Category: Economics

Goodbye Thompson, Hello Recession, Goodbye Heath Ledger

Yesterday was a crazy day!

First, Fred Thompson finally dropped out of the race. Well… I can’t say “dropped out” really… I mean he was barely even running. He was more walking, skulking, or sauntering. Maybe he was mozying. Yes. Mozying. And now he’s undoubtedly back in his overstuffed armchair watching old Law and Order reruns (like the rest of us)…

Also, Bernanke announced that the Fed would cut interest rates by .75% yesterday, one of the biggest cuts in over 20 years. Way to show no one’s panicked in this country, especially in the financial sector… whoa! Big write downs again today by Bank of America and Wachovia… awesome. More correction…

BRING IT ON! I’m not trying to tempt the fates. I don’t want good hard working Americans to lose their jobs or retirement money, but I’m OK with some of those billion dollar hedge funds and executive bonuses to be brought down out of the sky. But there’s another, better reason for wanting our economy to slip… it’s the only way a republican will get elected this fall — and by then, we’ll have probably pulled out of this bagel anyway.

And who better to lead the republican party and the nation during a financial crisis than the man who made a fortune making turnarounds for a living. Americans will be desperate for an aggressive economic policy, giving President Mitt Romney the Carte Blanche he needs to clean house in our federal government and give us our tax dollars back. Every percentage point that slips off the Dow is one more for Romney.

Lastly and sadly, Heath Ledger died yesterday from an apparent overdose. He was a certainly a gifted actor, but it wasn’t his death that shook me… it was the fact that he was less than 2 years older than me. Talk about making you feel mortal… Sadly, Ledger will now only be remembered for playing a gay cowboy, (who incidentally is one of the most tragic characters in all cinema) rather than for the great body of work he had yet inside of him. Perhaps it is that loss that we should grieve most of all.

Your Own Personal Bagel

Listening to the radio whilst (no one uses that fabulous word anymore) coming to work today I was listening to two of the country’s economists (read: blowhards) speculate about what the current stat of our economy is, whether or not we were headed into a recession, and whether or not we are actually in one (and we don’t know it yet).

So… I came to work and looked up the word ‘recession’. Recession (thanks, wikipedia) is defined as “two or more quarters of negative economic growth or negative gross domestic product.”

This reminds me of bagels. Let me explain. On one of my favorite episodes of The West Wing, there is a fear of economic downturn sweeping through the staff. Josh walks into a meeting and just flat out says the word ‘recession’ and he immediately get shushed and given dirty looks. Apparently it’s bad luck to speak such words, so you use the harmless euphemism: a “bagel.”

cream_cheese_on_bagel.jpg

So is our country headed toward a ‘bagel’?

One of these economists actually had an interesting thought. When they started talking about consumer spending, they said that surprisingly consumer spending has continued as if there were no economic problems on the horizon. So people obviously didn’t want to accept the thought that the economy might be slipping, and people aren’t really feeling the pinch of a recession just yet.

So the question is… are you having your own personal recession yet? Most of us who are steadily employed have a pretty “fixed income.” So usually, if a recession hits, it hits some people extremely hard (they lose their employment), while the rest of us just lose opportunity (fewer raises, bonuses, etc). When people ask “how bad will the recession be?” what they are really asking is, “is it going to threaten my job?”

So the idea is… all economics are local, right? So… anyone here feeling the effects of the economic slowdown?

I have felt them in two conflicting ways… 1) my retirement fund slowed growth last year by about 8%. Betting on a slipping economy, and being young and willing to take the risk, I changed over 50% into foreign investments, due to the weakness of the dollar. Hopefully that will perform better this year.

On the other hand, though, I’ve been starting a business… an expensive venture, but which is already showing promising financial futures. I’m not getting rich or anything, but it’s paying for itself, and has growth indications.

I personally think this will be a mild ‘bagel’ if it’s a ‘bagel’ at all, mostly because of the weakness of the dollar and the ubiquity of the global economy. Exports will raise and foreign investment in the US will increase (speculators looking for a deal on a sure thing). This will create jobs and stimulate growth once more.

So, stay tuned… we’ll see where this thing goes. One thing’s for certain, it’s way too early to tell.

If it is a bagel, hopefully it’s smothered in strawberry cream cheese!