A Rising Tide

I’ve been receiving emails with copies of opinion pieces that were forwarded to me by people who think I should get an insight into the viewpoint of those who are strongly opposed to any government intervention that they fear will become the foundations of what would be the end of Capitalism.

While I respect the concerns expressed, I’m equally cautious about the depth of the negative sentiments expressed based on what they project or perceive to be the ultimate goal of the current administration.

From a personal standpoint, I would hope that the government intervention that we’ve been witnessing of late is more akin to and can be likened to the air-bag in an automobile - it doesn't prevent an accident from happening and it shouldn't deploy until one happens. Like the air-bag, the government actions should help to cushion us from the full impact of the economic downturn. Similarly, just as it isn't advisable to drive around with a fully inflated air-bag, the interventions should not become permanent crutches that we become reliant on. Safe, defensive driving is always the better way to go.

Some notes of frustrations expressed in the emails were more pointed and pushed for the elimination of taxes (and thereby the government’s ability to spend or to intervene) and the adoption in its place a “user pays” system where the real tax payers are not forced to subsidize the cost of services rendered to those who don’t pay taxes. They argue that (i) American workers and industries are not competitive on an international level because of unnecessary regulations and taxes, and (ii) one half of the American population do not pay any taxes and they are the ones that take advantage of the services paid for or subsidized by the government through taxes imposed on the other half of the American population.

There is certainly merit to their claim that some of the recent government interventions have unfairly given the failing institutions a competitive advantage at the expense of others – why should any of the tax dollars paid by the innocent be used to save those who had lived vicariously and spent lavishly? In a free-market economy and in a true capitalistic environment, those institutions should be left to fail so that the laws of nature can prevail and others can come in and take their place.

Unfortunately, we have corporations and industries that have been allowed to grow so big that their executives can command remuneration levels that are sky-high while their failure have created a crater so big that it may cause other parts of the economy to implode. We also have been equally guilty of allowing unions to become so massive and powerful that the profits and resources that should have been reinvested into Research and Development to make better products to make our industries competitive have been diverted to fund benefits schemes that are way out of step with what the competition is paying.

If we truly believe that small businesses drive a major part of the US economy, we have to ensure that the laws favor them over the big corporations – or, at the very least, they are not at a disadvantage.

If we truly believe that executive compensation should be in line with the profits they are able to add to the bottom line each year, we have to ensure that a full assessment of the risks they have taken on are accounted for (and is transparent so that all investors are cognizant of their magnitude) and that the compensation is in tandem with obligations that stretches out for years beyond that in which the profits are reported.

If we truly believe that workers’ rights are trampled upon (with no unions to protect workers), we should enact laws that make them easily identifiable and punishable and leave the negotiation of wages and benefits to the dictate of the free market. If industry or a business underpays and is not competitive with other industries, it will so find itself with few qualified employees. What are elected government officials for if they surrender their duty and responsibility towards their constituents?

Government policy and intervention is a fact of our daily lives and are not all bad.

Monetary and interest rate policies affect businesses and individuals at every level but not everyone benefits at the same time. Businesses sure aren't complaining about the near zero interest rates of late but retirees depending on their savings for income are sure hurting.

The rich, in general, do not send their kids to public schools but millions of American families benefit from them. If only those who use public schools have to pay for those services, there would be a lot fewer Americans who can afford an education and that would be detrimental to the competitiveness of American employees and corporations.

Not everyone can afford the quality of healthcare that the insured, working population have access to thanks to the private medical insurance plans paid for (in full or in part) by their employers but it should not mean that the poor and those who are struggling and are uninsured should be denied even the very basic level of care. A healthy population can only be a good thing for the American economy. Anyone who says that the poor and uninsured can get medical attention by going to the Emergency Rooms at hospitals is in denial and ignoring the harsh realities of what that means. One can only wish on them the same ‘bad luck’ as they wish on the less fortunate.

A population that is continually progressing up the economic ladder can only be good for American industries and businesses. America needs a healthy, educated and progressively affluent consumer base. That’s what the economic growth in the last decades were based on.

These are exceptional times and we need exceptional solutions. We need to learn from history and not behave like Marie Antoinette who reputedly said “Let them eat cake” when told that the common, starving people on the streets of France had no bread to eat. Her head ended up on the floor of a guillotine.

These are times when the hard hit need the help of the more fortunate ones even more intensely. We can’t let the water drain from the lake and not be parched ourselves. After all, a rising tide lifts all boats.

Getting Back On Track

The U.S. economy is in the doldrums and, although the pace of job-loss appears to be slowing, the number of Americans claiming unemployment benefits is still at record levels – 6.35 million as of April 25. Further job losses can be expected in the months ahead as consolidations and reorganizations continue. Examples include:

- GM and Chrysler’s plant and dealerships closings. Suppliers to the auto companies that will be impacted will also shed jobs as a result.

- Production capacity cuts at Boeing, one of the last bastions of the American manufacturing industry, as both U.S. and foreign airlines opt to push back the delivery dates of aircrafts on order.

- Continuing declines in employment rolls in banking as the recent voluntary and forced acquisitions move forward and duplicate positions are eliminated.

Many analysts expect the jobless rate will hit 10 percent by the end of this year.

Despite all these troubling signs, the U.S. dollar has stayed strong, regardless of how many interest rate cuts we’ve witnessed and how big the deficit has grown and how much more money the U.S. Treasury has printed. As a matter of fact, the U.S. dollar grew stronger as the global economic environment became more unpredictable. Why? Simple – it is the world’s reserve currency.

Unfortunately the status of being the reserve currency works against America’s interest in such difficult times. The artificially strong dollar continues to make it cheaper to import goods from foreign countries than to manufacture locally. While it may be true that American businesses’ productivity is higher, cheaper labor and lax controls (on things such as environmental impact) in developing countries make it hard for American manufacturers to compete on a cost basis. Fiber optics, high speed networks, and expanded bandwidth that enabled and accelerated the migration of technology and back-office jobs to lower costs countries will remain in place and keep those jobs out of the U.S.

To get back on the track of economic growth, we need to see a gradual but significant decline in the value of the U.S. dollar. Here are some reasons why:

- A weaker dollar will make imports and foreign labor more expensive, reversing the trend of both manufacturing and service job migration to off-shore locations.

- Conversely, a cheaper dollar would also make American made products more competitive in the world market.

- Foreign businesses (especially those in the EU) would want to invest in the U.S. to take advantage of a highly trained and productive work force.

- Subsidies to the agricultural sector would no longer be required as U.S. agricultural products are more competitively priced on the world market.

- Tourism would boom as visitors from other countries find U.S. destinations more affordable.

The counter argument is that America has become so dependent on imports that the higher prices on imported products will result in inflation and will ultimately hurt consumers. That may be true in the short term and for certain products – in the longer term, the U.S. can be largely self sufficient in many areas. Inflation is less of a threat until the unemployment numbers have declined significantly and liquidity has returned to normal. Beyond that, the Fed has plenty of room to aggressively raise interest rates to prevent run-away inflation.

Sure, we won’t be buying as many imported toys and gadgets but that’s not a bad thing. We’ve become overly reliant on toys (children and adults alike) to make us happy. The growing rate of obesity is not just from junk food and over-eating – it is also from a lack of exercise and time away from toys that do not help us burn up all those extra calories.

The best part of a cheaper currency is that businesses will not have to cut wages or staffing to be cost competitive. Consequently, the bleeding of jobs to offshore locations will stop. As American products, priced in U.S. dollars, become more attractive in the world markets, manufacturing and other jobs in the U.S. will grow again.

Crude oil and gasoline prices will likely go up as oil producing nations demand more dollars for each barrel of oil they pump out of the ground. However, the higher prices will have a positive long term impact as it will provide us with a greater impetus to move forward with the drilling for new oil-fields in addition to using alternative fuel and energy sources that are cleaner, greener and more sustainable.

Strange as it may sound, we may not have to take more specific action to bring the value of the U.S. dollar down. The yield on U.S. dollar Treasuries is practically down to zero and the massive amounts of money that the U.S. government has injected into the economy to help soften the impact of the downturn and to stimulate growth and job creation will, in the long run, deflate the value of the U.S. dollar. Diabolical…!

What we need to see happen is a resurgence in the markets’ confidence that the economy has bottomed out and a recovery is likely, albeit somewhat in the distance. Hopefully, the trend of the Dow in the past two months is a sign that the present administration has done the right things to calm a nervous market and to rebuild a confidence that had been badly shaken by the sub-prime mortgage meltdown and by Madoff’s multi billion dollar Ponzi scheme.

SIDEBAR

If you’ve been watching both the DOW and the currency markets, you’ll have seen the dollar’s strength moving in the opposite direction – each time the U.S. stock market is doing well, the U.S. dollar is weaker. Just as investors flock to the U.S. dollar in their “flight to safety” during uncertain times, they become less risk adverse in a more upbeat market and invest in currencies with the expectation of a higher rate of return.

Illustration 1 below shows that between September and December 2008, the drop in the Dow was closely mirrored by the drop in the exchange rate of the Australian Dollar (meaning that the U.S. Dollar got stronger). As the Dow began its recent climb starting in March, so has the value of the Australian dollar.

Illustration 2 below show the same movements in the Dow versus the Euro. The trends mirror each other but the relationship is not as tight as in Illustration 1 above as the Euro is less of a “speculative” currency.

Health Care

A friend forwarded me an email with amusing cartoons about the “Golden Years” and appended at the end of all the email was the following poem (author unknown):

A row of bottles on my shelf
Caused me to analyze myself.
One yellow pill I have to pop
Goes to my heart so it won't stop.
A little white one that I take
Goes to my hands so they won't shake.
The blue ones that I use a lot
Tell me I'm happy when I'm not.
The purple pill goes to my brain
And tells me that I have no pain.
The capsules tell me not to wheeze
Or cough or choke or even sneeze..
The red ones, smallest of them all
Go to my blood so I won't fall.
The orange ones, very big and bright
Prevent my leg cramps in the night.
Such an array of brilliant pills
Helping to cure all kinds of ills.
But what I'd really like to know
Is what tells each one where to go!

Funny and yet scary thoughts at the same time. I certainly don’t want to have to be popping all those pills just to keep going.

As medical advances come up with all kinds of drugs and medication which permits us to live longer, the question we are all forced to face is whether or not the ends justify the means. How much of a burden are we leaving to the next generation as the cost of healthcare sky-rockets and tax the Medicare and Medicaid systems?

As the United States push forward to adopt a more universal health coverage, it is inevitable that the quality of care will drop off unless the government is able to fund the added costs. It is like a triangle with one of its angles representing “Scope”, the second angle representing “Quality of Care” and the third angle representing “Costs”. By expanding the “Scope” angle to bring more people into the healthcare system, the “Quality of Care” angle will tighten, unless, of course the “Costs” angle is expanded at the same time.

In order to keep the costs down so that more people can benefit from the universal health coverage without an increased tax burden on everyone, Americans will have to be taught how to take better care of themselves. It is not an impossible task – a popular TV show has demonstrated to the world that it is possible for even the grossly obese to lose weight and become healthy enough to get off their blood pressure, diabetic and other medication.

Millions of dollars are spent every year to encourage smokers to quit and to dissuade young people from taking up the habit. What we need is a similar push to get people off their couches and to start exercising and to rid themselves of eating habits that are detrimental to their long term health. Schools should have compulsory “healthy living” classes so that the next generation grows up armed with all the knowledge they need to stay away from poor eating habits and bad diets. Parents can set the example for their children to follow by adopting a more active lifestyle, getting their kids away from computers and video games and onto the playing fields, or their bicycles or scooters, and onto the path of a better and healthier life.

Despite the very vocal objections, cities have successfully banned smoking in public places, pubs and restaurants, realizing that an unhealthy public is a drain on the cities’ resources. They need to take similarly drastic actions to force restaurants to serve healthier food as the city authorities themselves strive to provide more parks, facilities and occasions for their residents to get moving. To fund these new healthy-living programs, they should implement a “Fat Tax” and make it applicable across the board for all sales of food / drinks that are high in empty cholesterol and fat.

Lifestyle changes are the hardest but the most effective way to trim health-care costs.

Herd Mentality

In every age, culture and religion, people have a tendency to follow the crowd in the hope that somewhere at the front of the line is a leader who knows what he/she is doing.

When I was a lot younger, my older brother would suggest that we try walking along a busy avenue while pointing our fingers up at the sky or the side of a building as a prank. He was convinced that in no time at all we would have a crowd of on-lookers who would stop to stare at the same spot that we were pointing at.

If there are enough people in a crowd moving in a certain direction, the sheer force of the number of bodies going in that direction would move everything else along with it. This phenomenon of “momentum” and “critical mass” is understood by everyone who handles or has studied marketing. That is how market moves – up or down.

When enough people believed that the good times were rolling, there was an endless stream of investment, capital, credit, development, and spending, and everyone made money from their investments and felt good about it although not everyone managed to cash in on their paper profits. Few dared or wanted to challenge the status quo or the riskier bets that could upset the apple cart. Those that dared to suggest that greed has overtaken good-sense were quickly ostracized and ridiculed. After all, it is hard to imagine that so many people could be wrong at the same time.

When the size of hedge funds became significant (we’re talking about billions of dollars in some of the hedge funds) and when they, along with short-sellers and day-traders, began placing bets against the likes of Lehman and other publicly traded institutions, the sheer magnitude of their combined actions wiped out billions from the market valuations of their targets.

When corporations started to outsource jobs as a cost cutting measure, sending the jobs to cheaper off-shore locations while laying off American employees, others followed just to be cost-competitive, forgetting that by delivering better services and products and creating awareness that they help maintain US jobs, they can ‘turn the tide’ and effectively compete for the minds and wallets of Americans.

My rant here is not just about the herd mentality or the number of people going down the same path. My point is that there are not enough independent thinkers. There are not enough people who take the time to understand or to simply ask the questions: who, what, where, why, when, and, more-importantly, what-if?

True, some of us already have too many distractions and responsibilities to handle and, for good or bad, we hope that someone in a leadership position actually knows the answers and they are good ones. After all, that is what the ‘leaders’ have been paid or elected to do. We simply can’t do everything ourselves and we have little choice but to trust in the professionals to do their job. That having been said, I can’t think of a good reason why we are not asking the right questions or what prohibits us from asking those very simple questions.

Alas, some in the news media have stopped asking the necessary questions while others have lost their independence and ability to challenge the elected officials, the powerful, the rich and the popular thinking. For this reason, I applaud the New York Times and other web-enabled news media for allowing the masses and the thinking people to voice their feelings and to comment on various issues and topics of concern that we are faced with everyday so that “We the People” are heard. This new form of expression is at once liberating and empowering. While contributors and columnists continue to express their opinions and thoughts, their writing is enriched by the counterpoints and thoughts of their readers from around the world.

Popular thinking is an incredible force that one has to reckon with on a daily basis. What is popular may not be what is right - it is simply what the majority believes in at a given point in time – and as it is with all things, can change. I’ve always maintained that in many cases, the only difference between right and wrong is the belief of the majority over that of the minority. In a society where more people are left-handed, the right-handed ones would be considered as ‘goofy’.

Hang up on the ‘herd mentality’ and start asking questions.

A Market on the Rebound?

The stock market has been on the rise. Yippee!

On March 9, the Dow (DJIA) hit a new low, closing at 6,547 – its lowest mark in a long, long time. Less than a month later, the same index hit an intra-day high of 8,075 on April 2. Hurrah! Hurrah! We’re up by over 23% since we hit that low.

We all heave a sigh of relief. Better days must be ahead, surely…?!?! Or are they?

Should we abandon all caution and start betting whatever’s left of the family home and the kitchen sink into new investments in the stock market and hope to recoup some of what we had lost in the downturn which began over a year ago? Should we take the risk now in order to be early to the game – after all, the early bird catches the worm?

Like you, I have been tempted. I like to be optimistic but I am hesitant. I’m not sure if the extended market uptick of late is based on solid evidence of improving performance or if it is the beginning of another round of “irrational exuberance”?

The trouble with looking at stock indices as a guide for how well the economy is doing (or is projected to be doing) is that the stock markets take into account forward looking estimates which are purely conjectures – assumptions based on other assumptions which in turn are based on further assumptions.

Lest we forget, faulty assumptions were essentially what brought about the dramatic economic downturn. There were too many untested and unrealistic assumptions:

- The assumption that bankers and builders took, that home prices can continue its spectacular rise although the take home pay of the average worker has stayed flat or that it has decreased in real terms or that job growth has been dismal.

- The assumption commodities traders took, that crude oil and gasoline prices can hit new highs everyday with no impact to the end products or services costs and the consumers’ ability to consume.

- The assumption that credit default swap insurers took, that the risks attached to mortgaged based securities are more hinged on the issuing party’s credit rating rather than the ability of the consumer to service the underlying mortgages.

- The assumption that executives at various corporations took, when they sent all kinds of jobs overseas to improve their bottom line (and to get a bigger profit based incentive bonus), never considering the impact that the loss of jobs en masse have on the ability of Americans to consume those very same products or services they produce.

- The assumption that the authorities took, that regulations are unnecessary and that the markets will regulate themselves as the market players will act wisely.

We were all too seduced by the idea of fast money and instant wealth that we lost sight of the risks and consequences of faulty assumptions and the need to understand and manage them.

Despite the outcry and objections of some, the government has (wisely or unwisely) poured in trillions to stave off economic disaster and to bolster confidence. The players are coming back into the market and credit is ‘loosening up’ but that does not mean that the economy is well. It will take time to heal.

Credit is only useful if consumers have the means or ability to borrow and that depends on their capacity to repay which in turn depends on their income, which in most cases, depends on them having jobs.

Similarly, corporations will borrow to invest in production capacity only if they believe that there will be a demand on their goods or services and that again will depend on consumers having the capacity to spend which again depends on whether they have jobs.

Until you hear that new jobs are being created and the employment trend is on the upswing, don’t believe everything you see or hear about the market on the rebound. The job creation effect of the multiple stimulus packages will take time to make its way through the system before the economic recovery can be on a steady path.

Keep your eyes open and your ears pinned to the ground to watch out for significant projects and events that create a demand for workers or raw materials. When you do, that will be the time to put your money into investments that will benefit from the positive impact.

In the meantime, if you “play” the market as an individual, know for sure that you are putting your money at risk, betting blindly that the index will go one way or the other. It is like rolling the dice and hoping for the best.

I guess I’ll never be filthy rich because I am inherently not a speculator. It is OK with me. I sleep better at night not having to worry about the bad assumptions or the risks.

[Addendum: The above was posted on April 2. On April 3, the Bureau of Labor Statistics reported that unemployment climbed to 8.5% in March (up from 8.1% in February) with the US economy shedding another 663,000 jobs in the month. The Bureau also adjusted the January newly unemployed numbers from from 655,000 to 741,000.]

The Economy is Bad – So Beware!!

Yes, we already know the economy is in a poor shape – we hear or read about jobs lost or shops and factories closing with a frightening frequency. Based on what is counted alone, unemployment has reached 8.1 percent in February 2009 and the trend is not encouraging. A total of 12.5 million people are unemployed, an increase of 5.0 million in the last twelve months alone (source: US Dept of Labor - http://www.bls.gov/news.release/empsit.nr0.htm).

We are so inundated by the endless streams of bad news that some among us would like to tune it out altogether, especially if it has not impacted us in a direct way. We’d go crazy with fear if we gave in to the media’s relentless drive to get the same bad news across every day. We cling on to every bit of good news we can, hopeful that things will eventually turn around.

The point of this note is not to give you more bad news on the economy. It is to warn you and to have you warn those around you of the many scams that are proliferating via email. Recently, I’ve come across an incident where the scam artists even used regular mail to send out a very genuine-looking-fake-check with a letter encouraging the intended victims to actually take it to their bank and deposit it. The clear giveaway, of course, was the condition that the victims not tell anyone about it before the whole transaction was complete. I would likely have brushed it off if I had not come across another incident where a retiree I know lost money to a different variation of the same con game.

The recession does not mean that the con artists, the scammers and the opportunists are going to give up and walk away. To the contrary, they are taking full advantage of the situation and putting their best game forward to milk the unwary. What is worse is that they are employing hooks that will pull in those who genuinely need help the most.

Think of it – when times are good, and you have a job, you are less likely to fall for the “work-at-home” schemes or “you’ve won a foreign lottery” claims.

When you are out of a job, an email or a flyer telling you that you can earn a few hundred dollars a week sitting in-front of your computer, you’ll be more than a tad tempted to take a look and see what it is all about. It is exactly what the con artists are relying on – your willingness to take a chance.

When you are no longer able to or when you no longer have work, you’ll understand what it means to be afraid – of living with no health insurance, of not having food on the table, of not being able to pay the rent, and, worst of all, of having to tell your loved ones of the very things you had never imagined you would have to say to them. In your desperation, you might just try anything and you’re a clear target for the con artists to prey on.

When banks were paying a fair interest on deposits and corporations were distributing dividends to their shareholders, the elderly could live off the income from their investments and not worry about eating into the capital they have set aside. Until the banks and corporations return to health, every elderly person is revisiting their retirement plans, funds, and income and scrimping to avoid that horrible possibility of being destitute before their days on earth are done. They are the easiest of victims and a gold mine for the con artists.

Take a few minutes and talk to siblings, your friends, your parent and your grandparents about such tricks now – it is your duty! If you care at all about their well-being and about their financial security, now is the time to do it. You may not be able to do anything about improving what they have set aside for their silver or golden years but you can, at the very least, do something to protect their nest-egg.

Remember, they may not be as well informed as you are about the treacherous tricks that exist today. The older generation grew up in an age where the tools to reach the masses with the same con schemes were not as readily available. Today, a 1-800 number can be routed to anywhere in the world to a genuinely sounding ‘account officer’ in a country where laws do not exist to put such con men away.

If ever there is a time for everyone to be more vigilant, it is now.

When The Going Gets Tough, The Tough Goes Shopping

It is probably shocking that I should cite (read “promote”) this oft quoted, sassy saying at a time when unbridled spending leveraged on paper gains in asset values appears to be the root cause of what ails our economy. We are in the throes of a big hangover after an all night party, an orgy of booze and whatever else that had added to the fun when it all happening, but, when the clock rang in the new day, has turned out to be yet another case of misbegotten self-deception and ignorance of the consequences of our uncaring actions.

Congress has just passed a $787 billion package of economic stimulus and the President will be signing it into law later today. It is great that something is being done but the reality is that however big it appears to be on paper, it is not quite enough and, echoing the sentiments of the more pessimistic economists, will only help stave off the onset of an economic depression. Extended unemployment benefits is only a temporary relief, barely enough to cover the true cost of living of those who have lost jobs involuntarily. Those who were self-employed do not even have the benefit of unemployment insurance. What we need in addition to job creation is job preservation. We should not keep infusing more blood into the patient if we don’t take the necessary steps to stop the bleeding.

I've been passing on the same message to my friends and acquaintances who have 'recession proof'' jobs and who have been wise to avoid the many ills that led to this recession - go out and spend some money. Forget about buying gold or putting your money away in an offshore account to protect your wealth. If the US and World economies do not recover, there is nowhere truly safe for one to disappear to. What we have seen in terms of collateral damage around the world as a direct or indirect reaction to the problems facing the US demonstrates the tight integration of the world’s economies. We may be living in different countries but we are not isolated from each other’s ills.

Why do I preach the need to spend to the more fortunate ones who have planned and saved for a rainy day? The smart ones spend counter-cyclically - work and save when jobs are plentiful and the pay is good, buy when things are cheap and demand is weak (you get the best picks). If you don’t do your part to help, you may someday conclude that you are not that smart after all.

Here are some suggestions on what you might do that can help the economy recover:

- Go out to dinner. If you can, invite someone you know who have lost a job - it will cheer them up and keep the restaurants running and a long line of direct and indirect jobs going. For one thing, these jobs cannot be outsourced to a foreign country.

- Go on a vacation at a domestic resort. Ski, bathe in the sun, kayak, ride a bike, etc. These industries employ the highest ratio of workers to customers. Keeping jobs going is easier than having to 'create' new jobs. You won’t be getting a tax credit for this under the stimulus package but do it anyway.

- Go shopping. Buy the pair of running shoes you have been meaning to but have not had the time because you were busy working. Buy that tie-dyed T-shirt or hand-made costume jewelry that you’ve always wanted from the local artists. Buy from your local farmers and grocers. While you are at it, give a go at haggling over the price – you’ll be pleasantly surprised if you do ask. You’ll enjoy the whole experience and you’ll be back for more – your ego needs to know that you can do better the next time. If possible, favor the small businesses - they are generally higher in the employee to customer ratio than the big chains. Don't fret over whether the item you buy is 100% local - bringing the item to your local store employs many, many people. Think of the jobs involved in the shipping and warehousing process. Even the task of displaying them on shelves and taking your money at the checkout desk involve people. A big portion of what you pay for any item goes towards these value-added services.

- Trade in you gas guzzling SUVs for the more eco-friendly vehicles - it does not have to be a hybrid that go 50 mpg. You'll be saving the earth and keeping yet another long line of jobs going - from the people in the assembly lines to the salesmen and to the garages that service your cars. Take advantage of the tax incentives in the stimulus package. You'll be treated like gold and you'll get deals that you could not have dreamed of during the boom years. Besides, you'll be better prepared for when oil and gas prices shoots up again.

It takes someone with the right combination of brains and guts to take the right actions. Now is the time for the tough to go shopping.

When the economy is on the road to recovery, you can revert to saving and putting money aside for the next ‘rainy day’. Be smart.