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Wednesday, June 1, 2011

June 1st (economically its Dec 1st)

All economies run in cycles; ebbs and flows much like seasons in a year.  When an economy is in a downturn, even when mild it is a "winter".  When true recovery occurs, that's the equivalent of "spring".  When things are bustling, its "summer" and when the economy starts giving signs its slowing down and changes are afoot, that's the "autumn".

Economies do not work in perfect 12 month cycles like weather but the analogy is still accurate.

For Wall St. and big business, they experienced a very short "winter" period back in late 2008 until March 2009.  Due to trillions of Fed money, they experienced a sincere recovery; a true "springtime" into "summer".  Of course the rest of the nation never felt it. How could they when they were purposely excluded from the 'party'.  They were just repeatedly told spring was here and summer was just around the corner, so Stay Calm.  

And just as everyday people are itching for a sincere recovery to affect them, now you see signs of "autumn" in Wall St. and the corporate world.   While yesterday the market went up 128 points based on nothing but greed, today its down 213pts as of 1:50p based on fear.

So... I peeked at the Drudge Report, and saw this header via a CNBC article:

"We are on the verge of a Great, Great Depression..."

So how could one Not avoid clicking on that link, right?

The official title of the CNBC article is Wall Street Baffled by Slowing Economy, Low Yields: Trader  and this what the trader, Peter Yastrow, market strategist for Yastrow Origer, told CNBC --

"What we’ve got right now is almost near panic going on with money managers and people who are responsible for money... They can not find a yield and you just don’t want to be putting your money into commodities or things that are punts that might work out or they might not depending on what happens with the economy."

And then the kicker...

"Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything... We’re on the verge of a great, great depression. The [Federal Reserve] knows it.  We have many, many homeowners that are totally underwater here and cannot get out from under. The technology frontier is limited right now. We definitely have an innovation slowdown and the economy’s gonna suffer."

I used to think people lived in la-la land and embraced this "recovery" nonsense.  Then I realized it wasn't the case.  The media keep working to hard-sell this 'recovery' specifically Because "We the People" do Not accept it.

June 2nd is the 2nd "anniversary" of the nation supposedly being in 'recovery', so an investment strategy company released its monthly poll data including a question about whether people believed the nation is in recovery.   Surprisingly, 66% believe the nation is still in recession which means only 33% drink Kool Aid.

The summary of the past two years is this:   A small group most people have never heard of, the National Bureau of Economic Research’s (NBER) Business Cycle Dating Committee decided on June 2nd, 2009 that the nation is no longer in recession.  Making themselves the official arbiters of peaks and troughs in the business cycle, they determined that economic conditions have ceased to decline, thus recession is over...  Taaa Daaaa!  

And this declaration from a small group of know-nothings means that every politician and media outlet have safe cover to blast "Recovery" as often as they wish and never be technically wrong even though they are.

The truth is--  and I hate it as much as you -- is that while it is June 1st on the calendar, and its sunny & warm outside (unless you live south of the equator; there its wintertime), on the economic calendar, it turned December 1st.

Most things in life we have no power or influence over-- nations going to war, budget cuts, etc.. but we have control over our own finances.  People do as they wish obviously but it would be irresponsible of me to lay out the bad without some suggestions to empower oneself.   

The famous adage of "A penny saved is a penny earned" will become more and more important as time goes on, except to modernize the adage and make it really relate to you, think of it as "$100 saved is $100 earned".  For instance, if you Must travel for summer vacation, consider local sites that use up less gasoline and don't require hotel stays.  If you need a new dress or suit, perhaps a brand label costing twice as much as another label is the best way to go, etc...  Any money you save now, is money you will have for the future, when things get really dicey and you will Most need it.

Remember, you can still live for today and enjoy life to its fullest but one can never forget there's a 'tomorrow' and day after that..  Its still not too late for grasshoppers to act like ants.

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