Monday, January 14, 2008

Its the economy stupid...

I often post about the economy and I often say that it is better then the Democrats say it is; however, it is worse then the Republicans think it is.

The truth is there are some economic indicators that are good and some that are bad...

I have always felt that a major global recession is coming in the next ten or so years; however, I think it is likely to come within the next five years at this point.

Both Democrats and Republicans are turning a blind eye to our economic problems and instead are trying to spend our way out of our short term problems. This will possibly work short term; however, in the long run it is just making the recession worse when it finally hits us.

I suggest that all of the readers of this blog take a few steps towards protecting themselves and their families from future financial turmoil:

1. Stop spending as much money as you are spending. Most of us need to "tighten our belts" and spend less money.

2. Save money.

3. Diversify your investments.

Mike Sylvester

5 comments:

Robert Enders said...

Mike,
Inflation is good for people in debt. If the bottom falls out on the dollar, that will make my mortgage that much easier to pay off.

Jeff Pruitt said...

Your salary could very likely lag inflation which would be disastrous for somebody who's already maxed out...

gadfly said...

The Republiocans are fighting over who has the best idea for solving Michigan's poor "auto industry" economy, but only the recall of the freakin' governor will solve that problem.

No politician is talking about the housing sector, which has the only really bad economic indicators out there and that problem is exacerbated by the government-imposed low-income mortgage program which has predictably blown up in the faces of stupid politicians who forced it upon banks.

The worse thing we can do is get the media hyped on the subject because they will surely take us from a growing economy to stagnation or recession.

Robert Enders said...

Population growth fuels housing. Want to sell more houses? Have more kids!

Mike Kole said...

Inflation is good for landlords and property owners with mortgages. Their mortgages stay the same, but the rents (for landlords) and wages go up. I recall my parents paying off their mortgage slowly in the late 80s, because the payment was around $100/month. That was a big payment in 1966, but due to inflation over that period, it was a joke by 1989. I owned rental property up until 2005. The years up to there were terrible for landlords, because there was an absence of inflation, and rents necessarily remained stagnant.

Of course, it's bad for everybody else.

Mike, do you think it's too late to put some part of the portfolio in gold? It's at a pretty high price right now, so it looks like a risk... but holding cash seems like a bigger risk (as inflation decreases its' value).