Two cents on the economy

What is happening in our national economy and also in Europe is the positioning of investors into a new paradigm based on the perception that consumers will not be making the purchases on credit like they did five to fifteen years ago. In addition the realization that the number of consumers has dropped because of real unemployment figures that hover at least at 25% and in Europe as high as 35%. Healthy corporations have been saving cash instead of investing profits and those missing dollars affect the investment portion of finance and economy. Banks will now begin charging these corporations more money to hold these huge sums of cash as a way to recoup fees lost when the corporations would invest. All of these arenas are shifting trying to first become stable and then to be strategic and identify new ways to generate income based on the new paradigm which is becoming the new economy and marketplace.

I think what has happened is that individuals have looked at the result of the whole raising the deficit spending cap and decided that a fundamental, systemic change is beginning to occur in our government. That change is that people are pushing for real changes in how the government does it business meaning that a real drive is happening for the government to have a budget and to stick to it. This means that spending is to become restrained which means some “projects” that result in goods and services will not be realized or if they are they will be a smaller percentage than before. This then would result in less labor required which translates into less FT jobs and benefits and that translates into X number of current consumers being either restricted in their consumption because of loss of job or at least a decrease of some percentage which snowballs into many people and that drives even less demand than currently for products/services which means mfg/etc need less employees working FT etc, etc. So the individuals who are the bankers/investors/money are realizing that the government is not going to be in the position to improve the economy (first paragraph) so they are reevaluating how they are going to use their money.

Some of the next variables are the US 2011 and 2012 elections, Israel and the Palestinian issue, China and Russia concentrated push for replacing the US dollar as the reserve currency, EU whether it develops into a black hole or not – and/or if the individual countries push for nationalism erodes the unity, power & value behind the euro. These don’t begin to address every real variable out there but they are ones that will definitely drive MSM and political spin.

What does all of this mean for people like you and I? We need to pay of our debts as quickly as possible because banks/ creditors will keep raising finance charges in an effort to recoup lost $ at the sales registers. Save cash.