The folks at iTulip have come up with a very interesting recap to last year and an attempt at a forecast for 2009. As any armchair economist can foretell, 2009 will not be a banner year for the economy, neither macro nor for a lot of individuals.
Click the link above and prepare for a rather long read, but a very interesting one that is worth the time.
In essence, I agree with their conclusion:
[...]We do not know how it will unfold but expect to see a major currency event this year.
As much as it pains us to say it, we cannot shirk from our responsibility to note that the politics of a shrinking global economic pie will not improve prospects for peace in 2009. Our international institutions for regulation of trade and economic development are geared to managing the challenges of growth, not shrinkage. The tendency of nations to withdraw into themselves in times of economic trouble when increased cooperation is all the more critical must be countered with a concerted effort to maintain close and constructive economic and political ties. Europe is especially vulnerable, and we hope that US leadership stays particularly close to its European allies during the year ahead.
Keep in mind, that as ugly as the economy and markets get in 2009 that there is nothing new under the sun and this too shall pass.
At the start of 2007, I knew that many mortgage lenders would fail. Okay, I knew this because I listened to people much smarter than I, such as Bill Dallas. And at the outset of 2008 I told clients and friends while musing over a beer, that banks would fail. Okay, I did not go nearly far enough, in hindsight.
So, for 2009? On the one hand, that is a more difficult one to predict. As stated above, there are multiple macro-economic and political influences that I would not speculate on. But on a personal level, times will get tight. First with deflation, which we are beginning to experience now, and then with very high inflation – and I say this based on the recent past performance of the governement actions which begin well, then get off track. I do not think the government will do what it needs to effectively contain the coming very high inflation.
What do we do, here in the suburbs around Atlanta? Easy. Prepare.
- Consolidate debt into a low interest and managable monthly nut. This can be done by rolling credit car debt, car loans or other unsecured debt into a new home loan. Look to FHA loans if you need to cash out quite a bit of equity. Conforming mortgages work well, also.
- Cut expenses or take on another job (or start a home-based business). Just look at your budget and do what you need to make sure that there is extra to save and stock away over the coming months. This will be important to cover things as prices inflate, and just in case you are caught up in the next wave of layoffs as unemployment rises.
- Plan to do things to enjoy life and relieve stress. Start by turning off the evening news, if you haven’t already. Watching that will give you an ulcer, if done on an extended basis. As the iTulip article stated, ‘this, too shall pass’. So, stop and smell the roses (or tulips) along the way.
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