Some thoughts– First on the credit contraction, which will be getting even tighter: from Grant’s Interest Rate Observer: “In the five years to December 2007 America’s credit market debt climbed by nearly 57%, to $18 trillion. However, in the same half-decade, nominal GDP was up by only $3.3 trillion.” So, for every $5 borrowed, GDP increased by only $1. Even that is not entirely accurate–by many reports, 70% of from GDP is on consumer spending, which is consumptive rather than productive spending. They are dollars that don’t make anything of value, of wealth. Bottom line, we have not been creating wealth at the same time as we have been lopsidedly granted credit, and the credit contraction to come (it is more of a correction, imho) is going to be much sharper than what we’ve been experiencing these last few weeks. Get ready, people. My spouse an I are opening up a HELOC so it’s ready if we need it in an emergency (like a job loss) because months from now we’re sure not to get as good of an opportunity. Also, anyone who has balances on their credit cards should definitely make serious inroads on paying them down ASAP and then some.

Second thought: Here is a great website http://www.shadowstats.com/ It shows you current government reported statistics about the economy compared to alternate ways of calculating the same stats with detailed explanations of how they are done. It is by subscription, but they release the data from 6 months and before (along with a few main charts) for free, so you can check out what they do. It’s helpful for those interested in how government manipulates data for the public although those who have a working need for the current data would of course need the subscription. Here’s a little example of what they do: http://www.shadowstats.com/alternate_data (Courtesy of ShadowStats.com) Basically, unemployment and GDP are worse, CPI is higher, and the dollar is lower than the government wants you to believe. Unbelievable, eh? (not)

Slowly, slowly, I am learning. It’s good to be awake.