With an economy that has
been on artificial life support for the last five years, it looks like the
government is finally going to pull the plug. We are probably going to be in
for the ride of our lives on this financial rollercoaster and you may need a
mattress to cushion the fall if you get thrown off.
Many of the benchmarks that
are being considered to mark the need for the “taper” of stimulus to our
economy may actually be false indicators of our true economic status. The
jobless rate shows a decrease but is lead by an increase of part-time workers
which is probably due in large part to the upcoming effects of the Affordable
Care Act, many of which are probably as yet undetermined.
Artificially low interest
rates are probably going to increase significantly and good luck in finding a
bank that is willing to loan you money. Most banks are still fundamentally
under capitalized and even with a rise in interest rates may be hesitant to
loan money to the average individual who is likely to be reduced to part-time
status in their job.
The low rate of inflation is
also considerably inaccurate when you consider that food and fuel costs aren’t
included in government statistics. It is hard to believe that the inflation
rate can be considered to be under control when fuel prices have nearly doubled
in the last few years and food costs are also significantly higher.
Let’s not forget about the
significant increase of the number of individuals that now rely on some form of
government assistance in order to merely survive. Many individuals have even
dropped out of the workforce because the amounts of government benefits are
greater that can be obtained from what used to be characterized as “gainful
employment”.
The decrease in the median
income of most families is not likely to improve, especially if they suddenly
find themselves working part-time. A further reduction in income won’t offset
the higher costs of individual healthcare that are also likely to occur. Unfortunately,
it appears that our economy is still in a coma and has yet to wake up. It may
turn out to be a very rude awakening for everyone.
Essentially, like any
individual once removed from life support, you will be on your own and your
survival will be at stake. It may be time to start stuffing the mattress to
cushion the fall.
Got mattress?
Staying above the water
line!
Riverwalker
Disclaimer: This is not to
be considered financial advice of any kind and is only an opinion of this
author.
2 comments:
Sounds like good advice Riverwalker. I recently read that quote on how a person became bankrupt - "Slowly, then suddenly". You have to choose which bills get paid, then none of them get paid and you are left out in the cold. Most of us have a person who let us crash on their couch, but if they are in the same position . . .
To; anon 6:01
The Fed backed off on their "taper" yesterday. I think someone realized that our economy is still in really bad shape and pulling the plug on the stimulus would have caused everything to "tank".
Our weak economy isn't ready to absorb all the extra money that has been artificially added to the economy. They've created another "bubble" and don't quite know how to keep it from popping.
RW
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