment. They're generally the same on every receipt issued by the same store. Consider them behind-the-scenes details that you can safely ignore.

Store copies and customer copies are the same. You've eaten a nice restaurant meal, tallied the tip and signed the credit card receipt -- only to realize that you've walked off with the wrong copy. "It's usually not a problem," says Heather Petersen, CEO of National Merchants Association, a payment and transaction processor. Most companies now put the tip and signature line on both copies of the receipt, so it's not a big deal if you signed the wrong one. Even if you left only an unsigned copy of the receipt, your dinner will still get charged.

You can sign as Mickey Mouse, but you shouldn't. Speaking of signatures, they matter more than you think. In an ideal world, a cashier should compare the signature on your receipt to the one on the back of your credit card. However, that rarely happens these days, and certainly no one at the bank is scrutinizing electronic signatures. That doesn't mean you're free to scrawl whatever you want, though. "This is a legally binding contract," says Petersen. "It states right on there that the undersigned agrees to pay." If the seller does notice that you signed a silly name, he can void the transaction. Plus, if you need to dispute a fraudulent charge, the signature can be a key bit of evidence. Signing your receipt "Kim Kardashian" will not help your case.

Your receipt and your bill may not always match. When your credit card bill arrives, pull out your receipts and make sure what you signed for is actually what you were charged, paying particular attention to transactions where you wrote in a tip. It's easy for a cashier to mis-key the wrong amount or to fraudulently add a few bucks to your tip. Plus, if you messed up on your math, your cashier will generally go by what the total is -- but not always. "It could be a case where they take the liberty of saying, ‘I'm pretty sure they meant $5, so I'm going to charge $5,'" says May. If something is off, your credit card receipt gives you the ammo to dispute the charge with your credit card company.

It's wise to keep your receipts around. "By far the best reason for archiving receipts is in case of an IRS audit," says Jake Brereton, marketing manager for Shoeboxed, a company that digitizes customers' receipts. But it's also helpful in case you need it to use a warranty, get a refund challenge a charge or (duh!) make a return. With Shoeboxed, you mail in an envelope of receipts and wait for them to be added to your cloud-based archive; basic service starts at $10 a month. To do it yourself, file receipts for a year or two, then shred.

Old-fashioned isn't best. Remember those clunky machines that cashiers once used to make an imprint of your credit card? Occasionally you still see them (or hand-written receipts) when small businesses lack the infrastructure to process your credit payment electronically. It seems like an innocent throwback, but "those are riskiest kinds of transactions," warns May, because you have no idea what happens to your credit card number afterwards. If a salesperson hauls out the old-school imprint machine, it's best to go get some cash.

You don't have to get a receipt. If you don't plan on keeping your receipt, don't ask for it. "It's better to not have it than throw it in the trash," points out Petersen -- not only because it's not secure, but because it's a waste. Plus, many retailers have moved toward electronic receipts and ask whether you'd like your receipt emailed to you vs. receiving a paper receipt. According to some estimates, it takes approximately 9.6 million trees to create the 640,000 tons of paper that go into receipts each year. So, if you choose an emailed receipt or just hit "no receipt" when you pay at the pump, you'll be doing yourself a financial and environmental favor.

Thursday, 26 January 2012

The eurozone: still reasons to be fearful; The widespread adoption of fiscal austerity will keep hobbling the region

Vikram Khanna

(SINGAPORE) In town last week was Klaus Regling, CEO of the European Financial Stability Facility (EFSF), which is the eurozone's main bailout fund for troubled sovereign debtors.

Part of his mission, it appeared, was to reassure the growing tribe of eurosceptics that the eurozone was well in control of its crisis, which is the stuff of headlines these days.

Candid and straightforward, he made a strong case for the durability of the eurozone and left no questions unanswered. But for all that, it was still a less than fully convincing effort.

Mr Regling, whom The Economist magazine has dubbed the eurozone's 'Chief Bailout Officer', arrived at a slightly awkward moment; on Jan 16, ratings agency Standard and Poor's (S&P) had downgraded the EFSF (from AAA to AA+), after having three days earlier cut the ratings of nine eurozone sovereigns (including France, Italy and Austria).

He pointed out that the cut in the EFSF's ratings (which came from only one credit rating agency) would make little difference to its lending capacity or to confidence in the institution. On this, he was probably right; there was certainly no discernible negative reaction from the markets. The EFSF will live on and might even thrive.

However, the rest of Mr Regling's presentation to the media here was not as reassuring as he perhaps wanted it to be.

He began with a slide titled: 'Don't underestimate Europe!' He pointed out that the European Union, which comprises 27 member states, is the largest economic area in the world, accounting for about 20 per cent of the world's GDP.

He claimed that Europe's economic performance 'has been better than perceived', noting that growth in per capita GDP has been 'identical with the US in the last 20 years'; it is only because of its poorer demographics (basically lower birth rates) that Europe's absolute GDP growth has been lower.

While Europe is indeed a major engine of growth, from the perspective of its trading partners, its absolute growth rate (as well as import intensity) matters more than its per capita growth rate. Moreover, in the midst of the eurozone crisis, past growth is less important than present and future growth.

And here, the projections for the eurozone are troubling. In its September 2011 World Economic Outlook, the International Monetary Fund (IMF) forecast euro area growth for 2012 at 1.1 per cent, compared to 1.6 per cent for the United States. The OECD Economic Outlook of November 2011 is even more pessimistic for the euro area, projecting growth of just 0.2 per cent, versus 2 per cent for the US this year and 1.4 per cent (versus 2.5 per cent for the US) in 2013.

One of the reasons the eurozone is poised for slow growth, if not recession, in 2012 and 2013 is the widespread adoption of fiscal austerity. This has been enshrined in a so-called 'fiscal compact' championed by Germany and agreed by European leaders last December.

Under this compact, countries will aim to keep their fiscal deficits to no more than 3 per cent of GDP and national debt to 60 per cent. Leaving aside the fact that these targets are far away from where troubled debtors are today, they are the same targets that were agreed under the eurozone's 'stability and growth pact' in 1997. Several countries breached the targets then.

Mr Regling maintained that the difference this time is that enforcement will be stronger; the fiscal and debt targets will be written into countries' national laws. Those who breach them can be taken to the EU's highest court, the European Court of Justice, and face sanctions.

The credibility of these 'enforcement mechanisms' is doubtful, however. At the national level, legal limits on budget deficit levels have had a mixed record. More often than not, political pressure to maintain or increase expenditures prevails over legalisms, or governments tend to find creative 'off-budget' ways to spend what they need to spend.

At the European level, if breaches of deficit and debt levels are exceptions to the rule, it is possible that the violators will be taken to court and sanctioned. But whether that will happen when breaches are more the rule than the exception - as happened with the old stability and growth pact, when even France and Germany were in breach - is moot.

The eurozone also suffers from the fact that, unlike the United States, it lacks a system of easy fiscal transfers. Labour mobility is lower as well, even though it is (in theory) a unified labour market.

Mr Regling explained the measures taken by individual countries, describing Ireland as a 'success story', Portugal as being 'on track' and Spain as 'taking swift action'.

While the accuracy of these descriptions can be disputed, there is no denying that eurozone governments have taken many tough decisions, especially on the fiscal side. The question is whether those were the right decisions. Many economists think not; pursuing fiscal austerity is not what countries should be doing when faced with ballooning deficits and debts in a recessionary environment, and where no easy mechanisms for cross-border fiscal transfers exist.

Mr Regling, in tune with many German officials, urged that investors look more at the medium term - that is, three or more years out. He complained that Anglo-Saxon investors especially (though not Asian investors) were very short- term in their focus and did not pay enough attention to medium-term issues.

To underline the importance of the medium-term view, he drew a parallel with the Asian crisis of 1997/98, pointing out that, at the time, the IMF was much criticised for the tough monetary and fiscal policies imposed on the crisis-hit countries of South Korea, Thailand and Indonesia. But subsequently, these countries emerged stronger. So will it be with Europe, he suggested; the austerity being imposed now will show up in better performance later.

These arguments are problematic. First, on the issue of investors being 'too short-term focused': the fact is that many eurozone debtors do not have the luxury of time. They are faced with having to make bond repayments (or do bond issues) within weeks, and the success of these efforts have frequently been in doubt. In that sense, many of them - most dramatically Greece, but not just Greece - have urgent short-term problems too.

Short-termism therefore comes not from investors' faulty mindsets but from the very nature of the problems of the eurozone. Indeed, any investor accused of excessive short-termism might well respond: when your house is burning, you don't think of the medium term.

The parallel Mr Regling draws with the Asian crisis is also invidious. One of the critical measures that enabled South Korea, Thailand and Indonesia (and Malaysia as well) to restore their competitiveness and recover from the crisis was sharp devaluations in their exchange rates. This option is not available to the eurozone's beleaguered sovereign debtors. Stuck with the straitjacket of the euro, they are forced to engineer sharp 'internal' devaluations - that is, cuts in domestic prices and wages, in some cases of the order of 30 per cent in a single year. Even if this were economically wise (which it isn't), it is politically unworkable, and the fact that few countries have come even close to achieving it is no surprise.

There was, however, one particular area where Mr Regling did have a point. That slide was titled: 'The ECB has taken significant measures.'

After having dithered for the better part of two years, the European Central Bank, under its new president Mario Draghi, has indeed acted decisively and imaginatively. It has cut interest rates (something it should have done back in 2010, if not earlier); continued buying sovereign bonds from the secondary market; and liberalised its requirements for collateral from banks. Most significantly, on Dec 21 last year, it launched a 489 billion euro (S$804 billion) long- term refinancing operation (LTRO) under which it has provided eurozone banks with three-year financing at an interest rate of one per cent.

This facility has helped improve liquidity across the eurozone and enabled banks to shore up their capital as well as reduce their holdings of sovereign debt, which they can park with the ECB as collateral. Some banks have also used the cheap funding to buy sovereign debt, earning a nice spread. The ECB has indicated it will launch yet another LTRO facility in February - which might be even larger than the last.

The ECB's actions have probably prevented a financial meltdown in the eurozone. They are the main reason for the decline in bond yields and the equity market rally we have seen since the start of this year. Indeed, if the zone gets through the sovereign debt crisis in one piece, it would be due in no small part to Mario Draghi's creativity.

However, this creativity does not resolve the fundamental problems of the eurozone, which are essentially too much debt, too few resources to service it, and too few ways to obtain those resources - even from other parts of the eurozone.

So, especially as long as fiscal austerity remains the centrepiece of Europe's strategy to deal with its crisis and policies to promote economic growth remain off the agenda, there remain reasons to be fearful - including about the break- up of the eurozone itself.

Global financial system in danger zone: IMF; It wants to prevent panic deleveraging of assets by banks

Anthony Rowley; In Tokyo

THE global financial system has moved 'deeply into the danger zone', the IMF warned in a report published last night while calling for the establishment of some kind of 'gatekeeper' mechanism to prevent panic deleveraging of assets by banks in Europe and elsewhere as they seek to shore up capital ratios.

This warning in the IMF's latest Global Financial Stability Report came as the Washington-based financial institution also slashed its growth forecast for the global economy in 2012, following the example set last week by the World Bank.

'Financial conditions have deteriorated, growth prospects have dimmed and downside risks have escalated,' the IMF said in a World Economic Outlook Update, adding that 'the global economy is threatened by intensifying strains in the euro area and fragilities elsewhere'.

In a third report called the Fiscal Monitor Update, also published last night, the IMF further warned that national fiscal policy will have to 'walk a narrow path' in many countries 'as downside risks rise'.

The IMF has downgraded its forecast for global economic growth this year from the near 4 per cent it forecast last September to 3.25 per cent now, chiefly because of the continuing problems in the eurozone.

This is not as severe as the forecast issued last week by the World Bank, which dramatically cut its forecast for global economic growth in 2012 from 3.6 per cent to 2.5 per cent, mainly in the light of problems in the eurozone.

Advanced economies are expected by the IMF to grow at just 1.2 per cent in 2012 compared with 1.6 per cent last year while emerging and developing economies are likely to see just 5.4 per cent growth this year compared to 6.2 per cent in 2011. Even China is forecast to see its growth rate fall to 8.2 per cent in 2012 from 9.2 per cent last year.

But the IMF reserved its strongest warning for what it sees as risks in the global financial system as bank deleveraging poses a mounting threat of contagion across the advanced and developing economies.

'The US and other advanced economies are susceptible to spillovers from a potential intensification of the euro area crisis,' said the IMF, while adding that emerging Europe and other emerging economies are at risk of contagion from the eurozone crisis.

Actions taken so far in the eurozone have helped to improve financial market sentiment but 'sovereign financial conditions remain challenging and downside risks remain', the IMF said.

Chief among these risks is a further round of deleveraging by leading banks in the light of the 'funding challenges' they are facing. 'Public funding should be made available as a backstop' to efforts by banks to raise private capital, the IMF said.

'There needs to be a pan-euro-area facility with the capacity to take direct stakes in banks there,' it suggested.

Meanwhile, a 'macro-prudential gatekeeper' is needed to ensure that deleveraging plans are consistent with sustaining the flow of credit to support economic activity.

A parallel risk to bank deleveraging on the part of banks is the danger of governments tightening fiscal policy unduly, the IMF said. 'Governments should avoid responding to any unexpected downturn in growth by further tightening policies.'

'Countries with fiscal space, including some in the euro area, should reconsider the pace of near-term adjustment' while others such as the US and Japan 'need to clarify their medium-term debt reduction strategies', the IMF said.

Tuesday, 24 January 2012

How to Shape Up Your Finances in 12 Months

All 12 months of a fresh new year means 12 opportunities to get your credit shaped up and your budgeting under control. Here, experts offer one seasonally relevant idea for each month of 2012 to do exactly that.

January: Request your free credit reports.

Why January for this exercise, a favorite among financial advisors? “You want to get financially fit,” says Denise Winston, owner of Money Start Here, a Bakersfield, Calif.-based financial advice firm. Federal law entitles consumers to a free copy of their credit report from each of the three bureaus (Equifax, Experian and TransUnion) each year. To get these reports, visit, the website set up by the three bureaus. Pull all three; each contains different information, Winston says. Review them for accuracy and take steps to fix incorrect information. Letting mistakes slide can cost: Missing an error, and having to settle for a higher interest rate, cost Winston and her husband $15,000 in extra interest on their mortgage.

February: Give your credit cards a break.

For the next 29 days, use cash or a debit card for all purchases. “It’s a good strategy all our counselors talk about,” says Hank Keaton, president and chief executive officer at American Financial Solutions, a nonprofit debt-counseling service in Bremerton, Wash. Keaton recommends stashing cash to pay for the month’s needs in four envelopes: groceries, auto, dining out and miscellaneous expenses. “When it’s gone, it’s gone,” he says. “It’s a simpler, visual way to stick to a budget.” If you have racked up card debt, consider getting a balance transfer credit card with a zero-percent rate to help undo the damage.

March: Start planning your summer vacation.

It’s not too soon to begin vacation planning, particularly if you’re using frequent-flier miles or points to pay (desirable flights and rooms go fast, especially in this economy). Even if you’re not, last-minute airplane rides and hotel rooms are expensive. “The sooner you start planning, the better,” says Keaton from American Financial Solutions. One idea: Look at trip-planning sites for budget-minded bundles on hotel, airfare and car rental.

April: Think charitably, and strategically.

Contributions to legitimate nonprofits (501(c)3s) usually are 100 percent tax deductible, with no dollar limit on the amount you can contribute a year. Before you donate, check out the charity on or another charity-rating website. Then consider giving via a monthly donation charged to your credit card. The charity will benefit from your regular donation; you’ll benefit from the tax deduction and perhaps a token of appreciation from the charity, says Brian Wodar, director of wealth management research at Bernstein Global Wealth Management in Chicago. Don’t, however “set it and forget it,” he says: Review the charity and amount of the contribution each year, as well as your nonprofit-giving goals, to make sure the two still line up.

May: Use your tax refund wisely.

Households usually get some kind of refund this time of year. What to do with the “free” money? Pay off credit card bills with it, advises Shane Scott, counseling services manager at American Financial Solutions. The goal is a low debt-to-income ratio; ideally with a debt (both credit card debt and secured debt, such as auto loans and mortgages) percentage of no more than 36 percent. “The lower, the better,” Scott says. And adjust your tax withholding using a W-4 form, so next year you minimize your refund. Why loan money to Uncle Sam?

June: Shed some mortgage debt.

If you aren’t underwater (that is, your mortgage is higher than the value of your home), consider paying off your mortgage faster. Making one additional payment per year consistently can save years off a mortgage, thousands of dollars in interest, plus improve your debt-to-income ratio, says Joe Lucey, President of Secured Retirement Advisors, LLC, a financial advising firm in St. Louis Park, Minn. If you can’t manage an entire extra payment, round up to the nearest $100 with each payment. Even with such a small step, “the ultimate savings can really add up,” Lucey says.

July: Take a vacation; keep your budget intact.

Along with your swimming trunks, pack a debit card loaded with the amount earmarked for food, souvenirs, tourist attractions and other vacation necessities, suggests Neil Ellington, executive vice president at Consumer Education Services Inc., a nonprofit credit-counseling firm in Raleigh, N.C. Try your bank for the card -- most will offer the service free of charge, he says. You’ll also get a statement of your purchases. Use that statement to analyze vacation spending, and use that information to create a tighter budget for your next vacation, Ellington suggests.

August: Dial down cellphone spending.

When kids go back to school, texting and phoning escalates; is your cellphone plan up to it? If not, start comparison shopping, says Todd Ossenfort, chief operating officer at Pioneer Credit Counseling, a nonprofit debt-counseling service in Rapid City, S.D. Ossenfort suggests fixed plans (ones that include a set amount of minutes and texts) rather than per-call/per-text plans, “so you don’t have that surprise at the end of the month,” he says. Friends and family plans sometimes offer free calls/texts from users in your network, he adds.

September: Inspect now, save later.

In many parts of the country, September weather is clement enough to get outside and find money-draining leaks and faults in roofs, shingles, windows and insulation. It’s also a good time to do an energy audit, says Karen Carlson, director of education at InCharge Debt Solutions, a debt-counseling agency in Orlando, Fla. One example: Cleaning gutters to allow rainwater to drip off effectively can extend the life of a roof by five to six years, Carlson says. When chilly fall weather sets in, keep the thermostat down, and bundle up in sweaters and warm socks, she adds.

October: Check in on college kids’ spending.

College can play havoc with finances, especially for freshmen not used to budgeting for themselves. This month, have a midterm check-in with students on their spending, suggests Heidi Albert, co-founder of School2Life, a Chicago-based firm that helps teach kids about finances. Review spending for everything from books and school supplies to meals out and dorm-room decorations; look for too many impulse purchases, Albert says. Work with spendthrift students to create a reasonable budget, or hand them a debit card (or prepaid card) with the amount they’ll need to finish the semester.

November: Rein in holiday spending, starting now.

Thanks to Thanksgiving and early-bird specials, the holiday spending spree starts this month. Take the fear factor out of bills by recording credit card charges in your checkbook, advises Mary Hunt, the Cypress-Calif.-based author of “7 Money Rules for Life: How to Take Control of your Financial Future.” “I tell people ‘Wise up, you’ve already spent the money,’” Hunt says. Here’s how: Take your checkbook register with you when shopping. When you make a credit card purchase, record the amount and deduct it from the balance as if you were writing a check. (Hunt uses a red pen to make finding the credit-card transactions easier). When you get your credit card bill, reconcile the bill with your check register, then write a check. “No more surprises,” Hunt says. “It sure keeps you aware of what you’re spending.”

December: ‘Tis the season to pay cash.

Start 2013 off on the right financial foot -- without a huge credit card bill on the horizon. Denise Winston of Money Start Here suggests carrying cash, not credit cards, to the mall. It’s easier to resist temptation with that finite amount of cash in your wallet. Merchants are more willing to bargain, returns beget cash (not a credit card credit a month later) and thus help with cash flow, and cash makes budget-minding easier. “The bottom line -- cash is king,” Winston says. “You can’t spend what you don’t have.”

What the Top 1% of Earners Majored In

We got an interesting question from an academic adviser at a Texas university: could we tell what the top 1 percent of earners majored in?

The writer, sly dog, was probably trying to make a point, because he wrote from a biology department, and it turns out that biology majors make up nearly 7 percent of college graduates who live in households in the top 1 percent.

According to the Census Bureau's 2010 American Community Survey, the majors that give you the best chance of reaching the 1 percent are pre-med, economics, biochemistry, zoology and, yes, biology, in that order.

Below is a chart showing the majors most likely to get into the 1 percent (excluding majors held by fewer than 50,000 people in 2010 census data). The third column shows the percentage of degree holders with that major who make it into the 1 percent. The fourth column shows the percent of the 1 percent (among college grads) that hold that major. In other words, more than one in 10 people with a pre-med degree make it into the 1 percent, and about 1 in 100 of the 1 percenters with degrees majored in pre-med.

If course, choice of major is not the only way to increase your chances of reaching the 1 percent, if that is your goal. There is also the sector you choose.

A separate analysis of census data on occupations showed that one in eight lawyers, for example, are in the 1 percent -- unless they work for a Wall Street firm, when their chances increase to one in three. Among chief executives, fewer than one in five rank among the 1 percent, but their chances increase if the company produces medical supplies (one in four) or drugs (two in five). Hollywood writers? One in nine are 1 percenters. Television or radio writers? One in 14. Newspaper writers and editors? One in 62.

Undergraduate Degree / Total / % Who Are 1 Percenters / Share of All 1 Percenters
Health and Medical Preparatory Programs 142,345 11.8% 0.9%
Economics 1,237,863 8.2% 5.4%
Biochemical Sciences 193,769 7.2% 0.7%
Zoology 159,935 6.9% 0.6%
Biology 1,864,666 6.7% 6.6%
International Relations 146,781 6.7% 0.5%
Political Science and Government 1,427,224 6.2% 4.7%
Physiology 98,181 6.0% 0.3%
Art History and Criticism 137,357 5.9% 0.4%
Chemistry 780,783 5.7% 2.4%
Molecular Biology 64,951 5.6% 0.2%
Area, Ethnic and Civilization Studies 184,906 5.2% 0.5%
Finance 1,071,812 4.8% 2.7%
History 1,351,368 4.7% 3.3%
Business Economics 108,146 4.6% 0.3%
Miscellaneous Psychology 61,257 4.3% 0.1%
Philosophy and Religious Studies 448,095 4.3% 1.0%
Microbiology 147,954 4.2% 0.3%
Chemical Engineering 347,959 4.1% 0.8%
Physics 346,455 4.1% 0.7%
Pharmacy, Pharmaceutical Sciences and Administration 334,016 3.9% 0.7%
Accounting 2,296,601 3.9% 4.7%
Mathematics 840,137 3.9% 1.7%
English Language and Literature 1,938,988 3.8% 3.8%
Miscellaneous Biology 52,895 3.7% 0.1%

Monday, 23 January 2012

6 Careers to Watch in 2012

For many people, the new year sparks fresh interest in finding a new job. Some are just looking to switch workplaces, but others are hoping to start or change careers. So where are the jobs?

According to Tig Gilliam, CEO of staffing and recruiting firm Adecco Group North America, they aren't within the government, nor are they in construction. Key indicators of those sectors' slackened openings include post office closures in 2011 and a long-suffering housing market, says Gilliam. However, highly specialized professions, particularly in the healthcare, information technology, and finance industries, should provide a wide-range of employment opportunities. "These sectors have fared well throughout the recession and are poised for growth in the year ahead," Gilliam says. "Finance, mortgage-related, and accounting jobs will show growth based on low interest rates and homeowners opting to refinance."

The Labor Department's projections on the fastest-growing occupations corroborate Gilliam's predictions. According to the Labor Department's findings, here are six careers that should provide plenty of job openings in 2012 and the years to come.

1. Accountant

Accountants are in especially high demand in April. But throughout the year, large firms require the assistance of public accountants to prepare, analyze, and verify financial documents. The Labor Department projects that more than 279,000 accounting positions will become available between 2008 and 2018.

One pleasant perk: Many accountants are their own bosses. The Labor Department estimates that 8 percent of those in the profession are self-employed.

How to nab an accounting job: You'll need a bachelor's degree. For the best job prospects, you should also take and pass the exam to become a certified public accountant, or CPA, which has its own educational requirements. You might also gain a competitive edge if you have a master's degree in accounting or business administration.

2. Registered Nurse

Caring for others could be considered more of a calling than a career. Still, the Labor Department includes registered nurses on its list of professions that will continue to hire plenty of workers in the coming years--an estimated 582,000 nursing jobs will need to be filled between 2008 and 2018. One reason demand remains high is because of the profession's exhaustive number of specializations, which include variances in work setting, medical treatment type, particular diseases, and particular organs.

One pleasant perk: Most RNs work in hospitals, but the Labor Department estimates that 40 percent of employed nurses provide care in homes, schools, and community centers. Those healthcare professionals are likely to keep normal business hours.

How to nab a nursing job: There are three ways to become a nurse. The least common method involves enrollment in a hospital-administered diploma program that lasts for three years. Another route is to pursue an associate degree in nursing at a community or junior college. For more in-depth training and potentially better job prospects and pay, you might consider the third option: pursuing a bachelor's degree in nursing at a four-year college. If you already hold a bachelor's degree, you could opt for an accelerated Bachelor's of Science in Nursing program that takes about 18 months to complete.

3. Computer Systems Analyst

The need for well-trained, information technology professionals is apparent, given our digitized society. People who choose a career in this field are problem solvers whose responsibilities entail building, matching, or fixing a computer system to meet the needs of their clients. Those clients could range from corporations to laid-back Internet start-ups. There should be as many as 108,000 computer systems analyst openings between 2008 and 2018.

One pleasant perk: Computer systems analysts and other IT professionals with advanced specialized knowledge or experience can parlay their skills into independent consulting or may start their own business.

How to nab an analyst job: Most computer systems analysts have at least a bachelor's degree in a technical field like computer science, mathematics, or even engineering. And a complementary graduate degree is preferred for many companies looking to hire in the profession. For example, analysts who work in a corporate setting often pursue a master's degree in business administration.

4. Social Worker

Social workers help people to cope with significant transitions in their lives, like the adoption of a child, the loss of a parent, or the adjustment to sobriety from substance abuse. For the next few years, these types of professionals will be in demand throughout the country, particularly those who specialize in medical and public health (also known as clinical social work). According to the Labor Department, there should be more than 103,000 new positions for social workers between 2008 and 2018, and nearly 58,000 of those are healthcare positions.

One pleasant perk: You could increase your marketability by focusing on a specific niche. Examples include family, child, and school social workers who specialize in deaf children, or clinical social workers who administer to cancer patients.

How to nab a social worker job: The minimum requirement is a bachelor's degree in social work or a related field like psychology and sociology. An increasing number of social workers also hold a master's degree, particularly those who do clinical work. After basic courses are completed, social workers must obtain licensure, granted from sitting exams and practicing a certain number of supervised hours of fieldwork.

5. Dental Hygienist

Of course dental hygienists clean teeth. But they have a handful of additional duties that vary by state. Some hygienists can place fillings, others can administer local anesthetics, and still others remove sutures. All hygienists strive to help educate patients about the best practices for brushing and flossing their teeth and gums, however. And according to the Labor Department, there should be more than 62,000 positions to fill in this profession by 2018.

One pleasant perk: This could be an ideal occupation for someone who requires a flexible schedule. The Labor Department reports that approximately half of all dental hygienists work part time.

How to nab a hygienist job: Aspiring hygienists must study at an accredited dental hygiene program. Those who work in a private office have at least earned an associate degree within their program. Bachelor's and master's degrees are also offered, with which a hygienist could choose to do research or teach. And similar to dentists, hygienists must be licensed by the state in which they practice.

6. Sales Manager and Representative

This profession requires a cool head and a competitive spirit. Sales representatives and their managers are customer service representatives in the most basic sense, seeing as they make sure to keep their paying clients happy and loyal. But they also are charged with bringing in new customers to meet and improve their bottom line. Those in the managerial role are often still salespeople, but they also have the charge to hire, fire, and motivate their team to exceed expectations.

One pleasant perk: While it could be difficult to obtain a sales job and rise in the ranks without a bachelor's degree, it's not impossible. Experience, plus strong communication and sales skills, could serve you just as well in your career.

How to nab a sales job: As mentioned, many sales representatives and managers have a bachelor's degree. Good word-of-mouth also helps, as many people working in this industry completed an internship at the firm where they were eventually hired. Those who are managers most likely ascended through the ranks.

Thursday, 19 January 2012

Feng shui investing: year of the dragon

by Josh Noble

With the year of the rabbit drawing to a close, thoughts turn to the prospects for the year of the dragon. Dragons are said to be highly auspicious, provided their natural ferocity can be kept in check.

Should investors be scared? Or do the soaring wings of the mythical beast offer equity markets a flight into the stratosphere?

CLSA’s Philip Chow, shipping analyst and occasional feng shui master, offered up his findings after a look into the crystal ball using the ancient Chinese art of feng shui.

As a quick reminder, last year was tough. Few investors will miss the timidity of the rabbit – an easily frightened animal, who bolted underground at the very mention of the letters EFSF. The year was also burdened by elemental imbalance, with a dangerous excess of fire and metal. Chinese markets performed poorly.

But the dragon – the only mythical beast among the 12 zodiac signs – is made of sterner stuff. What’s more, 2012 in has no fire in its charts at all, and only a touch of metal, making it a generally smoother ride.

However, the first half of the year looks troubling, with the dragon – a black water dragon to be precise – keeping its head firmly underwater.

The summer months will suffer from a scorching amount of heat, meaning the market is set for a lacklustre first six months, and July could see the worst of it. Sell in May and go away.

Another worrisome reading comes for Angela Merkel. The German chancellor is (zodiac-wise) a wooden horse, and is thus unsuited to a water dragon year. In fact, Chow says Merkel’s charts predict a “shocker of a year”. Assume the eurozone crisis continues throughout, perhaps escalating in the summer.

The dragon, however, is essentially a gamechanger, and is characterised by both dramatic turns of direction, and extreme speed.

August should see an inflection point, with the dragon bursting out of the sea and soaring into the sky. The third quarter rally should be a powerful one.

The reading for heir-apparent Xi Jinping offers further hope. Dragons herald a change in emperor. Historically, new leaders would often “see dragons” just before assuming power, and thus have the blessing of the gods. Xi’s charts look fine – if somewhat unspectacular. If China is about to crash, it won’t be this year.

The flow of money is set to head from east to west. Expect China to keep snapping up eurozone bonds and European assets, and expect capital outflows to continue making their way into Manhattan penthouses. Treasury yields will remain low.

As for sectors, it’s all about water and wood. That means load up on water-related sectors like Macao gaming, shipping, tourism, and woody plays in agriculture and fashion. Of particular interest should be cement – a neat mixture of water and earth.

There’s a saying in Chinese – you can never see the dragon’s head and tail at the same time. That’s because it moves so fast. The rally will run out of steam by December, and dragon is likely to rest for the remainder of the lunar year.

The silk-clad Chow is keen to stress that CLSA’s feng shui index is presented with tongue firmly in cheek. Indeed, last year’s predictions were somewhat off.

But those pondering an August inflection point would do well to mark the Jackson Hole address in the diaries. Any announcement of QE3 from Ben Bernanke could be just the catalyst needed to turn things around.

Tuesday, 17 January 2012

The beginning of a new year is usually a good time to reflect on the past in order to make certain resolutions about the coming one. In investing, future success can have little to do with what has worked well in the past. Trying to predict short-term market movements is also generally an investment strategy that can lead you to financial ruin. Keeping these perspectives in mind, below are five of the dumbest things you can do with your money in 2012.

Trade Volatility
Lately, it has been en vogue to consider volatility its own asset class. Trading volatility has become possible through vehicles based off the Chicago Board Options Exchange Market Volatility Index, or VIX for short. A range of exchange-traded funds (ETFs) have been created so that investors can make bets on the extent to which the market bounces up and down. There are even ETFs that let investors gain twice the exposure to market volatility, which can be used to make bets on both advances and declines in the market.

The problem, as with most short-term strategies, is developing a compelling trading strategy capable of predicting market volatility. Trading VIX-related indexes may make sense for hedging near-term market fluctuations, but there is simply not going to be any way to predict market moves with any certainty. Major inflection points in the market are missed by the best investors and include the credit crisis, flash crash and latest concerns over sovereign debt levels in Europe. Without a crystal ball, speculating on future market volatility has to be one of the dumbest things investors can do with their money.

Buy Bond Funds
U.S. interest rates have been on a steady decline since around 1980 when they reached the double digits. These days, shorter-term rates are hovering around zero, while the 30-Year Treasury Bond rate is extremely low at roughly 3%. These low rates qualify as all-time lows in many instances, such as for bank Certificate of Deposits (CDs), mortgages and U.S. Treasury rates.

Savvy investors, including Pimco's Bill Gross, have lamented at the low interest rate environment. Sadly enough, Gross's near-term call on the appeal of U.S. Treasuries has left his flagship Pimco Total Return Fund badly lagging its index and an estimated 84% of its peer group. Given the low historical rates, many see it as only a matter of time before rates start to rise. As bond prices move in the opposite direction of yields, there is the potential for sizable losses for many investors in bond funds. At the very least, investors should consider investing in individual bonds to at least ensure the return of their principal at maturity.

Speculate in Currencies
As with trading volatility, speculating in short-term currency movements is another dubious investment strategy. As with most investing, a long-term perspective can be much more meaningful. The Economist magazine issues a Big Mac Index, the origin of which has been described as a "light-hearted way to make exchange-rate theory more digestible." Namely, it looks at the price of a Big Mac across the world as a proxy for the extent that currencies are either undervalued or overvalued, relative to each other. Specifically, it states "that in the long run, the exchange rate between two countries should move towards the rate that equalizes the prices of an identical basket of goods and services in each country."

Betting on short-term movements in currencies is a certifiably dumb strategy, as shorter-term fears and emotions can push currency relationships far off from what is reasonable over the long haul. The carry trade, or borrowing in a currency with a low interest rate to invest in one with a higher interest rate, is a case in point. A popular carry trade in recent years involved borrowing in the Japanese yen, and it has unraveled at various times, including during the credit crisis in 2007 and natural disasters earlier this year. As with many short-term market movements, many speculators were caught by surprise.

Load Up on Gold
A market strategist at Fifth Third Bank recently suggested that investors in gold implement a gambling strategy that also works in Las Vegas. After a big win or run up in any investment, put your initial capital back in your pocket and continue to play with house money. This minimizes the potential that an investment, such as gold, which has had an amazing price run, stops for a breather or gives up most of its original gains. Investors in residential real estate back in 2005 and 2006 would have been well served with this strategy, and while gold may continue to have a strong run (gold is up more than 150% over the past five years, while the stock market is flat), buying it aggressively at these levels is likely a very foolish trading strategy.

Invest in Social Media
The fact that many social media firms continue to push through initial public offerings (IPOs) in the face of a difficult stock market should serve as a solid indicator that these companies have unknown underlying business appeal over the long haul. Firms including Groupon, LinkedIn, Facebook, Zynga and Twitter may be growing sales rapidly, but they are spending just as much to advertise and boost sales.

Collectively, they have unproven business models, barriers to entry are very low as competing sites are rather easy to develop, and hundreds of millions of dollars of investment capital are pursuing only a handful of good ideas in the space. It all spells a recipe for disaster, for investors looking to invest these days.

The Bottom Line
Smarter investment choices include buying into blue-chip stocks and even residential real estate in many markets in the U.S. With a long-term perspective, many wise investment choices can be made. The dumber ones generally consist of trying to predict short-term market movements and piling into investments that have had very strong price runs or are extremely popular.

Monday, 16 January 2012

22 Signs That We Are On The Verge Of A Devastating Global Recession (GMF, FXE, UUP, SHLD, XLF)

Michael Snyder: 2012 is shaping up to be a very tough year for the global economy. All over the world there are signs that economic activity is significantly slowing down. Many of these signs are detailed later on in this article. But most people don’t understand what is happening because they don’t put all of the pieces together. If you just look at one or two pieces of data, it may not seem that impressive. But when you examine all of the pieces of evidence that we are on the verge of a devastating global recession all at once, it paints a very frightening picture. Asia (NYSEARCA:GMF) is slowing down, Europe (NYSEARCA:FXE) is slowing down and there are lots of trouble signs for the U.S. economy (NYSEAWRCA:UUP). It has gotten to a point where the global debt crisis is almost ready to boil over, and nobody is quite sure what is going to happen next. The last global recession was absolutely nightmarish, and we should all hope that we don’t see another one like that any time soon. Unfortunately, things do not look good at this point.

The following are 22 signs that we are on the verge of a devastating global recession….

#1 On Thursday it was announced that U.S. jobless claims had soared to a six-week high.

#2 Hostess Brands, the maker of Twinkies and Wonder Bread, has filed for bankruptcy protection.

#3 Sears (NASDAQ:SHLD) recently announced that somewhere between 100 and 120 Sears and Kmart stores will be closing, and Sears stock has fallen nearly 60% in just the past year.

#4 Over the past 12 months, dozens of prominent retailers have closed stores all over America, and one consulting firm is projecting that there will be more than 5,000 more store closings in 2012.

#5 Richard Bove, an analyst at Rochdale Securities, is projecting that the global financial (NYSEARCA:XLF) industry will lose approximately 150,000 jobs over the next 12 to 18 months.

#6 Investors are pulling money out of the stock market at a rapid pace right now. In fact, as an article posted on CNBC recently noted, investors pulled more money out of mutual funds than they put into mutual funds for 9 weeks in a row. Are there some people out there that are quietly repositioning their money for tough times ahead?….

Investors yanked money out of U.S. equity mutual funds for a ninth-consecutive week despite a bullish 2012 outlook from Wall Street and a December rally that’s carried over into the New Year.

#7 There are signs that the Chinese (NYSEARCA:FXI) economy is seriously slowing down. The following comes from a recent article in the Guardian….

Growth had slowed to an annual rate of 1.5% in the second and third quarters of 2011, below the “stall speed” that historically led to recession.

#8 The Bank of Japan (NYSEARCA:FXY) says that the economic recovery in that country “has paused“.

#9 Manufacturing activity in the euro zone (NYSEARCA:FXE) has fallen for five months in a row.

#10 Germany’s economy actually contracted during the 4th quarter of 2011. At this point many economists believe that Germany (NYSEARCA:EWG) is already experiencing a recession.

#11 According to a recent article by Bloomberg, it is being projected that the French (NSYEARCA:EWQ) economy is heading into a recession….

The French economy will shrink this quarter and next, suggesting the nation is in a recession as investment and consumer spending stagnate, national statistics office Insee said.

#12 There are a multitude of statistics that indicate that the UK (NYSEARCA:EWU) economy is definitely slowing down.

#13 In the UK, the average price of a gallon of gasoline has risen to an astounding $9.67.

#14 It is being reported that the Spanish (NSYEARCA:EWP) economy contracted during the 4th quarter of 2011.

#15 Bad loans in Spain (NYSEARCA:EWP) recently hit a 17-year high and the unemployment rate is at a15-year high.

#16 According to a recent article in the Telegraph, the Italian government is forecasting that there will be a recession for the Italian economy in 2012….

The Italian government predicts GDP will contract 0.4pc next year, but many economists fear the figure is optimistic.

“We can say without mincing words that we have already slipped into recession,” said Intesa Sanpaolo analyst Paolo Mameli. “We expect GDP to keep contracting for the next 3-4 quarters.”

#17 Italy’s (NYSEARCA:EWI) youth unemployment rate has hit the highest level ever.

#18 The unemployment rate in Greece for those under the age of 24 is now at 39 percent.

#19 Greece is already experiencing a full-blown economic depression. About a third of the country is now living in poverty and extreme medicine shortages are being reported. Things have gotten so bad that entire families are being ripped apart. According to the Daily Mail, hundreds of Greek children are being abandoned because the economy has gotten so bad that their parents simply cannot afford to take care of them anymore. The note that one mother left with her child was absolutely heartbreaking….

One mother, it said, ran away after handing over her two-year-old daughter Natasha.

Four-year-old Anna was found by a teacher clutching a note that read: ‘I will not be coming to pick up Anna today because I cannot afford to look after her. Please take good care of her. Sorry.’

#20 In Greece, large numbers of people are simply giving up on life. Sadly, the number of suicides in Greece has increased by 40 percent in just the past year.

#21 In many European countries, the money supply continues to contract rapidly. The following comes from a recent article in the Telegraph….

Simon Ward from Henderson Global Investors said “narrow” M1 money – which includes cash and overnight deposits, and signals short-term spending plans – shows an alarming split between North and South.

While real M1 deposits are still holding up in the German bloc, the rate of fall over the last six months (annualised) has been 20.7pc in Greece, 16.3pc in Portugal, 11.8pc in Ireland, and 8.1pc in Spain, and 6.7pc in Italy. The pace of decline in Italy has been accelerating, partly due to capital flight. “This rate of contraction is greater than in early 2008 and implies an even deeper recession, both for Italy and the whole periphery,” said Mr Ward.

#22 The major industrialized nations of the world must roll over trillions upon trillions of dollars in debt during 2012. At a time when credit is becoming much tighter, this is going to be quite a challenge. The following list compiled by Bloomberg shows the amount of debt that some large nations must roll over in 2012….

Japan: 3,000 billion
U.S.: 2,783 billion
Italy: 428 billion
France: 367 billion
Germany: 285 billion
Canada: 221 billion
Brazil: 169 billion
U.K.: 165 billion
China: 121 billion
India: 57 billion
Russia: 13 billion

Keep in mind that those numbers do not include any new borrowing. Those are just old debts that must be refinanced.

As I mentioned at the top of this article, things do not look good.

The last thing that we need is another devastating global recession.

As I wrote about yesterday, the U.S. economy is in the midst of a nightmarish long-term decline. The last major global recession helped to significantly accelerate that decline.

So what will happen if this next global recession is worse than the last one?

Sadly, the people that will get hurt the most by another recession will not be the wealthy.

The people that will get hurt the most will be the poor and the middle class.

So what should all of us be doing about this?

We should use the time during this “calm before the storm” to prepare for the hard times that are coming.

As always, let us hope for the best and let us prepare for the worst.

But things certainly do not look promising for the global economy in 2012.

Courtesy of Michael Snyder, The Economic Collapse

Sunday, 15 January 2012

Here’s how having a beer or cappuccino could help you nab your next banking job

by Shree Ann Mathavan

You no doubt know the drill when it comes to formal interviews, but the line can get a little fuzzy when it comes to meeting prospective employers at a café or bar. With this in mind, we present a guide to coping with cappuccino meetings.

Although not exactly new to Asia, these sessions are growing in popularity, says Annie Yap, managing director, AYP Associates in Singapore. She cites a recent case of a candidate who was hired after three coffee meetings – even signing the appointment letter took place outside the office.

They are informal dialogues between you and the line manager. The entire team won’t be sizing you up at a coffee shop, so relax. The discussions are typically the purview of senior professionals (VP and above), especially in the front-office and private banking, says Yap.

Although the get-togethers are usually preliminary chats before the formal interview, Johannes Tan, senior consultant, financial services and banking, PSD in Shanghai, has seen them happen afterwards, such as when a candidate expresses doubts about making the job switch. “Having a coffee with the line manager to discuss these concerns can really help. Leaving the familiarity of their current firm can be tough for experienced hires, so it helps if they can get support from the new firm,” says Tan.
Where and when

The meetings can take place in cafes, hotel lobbies, pubs (if it’s after work) or at a restaurant over a meal.

The rationale is simple. Most of these candidates are fairly senior and given that the talent pool in their field may be small, they wouldn’t want rumours spreading that they have been interviewing at a rival firm. From an organisational perspective, casual meetings are logical as well. Yap explains: “The whole hiring cycle can take a very long time because of bonuses and interviews, so it makes sense that line managers meet up with potential candidates first – in anticipation of headcount. It gives them a head start.”

Another factor why they are especially prevalent during this time of the year is because candidates aren’t willing to commit to jobs before bonuses are doled out, adds Tan.
Who pays

The onus is on the firm to foot the bill.
Dress code

The setting may be casual, but this isn’t some boozy shindig. Behave as you would in a formal interview. “Put your best foot forward. You need to present yourself well and this means dressing like you would in a proper interview,” advises Tan.

Even if the meeting takes place over the weekend, Yap advises candidates to avoid jeans. Smart casual is preferred with collared shirts and slacks for the men and dresses for women.

“Prepare exactly as you would for a structured interview. This means finding out as much as you can about the role, the hiring manager and the company,” says Yap. Tan also recommends asking the potential employer lots of questions. And of course the usual protocol, like not being late, applies.

Discussing compensation can be very tricky in a casual setting and recruiters we spoke to had mixed views on the issue. Yap says: “I don’t think it’s presumptuous to bring salary up because if expectations aren’t managed, it could end up wasting the time of both parties.” Keep it simple: state your current remuneration and the increase you hope to get. “As long as you aren’t being too demanding, it won’t create a negative impression.”

Tan on the other hand, thinks it’s best not to bring up compensation at the initial stage. If the subject does arise, he suggests giving a flexible salary range. “Convey the fact that you are open. You don’t want to appear to move jobs only because of money, which can be a huge turn-off.”

Investing For Success in 2012

By Sheraz Mian

Stocks were all over the place last year, but finished close to the starting point. Should we expect more of the same?

Or, as some doomsayers never tire of reminding us, should we get ready for that day-of-reckoning stemming from problems in Europe and fiscal imbalances in the U.S?

I don't buy into those scenarios. In fact, I firmly believe that we entered 2012 in much better shape than in the last several years. Don't let the endless harangues from doomsayers about Europe and China scare you away from the stock market.

I am not brushing the problems under the rug; Europe's debt problems and questions about China's growth are real and remain a concern. But there are reasons to believe that we will have a lot more clarity on these issues in the coming months than was the case last year.

I am not someone who always sees the glass half-full. My sunny outlook for 2012 has a sound fundamental basis, which I want to share with you here. Suffice it to say, I see a lot better performance this year than what we saw in 2011.

What Will 2012 Bring?

Many of the issues that kept the market in check last year are still with us and will likely remain so through at least the first few months of the year. But I expect visibility to improve going forward, driving most of the gains for 2012.

Recessionary worries about the U.S. have eased, with the economy expected to grow a little over 2% in 2012. It is hard to get excited over that level of growth. But a 2% growth pace starts looking a lot more attractive relative to the outlook for the other major developed economies.

Importantly, this is plenty of growth for the corporate sector to sustain its profitability momentum. With the fourth quarter earnings season just getting into high gear, it is expected to show a lower growth rate than what we have become accustomed to in the last two-plus years. But that shouldn't be much of a worry given where we are in the earnings cycle. With margins effectively at peak levels and top-line gains getting hard to come by due to the relatively softer global economic backdrop, growth rates were bound to come down. And they have.

Using different valuation metrics, I arrive at stocks generating gains in excess of +10% from current levels this year. But I am not looking for a nice straight up move in 2012. In fact, I envision two distinct phases in the stock market this year, with each requiring its own set of investment strategies.

Goldman Sachs Information, Comments, Opinions and Facts