Many people would like to make the easy comparison to the Great Depression of the 1930′s in America when they are discussing the recession today in the United States, but in a lot of ways, this comparison is not especially apt, because what we are experiencing is a bursted bubble, rather than a deflation of every aspect of our culture. If you would like to see into a magic mirror, and know your economic future in the United States, surprisingly, there is another country that offers a better insight into the future of this crisis.
Japan in the 1990′s experienced a very similar real estate burst, followed by a very similar domino effect of banks and small businesses, buyers’ confidence, and layoffs. If we want to know what the magic mirror holds for the United States, we should turn our eyes to the East, where Japan’s decade long recovery may foretell what will become of our crisis, and our personal welfare.
What are the contrasts betwixt our two fortunes in these crises, though, and do we have any chance of a deflation cycle that lasts less than 10 years? A major difference between the United States today, and Japan in the 1990′s, is that in Japan the federal system responded to its banking problem much more slowly, whereas in the United States a certain degree of transparency and quick reaction time has left us with more hope than our Asian counterparts.
In the United States, because we are vigilant readers and thinkers, because we vote and write to our representatives, we can affect change ourselves. We can help our country heal from this recession, in a way that was impossible in Japan 20 years ago. We should react, and do what we can to be informed voters.
If you plan on retiring at any point in life, let alone at the age of 65 years old, you need to start planning the moment you get your first paycheck, and not when you hit your mid-life crisis. Unfortunately, much like our economy, our personal economics are programmed to kick-in only in crisis mode, and most people only save haphazardly until gray hair and deep-set wrinkles make the reality of retirement more apparent. What can you do, when it already feels too late to make a first step, to prepare for a perfect retirement?
First, you should take an accurate account of your net worth, and if it is in the black, or, a positive balance, then you have the opportunity to save for retirement immediately. If you have significant debts, especially high interest loans like credit cards, it is more important to pay these debts off before beginning to save. High interest debt is bad for you personally, and in terms of economics, it doesn’t make sense. Before you actually start saving, consider what costs you can cut from your life. Could you reduce your cable television service, could you carpool to save money on gasoline, could you buy store brands rather than labels, and whatever you can afford to do, do it. Every dollar saved today will be appreciated when your medical costs quadruple in the future.
When you begin saving in earnest, talk to someone in your preferred bank about different savings accounts, different interest rates, and the risk involved in money markets in this economy. Economics is not a simple subject, so consider thoughtfully before you invest your money in stocks during the crisis. CD accounts are safe, and offer higher interest, and Roth accounts are generally accepted to be a great idea for retirement savings.
Everyone remembers the fluctuation in gas prices in the United States, because it affected everyone instantly. How many dollars did you spend during the period when gas reach $5.00 a gallon in some states, more than you would have spent if prices had remained stable? Some people have raised the question, why didn’t the government stabilize the price of fuel to benefit the economy, rather than allowing it fluctuate high, then to the lowest prices in record since the birth of generation X drivers, without considering the ramifications of that much government control.
Should all levers of control over the economy be handed over to the government, or should private sector investors and companies be allowed to manipulate consumers into paying outrageously high prices, when the private profiteers are still receiving generous, multi-million dollar bonuses for Christmas? Oil company spokespeople made statements on the news, claiming that their companies were cutting themselves to the bones, minimizing costs and taking profit losses, even while their online statements reflected their true profits, bonuses, and lavish retreat spending. But, is that to be expected and condoned in a Capitalist economic system?
As a driver, would you be surprised to see the cost of filling your tank with gas go up 50%, again? Most people would not be surprised, and are worried in response to the reports that increased costs of oil per barrel will be passed on to drivers in early 2010. The economy, depending on the wars in the Middle East, could change drastically in 2010, and gas prices could plummet as soon as Obama’s re-election campaign begins, but something that is sure is that the cost of fuel will increase over time, and as a constituency, people need to decide how much control government will have over monitoring and relieving the situation.
If you have ever seen the horror that is the Debt Clock, at www.usdebtclock.org, you will understand how complicated the economy in the United States is today. Do you want to understand the figures on that page-long clock, or would you prefer to keep things simple? For your inner simpleton, there is the website http://www.brillig.com/debt_clock/, which includes a listing of all actions in Congress and the White House that will add to the debt.
How is it possible that other countries with much less debt find themselves at the brink of, or in the midst of, collapse, while we manage to continue proceed, spending an increasing percentage of the money that doesn’t exist? Is the United States a blessed and lucky country that will never have to pay back these monies? The sad truth is that every bond sold to the highest bidder must eventually be paid back, with interest every year for 10 years, and finally in full at the end of 10 years. All of the National Debt must eventually come due, surely in succession with enough bonds being sold to cover the cost of re-payment for current payouts.
When will the debt catch-up to America? No one is sure of the end of this road, but in USA Today on October 16th, the figures for our estimated current National Debt ($1.42 trillion dollars) were released, along with the projection that our National Debt will top $9.1 trillion dollars within a decade. What does that mean for a simple citizen, one who doesn’t want to understand the debt ad naseum, but at an easy-to-comprehend level? All we need to know is that the debt is bad, and that allowing it to accrue at an increased rate will end our country’s success, as limited as it may be perceived currently.
There is a lot of noise on radios and televisions about the government needing its constituency to open their pockets, give in to their craven desires to splurge on needful things, and stimulate the economy with their lifetime savings. Is it really better for the economy if people dip into their retirement money, kids’ college funds, and maybe a Home Equity Line of Credit to boot, or to continue tight-fisting every dollar, waiting until the recession subsides in order to upgrade homes, buy new cars, and relax financially, in general?
People who save their money may be helping the economy more than those who are splurging on extra Christmas presents, home refurbishments, and other things that could be lived without. When you save your money for a long period of time, especially if you are saving your money in time-locked accounts, like CD accounts that have a set period of time before you are able to withdraw any cash, banks are spending your money for you. A single dollar may be lent out and paid back 3 times in a period of savings, whereas if you spend it rather than allowing your bank to invest it, it is only cycled through the economy 1 time in that same period of time.
Is it always the case that banks are lending money, helping the economy? In fact, many banks have begun to act like the bank of Marley & Scrooge, white-fisting dollars and fighting for survival by saving everything, rather than investing in your future. Or, in some cases, banks may not find valid projects to invest in, or there may be a lack of interested loan applicants to use all of the available funds. Basically, whether saving or spending your surplus money, you should do what makes sense for your family.
Little Known Tips To Wipe Out Day Trading Losses Guaranteed
by: David Jenyns
Studies have shown that you should never risk more than 2% of your float on any trade. Why 2%? Well, in fact, many day trading professionals will tell you that 2% is too much. They`ll risk 1% or even as little as a quarter of a percent on any trade. Whatever percentage you pick, the Read the rest of this entry
Hey Readers! I’ve been comin across some crazy stuff the past few days from a few different blogs around the web which I just had to share with you. Check em out below…
Brian Lenihan, Ireland's finance minister, holds his budget report at the Department of Finance in Dublin on Wednesday. “Notwithstanding the difficulties of Read the rest of this entry
If you are one of the millions of fans of the vastly popular Colbert Report on Comedy Central, then you have definitely heard some or all of his various tirades against the economics debates in the United States today. The funny man never clearly states his own opinion, but the angle of the show clearly illustrates his liberal leanings. Is he the Colbert for you, or, perhaps, is Jean-Baptiste Colbert, the former French financial minister your preferred sources of economics information?
To answer that question, you will need to honestly ask yourself, have you been frenchified with haute couture and films a la Jean de Fleurette? If you like a certain crooked-toothed, anchor nosed actor appearing in every released comedy in a calendar year, you might be French enough to prefer the Baptistean view of economics. However, if you like the razor-straight smirk of one Stephen Colbert, as her snarkily interviews current politicians and otherwise infamous economical minds, you might find Jean-Baptiste Colbert too old school for modern economics.
If you still are not sure with Colbert is the economist for you, consider this: Jean-Baptiste Colbert lead the French monarchy into the French Revolution, successfully restructuring government for future economic success (if getting the members of the court be-headed), whereas Stephen Colbert merely offers constructive quips of advice, while reaching an audience of viewers who would otherwise know nothing about the recession, crisis, or “truthiness” of modern problems.
By this point you should know with certainty whether or not you are a freedom fry, or frenchified, an appreciator of former French ministers, or ministering with peccadilloes, an un-serious examiner of economics, or an economist serious enough to face the guillotine. But, if you still don’t know, say “truthiness” ten times fast, and you may discover what kind of Colbert economist you are.
I hope you’ve been enjoying my posts lately. I thought I might do something different today and rustle up a few bits of info from around the WWW. These are some of the news items and blog posts that have been popular over the last few weeks. Leave me your thoughts.
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