With the mainstream media constantly touting economic recession, unemployment, and spending cutbacks, it’s easy to believe the doom and gloom.  However, I just got back from the malls this afternoon and it’s so far from the reality that was reported on the news.  I’ve twittered what I saw in the malls in the past couple months.  I still see people packing the malls, buying up a lot of stuff, eat at expensive restaurants¹, and still spending on luxury goods².  I think the reality is so different here in Orange County, California.  Or maybe, the residents here are still in denial about the slumping national economy.  Perhaps the reality is that we have it well here in California, and we’re still able to continue living the good life.

After reading a few articles, apparently life is good outside California as well.  Other towns are experiencing bustling local economy.  Even Amazon is claiming best ever 2008 Christmas season for online shopping.  I suppose consumers are still optimistic about the economy, and still willing to spend money in this otherwise “tough times”.  Consumer spending is probably the ultimate bailout for this ailing economy.  So I’ll go buy more stuff, and do my part to get out of this “recession”.

This article was posted on Rudy Amid's Blog:

Bustling Local Economy

1. Such as Cheesecake Factory
2. Such as Apple products

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What is the difference between then and now, anyway?  During the 1930′s Great Depression era:

1. Government was slow to act, not recognizing dire issues
2. No bank deposit insurance
3. No unemployment insurance
4. Stocks had zero value after crash (90% destruction)
5. 45% Mortgage Default
6. Unsophisticated information systems
7. Global investment had minor power in recovery
8. Little financial controls or governance procedures

Now, the situation is way different:

1. Governments are acting fast, recognizing impacts
2. Have deposit insurance
3. Have unemployment insurance
4. Real estate has value and need for homes will remain
5. Government will underwrite primary homes (foreclosure today at 3%)
6. Sophisticated data and communication systems
7. Global investment can play a large role
8. Significantly improved powers of intervention

So, we’re better equipped and well prepared now.  There are safeguards, and the US Government plays a bigger role keeping this crisis in check.  The economic crisis we’re experiencing right now doesn’t feel like the 1930′s.  It’s more like the 1970′s, where we feel the pinch and the situation is still tolerable.

Photo Credit: Tony the Misfit

This article was posted on Rudy Amid's Blog:

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Who’s really to blame?  The CEO/CFO of companies who let their stock prices go down?  Is it the financial advisers at Wall Street, who tell us it’s OK to invest more in certain hedge funds because they’re speculating higher profits to be gained later?  What about President George W. Bush who plunged us further into debt by giving golden parachutes to banking executives?  Or, is it also possible the problem is me, you, and the average consumer?

The answer can very well be all of the above.  There’s enough blame for everyone.  But, it all comes down to us, the folks at “Main Street”.  We make greedy investments in the highly speculative stock market, hoping to make at least 30% profit within a few months.   We buy houses that we can’t really afford because we’re hoping to sell again, in the near future, with a tidy profit.  We take jobs with the fly-by-night lending companies because there’s a huge demand in credit processing.  We signed up to become real estate agents because selling a house is easy and the commission is too good to pass up.  I didn’t make those excuses up.  They were actually happening to the people I know and talked to, recently.

It’s a scary reality, but one that we can usually avoid if we just use common sense!  When it was all roses, no one objected to the profit taking.  Not many people stop and say, “Wait a minute, how long can this last?”  Recall this stuff happened before!  Remember the dot-com boom?  Back in 1999, I certainly didn’t expect it when pets.com was considered a darling company.  The company I worked with, at the time, was on a spending spree, gave lavish gifts, hired more middle managers, and took a lot of “off-site” meetings.  I was along for the comfy ride, until they decided to kick me off the limo while it was still moving downhill.

Good thing too.  Now I’m more cautious in what I do, and where I put my money.  This is where common sense really helps.  Common sense tells me I have to work smart, work hard, and bring value to my employer.  Common sense tells me to buy a house I’m going to live in for the next 20 years, instead of the next 2 years.  Common sense tells me to put money into long-term investments such as a 401k, or College Fund for my daughter.  Common sense tells me to start saving money and help others, using the 70-20-10 rule: 70% expenses, 20% savings, 10% charity.

So, what are the key words to ride out the recession?  Long Term, Savings, and Perseverance.  Along the way, don’t forget to care about the people around you.

Photo Credit: dweekly

This article was posted on Rudy Amid's Blog:

Recession-R-Us

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