Eight More Painful Observations From Montana

A lot has happened up here in Montana over the past week. And I got so much positive response about my “Eight Not-So-Pretty Observations from Big Sky Country” column that I thought I’d give you some more.

Remember, these aren’t news items that I’ve accumulated over time. These are tidbits - ugly tidbits that popped up in just seven days!

By the way, if you didn’t read last week’s column, I suggest you read that one first.

At this year’s C.M. Russell Art Auction, 24 of Charlie Russell’s famous paintings didn’t even get the minimum bid.

Big Sky Observation #1: Charlie Russell is considered one of the greatest western artists of all time. And we Montanans are pretty darn proud of him. While I certainly can’t afford to buy one of his paintings, I really admire his work. Each year, the C.M. Russell Art Auction attracts western art lovers with big, fat checkbooks from around the world. Not this year. Total sales were down 26 percent from 2008 and 39 percent below 2007. Twenty-four works of western art didn’t even attract the minimum bid.

Big Sky Observation #2: Thanks to a tumbling stock market, the University of Montana’s endowment fund dropped from $130 million to less than $100 million in the last 12 months. Donations are down, too, compounding those woes. What’s more, Obama’s proposal to place limits on the deductibility of charitable donations sure isn’t going to help the University of Montana, or any other charitable organization, either.

Big Sky Observation #3: Last week I told you that the unemployment rate in my county had shot up to 11.3 percent. Now, some of those out-of-work men and women are willing to make the ultimate sacrifice to put food on the table for their families. The Montana Army National Guard signed up 61 new recruits in February … the most ever in a single month! That number is even more impressive when you consider that our National Guard raised the minimum required test score on the Armed Services Vocational Aptitude Battery (ASVAB) exam.

A recruiter observed, “What we’re seeing is a large number of older people that are interested in joining. A lot of people that have been laid off.”

Big Sky Observation #4: As I wrote last week, hunting is big business in Montana. In fact, it’s so big that the Rocky Mountain Elk Foundation, whose mission is to ensure the future of elk and their habitat, sold a hunting package at its annual fundraiser to a California hunter for $60,000 - a nice chunk of money. But that’s down a whopping $112,000 from what the same package went for in 2008!

Steve Wagner, a spokesman for the foundation said, “I’m confident that’s a factor of the economy.”

Big Sky Observation #5: Bernie Madoff may be getting all the headlines, but Montana has its own share of investment crooks and thieves. The number of securities and fraud cases in Montana has skyrocketed.

The monetary losses are up about 1,000 percent from last year. It’s really unprecedented,” said Jessica Rhoades of the Montana State Auditor’s Office.

Tax revenues on gambling could decline for the first time ever.

Big Sky Observation #6: I’m not much of a gambler. Yet I must be in the minority because it seems like my town has a casino on every corner. Those Montana gamblers, however, are cutting back. Tax revenue from video gambling was down 5 percent in the most recently reported quarter.

“We may see a decrease for the first time in the 21-year history of the tax,” said Rick Ask of the Gambling Control Division.

Big Sky Observation #7: One of the oldest sawmills in Montana is about to close its doors for the last time. The Ksanka saw mill in Eureka, Montana has been operating for 54 years but is now shutting down because the real estate collapse has killed the demand and prices for lumber. Back in February of 2007, fir studs were selling for $318 per thousand board feet. They dropped to $225 in August and are now down to $165.

Big Sky Observation #8: I have always believed that cardboard sales are one of the most accurate indicators of economic health. The more goods our country produces, the more boxes we need to ship them in. Smurfit-Stone is closing its cardboard plant for 10 days in April because of weak demand. And Montana isn’t the only plant that Smurfit-Stone is shutting down … the company has already closed down several plants in the Midwest.

If you’re tempted to dismiss these painful economic data points just because you think whatever happens in little ol’ Montana couldn’t have any implications to the rest of the U.S., I urge you to reconsider.

The economic black cloud hanging over Montana is no different than the one rest of the country is seeing.

Montana may be a little behind the times in a folksy, charming way but the root of our economic woes are exactly the same as they are throughout the entire country …

Our real estate market is in shambles, property values are tumbling, credit availability is melting faster than the spring runoff, unemployment is rapidly rising, businesses are hunkering down for tough times, and consumers are thinking twice before parting with their money.

So consider following the three steps I laid out last week:

1. Build up your cash reserves …
2. Invest with a safety net …
3. And buy some gold.

To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates
but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive.

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