Reports of the economic recovery say the United States has stabilized and headed up, but if jobs are missing, then there really is no recovery. Personal incomes drive the economy. Loans are a function of income, a person’s cash flow. If the unemployment rate isn’t improving, then the economy isn’t improving. There’s a direct relationship. You can ignore all of the other economic statistics, but pay close attention to this one. Everything else is secondary to this vital data point.

Also, the typical American consumer comprises 2/3 of the U.S. economy. The federal government and economists are anxious for this spending machine to start up again. Their goal is to reassure the citizenry that the economic environment is returning to normal. However, they are not recognizing that the rational decision for people is to actually conserve resources (save money) until the future looks brighter.

To fix the situation, the housing market needs to be fixed. Banks should mark down the values of the home. The federal government should assume ownership of the houses provided that the home payments are still being made. When the housing market recovers in, perhaps 5 years, the homeowners would have the option of buying the property back.

Second, the senior bank executives, who oversaw and caused this turmoil, should be fired and sent to jail. Those executives have no incentive to fix the problem they created. While people continue to lose jobs due to their indiscretions, they are still receiving bonuses. Why? When someone owns up to this crisis, well start to see the banking crisis abate. Until then, we’re stuck with our anemic environment. It will only get better after much-needed changes have been made.

The U.S. has a capitalist-oriented economy. We are so successful that we are the market leader in finance (or co-leaders with London). However, Personal Finance is not taught in grade schools on a regular basis. This fact is amazing. One of the most important life skills is managing money. In your life, you will very likely get credit cards, auto loans, college loans, home mortgages, life insurance, and investment vehicles. Why aren’t we taught about the cost of borrowing, the time value of money, or how to balance a checkbook? Personal finance is more important than that Art or Social Studies class in terms of overall effect on your life. If you can imagine the U.S. full of money-savvy individuals, then maybe the “right” interest rate on credit cards would be within a few percentage points of a home equity line of credit (~5.5%) or an auto loan (~7%), not 18%. Credit cards really are ultra, short-term loans that should be paid back in 30 days. It is meant for emergencies, not food and clothing. If you bought those denim jeans on sale at 30% off, and don’t pay that off immediately, you really didn’t get that great deal on jeans that you thought.

How do you want to empower yourself? Luckily, finding information is really easy. Surf to the Internet (finance.yahoo.com, about.com, wikipedia.com), visit the personal finance section in a bookstore or library, ask financially-savvy family or friends, subscribe to a magazine (Money, Kiplingers, etc), or take a community college class. The good thing is the information is out there, and there are people willing to help you learn.
It’s heartening to hear about a school that’s headed in the right direction.

ABCs? Chicago Students Learn  NYSE

http://money.aol.com/news/articles/_a/abcs-chicago-students-learn-nyse/20080309160309990001

You could interpret the title as “Save (money), everyone” or “Save everyone” (as in your salvation). Either way, it’s similar enough in definition to consider it the same. The good ole U.S. of A. has a negative savings rate. That means, the average American spends more than he/she earns in a year. Think about it. We’re spending as if there is no tomorrow. Spend everything before the banks catch up with you. That’s not a way to live. In your lifetime, you will have had $1.2 million pass through your fingers (40 income generating income years at the average GDP per capita of $30,000/year). Everyone’s a millionaire, EVERYONE. It’s the choices throughout your lifetime that determines how much you have at the finish line. With money comes options and freedom and responsibility.  Think about THAT. That’s power, and it’s available to every breathing person in the U.S. It’s up to you whether you take advantage of that or not.