New Economy Citizen Media

Bush Reminiscent of Herbert Hoover

Sunday March 16, 2008

"This has become the Bush recession," Senator Charles Schumer, a New York Democrat, said on the Fox News program. "The president's hands-off attitude is reminiscent of Herbert Hoover," who led the country from 1929 to 1933.

Charles Schumer has brought up a valid point. One of the easiest things for the President to do would be to stop buying oil for the Strategic Petroleum Reserve. That act in and of itself would be enough to create far more supply than demand in the oil markets and would cause prices to fall rapidly. This would provide more stimulus to the economy than any of the rebates that are still months away.

With regard to the rebates, mine will go to pay down credit card debt. It would be crazy not to use it to pay down debt. You should consider a similar scenario if you have consumer debt. Remember that the banks are likely to change terms on revolving debt. There has been a precedent for this already with a couple of banks. The whole purpose of the rebate, in my opinion, is to skew the economic numbers prior to the election in November.

I have been asking myself for several days why I continue to fund my 401K to the maximum limit when it is steadily losing money. I have changed investment options a half dozen times since August. Losses have slowed but not stopped. I am considering another alternative. Possibly I will take a loan against the vested portion of the account. The proceeds of the loan will then be used to pay down my credit card debt and hopefully by the time I have repaid the loan, market conditions will be better. The fact that hope is not a viable investment strategy continues to nag at me as I ponder this course of action.

On the topic of continued tax payer bail outs on Wall Street, Look for Lehman Brothers to possibly be the next recipient of a hand out. Treasury Secretary, Henry Paulson, has made it clear that when it comes to dispensing tax payer dollars to support his cronies on Wall Street, your money remains at risk. He appeared on several news programs today. I had the pleasure to watch him tap dance around Wolf Blitzer's questions on CNN while I was at the gym.

Wolf made the off hand remark "who saw Bear Stearns coming?" The answer to that question is that anybody who watches Fast Money on a regular basis saw it coming. Thus the mention of Lehman Brothers as being on shaky ground.