Also, 1 in 8 banks are likely to close starting in 2010 after the financial bailout money runs out. The bottom of this economic collapse is still a few years away.
I have been very critical of the Obama administrations monetary policies and budget deficits. But it looks like the Obama team is starting to realize that there is little they can do and the best course of action is to turn and face the recession head on.
Forget about saving failing company that are bound to fail anyway. Focus on rebuilding the economy, by helping businesses get credit (not individuals who are broke) to expand their production and increase their savings.
The economy is still shedding jobs like old socks, but at least the stock market has bounced back above 8000 and some people are hopeful that we have hit the bottom. Take advantage of the positive outlook that is in the air and use this opportunity while you still have a job to get out of debt and increase your savings account – and start looking for the next line of business that you could work in.
The banks are still sitting on a rising pile of foreclosures that they will eventually have to sell, but for now congress has changed the accounting rules (mark-to-market) to allow banks to artificially claim their assets are worth more than their true market value.
This change in this account rule is the primary cause for the stock market rally that we have seen, but it didn’t change the fact the many banks are still insolvent if they were to sell their assets at true market values. This accounting change makes it legal for banks to use accounting practices like the one's that devastated Enron a few years ago.
Who knows how long the economic will hold together before the auto industry collapse drags the stock market down a few thousand points. If you have not adjusted your retirement investment account, now is a good time to move to safer assets classes or get out of the market altogether.