Many letters this week point out that people don't have much to spend right now. And that they are more worried about having a buffer if they lose their job. Pretty obvious...

I've never understood the weird commnets about spending & saving in the US.

1. Americans should save more
2. The American consumer support the world economy
Oh, have cake & eat it? And
3. The US has to borrow its capital from creditor nations, becuase Amercian don't save enough

It's the have cake & eat it that I find so weird -- Maybe not, it just puts corporate profit ahead of financial stability and turns Americans into slaves. Wage slaves.

Another trillion there.

Next thing you know, you're talking real money.

A concerted worldwide effort to create more money will cure a lot of bad debts.

But who is first in line for all this new money?

I don't know the answer to that but I can tell you it's no one working for a living.

Prepare for a $60 loaf of bread.

Evil perfected right before our eyes.

I did inhale.

the current rise in the stock market is a bear rally and doesn't have the legs to return the United States to prosperity. He's accurately forecast the six previous rallies and expect he's correct about this temporary uptick as well. Don't be fooled that inflation is going to kick in any time soon--the deflationary period is far from over. Deflation will make housing cheaper, so let it do its think without being greedy that YOUR house is getting devalued--so too are millions of homes in the United States. The middle class deserve affordable homes that loans will be repaid. If they took out loans they had no resources to pay for--tough--them's the breaks.

Sorry don't presently have the link for it, am in the process of getting my computer back up to speed and wouldn't dare interrupt the removal of software currently being deleted so I can reinstall it.

The Fed and politicians act as though the market and the economy are the same. They seem to think that by propping up and even manipulating equity and bond values they can thereby also influence the economy. To a a degree this is true due to the wealth effect.

But the fact is that it is the economy that ultimately drives market prices because of pesky things like P/E ratios. To have a sustainable recovery, earnings have to improve, and wages have to rise, and consumers have to feel confident. Market prices alone are not sufficient. There has to be adequate aggregate demand, and over 70% of aggregate demand is historically provided by US consumers.

When US consumers are increasing their marginal propensity to save, their jobs are not safe, and wages are not stable, let alone not increasing, the basis for a recovery grounded in economic growth is lacking. Consumers are not spending, and so businesses are not investing.

There is little indication that the fundamentals are in place for a growth-based recovery. Right now, the economy is running on the government picking up the slack in aggregate demand through stimulus and backstopping capital with the bailouts. Residential RE is still in decline and commercial RE is cracking, too, putting more pressure on creditors. The government is trying desperately to prop up RE values, but that is not working yet. Toxic assets are still toxic, and the plan is to unload them onto taxpayers "behind the curtain."

There is still a huge amount of delevering and debt destruction to come. Unemployment is expected to rise into 2010 and perhaps not level until 2012.

Personal consumption expenditure (PCE) and residential RE are the leading indicators, and there is no firmness in either as yet. Therefore, there is likely no real recovery in sight despite what the equity markets may be interpreted as saying to the contrary.

I'm not so sure *international* Joe in the street is not spending.

Not everyone in the world are as indebted as americans, many countries also have good social security nets that will catch you if you tumble. That makes it much, much easier to cary on normal economic activity even though there is a small risk your job will disappear.

Here in Norway my feeling is people are certainly going back to pretty solid spending. Property prices are up almost 10% for the year so far, and both transaction volume and prices are almost back to what they were last summer. Same is true for most of scandinavia (except Iceland).

For me personally, I am adding another floor to my home right now, and once that is done and paid for (the bank won't finalise financing before construction is done and it's time for me to pay up) I plan to upgrade my car. I plan to take about 3-4 months paternity leave, even though I'd make a lot more working. My company is sending 2 people to JavaOne this year, which is a big expense for a small company, and not strictly neccesary. We are also hiring (So if you're an excellent java developer with 5+ yrs experience willing to work in Oslo...).

The point is the economic situation is not the same everywhere in the world, there are huge regional differences. For every dollar of the US deficit for example, somone has a surplus and/or income.

It seems extremely clear to me that the big economic powers have agreed on a strategy, and that is to print, print, print, in a managed and balanced manner, and across all major currencies.

As can be seen from the G20 action plan, the plan aslo includes destroying other types of safe havens for capital, such as gold. This is why they dump 7B worth of gold reserves onto the market.

By printing money and destroying oher safe havens they will force owners of capital to invest/spend. Housing prices will stay afloat, infaltion will shave off part of everyones debt, and wheels will start moving again. The beauty of the plan is that the cost of it is paid for entirely by all the money printing. After all, it's only paper, if even that (most money is electronic these days).

This is exactly why I'm pretty confident in my own spending. I have very little debt right now, and don't want to be stuck in that situation once the inflation hits.

... but I plan to take advantage of the Canadian "stimulus" tax credit for home renovations.

Business is still surprisingly good in my IT niche although the other Canadian region far out-perform Central Canada.

I guess I can call myself lucky that I currently have to work my butt of for an IT project from hell.

On the other hand I sometimes think that losing my job wouldn't be all that bad. I'd have a good excuse to go back to Germany and just work on some business ideas that I've been kicking around for a while.

So by all means I consider myself pretty lucky.