It may seem counter-intuitive to what you may think is an economic textbook answer. With practically inevitable hard economic times ahead, most people’s natural reaction is to begin curbing their spending and to start hoarding cash. However, this behavior of spending less and saving more has a very negative impact and becomes nothing more than a self-fulfilling prophecy of economic hard times. The herd mentality puts jobs, even yours, and more at risk.

Being prudent with your money during hard economic times is important, but spending less will have an exponential effect on businesses, jobs and more. Businesses rely on revenue through sales to pay their employees, meet financial obligations to creditors and invest in new projects that make them more money. Declining revenue will force businesses to layoff employees and not invest in future projects. Those layoffs compound the problem even further because more of the population now has less money to spend. This vicious cycle starts all over again; jeopardizing millions of jobs.

But what if you really don’t want to spend your money? Wouldn’t a savings account be the best alternative? Not necessarily. Credit is frozen or has retracted severely from even several months ago. Banks use your checking and savings deposits to loan out to other customers or even banks. Tightened lending standards means lending may only occur to the best bank customers. This shrinking pool of people who can actually borrow, but at higher rates, may deter them from borrowing altogether. Fewer people borrowing means banks end up with a surplus of cash that they can do virtually nothing with. Banks can’t lend your money to earn interest and when you combine that with more and more people adding money to savings accounts, it lowers the rate of return for everyone.

What should you do then? Continue to spend your money.  If you don’t want to save, then invest in dividend-paying stocks (which are very cheap these days) and low-yield bonds.  This will put money in the pockets of entrepreneurs and businesses who will turn around and use the money to create jobs and start new projects thereby jump-starting the stumbling economy. If you’re really a doomsdayer, purchase goods with intrinsic value like: food, fuel and clothing. At least you can use this stuff if the economy collapses and it will always give you something to barter with while people are burning their dollar bills to stay warm. Whatever you do, keep the economic blood pumping by spending money.

The House of Representatives has finally reached a decision on President Bush’s bailout bill. The bill was narrowly…rejected. Since then, Wall Street has fallen apart…again. The Dow Jones industrial markets closed almost 800 points down. The Standard and Poor’s 500 index is off 106 points. The Nasdaq Composite Index is off almost 200 points. Citigroup also bought all of Wachovia’s assets. All of this is because the House of Representatives rejected the bailout bill.

The biggest industries to suffer today have been the technology industry and the energy industry. Worries that all of the economies around the world are slowing down have caused the slow down. Consumers around the country aren’t the only ones who were shocked by the vote. Traders of Wall Street were shocked that the bailout bill vote ended up the way it did. However, it is possible that each side will take part to negotiate a new version of the bill.

Now, let’s look at the Citigroup situation. The Federal Deposit Insurance Corporation has again facilitated another acquisition. It was announced this morning that Citigroup will acquire all of Wachovia’s banking operations. The FDIC was sure to clarify that Wachovia did not fail. It further went on to state that all of its depositors were and still are protected. This acquisition is to help Wachovia’s burdens from the mortgage loan mess.

Gas prices are still affecting our economy. The price of crude oil dropped from $106.89 to $96.37. This is because there are so many concerns about the global demand being completely weakened.

The initial bailout plan that was proposed by the Bush administration has been tweaked several times. Both sides, the Democrats and the Republicans, worked all weekend long on a bill that would please both sides. Here is what they came up with:

1. The bailout plan legislation will be expanded to include the bad assets of pension plans, local governments and small banks.

2. Includes a Republican demand that would allow the government to insure the value of some of the bad loans and toxic securities instead of buying them outright.

3. New executive-compensation limits would be part of the legislation that prevents “golden parachutes.”

4. The government would get $250 billion up front, with an additional $100 billion based on the president’s approval. The remaining $350 billion would have to undergo congressional review.

Lawmakers are confident that this new bailout bill will pass in the next few days. Until then, our economy continues to go downhill.

The race for the White House is in full swing. Barack Obama and John McCain continue to battle it out before the actual election in November. Barack Obama and Joe Biden remain on the Democratic ticket. John McCain and Sarah Palin are the Republican’s choice. Barack Obama has just gained his first clear lead of John McCain. It appears as though the state of the economy is having a negative affect on John McCain’s ratings.

The Washington Post-ABC News national poll has just been released. This poll shows the clear lead that Barack Obama has over John McCain. Only 9 percent of the people who took the poll rated the economy as either excellent or good. This is the first time that number has been a single digit number since before the 1992 election. Only 14 percent of the people polled said the economy was headed in the right direction. This is also a record low number. The last time this number reached such a low percentage was back in 1973.

Apparently, votes are more confident in Obama’s ability to readjust the economy than they are with McCain’s. Obama’s financial platform has clearly given him the lead of McCain…at least for now. Voters tend to think the Obama is more in tune with the real financial problems that Americans face. The poll shows that he has a double-digit advantage when it comes to handling the problems on Wall Street. The ratings show that Obama has “won over” 52 percent of voters, while McCain struggles to hold onto his 43 percent. It was only two weeks ago when the race was virtually neck and neck. That goes to show you how bad and drastic things have gotten in only two weeks time.

Voters are putting more emphasis on the economy now than ever before. Regular people, like you and me, want to see a change in the economy. A change for good. People are worried that the “Next Great Depression” is right around the corner. Voters want to be assured that their financial situations, their jobs, their careers, etc are going to be protected. Apparently, voters are more comfortable with Obama’s promise to re-stimulate the economy.

The poll shows the 52 percent of people are extremely concerned with the way the economy is going. These people “believe the economy has moved into a serious long-term decline.” College students have again turned the tide of the race. White people who do not have college degrees support John McCain by 17 points. Obama is supported by white people who do hold college degrees by 9 points.

The economy will continue to be a major factor in the 2008 Presidential Election. Take the time to study each candidate and vote for the one who has the strongest values that correlate with your own. Let’s make sure we elect a competent President who can turn the economy around, whether that be Obama or McCain.

Federal Reserve Chairman Ben Bernanke.

It has been sometime since we heard what Alan Greenspan had to say about the economy. That is because he isn’t the Federal Reserve Chairman anymore. Since 2006, Ben Bernanke has been the Federal Reserve Chairman. We haven’t really heard a lot from Bernanke…until now. The American economy continues to spiral downward. Millions of people around the country are in too much debt, either mortgage debt or other forms of debt. The situation on Wall Street continues to get worse.

The financial crisis that our country is experiencing right now could completely hinder more U.S. business growth. Ben Bernanke has pledged to “act as needed” to stabilize the unstable economy. Unfortunately, the Federal Reserve is having to fight the biggest financial battle since the Great Depression. Recently, Bernanke and his team at the Federal Reserve, have undergone intense questioning on Capitol Hill. The questioning is about whether or not the Bush administration’s plan will work. The Bush administration has suggested a $700 billion bailout plan.

This plan has already seen a massive amount of scrutiny. It seems as though the whole country is becoming more and more frantic about how to get our economy back up and rolling. The majority of Americans don’t seem to be listening to the Feds’ reassuring words. Is that because they don’t seem to be all that reassuring? The Federal Reserve and Ben Bernanke keep saying that the Fed will do everything in its power to provide relief to the weakening economy.

Ben Bernanke doesn’t seem as calm and collected anymore either. Do we have reason to be concerned? Absolutely. Our entire economy is falling out from underneath us. Because the economy is slowing down at an increased rate, we can expect more inflation for the rest of this year and next year. However, Bernanke is all for the Bush administration’s bailout plan. He continues to warn Congress about the consequences that our country will face if we don’t enact the bailout plan.

Bernanke says that if the bailout plan isn’t put into force, nobody will be able to borrow money. He says that this “scenario could result in the world’s largest economy grinding to a virtual halt.” Bernanke goes on to explain the caution in which lenders have begun to use. This cautious behavior can completely stop business growth.

Gas prices continue to be a factor in our economy. Although gas prices have dropped since the all time high of $147.27 per barrel, oil prices still continue to fluctuate. Since last week, oil prices have increased approximately $15. The dramatic fluctuation of oil prices leads to the problem of not being able to predict the future price of gasoline.

The Feds continue to meet to see if they should drop interest rates even lower. The Federal interest rates remains at 2 percent. However, the Feds have alluded to the fact that they will lower it further if times get really desperate.

Everyone needs to do what they can to help stimulate the economy. We need to be constantly watching Wall Street and the effects that it has on our economy. Now is the perfect time to be prepared.

President Bush addressed the issue of our failing economy to the entire country on Wednesday night. His address was mainly a warning to all Americans and especially those lawmakers who are reluctant to pass his $700 billion bailout plan. President Bush warned that if this plan is not passed, jobs will be lost, businesses will be forced to close, retirement accounts will fail and our country will be headed towards a “long and painful recession.”

Our economic problems have surpassed President Bush’s ability to correct the problem. In fact, President Bush extended invitations to both presidential candidates, Barack Obama and John McCain, to work out a compromise. One of the aforementioned men will “inherit” the weakened economy in just four months. Key congressional leaders were also invited to help solve the problem.

President Bush stated, “Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.” President Bush expressed his concern for our troubled economy. He is welcoming advice and recommendations from both political parties. However, he said that he would not put any regulation in force that would prohibit economic growth.

The Bush administration’s bailout plan has already been met with extreme skepticism. It was announced just last weekend, and has already undergone a massive amount of controversy. Americans and lawmakers, on both sides, are very concerned about the impact it will have on American taxpayers and the entire private sector. Many wonder whether the timing is right to enact such a large plan. Similarly, many people are concerned with the massive amount of debt the plan entails.

President Bush addressed these concerns. He stated that he was extremely hesitant to put taxpayers money on the line to help failing businesses. Critics of the plan have been concerned that taxpayers will have to bail out individual companies and struggling businesses. Bush stated that individual companies are not the main focus. He also tried to put Democratic fears at ease about whether the CEOs of these failing companies will be rewarded. They will not, he said.

Bush understands that this country faces the largest financial crisis in decades. Because of this, he pleaded with Americans everywhere, especially lawmakers, to accept this plan. Senators Obama and McCain also issued a joint statement urging lawmakers to act and to act promptly. Something drastic must me done if our country wants to rebound quickly from the negative effects of a failing economy.