Stagflation is right around the corner

Well, it looks like the stars of recession are beginning to align.  I remember about a year ago, when our trustworthy, impartial friends over at the National association of Realtors said that the housing slowdown would be over by the end of 07, and that it was a great time to buy (isn’t it always?).  The market has shown otherwise.  Most economists say that a recession is now nearly guaranteed.  I remember the creepy fat guy on disney’s Pinochio, telling the little jackasses, “You’ve had your fun, now pay for it!”  Well, we certainly had ours. 

I sometimes wonder how we didn’t see what was coming.  Is our society now so advanced that even the laws of math don’t apply?  Many otherwise intelligent people just can’t put off the gratification that comes from buying right now. 

I recently talked with a friend about lasic.  His first thought was to transfer the cost to a payment plan over 4 years.   No wonder Americans are in such poor financial shape.  The idea of paying for things up front has completelty disappeared.  I teach for a living, and am continually amazed by the amount of people that want me to shove infromation down their throats without them exerting any substantial mental effort.  You have to pay the price if you want the benefits. 

We are the sailor who went out and had a fantastic time, disregarding the advice of the old fogies that advised us to use moderation.  We are waking up the next morning with a hangover, an empty wallet, and a yet unnamed venereal disease.   The question is, what’s the cure?

I guess that individuals have made good decisions and are finding themselves in a precarious situation as far as investments.  If you are not extremely interested in the stock market, you should do what the old fogies recommend.  Cost average though the downturn, because no one knows when we will finally get the upswing.  Your financial solvency will yield big dividends.  I remember hearing about some economist in california that sold his house and planned on buying back after the market regained sanity. 

These environments can be tricky to navigate.  You want to keep your money is non dollars as much as possible, but it would be nice to be able to keep the cash around to swoop up bargains (anyone have any good theories on how to do this, other than foreign currencies?).  I am staying with companies that produce commodities.  They will be braced against the inflation.  The recessionary environment will hit them, but they should hold up, given the Asian situation.  Other areas might me European stocks, or your “Proctor and Gamble” companies of the world.  Make sure you are going for basic goods that meet basic needs.  One are that should be taking a hit fairly soon is consumer electronics and car stocks.  Anything that produces durable or semi durable goods will take a dip, such as apple.  People will have trouble forking over $300 for the latest ipod when they aren’t sure their job will be there at the end of the month. 

 Any comments are welcome, and good luck to all

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