After reading this article on Yahoo about all the cool gadgets that are coming out, I started thinking. We are becoming consumed by our desire to buy new iPods, iPads, iPhones, laptops and plasma TV’s. We are buying gadgets at an incredible pace.
Recently, I was thinking about getting an iPod Touch, so I can play Angry Birds. I must be the only person who is not playing it. It seems that if you don’t have a cool new gadget, you are out of touch with new technology. The more I thought about getting a new iPod Touch, I thought about the reasons that we crave new gadgets.
After watching an interesting episode of 60 minutes about unemployment yesterday, I thought that we can learn so much from this financial crisis. The economy is changing, and the old rules don’t apply. In fact, if we keep living by those old rules, financial crisis is going to happen to us.
Here’s some things that we can learn from the problems of millions of Americans caused by this changing economy.
After reading this article about a possible rocky future for the U.S. (and world) economy, I wondered how many people are prepared. What would you do if we had another depression? What would you do if we have hyperinflation and the dollar becomes worthless?
Are You Ready?
I have mentioned it many times before. Depressions tend to happen once every 80 years. How long has it been since the last one? 80 years. Thanks to crowd psychology, once everyone has pretty much completely forgotten about the last one, the next one can start. Good times come and good times go. Economics happens in cycles. Continue reading →
This article on Yahoo Finance talks about how the housing market is continuing to decline. As with most government intervention, the effect of the first time buyer’s credit had a short term benefit and I think it will have a long term negative effect.
Besides that, it enticed the most naive and inexperienced buyers to buy at the worst time possible. The housing market is going down and there is nothing to slow it down. Unemployment is high and the economy is weak. It is quite easy to see that housing prices are not likely to rebound any time soon.
Recently, as the stock market soars, there has been a large amount of news about how well the economy is doing. They say that the housing market has hit bottom, and that the economy is recovering. However, this article by the Associated Press is about how unemployment is rising.
Regardless of what the newspapers say, it is important to look at the fundamentals that drive the economy. The government has created massive band-aids to prevent a depression, and they seem to have worked. But it is important to understand the difference between a recovery and a temporary band-aid.
It seems that the economy is the number one topic of discussion these days. Most people are blaming it for all of their financial problems. The news is full of stories about the negative effects of the terrible economy such as foreclosures and layoffs.
One reason that I touched upon in the previous post is the falling price of oil and gasoline. Not only does it make life easy for us at the pump, but it has a cascading effect throughout the economy. Most of the things that we consume are physical, and therefore require energy to be delivered to us. When oil prices are high, it costs more money to ship everything. And these cost increases can be seen in every physical product that we consume. It includes drinks, food, books, computers, and even cars. The good news is that as the cost of crude oil falls, the price of most of the other items in the economy falls as well.
One of the top stories on the news each night is the real estate market and the foreclosure crisis. As housing prices continue to fall and the economy weakens, record number of people are losing their homes to foreclosure. Now it’s Obama’s job to try and fix the problem!
While it’s true that millions of people got loans that they really couldn’t afford during the real estate bubble, I don’t think that’s the real cause of foreclosure. The problem is that 90% of Americans are six months away from being foreclosed on. Why? Because they spend a little bit more money than they make on their job, and their use as much as possible on their credit cards.
It’s really part of the American way. President George W. Bush borrowed more money than any president in history. Now our national debt stands at over $10 trillion, and is growing at record pace. Obama has even committed to spending more money to solve the problems of people who didn’t manage their finances properly!
The news says that Obama has to fix “The Foreclosure Problem.” I suggest you that there is no foreclosure problem to fix. What needs to happen is that he needs to set up ways for the American people to learn how to manage their finances better. Living paycheck to paycheck and spending as much as possible on stuff like cars and plasma TVs is not going to lead to a strong financial situation. We need to learn how to manage our finances better so that when we have a financial challenge, it does not turn into a financial crisis.