Thinking on Artificial Inflation

A quick thought on Inflation; A question has arisen in a small dialogue today of whether interest rates should be raised due to inflation? One thought, which kept coming to mind, was the delicate issues with the housing bubble. Some in the group did not believe it to be a significant factor others were worried that a rise in interest rates would be met with a big reaction in the stock market and also the housing markets in many regions in the United States?

Some of us were concerned that the inflation which was being witnessed was not due to strong consumer demand in the market place where companies are able to charge more but because of artificial wholesale inflation caused by fuel prices which was artificially driving up costs of every thing else, even though we have had a steady decline in the diesel fuel prices for five straight weeks now it has been small with the average price still at $2.00 which is high by any relative historical perspective.

When inflation exists in items which are not consumer electives but rather regarded as necessities, things like food, milk, fuel, etc. which drive prices up in the markets they effect such as restaurant prices, catering services, hotel services, private school tuition, etc. from food these are not consumer electives but perceived necessities, which also drive up costs in non-electives. Now if you take out the ‘factored in’ costs of the food or fuel for the increases and the expectations of consumers to higher prices due to this fact for instance the increased costs of fuels a 6.7% increase in cartage for good to market to offset fuel costs and let’s say that 25%-100% of that is fear factor or media hype scare to justify it. Then you could say the actual costs of the increase should have been 3.33% to 5.66% but due to the unknown nature of the impending melt down of the Saudi Arabian government and royal family and companies fearing the worst the price increase would be much higher than the actual. Both to protect the transportation company from financial ruin with low earnings next quarter and because they can raise prices due to perceived civil war in that region or further unrest as Iraq’s facets are not fully turned on yet. Such that even though for instance diesel came down this week by 1.1% in line with a steady over all average decrease from the high of five weeks the prior, would make little difference and although the most competitive companies in shipping will be lowering rates others may not as to make up for lost ground by being caught off guard when reserves ran low and having to buy high at the same time the US military reserve was stock piling in case of emergency and could not afford to let go any supply to the private sector to temporarily stabilize prices.

When you look at this artificial inflation caused by oil prices you have to take this into consideration in the over all inflation situation, and allow for things to re-stabilize things before raising rates to curb so-called inflation. The inflation rates must be adjusted and taken out the inherent additional costs in everything due to the increased costs in fuel, a necessity.

So do you raise rates in times of unrest and fear and instability or do you wait for a bit and allow a few things to come back into perspective and stabilize in a free market setting. If you allow interest rates to slow the flow of monies in all parts of the country now, as many are not getting their fair share of the money flow, you will see regions come into harder times as they have not recovered like the areas of supreme money flows near and around Fed Banks. Larger cities, which suck money in and allow it to flow in circles need to be adjusted first and slowly, but not using inflation data, which is biased due to a spike in fuel. There are very few items, which are not effected by fuel. Also let’s look at water supplies and weather effecting food prices and spikes and factor that out too. Then we can find true inflation and I submit to you it is small enough to call for a stern warning of future scrutiny, but not a raise just yet, but a warning to all it will come and could come at any time as needed or required by superior data and to give the Fed back another lever to move in the future if needed to re-stimulate, because as we know when fuel prices stay high for too long we get recessions. As per historical data. As China becomes a user of more fuel, we will see demand go up and the supply play catch up and we are 10 years out for fuel cells and hybrids which can perform up to the abilities of reciprocating engines. Russian oil is seven years out, so there is a gap in supply issues and demand issues which means we will have higher prices in the future and killing the housing market now is not good as interest rates could significantly do that and cause consumers and middle class America to continue to run redline in credit card debt and higher house payments, fewer spend able dollars hurting retail, thus hurting jobs. Meaning higher fall-out rates, distressed sales and serious issues with income to long-term and short-term debt ratios.

Raise in interest rates>? Maybe?> But be careful we are not out of the woods yet. Perhaps a regional outlook might be better? Interest rates in larger growing areas could be raised slightly? For instance DC, Boston, LA, Sacramento, Metro NV, PHX, Seattle, etc. But in other areas like Albuquerque, El Paso, rural TX, KS, rural heartland, etc. no raise. But the money will crosses boundaries so it would be imperative that the Fed and the government work together on this to see that low interest small and med sized business loans get to the sub standard markets, a one size fits all is dangerous and as I travel the country I have to beg to differ with some of the information put out in the Beige Sheets, some is incorrect and inaccurate and does not paint a proper picture, the United States is the United States and not the United Countries surely, but a regional outlook and decision should be part of an interim game plan with out flipping the board over and disrupt those areas which are just seeing light at the end of the tunnel. The light is bright indeed, but certainly they should be allowed out of the cave for some fresh oxygen long enough to show their efforts were worthy of a job well done. Pursuit of happiness is best served when you can taste it and understand what it really is once in a while.

Allow parts of America that need the juice to get their filling with a stair step approach to the problems, the real issues with real inflation. We must not continue to judge inflation as it appears on the surface when the real inflation is much more agile, diverse and hidden from view. A sharp pencil approach studied by region to the dynamics of money flow is equally as important to the rise in prices due to the undercurrents of erosion returning Earth to Sea. I am sure when studied more closely you will agree. If not there is a place you can go to discuss such issues.

The Best Time To Starty Your Own Business

I started reading business opportunity magazines approximately 40 years ago. And for the last 40 years, the January issues have proclaimed:

NOW IS THE BEST TIME TO START YOUR OWN BUSINESS!

The reasons supporting this bold blast have varied over these 40 years as you can well imagine. This year the reasons float around the fact we are fat, i.e., great economy, low unemployment and an income level allowing for disposable dollars.

Let’s say that is true. Does that mean this is the best time to start your own business? Well, given this is such a monumentous decision the real answer is: It depends on your state of mind at this point in time.

But what have you got to lose, right? You don’t have to quit your job. You don’t have to take a second mortgage to finance the venture and you don’t have to sell your soul.
Why not go for it?

Couple this risk free environment with the Internet and there is almost no reason why you shouldn’t take the plunge.
As you may already know, the Internet has so much free information on starting a business that it would seem like the antithesis to not start your own business.

The Internet’s information pool hands you the tools to start your own business offline, online or both. The Small Business Administration’s site alone (http://www.sba.gov)
could launch any number of different types of businesses.

Put almost any type of entry into a search engine, and you will find some site dealing with the search request. In fact, if you had no other tool, search engines could dish up enough information to meet the research requirements for a Ph.D. on starting your own business.

Fortunately you don’t have to rely on search engines alone.
The major book sellers are still selling books by the volumes (pardon the pun) everyday. Seems information is the number one best seller today as 40 years ago.

Your local library has both books and computers. Chances are excellent these computers are also hooked up to the Net.
Magazines and newspapers are also on the shelves for patrons.

Don’t forget the mall. It has bookstores and the bookstores have books, magazines, newspapers, CDs, etc.

Information saturation is the fuel propelling start ups.
Given the economic safety net, or at least the perceived safety, people are stepping out to start up. Even if they fail, they accelerated commerce for the time they were in business. It is a win-win scenario.

You can accuse me of becoming brainwashed over 40 years of reading now is the best time to start your own business, but, think about it, when is the best time? It will always be now since yesterday is tomorrow’s today.

Your attitude determines your altitude. If you believe now is the best time to start your own business, then go for it.
Take the first step and don’t look back.

Medical Receivables Financing

The Rx for Ailing Cash Flow

The current adverse financial structure of the healthcare industry has placed hospitals, medical groups, private practitioners and other providers in a perilous position. Cumbersome and bureaucratic third party billing systems with long time-to-collection waiting periods have resulted in inconsistent cash flows and limited capital for growth. Nationwide, two-thirds of physicians work in practices that are set up as small business. Payment cuts 18% over four years, together with soaring malpractice premiums and other overhead costs, have threatened to put such practices out of businesses. More than 50% of doctors have deferred plans to purchase much-needed new equipment, and 30% either have laid off staff or are planning layoffs in the near future.

What Factoring “Is Not:”

o A Loan – Factoring is the sale of your medical claims for services already delivered

o Offered By Banks – Factoring is not an asset-based loan, nor is it a debt facility similar to those offered by banks.

Why not simply pick up the phone and call a bank for a loan to get through the crisis? Many of you already tried that and have been surprised to find that the average practice may not have sufficient credit and assets with which to secure adequate working capital. Additionally, the traditional banking loan application and approval process is long and involved. Debt is created for the practice to repay, and personal guarantees are required. The practice becomes less desirable for resale or acquisition.

Unlike bank lines that can tie up all of your assets, factoring involves only your third party medical claims

o No collateral other than accounts receivables

o No financial guarantees

o Unlimited amount of dollars

Factoring provides working capital without adding debt to your balance sheet. There is no predetermined maximum limit. This working capital arrangement is not limited in amount as many bank products are nor is it subject to banking “regulations.”

Surveys of physicians have identified the following immediate needs:

The creation of solid dependable cash flow

Decrease in the reimbursement interval between the time service is provided and payment is received

Increase in the overall percentage of claims collected

Reduction in administrative costs

Ready availability of cash for new equipment, expansion of office space, the addition of new partners, and practice marketing

This “wish list” would be complete if access to this working capital could be created debt-free. The physician practice would then have the financial freedom to focus on business growth and patient satisfaction, instead of focusing on how to meet the next payroll or malpractice premium payment. Is such a solution possible? Fortunately, the answer is YES!