#138. Barack Obama Propping Up Economy

"If we do not act swiftly and boldly, most experts now believe that we could lose millions of jobs next year," said Obama.

We are already seeing people losing jobs like the trees losing their leaves in autumn. News of factories reducing their operation time and working days are now highlighted in the media. 

The US government is now pumping more money into the economy crisis. The latest foray is more money (with at least US$20 billion) is channeled to the ailing Citigroup to prop it up. But how long can the US government keep bailing out these ailing companies? 

First it was the financial backing to JPMorgan Chase’s buyout of ailing Bear Stearns. Six months later, the government was forced to take over mortgage giants Fannie Mae and Freddie Mac. And recently to insurer American International Group.

Who else are queuing up in line for handouts? The Big 3 automakers in the US.

General Motors Corp., Ford Motor Co. and Chrysler LLC and their suppliers have been authorized US$25 billion by the US government to retool their assembly lines for making more fuel-efficient cars. Now, the Big Three automakers want an additional $25 billion in cash infusions from Washington to ensure they will have the funds to operate through next spring. Congress could act on it in December.

Read it again, to retool their assembly lines for making more fuel-efficient cars. For years, they have been producing big SUVs that guzzle petrol without any care of the fuel prices. The recent rise in oil prices must have given them some hard times. 

Car buyers who are wallet conscious (I don't think it is much of green conscious) are going for the Japanese makes that are many times more fuel efficient. And we know, no sales means no profit for the US makers. The US makers have been on a losing streak and it is now quite late for them to 'retool'. What do you think?

Well, let's see what else is going to happen. Which companies are standing in line to fall over, and how much the US government can keep churning out to prop up the ailing companies and economy.

Let's simplify things.

Imagine the you as an individual is a big corporation. If you spend more than you earn or save, what is going to happen? You will soon land in credit hot soup issues. You would need to get a loan from somewhere. 

It's the same with these big companies. If they are not making enough sales and yet have all the high overheads to bear, they will soon need to queue up in front of White House to ask for bailouts. 

Now, what is the best course of action as individuals? Always keep things simple. 

• When times are good, save as much as you can. Invest and grow your money. Look for ways that can make your money work harder.
• Spend less. I like the recycling motto: Reduce, Reuse and Recycle. Reduce your purchase by not buying things unnecessarily. Reuse whatever you have and thus your spending goes down. Recycle means buying good-condition used products if you can. Buy a pre-owned car if you can.
• Clear your debts. Pay off your credit cards debts. These are killers. Next, settle your car loan. And then your mortgage. Be as debt free as you possibly can. Neither a borrower nor a lender be.
• Look for ways to earn extra income. Opportunities are everywhere. Look for it.

I am a strong advocate of keeping things simple. Never complicate things. Keep things simple. If you don't need it, don't buy it. If you can afford it with cash, don't take a loan. If you can't afford it without a loan, then don't buy it.

People are always dreaming of fast money. They want to be rich by tomorrow's noon. My advice, again, keep things simple. One thing at a time. Pay off your debt, and then save and invest regularly. You can't dream of building a big house, if you don't lay one brick at a time. 

Keep it simple, dude.