On Jan 21, 2008 6:45 PM, Bobby wrote:
> Hi
> Don’t you think the Media has something to do with this.

Hi, yes definitely, and it’s always that way- goes with the territory. adds to volatility.

Every time you turn on the TV, open a newspaper, read the web, it says we are in a recession or we are about to be in one etc etc. ? Or more negative things. We are bombarded with this, as are others around the world, 24/7. Like now the NY Times online feature story says Stocks Worldwide Plunge on US Recession Fears. All it does is scare the people that aren’t as smart as you or see things as you do for what they are.

True, and worse. Look at this story from earlier today:

U.S. consumers pull back on spending, worry more about debt as economy weakens

Note the title. Then, look for any evidence of a pullback on spending.

NEW YORK – Joi Freemont, a dentist in suburban Atlanta, doesn’t have to look further than her appointment book to tell that people are worried about money.

Patients who used to get their teeth whitened all the time “now want to think about it a bit,” she said. Braces? “People were getting them for the kids, for themselves, but now they’re waiting,” she added. And when people get cavities, they have their fillings done one a month, not five or six at a time, she said.

As a result, Freemont and her husband are worried their income could drop

Could drop – hasn’t dropped yet.

and are trying to be more prudent with their money. They’re monitoring spending more closely and continuing to whittle down their credit card balances and her dental school debt, she said.

Paying down debt from income – this is not typical, as consumer credit rose at the last report.

“We know how to put the brakes on if we have to,” said Freemont, 35.

‘If we have to’ – haven’t yet.

Across America, there are growing signs that consumers are worried about the weakening economy, which could slip into recession.

What growing signs?

While some say Americans are not famed for their belt-tightening tactics, there are signs that people are trying to improve their personal balance sheets so they’re ready for tougher times.

What signs?

Mark Zandi, chief economist at Moody’s Economy.com, said the economic signals “are flashing yellow,” suggesting that consumers need to take care.

What signals?

Jobs are getting harder to find,

Employment and income are still rising as of December and early January reports.

while the crisis in the mortgage industry has made it more difficult for homeowners to borrow against their houses, closing down what has been a major source of extra cash in recent years.

If that has been a factor, there’s little evidence of a material ‘wealth effect’ – it’s been going on for several months, and employment, income, and spending haven’t suffered yet.

Consumers’ budgets have been squeezed by rising food and fuel prices.

Yes, but exports have fill the gap and sustained GDP.

Credit card balances surged through the fall months, according to Federal Reserve figures.

Yes, consumer spending has been OK.

Now delinquency rates on consumer loans are rising, the American Bankers Association reported recently. Even companies that cater to higher-income families, such as American Express Inc., are feeling the pinch.

Delinquencies are rising, but not yet to problem levels. And that’s an overstatement of the announcement by AMEX, which was a statement regarding prospects for next year.

When the economy stumbles, “you have to begin living within your means, or you’ll be forced to do so,” Zandi said.

‘When’ means it hasn’t happened yet.

But Americans are much better spenders than savers, said Greg McBride, senior financial analyst with Bankrate.com, an online financial information service.

“Consumer spending isn’t something that gets turned on and off like a light switch,” he said. “People will say they need to cut back, but they often lack the willpower to do it.”

Still, it appears that people are starting to make an effort.

Starting to make an effort???

Denise Dorman, who runs an advertising and public relations agency in Geneva, Illinois, decided not to replace her 12-year-old vehicle, a Jeep Grand Cherokee with 125,000 miles (200,000 kilometers) on it, to avoid taking on a car payment.

She and her husband Dave, a commercial artist known for his Star Wars illustrations, also are “aggressively paying off credit card debt.” And Dorman is seeking new opportunities to expand her business, perhaps into growth areas such as video-gaming.

“I’ll feel a lot more comfortable when our debt is paid down and business has picked up,” she said.

Sounds like business is good for them – is this the best example the author can find for their recession claim?

The couple experienced the downturn in the housing market firsthand as it took them 18 months to sell their former home in Florida.

True hardship!

They’ve also become increasingly aware of the nation’s deepening economic malaise from news reports and the presidential election debates.

Yes, to your point, Bobby.

“Altogether, it made us rethink what we’re doing financially,” she said.

Frank Krystyniak, 65, director of public relations at Sam Houston State University in Huntsville, Texas, said the uncertain financial
environment and the effect of the upcoming presidential election has him worried that his savings could take a big hit.

So he recently moved his nest egg out of stock and bond funds and into a fixed-rate account that should yield about 4.75 percent a year, he said.

This is not evidence of recession; it’s evidence of the media scaring people into reallocating assets.

He’s also wary of rising gasoline prices, which could curtail his driving to Colorado to visit family and indulge in his hobby of trout fishing.

Could curtail – hasn’t cut back yet.

Some consumer retrenchment might not be a bad idea, said Sheryl Garrett, founder of The Garrett Planning Network of certified financial planners and author of the “Personal Finance Workbook for Dummies.”

High debt and low savings indicate that consumer budgets are out of kilter, she said.

“A mild recession would be a good opportunity _ or cause or excuse _for people to stop and take a deep breath,” Garrett said. “So many people have overextended themselves.

Apart from why this is in here, it also says there’s no recession yet. The article offers no support whatsoever for its headline – because there isn’t any evidence of a consumer pullback yet.

“If you’re living on the edge when times are good, just what are you going to do when they get bad?”

Should be even more intense tomorrow – might get a ‘capitulation’ day or might just keep going down. It’s technical at this point.


> Bobby

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