Wednesday, December 10, 2008

It's the Economy Stupid

Was it Carl Marx or Bill Clinton that said, "It's the Economy Stupid"? Bill said it during the 1992 presidential election process, but what he failed to say was that American presidents don't control economic policy. Not really.

I was thinking about the economy today as I was thinking about Christmas presents this year. Our household has not felt the sting of unemployment – both my husband and I have earned more each year for the last several years. Not significantly more, but we have beaten inflation. We have a nice house, no credit card or auto debt, and we spend less than we make. So we are probably doing a bit better than the average American economically.

We are choosing to purchase fewer things for Christmas this year. We will not buy gifts for one another, and we will buy fewer gifts for acquaintances. Family will be getting gift cards this year, and one family member will be getting cash. One thing that we are doing a bit more of will be contributing to charities that help those less fortunate than us.

Each year, I give to Catholic Charities. It is a charity I believe in – because, more than anything, I believe they are ethical, they have low overhead and they spend the money how they say they spend their money. There are other charities who have been in the news for wasting money, spending money in ways not prescribed by donors, that type of thing. I don't worry about that with Catholic Charities.

This year, however, I need to find a charity that is both local and spreads Christmas joy. I need my money to go towards Christmas joy for those who are in financial need, who may be in pain or scared or both. Oh, this is a tangent I did not expect to have. I was talking about the economy.

I think my feelings – feelings that we need to hold on to a bit more money, feelings we need to cut back, feelings that by cutting back I am more in tune with others. All of these feelings will make our economy worse. Consumption in the United States is going down. That means those of us who produce CDs don't get as much money, those of us who make toothpaste don't get as much money, and our economy goes into a tailspin.

I look at my 401-K, at the mutual funds – both bond and stock funds. All have gone down. Read estate is down. Oil is even down. When I was in college, I learned about diversification. The point being that not all investments can be down. Well, years later, I look at the financial news and wonder, "Were my professors full of crap?"

Just because nothing has happened in the past does not make it impossible. Just new.


~gkw said...

I think they were full of crap. I'd rather not think of my 401K anymore... take a gun and shoot it.

Joe said...

Yes, they were full of crap.

Hold on. You earn more than you spend? What's that like?

Ian Lidster said...

We had virtually the same conversation last evening. All quite disquieting. I was actually looking foward to retiring some day. Ha! I have a statement from y investment company on my desk and I don't want to open it and ruin my day.

mal said...
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mal said...

Your professors were not full of crap, its just that vision through the crystal ball is always bad. I did call the oil crash...I just missed it by a couple of years!

Manufacturing in the US has been in a slump since 2002. The rest of the economy is just catching up with it.

With the steady decline in manufacturing the last 5 years, my earnings now are 2/3 of what they were in 03 and our company started lay offs last week. I am glad that like you, we are debt free and live with in our means. We have the added bonus of the OH working for a school district

Have you looked at the Salvation Army? We always send them a nice check this time of year. They also have one of the lowest administrative overheads around.

Leesa said...

~gkw: yeah, but in their defense, they had not seen anything like this before.

Joe: earning more than I spend. It means, occasionally, I go out of the house in shoes that don't perfectly compliment what I am wearing.

Ian: we are thinking alike.

mal: the Salvation Army is a good organization as well. I have stayed away from another national organization because of questions about their ethics and overhead.