The Economic Issues and Some Defensive Strategies and Ideas
According to the WESP World Economic Situation and Prospects Report from the United Nations, the US and global economy is in a rut and having extreme difficulty moving forward. The report recommends that governments must be innovative and think of new strategies to cooperate with business and the workers to stimulate the economy.

As per the United Nations Report, the US economy still remains weak and without direction. The report states that, “In the United States, despite recent improvements, the unemployment rate remains well above pre-crisis levels, at over 8 per cent. In the euro area, it increased to a historic high of 10.9 per cent in March 2012. It reached alarming heights in the debt-ridden euro area countries: in Spain it had jumped to 24.1 per cent in March 2012 (up 8.6 in 2007), 21.7 per cent in Greece (up from 8), 13.5 in Portugal (up from 8.5), and 14.5 per cent in Ireland (up from 5). In developing countries, in contrast, employment rebounded more strongly.”

USA Economic Woes – The Highlights
1. In a May 9th ABC news report, the number of highly educated professionals or PhDs on public aid or welfare has tripled in recent months.
2. In total, 44 million people were on food stamps in the US on a monthly basis in 2011, compared with 17 million in 2000, according to the U.S. Department of Agriculture. – Source ABC News
3. Moreover, Business Week reported on May 31st that The number of Americans on Social Security disability has jumped 23 percent since 2007.
4. Presently, The level of employment is about five million jobs lower than where it was in 2008, when the economy slipped into recession.
5. A record 5.4 million workers with their dependents have signed up to collect federal disability checks since President Obama took office.
6. CNN now reports this May that 12.7 million are unemployed in the United States not including the 4 million who have may have given up looking for work.
7. Economists forecasts and estimates reveal that about another 4 million workers have simply stopped looking for work, and so do not show up in the Dept. of Labor tally used for the unemployment rate
8. Japan’s stock markets fell again with the broader Topix index hitting a 28-year low.
9. To make things worse in 2012, Wall Street Stocks ended down a whopping 2 percent, extending May’s rout. The DJI Dow Jones industrial average also dipped into negative territory for the year which is the biggest insult to injury to a potential recovery and to workers’ 401K Plans.
The United Nations States that there are Four major weaknesses continue to conspire against economic recovery:
1. Deleveraging by banks, firms and households, which continues to restrain normal credit flows and consumer and investment demand;
2. Unemployment remains high, a condition that is both cause and effect in preventing economic recovery;
3. Fiscal austerity responses to rising public debts deter economic growth and make a return to debt sustainability all the more difficult; and
4. Bank exposures to sovereign debt perpetuate fragility in the financial sector, which in turn spurs continued deleveraging.

The UNs Ban Ki-Moon said, “Worldwide, more than 400 million new jobs will be needed over the next decade. That means that policy-makers must get serious, now, about generating decent employment,” said Secretary-General Ban Ki-moon at the high-level thematic debate on The State of the World Economy and Finance and its Impact on Development, held on 17 May. “It is time to recognize that human capital and natural capital are every bit as important as financial capital,”

In conclusion, there needs to be new, bold, and efficient ways to stimulate hiring, employment and consumer spending. Governments should begin to look at ways to treat the working professional and the employers as the customer and determine what types of simple benefits and tax reform could be imparted upon the hardest working and the most steadfast contributors.

There needs to be greater incentives to: compete, to create, to invest, and to participate. If the cash, food, and health benefits of “not working” outweigh the rewards of: hard work, risk and job stress, then the entire system is totally broken. In sum, because the markets and investment yields are not advancing in recent years, the pensions and government obligations grow larger while the available money gets smaller. In the end, the state, federal and city governments are not using sustainable business practices or budgeting, and if costs are not constrained, then debts will become unmanageable and insurmountable.

Defensive Market Tips: Some Stock Sectors that were resilient this week were: Verizon VZ, WalMart WMT, AT&T Symbol T, Sara Lee SLE, AmerisourceBergen ABC, Johnson and Johnson JNJ, Pfizer PFE, ristol-Myers Squibb, Wellpoint WLP, or you can find ETFs that are defensive in nature that own gold, silver, or other commodities Gold/DGP or Silver/SLV
Other Typical Defensive Stocks may include: Microsoft MFST, Mastercard MA, Monsanto MON, Walgreens WAG, Merck MRK, VISA symbol V, Chevron CVX, Exxon XOM, Lowes LOW

George Mentz is a world recognized wealth management commentator who has authored several revolutionary books. Dr. Mentz, an international attorney, has been a keynote speaker globally in Asia, Arabia, USA, Mexico, Switzerland, and in the West Indies. Mentz can be contacted at www.gmentz.com

References & Citations:

http://www.un.org/en/development/desa/newsletter/desanews/feature/2012/06/index.html#3974

http://abcnews.go.com/Business/growing-number-americans-phds-receiving-food-stamps-aid/story?id=16310858

http://www.businessweek.com/articles/2012-05-31/federal-disability-insurance-nears-collapse

http://finance.yahoo.com/news/job-growth-falters-may-123604088.html

http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/

http://news.investors.com/article/608418/201204200802/ssdi-disability-rolls-skyrocket-under-obama.htm?p=full

http://money.cnn.com/2012/06/01/news/economy/europe-unemployment-jobs/index.htm

http://online.wsj.com/article/SB10001424052702304065704577424492946765620.html

http://www.reuters.com/article/2012/06/04/markets-japan-stocks-idUSL3E8H42LZ20120604

*No tax or investment advice is implied herein. Before making any important investment, tax, or legal decision, please speak to a licensed professional in your jurisdiction.

As a professor and attorney who has been involved in e-learning for over a decade, I can only say that a college degree is available to all who are on the internet.There are superb accredited programs throughout the US and even internationally.

Regional & national accreditation bodies recognize many e-Learning programs. A long list of undergraduate and graduate online programs are delivered from traditional colleges by their professors and other programs are delivered by wholly online professors who typically have more practical experience in the business world.

The best news for online learners is this:
• Eligible students can still obtain loans and go to school
• Students need not commute
• You can stay at home and take care of family
• You can save gas and expenses to park
• You can be a road warrior and still be an online student
• Students can do it full time or part time toward an undergraduate, masters or doctorate.

The great thing about online learning is that the delivery platforms or learning technology such as: eCollege, Blackboard and others are very sophisticated. Moreover, the publishing houses of textbooks have now done all the hard work so that the texts, book, assignments, homework, videos, quizzes and exams can be integrated into the learning delivery platform for easy online viewing.

I have always encouraged adults to get the best in education, study their passion, and expand their horizons. Overall, degrees and diplomas help with securing jobs, pay scale, and access. Some degrees qualify you also for licensing in various areas that are regulated by the states. Keep in mind that some of the best ranked colleges and MBA programs in the world also offer online programs in which some are extremely expensive and competitive.

As of 2009, there were over 2,700 (4 year colleges) in the USA according to the U.S. Department of Education, National Center for Education Statistics. (2011). Digest of Education Statistics, 2010 (NCES 2011-015) Many of these colleges offer some online courses or a hybrid courses. Various colleges have a “so called” “City College or Adult Division” that also provides for online learning and degrees.

You need only to look at the stock charts for companies such as DeVry (NYSE: DV), American Public Education (NASDAQ: APEI), University of Phoenix – Apollo (NASDAQ: APOL), and other for-profit accredited institutions to see the phenomenal growth of online education in the USA and globally. According to a US News November 2011 report, the number of college students enrolled in at least one online course increased for the ninth straight year.

As for my experience, I have taught online for over a decade. I have truly enjoyed working with adult students, those who take care of family members at home, those who can’t commute, and also students with disabilities that limit travel. My best advice is to make sure that any online degree program that you attend is accredited by a CHEA recognized accreditation agency. For a list, go to www.CHEA.org As for business or law schools, it is generally best to attend a graduate accredited business or law program that is recognized by the ABA, ACBSP and AACSB.

Considering that this is the worst recession in 80 years, if you are unemployed and have the true luxury of time, then online education might be for you. Once you learn the online educational system & platform, you can do it from anywhere. I know because I have taught these classes from China, Latin America, Arabia and Europe. Further, my students have taken classes from all over the world and many were even serving in the military while attending my courses. Many corporations and governmental institutions will reimburse you for this type of education and many employers will respect your initiative if you are engaged in online education for a masters or other degree.

Additionally, you can even earn eligibility for a CPA or a law degree online these days and there are even great doctoral programs online too. As for graduate studies, I teach for an online graduate law program called TJSL Thomas Jefferson School of Law (Post JD Juris Doctorate program). They offer online programs that lead to the LLM Masters in Law, JSM Masters in Law for Bankers and Accountants, and they even have a JSD which is a PHD level research and teaching law degree. See: Online Law Degree We have some of the best professors with global experience. This is also an amazing way for lawyers, accountants and bankers to obtain a degree and specialization in tax, finance,compliance, and wealth management.

Overall, the online option is a perfect way to improve your credentials and hone your skills and there are many programs to choose from both in the USA and internationally.

Reference:US News – While online enrollment increases, the pace has slowed. By Ryan Lytle

TJSL http://llmprogram.tjsl.edu

All Rights Reserved – No legal advice is intended herein. Please consult with a qualified or licensed professional in your jurisdiction before making any important decision.

The United States recession has forced service providers to look across the ocean for new clientele. We see markets emerging abroad selling premiums once only offered to the Western World. With less money invested in U.S. business, a recession still underfoot, massive layoffs across the nation and continued outsourcing; citizens of the U.S. just don’t have the money to invest in these premiums.

Life insurance is an optional premium, and with any optional purchase it needs to attract to those who can afford the non essential.  According to a study by LIMRA in 2010,“[T]he percentage of U.S. households with life insurance coverage is at its lowest in 50 years. Only 44% of households have an individualized life insurance policy.”^[1] In the business of life insurance, markets with excess income are attractive. Increased population creates more clients, equates to more business, and increases profit. Ipso facto new market growth.

A quick glance at Bloomberg and one can track the new business model. U.S. stocks have fallen significantly. “[T]he 9.4 percent [drop] since July 22 dragged the S&P 500’s valuation to 13.4 times reported earnings, the cheapest level since April 2009”. ^[2] As for the Asian market, “the yuan strengthened beyond 6.4 per dollar for the first time in 17 years”.^[3]

When it comes to life insurance premiums, the wealth managers production relies on his/her ability to find new clients and place new business. The trend for business to move overseas is underway within the life insurance policy market.^[4] India is one of the newer markets selling life insurance. As of June 30, 2011 there are presently 24 life insurers registered to sell policies in India.^[5] Within the U.S. there has been a decline of agents. ”[I]n 2010, there were 184,873 “affiliated agents”, down from more than 246,000 two decades ago”.^[6]

In India, insurers provide somewhat of a hybrid to their policy holders. Current trends provide sales of a combination coverage called unit linked insurance policies, ulips. An almost mirror image to the variable universal life insurance policy, existing in the U.S. Both allow for flexible terms, however differ in that the ulips allow for the combination of risk cover and investment.^[7]

There is also the magic word consumers love to hear, a guarantee. Lest the insured have an issue with the insurers policies, the Indian Insurance Regulatory and Development Authority (IRDA), provides an ombudsman to mediate grievances.^[8] (Different from the standards in the United States). Strict guidelines are followed to appoint each ombudsman, and in office an ombudsman will be forced to leave if found partaking in any misconduct pursuant to the rules set forth by IRDA.

So, what say for the U.S. life insurance market? Will the U.S. begin offering services similar to those in the new foreign markets? Will the recession affect the U.S. life insurance market so much that it becomes obsolete? One thing is for certain, insurers fortify their continued dominance in the U.S. market with confidence, “…uncertain economic conditions continue to play to [our] greatest strengths.”^[9]

Contribution by: Morrissa Handy, J.D. Candidate, Thomas Jefferson School of Law

We invite your opinions and comments by posting them below, or by calling the Panel of Experts.

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^[1]Sandra Block, USATODAY, Households With Life Insurance Hits Lowest Level in 50 Years, http://www.usatoday.com/money/perfi/insurance/2010-12-03-1Alifeinsurance03_ST_N.htm (updated Dec. 03, 2010, 2:21 p.m.).

^[2] Rita Nazareth, BLOOMBERG, U.S. Stocks Fall as S&P 500 Posts Worst Slump Since March 2009, http://www.bloomberg.com/news/2011-08-04/u-s-stock-index-futures-decline-s-p-500-may-fall-for-eighth-day-in-nine.html (posted Aug. 04, 2011, 11:39 a.m. PT).

^[3] Fion Li, BLOOMBERG,China’s Yuan Strengthens Beyond 6.40 Per Dollar for First Time Since 1993, http://www.bloomberg.com/news/2011-08-11/china-s-yuan-strengthens-beyond-6-40-per-dollar-for-first-time-since-1993.html (posted August 11, 2011, 2:17 a.m. PT).

^[4] HSBC,Ins., http://www.hsbc.co.in/1/2/personal/insurance (accessed Aug. 10, 2011, 4:59 p.m. PST).

^[5] Ins. Reg. & Dev. Auth., Life Insurers, http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_NoYearList.aspx?DF=RL&mid=3.1.1 (updated 20, June 2011).

^[6] USATODAY, Households With Life Insurance Hits Lowest Level in 50 Years, http://www.usatoday.com/money/perfi/insurance/2010-12-03-1Alifeinsurance03_ST_N.htm (updated Dec. 03, 2010, 2:21 p.m.).

^[7] Id. at, Frequently Asked Questions, http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo261&flag=1&mid=FAQs (accessed Aug.11, 2011, 8:51 a.m. PST).

^[8] Id. at Functions of Ombudsmen, http://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo233&mid=7.1 (date 11, Aug. 2003).

^[9] Aurthur Postal, Natl. Underwriter, U.S. Rating Downgrade: Insurers Emphasize Continued Strength, http://www.lifeandhealthinsurancenews.com/News/2011/8/Pages/US-Rating-Downgrade-Insurers-Emphasize-Continued-Strength.aspx?k=life+insurance (published Aug. 9, 2011).

Some economists are reporting that the recession is officially over.

Others are less optimistic, suggesting that the recession could last into 2012. And with unemployment numbers hovering around 10 percent, median household income falling, and foreclosures mounting, the most important part of any potential recovery, the public, is still cynical.

What if even the most cynical predictions for the world economy are underestimating the length of the path to recovery?

One economist is predicting that the current recession could last until 2018.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the economic downturn in Advisor’s Journal, see Fed to Purchase $600 Billion in Treasuries in Move to Stimulate Economy (CC 10-94).