Don't Panic

Okay, if I don't have anything to say now about this past week and what's to come for the U.S. economy then I am never going to get into grad school. As my AIM away message Tuesday, the day the AIG bailout news was announced, I posted "It is my professional amateur economist opinion that the sh*t has officially hit the fan." Boy was I right. I am a little less uncertain now that it has happened though. Before this major news, I obviously realized the economy was wavering badly but I still saw some evidence that things were possibly not as bad as they seemed. Now I know that the Government and the Federal Reserve know they need to take major action and that makes me feel better.

The jist of the situation is that we are having something happen like what happened to cause the depression except this time the Federal Reserve and Treasury are doing something about it to prevent a depression. Absolutely no offense to Ben Bernanke, but I sort of wish Alan Greenspan were still the Chairman because his specialty area of study was the Depression and the failures of the Fed at that time to prevent it. I feel he would know better what to do, or at least what not to do. Hopefully, the government is consulting him.

Also, if Obama and McCain really want to look smart about the economy they should sit down with Alan Greenspan, or read his research. The game has majorly changed now with the elections and, just fyi, don't count on any of those tax cuts either of the candidates had promised so far.

Everyone is talking about the Depression and there is reason to be scared. BUT DON'T PANIC. That is the worse thing anyone could do. Keep your money in your FDIC insured bank and understand that money is there. Even though you will here that FDIC does not currently have the cash to fulfill their promises if more banks fail, don't panic because the beauty of money is that there is no physical thing backing it up that there needs to be enough of as long as that number from your bank says that is how much you have. That is not the best way to say it but you get the picture.

If you want to panic, how about use your emotions to motivate yourself to become more financially literate since this is such a problem in the U.S. I recommend reading the interview with Suze Orman on the latest Freakonomics blog post. Also, click around the web for more sources. I will try to find some legitimate ones and post them.

Speaking of not panicking: I totally agree with this blog post on Naked Capitalism about the proposed treasury bill about bailing out companies. It is an overreaction that I hope will not slip through because of panic. This quote says it all:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Can you say legislation overboard?

I just have one more thing to say: poor poor poor President Bush