Economic Downturn Gets Worse

We are entering a recession here in America as the bad economic news keeps coming:

General Motors is going to run out of cash in early 2009 and will go bankrupt if the government doesn’t bail it out. I hope the government let’s it fail, so that a more efficient company like Toyota or GE can buy the remaining pieces and introduce some real changes.
The Dow is all the way down to 8,200 points… a 5,800 point drop since the beginning of the bursting market bubbles. My guess is that it will stabilize somewhere between 7-8,000 points, though our country is in such a precarious position it could crash further.
Citigroup announced plans to cut 50,000 jobs. Many other companies are announcing similar plans.
The national debt in the United States continues to rise at a breakneck pace as the Iraq War and and bailouts continue to suck down your tax dollars.

I strongly suggest that all my readers cut their costs in whatever way you can and start saving a rainy day fund, because it looks like there is a financial hurricane headed our way. The likelihood of an inflation/deflation scenario has risen significantly lately and many, many people will lose their jobs. If you already have a job, stick with it until you find something better. If you don’t, then take something until you can find employment elsewhere.

Personally, I am planning to downgrade my apartment to something cheaper. I also am going to significantly cut my biggest spending area of entertainment. No more regular bar hopping or expensive restaurants until I am much more secure financially. I am going to continue to drive my fully paid-off Ford Contour for quite some time.

If you are smart and start saving a healthy fund now, you will be in a great position to buy a house for dirt cheap or to launch a business when everyone else is desperate. At the very least, you won’t be living in your car stealing potatoes to feed your babies.

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