My readers know I am an optimist. I see a glass of water as half full, not half empty. My entire life, I have always believed that if you worked hard enough and always did your best you would succeed. However, times are different now. I am sharing with my viewers my concern for our economy. Though I have shared my concern before, this time, I am listening to my own favorite economists and others who are saying the U.S. and the Global Economy is in free-fall with no end in sight. The stimulus package, though needed, is but a band-aid and will not stop this free-fall. Now more banks are failing and there is talk of Bank Nationalization.
. Robert Reich: "The truth is, no one has any idea how long this crisis will last or exactly how to reverse it. Anyone who says differently cannot be trusted..Financial stocks are in free fall because no one trusts financials any longer. A sell-off in bank, housing, insurance and other financial stocks has accelerated."
. George Soros: "the world financial system has effectively disintegrated.. there is yet no prospect of a near-term resolution to the crisis."
. Paul Volcker: "I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world."
. Lindsey Graham: "I'm very much afraid that any program to salvage the banks is going to require the government. I would not take off the idea of the nationalizing the banks."
It is clear, historians will look back and say we are in the midst of the 2008 -2010 Great Depression.
I ask all viewers and all Americans to start considering their options for the future. I don't want you to be fooled by some in government or in the media that are saying there may be hope to get out of this current mess this year or next. We all have to understand we are in the midst of a Depression.
Most of us still have some time. We need to start developing a plan in case you lose your job and your family has no income. Consider the fact you probably cannot sell your house. Even so, you can still make these plans and not negatively impact the economy.
Here are some simple suggestions:
1. Write down every penny you spend. That is, write down all your purchases, starting today. Do this for a month.
2. Once you have your list, make a monthly calendar. This will be your monthly plan. You can plan your shopping and your menus well in advance.
3. Figure out what you can buy in bulk once a month, things like Toilet Paper, canned/boxed goods.
4. Start clipping coupons. Also, if you shop at Wal-mart, they will match any low prices from any competitor. Just take their flyers with you when you go to the store.
5. This is the start of a monthly budget. Do some analysis. Decide what you need, what you don't need.
6. You will start saving money once you do this. So start saving as much as you can. Save enough money so that you can survive for 3 months if you lost your job.
7. If you do lose your job, you will probably qualify for unemployment. So on top of your 3 months savings, the unemployment will help you too.
8. Take any job. Don't think any job is beneath you. Remember, Wal-mart and McDonalds are always hiring. Think of the jobs your grandparents worked just to survive and bring you along.
9. If needed, bring extended family members who need help into your home and share costs until the crisis is over.
Don't wait for the last minute. Start writing down all you spend today. This is the easiest, yet most crucial step.
Finally, I think all of us personally remember the last 8 years and how we got here, so I will close with: "Thank you George Bush for eight miserable years of Economic Gloom and Doom and for getting us into this mess!"
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More from Robert Reich:
The stock market reached a six-year low today. Why? Some blame loose talk (including that of former Fed Chair Alan Greenspan) about nationalizing the nation's banks. Others blame Obama's new plan for helping homeowners who may not be able to pay their mortgages. But the real culprit is the accelerating decline in aggregate demand -- consumers, businesses, and exports. Companies are losing money because their customers are disappearing. That's precisely why the stimulus is so important -- indeed, why many of us fear it's too small.
One more from Robert. I love how he chastises the Republicans:
One of the oddest of right-wing claims is that FDR's New Deal didn't pull America out of the Great Depression, so Barack Obama's "New New Deal" won't, either. While it's true that the New Deal didn't end the Great Depression, three points need to be impressed on the hard-pressed conservative mind:
1. The New Deal relieved a great deal of suffering by establishing social safety nets -- Unemployment Insurance, Aid for Dependent Children, and Social Security for retirees. Most have remained, a worthy legacy. But because the structure of the economy has changed (a much higher percentage of the working population is now employed part-time in several jobs or as independent contractors, for example), there are gaping holes in the safety net which a New New Deal should fill in order that the Mini Depression we're experiencing not cause excessive harm.
2. FDR's public works spending did help the economy somewhat. By 1936, U.S. the economy was showing some life. Unemployment was declining and consumers were beginning to buy. But FDR cut back on public-works spending, and the economy sank back into its former torpor. A warning to Obama: Don't worry about so-called "fiscal responsibility" when aggregate demand still falls far short of the economy's total capacity.
3. The Second World War pulled the nation out of the Great Depression because it required that government spend on such a huge scale as to restart the nation's factories, put Americans back to work, and push the nation toward its productive capacty. By the end of the war, most Americans were better off than they were before its start. Yes, the national debt ballooned to 120 percent of GDP. But the debt-GDP ratio subsequently declined -- not just because post-war spending dropped but because the economy continued to grow as war production converted to the production of consumer goods. Lesson: The danger isn't too much stimulus, it's too little stimulus.
The George Soros quote is especially unsettling and the Reich remarks bring to the point the biggest problem i see: we should NOT return to previous spending levels. a) they are what created the bubble which burst and dropped us into this problem in the first place. b) our previous customer level of spending was based on false overextended spending, the kind of spending that causes both parents to abandon their children to daycares and leads them to take on 29% interest to use plastic because they don't actually have the cash to live the way they are expected to. America should not have been reasonably spending the way we did but despite the best efforts of blamelaying by the media it wasn't bad eggs on the bottom of the economic ladder. It was the message our elites insisted we be indoctrinated in so they could harvest all the available dimes from the rest of us.
They made the depression so again they could further enrich themselves with our lives.
Mikel,
I agree. Soros' comments are particularly scary.
I also agree that now is the time for all Americans to evaluate their spending practices and rip up those credit cards. Just writing down what/how you spend each day and tallying the totals for a month can be a life changing experience.
Dee :
You said :
"But the debt-GDP ratio subsequently declined -- not just because post-war spending dropped but because the economy continued to grow as war production converted to the production of consumer goods. Lesson: The danger isn't too much stimulus, it's too little stimulus."
Of course, Dee :
"You have to risk the eggs to get the chickens."
"Who doesn't risk, doesn't cross the sea"
"The Goddess Fortune always Favors those that are audacios" - Hernan Cortes to the scared troops.
You just hit the perfect center of the Shooting Target.
The Republicans are do-nothings and tax cutters for the rich. A strategy that has failed many times to revive the Economy.
The Problem is that we pay a lot of attention to the TV Idiots and Fools that are extremely abundant. Including Prominent Politicians that are idiots or at the Service of Rich People, and want tax cuts for the Rich and zero for the Poor ( Which are in large part Minorities ).
I am trying to make a list of Intelligent and admired people and avoid and forget the idiots.
This is my list of some Intelligent Commentators :
Economists :
Paul Krugman
Jeffrey Sachs
Robert Reich
Ingelligent TV :
Rachel Maddow
Keith Olberman
David Gergen
Some of the Guys of CNN but there is one Super Dangerous Imbecile there promoting a Big Progrom.
If you want to add some intelligent persons for my illustration and education, then please do so.
I rather forget the Uncountable Fools.
I am promoting the smarts and erasing the idiots and bastards ( mostly in videos ) :
Milenials.com
Prophesizing.com
Vicente Duque
Dee's advice is good. Credit cards are a convenience we can do without. If you decide to keep them the cardinal rule is, "Always pay off the balance every month just as you would if you paid cash for everything." Don't let them charge you those exhorbitant interest rates on an unpaid balance.
The problem with the purveyors of gloom and doom among those in the dismal science of economics is that they don't help. Recessions are largely a psychological phenomenon. Positive psychology is what id needed rather than prophecies of gloom and doom. Now that everyone has been educated on the severity of the recession it is time to start emphasizing the recovery plans and a positive outlook. Handwringing by top officials and economists will not help.
In the past, some writers on these matters have suggested a six month reserve rather than a three month rainy day fund.
It's easy to criticize tax plans that seem to benefit the rich or the most productive members of society. Many of the poor pay no income taxes whatsover so giving them a tax break makes no sense. Instead of camouflaging this as a tax break, it should be characterized and treated as welfare -- which it is. The more welfare we provide to the poor, the less incentive many of them have to seek work and or apply themselves diligently to their jobs so they become valued employees.
I have little sympathy for those who became greedy and bought homes they really could not afford with interest only loans, etc. Yet, the predatory lenders and realtors are even more despicable. In that regard, the fingerpointing should stop and the problem should be fixed with strict guidelines on real estate transactions and credit card balances and criminal penalties for realtors and lenders who violate the rules.
It may be nice to think that everyone should be able to buy a home but those days are or should be gone forever. It is much harder to buy a home in Europe than it is here. Many more people live in small apartments. Americans better get used to that idea.
In the post WW II decade many people lived in apartments and rooms in private homes. Then the government, the lenders, and the realtors came along and promoted the idea that everyone should own their own home and bent the rules so more could get in over their heads. They and we are now paying the price.
I would be interested in El Duque's ideas for a fair tax system. We already have one that takes from the rich and gives to the poor. We merely disguise it as Earned Income Credits, graduated tax brackets, AMT,reverse income taxes,etc. How much farther down that road does he think we should go?
Some real ideas instead of incessant carping about the rich vs the poor minorities would make a better contribution to the discussion. The philosophy he seems to be espousing is pure communism.
Debt vs GDP
Ultima,
I am not for gloom and doom. I am an optimist. But I believe in facing reality. We are in a NEW Great Depression that will get worse before it gets better and I think we should all realize it.
Frank Rich says Americans are in denial and don't want to believe we are in this Depression.
I think its time we all stop kidding ourselves. It may take years for the President's economic plans to take hold and recovery begins.
I agree with you. Perhaps the one good thing that will come of this is that ALL Americans will understand it is time to change our ways. No more pricey credit cards. No more McMansions. No more easy in/predatory home loans people can't afford. We need to know what we are spending and spend what we can afford while saving enough for 3 to 6 months with no income.
I am also hoping that home prices will come back to reality, especially on the coasts.
There is an awful lot of craziness going on now and there has been for the last several years. We in the midwest would just marvel at the home prices in California. Something that would hardly qualify as habitable here in the midwest was going for $200-300K in California. People would tell us our 200K midwest houses would cost 1 million in California. It was all false, as we now know. In most of the midwest, with the exception of a few states, our home prices grew much more modestly and so they haven't dropped much in value either, if at all. California, Nevada, Arizona, Florida, those states have some painful adjusting to do and no amount of spending and bailouts and more bailouts is going to correct that. Let's face it, the world's 12th largest economy (California) is basically bankrupt. Until they get their spending under control, they will continue to spiral down and drag the rest of us with them.
We need to let some things fail. If the big 3 automakers would have gone through a controlled Chapter 11 last year, they would have been on the way back to recovery. Instead, they're further in debt and back asking for more and we all know they are eventually going to have to file for Chapter 11 wasting all that money and time and money they could have invested in restructuring AND PRESERVING JOBS.
We need JOBS. The stimulus should have been targeted to two things - jobs and temporary assistance for people who have lost their jobs. Instead of that, we have millions being spent on programs which will do absolutely nothing to promote jobs and ALL ON BORROWED MONEY WE DO NOT HAVE. Eventually there will be no more lenders and then we will be playing with monopoly money. A loaf of bread will cost $20.
God help us all. I don't see any way out of this mess with the current programs that have been implemented.
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