What Is The Significance Of A Jobless Recovery?

We have heard so much from the media that the long-awaited economic recovery is on the way, or just around the corner. We have also been told that this recovery is going to be a jobless recovery. So, what is the significance of a jobless recovery?

A jobless recovery is a hoax. It is like window shopping: you can see an array of everything you want but cannot afford to buy; it whets your appetite, but cannot satisfy you.

So, what does "jobless" mean?

Typically, new businesses create new jobs. But in this economic environment, especially when credit is tight (the Federal Reserve wants the banks to lend, but the banks don't want to lend, and people cannot afford to borrow), there are hardly any new businesses, and hence no new jobs created.

Typically, big businesses add new jobs when the economy grows and expands. Over the past decades, big businesses had expanded too much. In this economic environment, they cut back on their jobs.

Economic recovery requires: creating new jobs, and reducing, if not stopping, cutback on jobs. But both are not happening, and will not happen any time soon.

Let's look at the present scenario.

Over the past two years, we have lost over 7 million jobs, instead of creating 1.5 million new jobs each year. On top of that, no significant new jobs have been created over the same period. The bad news is that the cutback on jobs is still continuing, and may continue for some time into the future. Recently, the head of the IMF said that unemployment might peak out in eight to twelve months. Even if this optimistic forecast were true, many jobs will have been lost by then. Instead of adding new jobs, job loss may continue for a while. So, in the next five years or so, the economy might be 10 million jobs short.

The US economy is consumer-based. That is, it depends on consumer spending. If consumers are out of jobs, where on earth do they get the money from to spend and support the economic growth needed for the recovery. Without jobs, they not only cut down on their spending but also default on their car payments, credit card payments, and mortgage payments. The economic outlook is depressing. Joblessness does not bode well for the economy from any angle.

So, what does a jobless recovery mean?

It means the US government is going to continue to pump money into the financial system to bail out banks and corporations, to give incentives to consumers. But robbing Peter to pay Paul doesn't bring about any economic recovery. Over decades, bubbles after bubbles have been inflated, and now is the time for deflation and paying off debts. Unfortunately, nobody wants this to happen, and the US government is doing everything to stop this from happening.

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Stephen Lau

Why The Economic Recovery Will Not Be Sustainable

Recently, signs of recovery of the world economy seem to be surfacing, and investors in the stock market are once again looking forward to another bull market. Such optimism has been engenered by the majority of polls. Even the President of the United States thinks Ben Bernanke is a hero who has saved the world economy from a crisis. In addition, Tim Geithner recently said that governments worldwide are "commited to an unprecedented program of policies to restore growth and reform the international financial system ....The financial system is showing signs of repair. Growth is now underway." Seemingly, everyone has painted a rosy picture of the economic recovery.

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Undoubtedly, governments worldwide are pulling out all the stops to stimulate economic growth and recovery. But try as they may, no recovery is going to happen anytime soon. There are several reasons why the economic recovery will not be sustainable:

1. The US dollar is weakening. Cheng Siwei of China bluntly told the press that if the United States kept printing money to buy bonds, it would lead to inflation, and after a year or two the US dollar would fall hard, if not collapse. It was a clear warning from the Chinese government that it would not watch the demise of the US dollar without taking some drastic measures, one of which is that China is going to issue bonds of its own in yuan currency. This is China's most recent move to challenge the US dollar. This move to protect its dollar asset does not bode well for long-term economic recovery. In other words, the Chinese government will sell its $2 trillion dollar asset as soon as an opportunity arises.

2. The key indicators of real economic growth are negative. Unemployment, for example, is still rising. Economists would argue that the job number will always lag behind economic growth. How could the economy be growing if fewer people are earning money? According to The New York Times, it could be a "jobless recovery." If that is the case, the recovery will not be sustainable over the long haul.

3. The US economy is based on consumer spending. Consumer spending is more than 30 percent down from a year ago. Many consumers are over their heads in debt, and they need to pay off their debt before they can spend again.

4. Currently, most stocks are still trading at nearly 20 times earnings with yield as low as 3 percent. In other words, the bear market is far from over. If stock prices don't go up, they will go down. Without a booming stock market, where will be the booming economy?

5. Despite all the stimulus plans, credit is contracting, not expanding as the government would like to see. Consumers are not borrowing, because they do not have means, and banks are not lending, because of the high risk involved. Credit crunching means more savings and fewer sales, and fewer sales would mean fewer jobs. It is a vicious cycle created by debt and decades of reckless spending. With foreclosures still escalating, do you think the debt situation will improve or reverse anytime soon? Now is the time to profit from foreclosures.

6. The last straw that breaks the camel's back will probably be inflation. The Federal Reserve is not going to balance the budget. Most probably it will continue to print more money for more bailouts and bankruptcies. The inevitable result is inflation. To curb inflation, the Federal Reserve will have to tighten monetary policy soon - this is a tall order, because if it tightens too fast and too much, it will abort the economic recovery, but if loosens too much and too long, it will let inflation run wild. It is a no-win situation for the Federal Reserve.

Whichever way you look at the economic scenario, it is not promising for any recovery anytime soon. The root of the problem is that everybody wants a quick fix to avoid a depression at any cost. Maybe a deep depression is what we need for the ultimate economic recovery, which has everything to do with debt.

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Stephen Lau

Should You Have More Than One Credit Card?

Many people have more than one credit cards; it is not uncommon for people to have several credit cards. This is partly due to the bombardment of credit card companies. This seems like easy credit. But users beware! The deathtrap is right around the corner.

If you don’t know how to manage your finance, in particular your credit cards, one credit card is bad enough, and several credit cards may swiftly put you into a never-ending credit card nightmare.

If you are waiting for the mail to deliver you an invitation to transfer your current credit card debt to a low introductory rate for a short period offered by another credit, you are already in hot water. After the low introductory rate – usually 2.9 to 4.9% APR (annual percentage rate) – for three to six months, you will be back square one – which is the existing high interest rate. Worse, with the temporary financial relief, you might spend more, ending up in a larger credit card debt. Don’t try to pay off one credit card debt with another credit card transfer – it is like robbing Peter to pay Paul.

Another worse scenario, you may resort to paying one credit card debt by charging it to one of the other credit cards that you have. You may do it by obtaining a cash advance, putting it into your checking account, and then using it to pay the other credit card.

Understandably, we are living in desperate economical times, and many people simply resort to any means just to survive, and getting into credit card debt is like getting into quicksand – it sucks you in deeper and deeper.

Use a debit card. Or simply spend less!

Use your Smart Credit Cards.

Stephen Lau

Smart Momey Management Resources

Managing Your Time Is Managing Your Debt

Use your time productively to become debt free.

To become debt free, you must understand your responsibility of productivity. Always approach life and work with the right attitude. Go an extra mile to take the initiative to do the things that you may consider finding someone else to do. In our society, many simply lack the initiative to put themselves to work. Don’t go through life looking for handouts. Instead, have the attitude of the ant: it works without respite and without supervision. Be a self-motivated worker! Without self-motivation, success in life would always seem out of reach.

Being debt free requires you to work industriously and to utilize your time gainfully.

Time is your tool. Time is a gift evenly distributed to all. You may be blessed with more or less gifts than others, but all of us have the same 24 hours a day. If you are blessed with more gifts, more will be expected of you. God is a provider of life and a giver of time. Be a good steward of your time. Your time is limited. Time means a lot to you. Time is a priceless commodity. You are responsible for your own time management. Time is your tool to get yourself out of debt. Time becomes an asset only if you utilize it to make money to get yourself out of debt, instead of getting yourself into deeper debt. Make good use of your time day in and day out.
You may have the problem of having not enough time, but real the problem is how you use your allotted time to achieve financial freedom.

You will never be able to reduce your debt without a plan or a road map. You must be able to access and measure your debt reduction progress. You must plan to manage your money to provide benefits for the present as well as the future. And that requires good time management.

Managing your time is managing your debt.

Stephen Lau

http://www.stephenlau.name

How to End the Never-ending Credit Card Debt

How long does it take to pay off a credit card debt? Does your credit card debt seem an unending nightmare?

Well, to give you some perspective: if your credit card debt is, say, $5,000 (which is a fair amount to many people), and you pay only the monthly minimum, it would take more than 25 years to pay off your credit card debt, if the APR (Annual percentage rate) is only 12.9 percent. Most credit cards charge a fixed interest rate, which is the APR divided by 12 months. That is, if your fixed interest rate is 18 percent, you will be charged 1.5 percent of the outstanding amount per month. If the APR is 21 percent for the same amount of $5,000, it would take more than 85 years to pay off your credit card debt.

So to end the never-ending credit card debt, you must know and understand the financial implications of the APR of your credit card. Obviously, the lower the APR, the lower the interest payments become.

The second consideration is that the higher the monthly payments, the sooner you will get out of the credit card debt.

The ideal situation to get you out of your credit card debt is: the lower APR combined with the higher monthly payments.

With the above in mind, here are some strategies to reduce your credit card debt:

• Go to a bank or a lending institution to get a loan with a fixed interest rate for 5 years to pay off your credit card debt. This strategy could reduce 15 to 20 years off the time it would otherwise take to pay off your credit card debt.

• If you cannot obtain a loan to pay off your credit card debt, then try to increase your monthly payments. Always pay more, if possible. This will reduce the payment period considerably - just like getting a bank loan.

• Pay off the credit card with the highest APR first. If all your credit cards have the same APR, then pay off the one with the largest balance.

• Stop using your credit cards. Stop incurring extra charges, such as over-the-credit-limit, or late payment. Don’t use them for convenience; instead, only use them for emergencies.

Go to Smart Credit Cards to choose a smart credit card that will become an asset, not a liability, to your personal finance.

Stephen Lau

Smart Money Management Resources

Smart Credit Card Management and Good Spending Habits

Nowadays nearly everybody has one or more credit cards. Credit cards offer much convenience. Credit cards are an asset when you have good spending habits. Good spending habits mean you plan your expenses in advance, and you stick to your budget no matter what. Smart credit card management and good spending habits go hand in hand.

Pay your credit card bills on time.

Avoid unnecessary charges and fees, wherever possible.

Understand how finance charges are calculated to save your money.

Pay attention to any Notice of Change in Terms arriving with your monthly statement, and read it carefully.

Read your monthly statement carefully. Contact the card issuer immediately when you notice any discrepancy or incorrect charges.

If you pay your credit card bill by check, make sure it will not bounce, or you may be charged a returned check fee.

When you apply for a credit card, find out if the card issuer will charge a fee every time you check your balance through the customer toll free number. If there is a charge, check your balance online instead.

When you apply for a credit card, read carefully the terms and conditions that come with the offer; especially, watch out for teaser rates (extremely low introductory rates for a short period only).

If necessary, use a secured credit card to establish or rebuild your credit record.

Above all, smart credit card management requires selection of a smart credit card.

Stephen Lau
Smart Credit Smart Money

Why Do You Need Credit Cards?

Everybody needs a credit card - a smart credit card at that.

A credit card has been touted as a "never-empty wallet." Or, does it really get you into debt?

If you use your credit cards to your benefits, and if you know how to exercise your legal rights, then the use of credit cards is indeed an asset, rather than a liability.

A credit card provides you with personal safety. You need not carry a lot of cash with you, and so there is less chance of being mugged or losing your money. As for airport security, you will receive less hassle than you would otherwise if you were to pay for you plane ticket with a check or cash.

Using credit cards will make your life simpler: you need not go to the bank or an ATM to get cash whenever you need it. If you use a premium card, you can get in your monthly statement an organized summary of all your purchases, including your spending pattern.

Using your credit cards may give you freebies, such as cash or gas rebates, discount purchases, free gifts, and free airline mileage.

Ever since the introduction of credit cards before the onset of World War I, smart consumers have benefited from using their credit cards. Learn how to reap benefits from smart credit cards.

Stephen Lau