Kelton,

Think of money as a correllary to the blood running in your veins. It is a very good analogy.

When you are not circulating your blood, you are conserving (saving) energy... but you are also NOT distributing oxygen throughout the body, nor clearing away the metabolic waste that your cells naturally create.

When you do as required to crank up the circulation, everyone gets oxygen, and everyone gets the chance to flush away their waste. On the other hand, energy is being consumed, muscles are being exhausted, and rest MUST follow in order for a healthy recovery cycle to occur.

When we *artificially* induce increased circulation via drugs, or medical machinery, a great number of potential problems begin to occur.

The decade-long loosening of credit guidelines (lowering of hurdles) artificially stimulated the circulation of currency, making the organism overall become complacent to efficient energy (money) maintenance & management. The economic "body cells" have come to believe that they (we) don't have to save or be efficient, because there is (or there WAS) always a next-day's infusion of easy money from additional sources of loans, and government-printed money paying government-commissioned services.

NOW the credit orgy has come to a cold-hearted, Eliot-Spitzer-fearing halt...

NEXT... the "endless injection stream" of additional unearned cash into the public by the government's self-funding printing press will grind to a halt (it simply can't run much more without collapsing the government itself.)

We're at a crossroads now..... either we learn to return to being a healthy financial organism (from the individual, to the family household, to the community, all the way up to the national government,) *OR* we incur very extreme consequences.

Those who adopt healthy financial behaviours personally will ultimately suffer the least (and may have the best chances of succeeding in spite of collapses around them.)

Cheers,
Dave Donhoff
Strategic Equity & Leverage Planner

Hi again well-behaved Kelton,

The TV stations have one purpose - to make money.

They don't get it from you - only the report to advertisers that your eyeballs are watching their screen, which allows them to charge more.

And now that there are a proliferation of channels, fragmenting the advertising market, plus with internet service providers making money from advertisers - that means less for the TV guys.

Remember one of the first things that Mr. Bush said after 9-11?

Let's keep the economy vibrant - don't hunker down and refuse to spend. Let's not let those guys win!

Years ago the retailers, unhappy with the speed of business, got the idea to get a little piece of plastic and let you use it to buy stuff now ... that you'd pay for ... later.

Later, when the economy went into a bit of a recession and there were quite a few layoffs ...

... many people still employed got scared and, instead of continuing to go out to buy stuff using the plastic ...

... decided that, in case they might be the next to get the axe - they'd better quit buying and pay off some bills.

Which, putting the retailers into a worse reduction of sales than had they not got that plastic game going in earlier years, resulting in them getting into panic mode ...

... but my feeling about that was, more or less, - "what goes around .. comes around".

As you know, the number of privately funded pension plans in the U.S. has been dropping - drastically.

Many say that Social Security is in trouble.

They used to tell of a three-legged stool to fund retirement - public pension, private pension, and personal investments.

With public pensions in trouble and shrinking private pension systems, two legs of that stool have gotten shakey, if present, for many.

That meant that the equity built up in their home was becoming a major component of the ordinary person's pension fund.

Then, as jobs were shifted to low-wage areas, employment became more insecure here, and wages didn't advance as fast as did the cost of living.

So the movers and shakers of the economy figured a way to keep business humming along.

They encouraged a number of homeowners to take out Lines of Credit based on their equity in their homes, rather than cutting back on their standard of living.

Resulting in the "owner"'s reducing the percentage of his/her home that s/he owned.

Which one of the managers of the economy cared a rat's derriere about the viability of the individual throughout his life?

Then - they got another idea ... sell some folks with low income and assets (who couldn't ordinarily qualify) a house (house prices had been rising, right? Shouldn't you, too, make money as house prices increase?).

But - s/he couldn't afford it.

So - instead of telling him/her of the real rate of interest, they tell him that they're charging 1.5% or so currently, and will re-negotiatre after three or four years or so ...

... (then we tack the other 4 - 5% of the real rate on to the amount of the loan).

Later, on re-negotiation, the buyer either says that he can't afford the full rate and walks away ... or he tries for a while, unsuccessfully ... and loses out in the end.

That game has cost me several thousand dollars in the past 3/4 of a year - so I'm rather bitter.

But - the point is - which of those guys who wanted to sell stuff ... *now* ... gave a damn about the consumer/citizen's long-term best interest? Including building up a viable retirement preparation system?

The financial guys wanted to have the folks save, plus some for retirement.

Every time that you loan $1,000. to a bank - they rent out about $8,000.

So they like to see you invest with them.

But many of them issue "credit" (i.e. really "debt") cards, as well.

So they speak out of both sides of their mouths, also,.

Seems to me that your best interest ...

... is to look out for your best interest.

(But, in Canada, I don't like earning much interest).

[End of rant]

ole joyful

But what are we good-hearted, patriotic citizens to do when we ALREADY have all the consumer goods we NEED/want?

Right now, in the household, we're busy splitting and stacking cordwood for coming winters. We're starting seeds and bringing others along so we may move then into the gardens in the coming months. We go to work, fund our household checking account and keep all the bills current. We continue to contribute to our retirement accounts, and save.

The library is FREE, we trade DVDs with our friends, and we eat our leftovers. We go out for a meal once/maybe twice weekly... sometimes taking in a "moving picture show", too.

So? we're supposed to do MORE?

As the dollar growes weaker, some interesting things are begining to happen. It gets cheaper for some foreign car companies to open more manufacturing plants in the USA. (gasp!) Brits flock to Florida to buy our cheap real estate. Old Joyful's fellow Canadians decide they can afford a vacation in Hawaii. Etc.

Maybe the tide will turn enough that we regain some meaningful jobs, actually *making* products, and workers can stop holding three low-paying service jobs to make ends meet. New, start-up manufacturers can hire workers without being unable to compete because they have huge pension rolls to pay.

Don't flame me, please. Unions have played and continue to play important roles, but some deals got out of hand and ended up hurting workers and employers. Watch the squabbles within airline pilots unions as the lines consolidate.

Do any other first world nations depend on consumers to fund 70% of the econommy?

I certainly won't "flame" you, Chisue. I've seen how union tentacles have kept shrewd, skilled NON-union workers like myself for using our ability outside of factory settings!

Frankly? my skills vastly outstrip those of 95% of most "line" factory stitchers (and I watched it happen over the course of the past 30 yrs.). I've worked tooth and nail to ensure that. I damn sure don't need a "union" to speak for me, thank you. In the 30 yrs. I've been learning/perfecting and practicing my trade I've NEVER been out of work. I'd be willing to bet most members of the garment workers union can't say the same.

As long as the money is saved in a bank or other institution, I personally see it as INCREASING the benefit to the economy. After all, that means I have money, that I'm also earning money on (granted, not much these days). Then the bank takes that money and lets someone else use it to buy things, etc and THEY pay a little to use it, which increases the amount the bank has to work with, etc--so it ripples out even more than if I just went out and blew it on a new DVD player. Only way saving isn't going to benefit the economy is if you save it in your mattress.

And speaking of STUFF--what's the deal with people ammassing so much stuff now that they don't have room for it in their homes? You can't drive down any road--city, suburbs or rural in my area without seeing a huge storage unit complex every mile or 2. Huh? I can see someone who maybe runs a business from their home needing a little extra storage space. But ordinary people are buying so much stuff that they have to rent storage units to keep it in. That's crazy--and selfish, and stupid, and costly and... well, I know a lot of people in deep debt, who can't afford their storage rent. Now THAT should tell the powers that be something about this country's economic crisis. When people go out and buy stuff they can't afford, with money they don't have and then have to rent storage places they can't pay for to keep it--there's way more wrong with the minds of the country than $600 is going to fix.

Maybe this is a needed swing-back. When I was a kid in the 70s tons of stuff was not so much the norm... While the weak dollar hurts, it might be helpful to bring outside money into our economy. I do think there will be a trend, probably driven by necessity, to smaller houses and less stuff. Anyway, I have to come up with something to cheer myself up as I contemplate paying for my family's trip to Europe (I'm not going :(), my daughter's braces, and lord knows what all else... meanwhile no one's getting any raises, of course...

It doesn't. It just hurts the bank accounts of 90% of people in Congress and in the Executive Branch whose income is from Halliburton and Big Oil and other huge corporations who depend on you to go into debt to buy stuff. Then when you lose your home or go broke you keep them in their position because the govt bails you out. The only way they keep their big corporate money and their job is for you to spend all your money, preferably even more than what you have.

Save all you want. The economy is going to continue going down and you're going to need that money soon enough.

I keep waffling back and forth: are we going to financial hell in a handbasket?... or is this just another anxious financial chapter that will soon pass?

I often consider buying a Gold ETF when I am at my bleakest, but man... $1,000 an ounce????? Seems a bit steep with lots of downside.

By the way, I loved Senator John McCaine's comments about not bailing out speculators. It was refreshing to hear such candor from a guy who needs as many votes as he can muster. pretty brave.

The speculators don't have many votes.

They're not popular, either - so it's a good idea to knock them before an election - that pleases a lot of voters.

While some of the big guys may go down ... many who pulled the rotten deals won't.

But a lot of the little guys will: paid out thousands ... walk away with nothing (maybe even continuing debt).

You owe the bank a million - can't pay - you got a problem.

You owe the bank 100 million - can't pay - they got a problem!

ole joyful

>>I loved Senator John McCaine's comments about not bailing out speculatorsJust as long as you realize McCain is fine with bailing out the banks and investor firms with taxpayer dollars. He is very firmly on the side of Big Money and the idea that government takes precedence over individual rights. I like McCain as a person, but I'm surprised more people aren't aware of his stances on many controversial issues.