What A Rollercoaster...

I can always rely of the Feds to brighten my day, and I mean that in a humorous way.

Take the way the stock market has been going up and down like a $10 hooker lately. We drop 400+ points...we rebound another 300. We drop 300 points, we bounce back with a 200 point gain. All of this within the span of a 24 hour period.

The really crazy thing about this, is that it's become more of a GLOBAL "tilt-a-whirl" than a national one. Japan is feeling the financial vicissitudes, as is London. In fact, every market around the world is being beset by the murmurings of money woes. Even lower gas prices are looming in the wings. There's still talk of a "possible" recession in the foreseeable future.

I for one, think we already might be there.

A recession is "supposed" to occur when the GDP suffers a drop over a 6 month period. That's 2 quarters of no growth for the economy...ANY economy. I tend to believe (and I could be wrong...it's been known to happen, albeit infrequently) that recessions occur when the GDP doesn't GROW at the rate these analysts have predicted.

For example, "if" they predicted a growth of say, .5% over this 6 month period, and we were practically stagnant at .2% (or less), then technically they can state that people are not BUYING enough (ergo, we fit the criteria for a recession). And we all know that SALES fuels any economy, whether it's tangible items, services, or (dare I say it?)...stocks & bonds (not James or Barry). When people don't buy as much as "they" want, or expect us to, someone suffers.

That's a given.

When supply outstrips demand, we have surpluses, and prices drop to recoup flagging sales. The "bottom line" must be maintained, as it were. But when people simply CAN'T buy, due to taxes, home or vehicle repairs, children's college funds, or illnesses, someone ELSE suffers, namely those producing the items we were SUPPOSED to buy. It's not all about "rocket science"...it's just common sense.

Now, we find this nation needs a "Stimulus Package" for this "E-Ticket" ride, namely an $800 rebate...bonus...gift...whatever you want to call it in order to get our economy kick-started. I think my wife and I can seriously use $1600...we're thinking of a roof for the garage. So we're stimulating someone's bottom line within our own economy (or soon will be). Although this stimulus package looks real good on the surface (and will look even better on top of our garage), there could be a huge backfire because of this.

And any mechanic will tell you a backfire ain't all that good, either for your engine OR your wallet. Let's suppose a majority of the people getting this "rebate" decide to just put THAT $800 away for a rainy day and NOT spend it AT ALL. That's not actually going to stimulate much in our economy, is it? Or suppose (as would be found in my neighborhood) that the $800 was used to purchase crack or marijuana. Wow, no taxes paid on THOSE purchases, so I guess no money directly goes back into any economy (maybe Mexico???). But wait, the seller gets to buy some new logo-emblazoned threads, or a grill for his piehole, or even louder speakers for his POS 80s Olds Cutlass. So in some perverse way, money IS put back into someone's coffer, albeit by the wrong methods.

The Federal Reserve has also slashed interest rates (by.75%) to encourage buying. Now this would mainly apply to "big ticket" items such as automobiles (sorry, I still like my 25 year old Firebird, thank you). This might be a good thing if you happen to NEED a new fridge (we're thinking about that too - we need to trade up eventually), or perhaps some other large dollar thing. That's a nice impetus, but comes with a price (other than the items in question). Suppose we "bend the plastic" to get these things at a lower interest rate. Sure, the credit card rate drops as well, but it CAN (and probably will) return to it's original high percentage soon enough.

Then...what will you do? You're up to your ass in debt once again, houses get foreclosed, bankruptcies flourish...but our economy is SECURE. And that's what's important.

Be careful...be very careful.

Personally, I don't think this nasty beast of recession will go away, not while this nation has such a HUGE trade deficit. When people are buying, we find that damn near ALL the goods are coming from overseas...so the deficit goes UP. But when we don't buy, then those overseas sellers have those surpluses piling up...and they don't like having all that crap taking up space, so they drop the prices, flood the markets, and we wind up buying it ANYWAY. And the trade deficit goes (all together now)...UP.

It's a no-win scenario.

If we could rely more upon OUR nation to produce what we need, we could turn this around, but it would take decades to reverse that trend. And companies aren't quite ready to give up their corporate (slave-waged labor) cash cows as long as their "bottom line" is met (regardless of whatever price it costs us). In the meantime...the only thing we're going to be able to do is attempt to enjoy the ride. We're (financially) strapped the hell in, we sure as hell can't get off, and closing our eyes won't make it all go away.

We basically paid to get on this economic rollercoaster (in one way or another), the best we can hope for is not to toss our cookies until the ride comes to a complete halt (which it won't).

Anyone for Pizza?