The Beginning Of The End
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The Facebook IPO: The Last Great Wall Street Party

The Facebook IPO is kind of like a graduation party – everybody comes together for one huge blowout to celebrate the end of an era before going their separate ways.  Unfortunately, most people on Wall Street do not understand how bittersweet this moment really is.  A tremendous amount of pain is ahead for Wall Street in the next few years, and we will probably never see anything like the Facebook IPO ever again. But the Facebook IPO sure has been fun to watch.  Facebook is one of the largest companies to ever go public in the United States.  According to CNN, 247 million shares of Facebook exchanged hands in the first 45 minutes of trading.  The Facebook IPO was nearly ten times larger than any other Internet IPO in history, and the amount of money being made by some people on this deal is absolutely amazing.  For example, it is being reported that Bono will make more money on the Facebook IPO than he has from being part of the band U2 for the past 30 years.  Sadly, this euphoria is not going to last for long.  The next wave of the global financial collapse is rapidly approaching, and once it strikes there will not be much for anyone on Wall Street to be smiling about at all.

During the IPO process, Facebook sold more than 420 million shares and raised about 16 billion dollars.

Those are incredible numbers.

At 38 dollars per share, Facebook would have a market cap of about 81 billion dollars.

So is Facebook worth 81 billion dollars?

Of course not.

But most stocks are tremendously overvalued at this point.

Yes, Facebook has 900 million users and it made about a profit of about a billion dollars last year.

But that does not add up to an 81 billion dollar company.

Not even close.

A recent article by Jay Yarow explained this in more detail….

As good a business as that is, it’s not Google good. It’s not Apple good. And at the current IPO pricing, Facebook has to be a much better business in the near future.

In fact, Yarow says that Facebook is going to have to dramatically improve in order to justify the current valuation….

So, what’s the bull’s case for Facebook? Unfortunately, it comes down to faith. You have to have faith that Mark Zuckerberg, Sheryl Sandberg, and the rest of the executives at Facebook will discover a magical money making product that will justify its valuation.

Unfortunately, there are already signs that the growth of Facebook is slowing down.

Advertising revenue during the first quarter of 2012 was only $872 million.  That was a decline of 7.5 percent from the previous quarter.

And eventually someone will come along and topple Facebook just like Facebook toppled MySpace.

Remember MySpace?

Facebook did not even exist a decade ago.  Right now there are young kids tinkering around in their college dorm rooms trying to figure out how to create something that will be even better than Facebook.

The truth is that Facebook is operating on borrowed time.  It is not going to remain “hot” and “trendy” forever.

But for the moment, there are a whole lot of people out there that want a piece of Facebook.

Hey, I am not in the stock market at all, but even I am half-tempted to buy a few shares so that I can introduce myself as a “part-owner of Facebook”.

After all, who doesn’t like Facebook?

Yes, government agencies and big corporations use Facebook to spy on all of us.  If you don’t believe this, just check out this article, this article and this article.

But there is an incredible upside to social networking websites such as Facebook and Twitter as well.

They have given average people the ability to communicate directly with each other on a massive scale.

In the past, the big corporations pretty much had a monopoly on mass communication.

If you wanted to get your message out independently of the big corporations, you could hand out fliers, you could send out mass mailings (very expensive) or you could try to get a book printed.

But today something that you post on Facebook or Twitter could be seen by thousands (or even millions) of people within a few days.

The Internet is filled with a whole lot of garbage, but it can also be used as an incredible tool for good.

Sitting at home behind your desk, you have the potential to touch the lives of people on the other side of the globe through the Internet that you would probably never have a chance of influencing any other way.

So I am very thankful for Facebook.

We should use tools like Facebook to wake people up while there is still time.  Our world is becoming increasingly unstable and we might not always have the opportunity to freely share our thoughts with the entire globe like this.

Just try to imagine a world without Facebook, Twitter, YouTube, blogs and Internet forums.

All of those things have only existed for a relatively short period of time, and there is no guarantee that we will always have them.

Instead of wasting our lives away in front of our televisions, we should be taking advantage of these tools to help change the world.

Every single day, hundreds of people are directed to my website from Facebook.  I am hoping to eventually increase that to thousands of people per day.

A great economic collapse is coming to this world.  People need to keep their eyes on the financial crisis in Europe and on the derivatives market.  The coming financial tsunami will likely be even worse than the crash of 2008.

People are going to be looking for answers.

Now is the time to be a light shining in the darkness.

Not everyone has the time or the knowledge to be able to set up a website or make YouTube videos, but nearly everyone is capable of setting up a Facebook account or a Twitter account.

If you make even a small effort, you could end up touching the lives of thousands upon thousands of people.

Yes, there are a lot of negative things that can be said about Facebook, but at least for today let us celebrate it for what it has given us.

It has given us the opportunity to make a difference on a massive scale, and that is a wonderful thing.

53 Percent Of All Young College Graduates In America Are Either Unemployed Or Underemployed

If you are in college right now, you will most likely either be unemployed or working a job that only requires a high school degree when you graduate.  The truth is that the U.S. economy is not coming anywhere close to producing enough jobs for the hordes of new college graduates that are entering the workforce every year.  In 2011, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.  Millions upon millions of young college graduates feel like the system has totally failed them.  They worked hard in school all their lives, they went into huge amounts of debt in order to get the college education that they were told they “must have” in order to get a good job, but after graduation they found that there were only a handful of good jobs for the huge waves of college graduates that were entering the “real world”.  All over America, college graduates can be found waiting tables, flipping burgers and working behind the register at retail stores.  Unfortunately, the employment picture in America is not going to get significantly better any time soon.

All over the United States, “middle class jobs” are being replaced by “low income jobs” and young college graduates are being hurt by this transition more than almost anyone else.  Massive numbers of young college graduates are now working jobs that do not even require a high school degree.  Some of the statistics about young college graduates are absolutely astounding.  The following is from a recent CNBC article….

In the last year, they were more likely to be employed as waiters, waitresses, bartenders and food-service helpers than as engineers, physicists, chemists and mathematicians combined (100,000 versus 90,000). There were more working in office-related jobs such as receptionist or payroll clerk than in all computer professional jobs (163,000 versus 100,000). More also were employed as cashiers, retail clerks and customer representatives than engineers (125,000 versus 80,000).

Can you imagine working really hard all throughout high school and college and always getting good grades and then ending up as a bartender?

Sadly, many hard working college graduates cannot seem to find a decent job no matter how hard they try.  The following is one example from the CNBC article mentioned above….

“I don’t even know what I’m looking for,” says Michael Bledsoe, who described months of fruitless job searches as he served customers at a Seattle coffeehouse. The 23-year-old graduated in 2010 with a creative writing degree.

Initially hopeful that his college education would create opportunities, Bledsoe languished for three months before finally taking a job as a barista, a position he has held for the last two years. In the beginning he sent three or four resumes day. But, Bledsoe said, employers questioned his lack of experience or the practical worth of his major. Now he sends a resume once every two weeks or so.

Have you ever been there?

Have you ever sent out resumes week after week, month after month, only to get absolutely nowhere?

Many recent college graduates are being advised by “career counselors” that they should go back and “get more education”.

But is that really the answer?  The truth is that there are lots and lots of unemployed and underemployed Americans with advanced degrees too.  For example, a recent Business Insider article profiled a law school graduate named Erin that is actually on food stamps….

She remains on food stamps so her social life suffers. She can’t afford a car, so she has to rely on the bus to get around Austin, Texas, where she lives. And currently unable to pay back her growing pile of law school debt, Gilmer says she wonders if she will ever be able to pay it back.

“That has been really hard for me,” she says. “I have absolutely no credit anymore. I haven’t been able to pay loans. It’s scary, and it’s a hard thing to think you’re a lawyer but you’re impoverished. People don’t understand that most lawyers actually aren’t making the big money.”

But what “more education” will do is that it will get you into even more debt.  Student loan debt can be one of the cruelest forms of debt, because it cannot be discharged in bankruptcy.

As I wrote about a few days ago, total student loan debt in the United States recently surpassed the one trillion dollar mark.  Students keep on racking up student loan debt in the hope that they will find “the American Dream” at the end of the rainbow.

Sadly, many students do everything “right” and still end up in the middle of a nightmare.

But it is not just young college graduates that are suffering in this economy.

As I wrote about a while back, the U.S. economy is not producing enough jobs for anyone at this point.

The mainstream media keeps telling us that unemployment is going down, but the truth is that the percentage of working age Americans that are employed is not increasing.  In March 2010, 58.5 percent of all working age Americans had a job.  In March 2012, 58.5 percent of all working age Americans had a job.

Does that sounds like improvement?

Of course not.

Unlike what we have seen after every other recession in the post-World War II era, the employment to population ratio is not bouncing back, and that is really bad news.

The main reason for this is because of the bad economy, but also it is important to understand that we are transitioning away from an “employment economy”.

Today, most large corporations view employees as very expensive “liabilities”.  The goal for most large corporations is to minimize those “liabilities” as much as possible.  In fact, these days some large corporations lay off huge numbers of workers even while they are making huge profits at the same time.

Once upon a time, Henry Ford made a conscious decision to pay his workers enough money so that they could afford to buy the cars that they were making.

Today, most corporations simply do not care about the living standards of their workers.  They simply want to maximize profits to the fullest extent possible.

Many small businesses would like to hire more workers, but the federal government has made hiring workers so complicated and so expensive that it has become exceedingly difficult to make a profit on a worker.  Most of the time it is simply easier to try to do more with what you already have.

The number of Americans that can work a job (“just over broke”) and still live “the American Dream” is steadily shrinking.  Increasingly, the financial rewards in our economy are being funneled to the very top of organizations and workers are finding that their living standards continue to slowly go down.

At corporations that belong to the Standard & Poor’s 500 stock index, CEOs earn 380 times what the average worker makes at those companies.  In 1980, CEOs only earned 42 times what the average worker made at those companies.

A fundamental shift is happening in our economy and it is not going to be reversed any time soon.  Workers are not valued at most companies anymore.  No matter how much of yourself you give to your company, when the day comes that you become “disposable”, you will be cast aside as so much rubbish.

That is why I try to encourage people to start their own businesses and to be their own bosses.  There is no job security anymore.  The job that you have today could be gone tomorrow.

Meanwhile, the federal government is actually spending your money to train foreign workers to take our jobs.  The following is from a recent Daily Caller article….

While the president has been urging “insourcing,” the government has been sending money to the Philippines to train foreign workers for jobs in English-speaking call centers.

According to New York Democratic Rep. Tim Bishop and North Carolina Republican Rep. Walter Jones, this is unacceptable and “shocking.”

The pair are calling on the United States Agency for International Development (USAID) to immediately suspend what is known as the Job Enabling English Proficiency (JEEP) program.

Can you believe that?

Over and over again, our politicians talk about the need to keep jobs in the United States and then they go out and do things that have the exact opposite effect.

It is truly maddening.

So what are the hordes of American workers that cannot find jobs supposed to do?

Well, one thing we are definitely seeing is a huge rise in the number of Americans that are dependent on the government.

For example, at the end of the Reagan administration the ratio of workers on Social Security disability to active workers was about 2 percent.

Today, it is over 6 percent.

During the first four months of 2012 alone, 539,000 more Americans were added to the Social Security disability rolls and another 725,000 submitted new applications.

Another federal program that is experiencing explosive growth is food stamps.

Last year, one out of every seven Americans was on food stamps, and the Congressional Budget Office is projecting that the number of people on food stamps will continue to grow through 2014.

It is so sad to see what is happening to America.  Our economy is being dismantled all around us and the future looks incredibly bleak.

Right now there are millions upon millions of Americans that are sitting at home wallowing in despair.  They don’t understand why nobody will hire them and they are rapidly running out of options.

The following is a comment that a reader left on one of my recent articles about the middle class….

I cannot believe my present situation…

I worked hard in school and college so that I could escape the low income uneducated mess I grew up in.

I made all the correct decisions with my career, finances, etc. I cannot figure out how I got to where I am at now.

In late 2008 I was laid off in the IT field. I was a go-getter, and I didn’t let anyone tell me the economy would make it difficult to find a job. I had another within 4 weeks.

Was laid off from that job last year. I qualified for unemployment, but then my employer decides to bring a bunch of lawyers and fight my eligibility. After I won again, they appealed again. I finally couldn’t afford to keep paying attorney fees. I finally lost the appeal. I had to pay all that money back.

I’m still trying to find a job in my field. Being the go-getting I am, I immediately took a job waiting tables which amounted to a 75% pay-cut.

I had saved 6 months of expenses and that is completely dry. I have completely drained my retirement and savings. Still cannot find a livable wage job after almost a decade in my field.

Things are slowly going into default and it feels utterly hopeless and stressful. My pristine credit rating is gone, my savings and everything I worked for is gone. I haven’t missed a payment on my mortgage, but it is coming. I can’t cut anything more than I already have.

I just can’t figure out how this could have happened to me. I played by the rules and made all the right choices. I skipped vacations and time off to prove I was a good worker and had what it took to be a valuable employee.

I really am just at a loss at this point. I’m single and have no family. This is really make-or-break for me. I have no fallback plan. The feeling of failure is just gut-wrenching.

Please say a prayer for that reader and for all of the other hard working Americans out there that are desperate to find a job.

If you are at the end of your rope, please do not give up.  Even in the darkest moments, there is always a way to turn things around if you will just keep on fighting.

Sadly, way too many people are giving up on life because of the economy.  In Europe, economic conditions have deteriorated so badly that there has been a dramatic increase in suicides.  The following is from a recent article in the New York Times….

The economic downturn that has shaken Europe for the last three years has also swept away the foundations of once-sturdy lives, leading to an alarming spike in suicide rates. Especially in the most fragile nations like Greece, Ireland and Italy, small-business owners and entrepreneurs are increasingly taking their own lives in a phenomenon some European newspapers have started calling “suicide by economic crisis.”

When the next major economic downturn happens in the United States, we will probably see a similar thing happen here too.

But people need to realize that our lives are not about how much stuff we own.

Even if every single thing is taken away from you and you are left with nothing that does not mean that your life is over.

Even if you have not been able to find a job for years, that does not mean that you should give up.

In life, everyone gets knocked down.

But unless you are dead, there is always a way to get things turned around in a more positive direction.

One thing that I have learned in life is that you must never, ever, ever, ever give up.

The years ahead are going to be really hard for the global economy, but that doesn’t mean that they have to be horrible years for you.

The years ahead can be the very best years of your entire life, but that will never happen if you decide to simply give up.

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