One of the benefits of not being a schmuck with money when times are good is that in harder times, the necessary cutting back you must do is not all that painful. We’re not talking about putting money away and saving here, that’s a whole ‘nother subject. Not taking on expensive and costly hobbies/toys/obligations just because you can is the key – saying no back then did the You of today an enormous favor.
The new buzzword out there is Austerity. It is the new global zeitgeist. Wikipedia describes its meaning in economic terms:
In economics, austerity is when a national government reduces its spending to pay back creditors. Austerity is usually required when a government’s fiscal deficit spending is felt to be unsustainable.
This means no more socialist free-for-alls in Greece and Spain. It also means cutbacks for municipalities across the US, some more drastic than others.
For you and I as individuals, Merriam-Webster describes Austerity like this:
1 a : stern and cold in appearance or manner b : somber, grave <an austere critic>
2 : morally strict : ascetic
3 : markedly simple or unadorned <an austere office> <an austere style of writing>
4 : giving little or no scope for pleasure <austere diets>
1 and 4 are fairly harsh, but the 2nd and 3rd descriptions are exactly what I’m aiming for in my personal life right now, regardless of my monthly earnings, how well the market acts or how profitable my trading is.
In case you’re not paying attention, Michael Shedlock is compiling a masterpiece of blogging on his site right now, a blow-by-blow record of every cutback, every shred of evidence of the crumbling municipal state of affairs from Illinois to California to New Jersey.
Even China’s central bank knows which way the wind blows, they are pulling back the reins on their economy before the horses charge headlong off a cliff.
Regardless of how you feel about the stimulus plans or the proficiency of the Federal Government’s programs, tough times are here and there is probably more pain ahead for your friends and neighbors – are you truly immune? Is your salary guaranteed? Is the company you work for in great shape? If so, you are in the minority.
Being opportunistic and seeking to capitalize on the relative weakness of others is not the same as being a bigshot. Don’t be a bigshot right now.
Visit Michael Shedlock’s Global Economic Trend Analysis