A New Year

Ahhh, 2009. At last. 2008 wasn't a very good year by any means you measure it. With nearly $7 trillion of equity wiped out in the stock market you could say it was the worst year in the history of the US. We've now gone through the first phase of the meltdown - layoffs in the financial services sector, foreclosures, tightening credit, bank and financial institution failures. So what does the future hold? The second phase where the ripple effect from the first phase moves across the rest of the economy. Some of the first to be impacted will be the industries that rely on discretionary income - restaurants, entertainment, charity, etc. Hopefully the second phase will be quick and we'll be finished by the end of 2009 so that we can move to the third phase - rebuilding. Although the second phase may be quick it won't be painless. Just the opposite, it could be quite painful for many Americans. We've already seen the first signs of the second phase with the auto industry. As consumers purchase less it will impact virtually every segment of our economy. Those who are strong enough to survive will emerge stronger. Those who aren't will fail. There is a bright side. We have historically low interest rates. If you own a home this is a good time to refinance. If you own assets such as land this is a good time to borrow against those assets - you may never see rates this low again in your lifetime. Eventually the low rates will rise and that will be because the economy is heating up. Let's hope we don't Greenspan the economy by raising rates too many times too quickly. When rates begin to rise you'll know the soothsayers believe the worst is over. Another bright spot is the cost of gasoline. At $1.50 a gallon it will help many Americans balance the family budget.