U.S. economy

The markets are off to the races again and we have reached the hysteria stage, where bad news is coloured as good news or simply ignored.

U.S. Consumers slashed their debt in July by the largest amount on record as job losses and uncertainty took their toll. Credit was cut by $21bn against expectations of $4bn. June's figure was down $15.5bn, leading to an annual decline of 7.4%.

This isn't good for a country where consumers account for 70% of GDP. This is added to the continuing unemployment problem, where -216k jobs was cheered by markets, despite a rise in the unemployment rate to 9.7%. No doubt the 216 number will also be revised downward with next month's figure.

The trade deficit has also widened despite a low dollar, yet the market calls this a sign of commerce returning.

Markets prefer to ignore such data and focus on things such as consumer sentiment, yet consumer and business confidence has only been rising due to stock market rises and would turn on a dime.

The news networks and officials are doing a great job of heralding recovery and calling themselves heroes, yet on the ground and on main street, the outlook is bleak. Rising foreclosures, falling credit, falling spending and shaky confidence.

The economy has picked up due to unpecedented stimulus packages which has been ploughed into markets and GDP boosting schemes, so there is still some risk once we are weaned off the stimulus.

Never before in history has there been such huge levels of interevention from governments to basically take a one-way bet on global recovery. These are the same people who got us in this mess in the first place so it's a bit early to break out the champagne.

Washington’s blog on real unemployment as opposed to what the Bureau of Labor Statistics is saying:

… Paul Craig Roberts – former Assistant Secretary of the Treasury and former editor of the Wall Street Journal – and economist John Williams both said in December 2008 that – if the unemployment rate was calculated as it was during the Great Depression – the December 2008 unemployment figure would actually have been 17.5%.

Williams says that unemployment figures for July 2009 rose to 20.6% According to an article summarizing the projections of former International Monetary Fund Chief Economist and Harvard University Economics Professor Kenneth Rogoff and University of Maryland Economics Professor Carmen Reinhart,… unemployment could rise to 22% within the next 4 years or so.

...and Lou Jiwei, the chairman of China’s sovereign wealth fund said recently, “It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose.”

The National Economy is affecting my Personal Financial Problems. The market has gone so low that my retirement is dwindling and I can't sell. That was my rainy day fund.
So to combat my financial woes we have cut back on groceries and no more entertainment. We drive as little as possible. Basically we use less and try to save.
Now our dear government thinks you can buy your way out of debt. I wish I had some funny money to do that for myself but I wouldn't want to burden my children with my extravagance.My approach is so totally different. Cut back and not spend. The government wants to spend us into oblivion and our future generations will pay the price if we are not a socialist country by then.