Wednesday, January 23, 2008
The economy...
Quite an eventful week for one anonymous financial aid advisor, who after getting his ass handed to him all last week, fumbled his trusty debit card into the ozone. Literally my brain went blank, and I could not for the life of me find my card. I have a new one, but now I need to update all my various bill paying activities such as my storage unit, gym, WoW, etc. I have much work to do before the end of the month, and honestly I'm not even sure how many bills were attached to my old card. Meh...
Card drama aside (and do not get me started about ********'s inability to get me a new card efficiently....) I'm posting because the economy is on a roller coaster right now, and I was struck at the various business sectors taking a vicious beating. I'm even more struck at the efforts of some hucksters to make a quick buck.
People selling market strategies in both good and bad (and sometimes when up is down and down is slightly sideways) is nothing new. I doubt the advice they're giving is all that new either, save for a different spin depending on which ever way the wind blows. My fave web sites are guilty of this as much as anyone else, and someone has to pay for the web hosting. Thus, I do not begrudge their sales attempts. Who knows? Maybe their advice or stocks picks are even useful, at least those with money to invest. The implication with that statement is that I do not have money to invest, and I don't. Still, let's say I did have money to invest AND have not been taking the advice of said incredibly wise money gurus, AND their advice is sound, which means that although I may have some capital, I'm drowning in debt and and investments (including my home) are taking a beating. Actually, this sound a hell of a lot like me. Anyway, should I use some of that capital to purchase the aforementioned investment advice and lay my financial future at the feet of whomever is hawking the incredible investment opportunity in recycled sneakers? Probably not, and not just because the investment advice is so patently ridiculous.
Truth be told, the monetary strategy I would advise (if I were actually paid to research such things and knew what the hell I was talking about) is use the recent and upcoming rate drops to restructure my debt to lower my payments and either pay down said debts or squirrel away the savings to build up a vulture fund or replenish my depleted bank account, depending on my overall financial health and long term goals. Herein lies the problem: the rate cuts will really only allow people and businesses to reduce the debt service load they already have. There is nothing in either the stimulus package that will allow people to take on more debt. It will cheapen the debt they all ready have (maybe). That will certainly help, but the extent is unknown. When all the bad debts have been wiped clean off the books, the reduction in the money supply will be staggering. If therein lies the problem, herein lies the rub: the economy has been so dependent on both cheap (and perhaps more importantly: EASY) credit and insane levels of consumer spending that even a regression to the historic mean would indicate a recession. Chances are consumer spending will drop far below the historic mean, since the prospect of dropping only to the mean would actually raise the mean to a higher point than the historic number. (Lord, I hate stats...)
Anyway, after waiting several minutes for the stat-induced migraine to pass, I'm back. So what does this have to with me? It is my blog, and waxing poetic about... well.... me is the reason this site exists. Well, after losing my card, I was cut off from spending over the holiday weekend. This disruption in my economic activity allowed me to get a free couch, and prevented me from buying more... lots of stuff I don't need. Specifically, more audio books on business money and investing. Haven't all my recent posts dealth with I don't need to buy anything? I'm trying hard to take my own advice on my own blog, but it is not easy. I get paid on Thursday, and I can't wait to reset all my automatic payments.
Card drama aside (and do not get me started about ********'s inability to get me a new card efficiently....) I'm posting because the economy is on a roller coaster right now, and I was struck at the various business sectors taking a vicious beating. I'm even more struck at the efforts of some hucksters to make a quick buck.
People selling market strategies in both good and bad (and sometimes when up is down and down is slightly sideways) is nothing new. I doubt the advice they're giving is all that new either, save for a different spin depending on which ever way the wind blows. My fave web sites are guilty of this as much as anyone else, and someone has to pay for the web hosting. Thus, I do not begrudge their sales attempts. Who knows? Maybe their advice or stocks picks are even useful, at least those with money to invest. The implication with that statement is that I do not have money to invest, and I don't. Still, let's say I did have money to invest AND have not been taking the advice of said incredibly wise money gurus, AND their advice is sound, which means that although I may have some capital, I'm drowning in debt and and investments (including my home) are taking a beating. Actually, this sound a hell of a lot like me. Anyway, should I use some of that capital to purchase the aforementioned investment advice and lay my financial future at the feet of whomever is hawking the incredible investment opportunity in recycled sneakers? Probably not, and not just because the investment advice is so patently ridiculous.
Truth be told, the monetary strategy I would advise (if I were actually paid to research such things and knew what the hell I was talking about) is use the recent and upcoming rate drops to restructure my debt to lower my payments and either pay down said debts or squirrel away the savings to build up a vulture fund or replenish my depleted bank account, depending on my overall financial health and long term goals. Herein lies the problem: the rate cuts will really only allow people and businesses to reduce the debt service load they already have. There is nothing in either the stimulus package that will allow people to take on more debt. It will cheapen the debt they all ready have (maybe). That will certainly help, but the extent is unknown. When all the bad debts have been wiped clean off the books, the reduction in the money supply will be staggering. If therein lies the problem, herein lies the rub: the economy has been so dependent on both cheap (and perhaps more importantly: EASY) credit and insane levels of consumer spending that even a regression to the historic mean would indicate a recession. Chances are consumer spending will drop far below the historic mean, since the prospect of dropping only to the mean would actually raise the mean to a higher point than the historic number. (Lord, I hate stats...)
Anyway, after waiting several minutes for the stat-induced migraine to pass, I'm back. So what does this have to with me? It is my blog, and waxing poetic about... well.... me is the reason this site exists. Well, after losing my card, I was cut off from spending over the holiday weekend. This disruption in my economic activity allowed me to get a free couch, and prevented me from buying more... lots of stuff I don't need. Specifically, more audio books on business money and investing. Haven't all my recent posts dealth with I don't need to buy anything? I'm trying hard to take my own advice on my own blog, but it is not easy. I get paid on Thursday, and I can't wait to reset all my automatic payments.
