The Economy: What you can do

There are many things you can do and this article has a tool kit for individuals.

You need to know how we got from the economy we had to the one we have, though, first.

When the first "Stimulus Plan" was promoted in 2008, Robert Barro and Nobel Prize-winners Robert Lucas, Jr., Vernon L. Smith, Edward C. Prescott and James M. Buchanan were critical of the government spending, saying that the package will increase unemployment and place more debt on future generations.

Those huge increase in deficit spending since 2007 when the Democrats took over the House (Pelosi) and the Senate (Reid). During the first six years, Speaker Hastert (R)added $2.833 Trillion over six years from 2000 to 2006, or $472 billion per year. Since the Chairwoman Pelosi (D) took over two years ago, she added $1.518 Trillion over two years, or 759 billion per year. That is a 60% increase in deficit spending.

U.S. Debt:
$5.674 Trillion - 2000
$8.507 Trillion - 2006 Increase of $2.833 Trillion over six years, or $472 billion per year
$9.007 Trillion - 2007
$10.025 Trillion -2008 Increase of $1.518 Trillion over two years, or $759 billion per year
You can check the figures for yourself.

The jobless rate for March of 2007 was 6.7 million unemployed or 4.4%.
The jobless rate for February of 2009 was 12.5 million unemployed or 8.1%.

So, the one Nobel prize winner who agreed with the Democrats was wrong and the four who predicted it would cause increased joblessness and U.S. debt seem to be correct.

This turning around until the market dips below 5800 and it is not likely to turn around for at least a month. Plan on April 1, 2009 looking a lot like April 1, of 1996 with a drop of over 850.

WHAT TO DO

If you are not in the Market yet, you should keep your money in FDIC insured accounts and at more than one bank. Another option is to buy Treasury bills. At 5800 though, the assets of companies are at a bargain price. They will either split up those assets in the courts, be sold at auction by themselves or survive and thrive.

If you are not making a decision between stock or commodity investments, then consider options that reduce your costs. If that means taking over a mortgage because it is less than the cost of rent, then do that. I would look at a 15 year mortgage payment cost to compare it with your rental. If you are in a small business, you are looking at investing in those things that maintain your means of production rather than expanding.

What I am expecting in the long run is an increase in the cost of living or inflation. Look at the prices of commodities for that. When precious metals and oil go up, then inflation will have set in. The reason for not having wild inflation yet is the low cost of fuel. The low cost of fuel is because consumer and commercial uses of energy have dropped all over, including Europe.

What my mother would have done is to fill the freezer, can, and stock up on dry goods like blackeyed peas, garbonzo beans, and other beans. But, then, she was in the Great Depression and would bunker down.

The long term solution is to reduce the cost of government in comparison to the Gross Domestic Product. We can only afford so much Government. When the Government says they are spending more, the Markets respond:

The Obama/Bush Comparison in the Stock Market:

01/20/09-03/06/09 -1647.75 (-19.9%) President Pelosi/Reid/Obama Administration

01/19/01-01/20/09 -2576.29 (-24.48%) President Bush Administration

That was with a 32.50 gain in the DOW today.

Obama is nearing the loses that President Bush had.... in less than two months.

The engine of job making is the small business owner and when the economy is good because Government is 17% of the GDP, then they survive and thrive. When the economy is bad because Government is costing 21 to 40% of the GDP, then the survival rate is low. Even if they do not fire employees, they are not going to hire them.

Of ARRA or the "Stimulus Plan," 49% is for revenue replacement in states, 33% is in tax cuts, and 18% is for "Infrastructure." While it builds roads and bridges, it does not increase our security at our ports or borders. While it gives money to alternative energy, in a budget of $787 billion, only $6 billion is for alternative energy. They are willing to loan hundreds of billions of dollars for failing banks but they are not willing to loan that money to rural electric co-ops and private developers of wind, biomass, and solar.

If they would unclench on the drilling, there is enough natural gas, including in and off the coast of Oregon, enough to meet our energy needs for 20,000 years. In terms of our state economics, selling oil leases and taxing production could, like it has in Alaska, end the state income tax.

Natural gas burns cleaner than gasoline and diesal. It is more easily and economically converted to than electric for transportation. As it is, it is created and escapes into the air every day without being burned. It is 22 times more potent in creating the greenhouse effect than CO2.