FOR YOUR EYES ONLY

Michael Webster

Business Consultant

(949) 494-7121 (949) 297-8648

E-mail mvwsr@aol.com   www.michaelwebster.net

301 Forest Ave., 2nd Fl., Laguna Beach, California 92651

The following report is excerpted from the premium online newsletter “For Your Eyes Only” published by the founder of the Journal Family of publications. Subscriptions are $99 per year. Send check, money order or credit card information to: Michael Webster “For Your Eyes Only”301 Forest Ave, Laguna Beach, CA 92653.

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Erring on the side of recklessness.

Who can know how long this stock market rally will last? Or
whether employment will really pick up or not? Or, when the
Chinese will stop lending? Or for that matter how long will the

economy last?

But Americans have decided to go ahead - as if everything
will turn out all right, no matter what. The thought
occurred to us when reading the latest employment reports.

It is still a "jobless recovery" as near as we can
figure... or even a jobless non-recovery. We suspect it will
soon be a jobless bust... but hold that thought for a
minute; today we're making some predictions and we're 
marveling at the extraordinary optimism of many Americans.

While American investors are optimistic to the point of
recklessness... people who actually know something tend to
be more cautious. While the little guys buy appalling
stocks at outrageous prices, the real pros - Soros,
Buffett, Templeton, Rogers, Grantham et al - head for the
exits. And now we find our friend Marc Faber saying that
business managers are currently 4 times as likely to sell
their stock as buy it.

And when managers hire new employees, again they show
timidity, not temerity; they are more likely than ever
before to pick up 'temporary' workers, rather than full-
time ones.

Faber quotes Jose Rasco of Merrill Lynch (A trillion dollar company)J

"... The temporary worker is the marginal worker and is the
first in the door. If demand remains strong, then companies
can hire those workers on a full-time basis. If that's the
case, then maybe we will see a traditional recovery led by
job creation and income generation. Or, conversely, the
rise in temporary workers could be a sign that employers
are beginning to apply accounting principles to human
resource departments. Instead of hiring someone on a full-
time basis, corporations may be moving their labor risks
from being a fixed cost to a variable cost. Rather than
bringing someone on board and paying them a full-time
salary and benefits, companies can keep them as temp/flex
workers whose workload can be adjusted with the vagaries in
demand. With companies lacking pricing power, and input
prices rising... what can a company do to expand margins?
The answer is obvious. The easiest way to boost corporate
profitability is by lowering its biggest fixed cost:
labor!"
And you can do that best by moving to China, Mexico, India,

South America, Indonisia, Philipines, Malishia and other cheap

labor force countries.

You may be shocked to discover this, dear reader: in
America's consumption-led economy, real wages are actually
going down. The rush of money into stocks over the last 15
months has not come from increased earnings... but from
increased debt. Lower rates encouraged consumers to re-
mortgage their homes. Mortgage debt rose... but so did other
consumer debt.

Where then did the money go?

"... It seems that only a small part of it was spent,"
concludes economist Gerard Minack. "Yes, the household
sector is still running a cash flow deficit (spending more
on consumer and capital items than it receives in cash
flow), so the shortfall had to be financed. That cash
shortfall was $113 billion in the year to June. But that is
relatively small compared to the increase in borrowing. As
it turns out, it seems that much of the Fed-facilitated
borrowing has gone into Wall Street."

The household sector became the biggest buyer of stocks in
the first half of last year - buying $416 billion of them,
despite the fact that real incomes were falling.

Real wages have gone down over the last 10 years. But the
cost of labor still goes up - because health insurance
premiums and other costs have been rising at double-digit
rates.

This is very bad news for the American proletariat. Even
though he gets less money, his employer is still under
pressure to get rid of him!

And here we have another little wrinkle in the fabric of
modern, degenerate American capitalism. Corporate managers
have no loyalty, neither to their shareholders nor to their
workers. They pay themselves extravagantly, sell their own
stocks short... and treat employees like inventory. The idea
seems to be to cut costs on everything but themselves... to
hire the cheapest employees possible, just in time, in
order to meet short-term objectives.

Nobody holds anything in stock anymore. No excess food in
the pantry. No excess products on the shelves... no excess
money in the bank, no excess employees on the payroll.
Inventory is an expense item. Erring on the side of
recklessness, Americans live hand to mouth... paycheck to
paycheck... as if nothing will ever go wrong.

"NO ONE is making long-term investments," writes Hirschel
Abelson after surveying the dozens of companies in which
his fund invests. Neither in equipment, nor in people. Of
course, this is no way to build an economy or make people
rich. In the modern, globalized economy, if an American is
to continue earning 10 times as much as a Indian, he has to
produce 10 times as much. Which means, the society in which
he lives has to invest massive amounts of money in new
equipment and training. Instead, corporate America seems to
care only about cutting expenses to make the next quarter's
numbers... and its own stock options.

The approach is not only reckless... it is hopeless.

"... We are at the point where peak efficiency has begun to
take hold and sources for further cost-reduction are
becoming harder to recognize," Abelson continues.

Eventually, business managers run out of costs to cut. Then
what?

So what can we do? I predict that the US economy is moving

toward an 80/20 economy. That is to say there will be POOR

Americans at 20% of the population and RICH Americans

being the 20%. Now which do you want to be? If you’re an

employee you most likely will fall into the 20 per center.

Or own your own business by becoming self employed and

join the 20 per centers.

If your interested in becoming self sustaining e-mail me at

wibcom@aol.com and I’ll show you how.

You should be developing your own personal asset protection

sovereignty program. Go to: www.michaelwebster.net  

and click on Asset Protection.

shelf life foods and be storing lots of fresh water, meds and

all the other basic’s you will need as this economy goes south.

Not to say anything about man made or natural disasters.

Go to” www.michaelwebster and click on USCD and

Christian Covenant for more important details.