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By Rebecca Maxwell

It comes up during our everyday conversations. It is the topic of local and national news programs almost daily. Not one person has been left unaffected by it. Our current recession has been hailed as the worst economic crisis since the Great Depression.

Statistics are coming out constantly to show how this economic recession is deepening. Yet, how does this latest economic downfall compare to the Great Depression?
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Causes

It is difficult to pin down just one answer to the causes of economic crises as there is usually a multitude of factors involved. Disaster in one section of the economy can cause a ripple effect throughout. Many factors combined to bring about the Great Depression. In the 1920′s, business was growing and people were eager to get rich quickly. However, this postwar boom encouraged industries to make more products than they could sell, and World War I left many countries reeling from large debts and taxes.

One similar factor that can be seen in contributing to the Great Depression and our current economic crisis is that of credit. Before the Depression, credit was extremely easy to obtain and large numbers of people built up debt. People invested in the stock market by using profits or by borrowing and therefore, turned it into a gambling operation. People bought stocks at high prices in hopes of selling at even higher prices. Stock prices were soon beyond their real value. This economic balloon kept expanding. When it burst, stock holders rushed to sell and the stock market crashed.

Similar circumstances can be seen in the financial markets of the last few years, especially in real estate. People investing in real estate drove up the prices, and in turn, homes prices became overinflated. Lending practices of banks added to the mess, in which many people were approved for loans they would not be able to pay back. As a consequence, major financial institutions, like Fannie Mae and Citigroup have lost incredible amounts of money due to these practices. When this real estate balloon burst, every section of the economy has been hit hard since then.

Statistics

After the stock market crash in 1929, the Gross National Product of $87 billion shrank to $41 billion four years later. The number of people unemployed in 1930 numbered 7 million. By 1931, the number was 12 million. The largest numbers of unemployment came in 1932, when 15 million people were jobless. The unemployment rate in 1932 was at roughly %25, meaning that one out of every four Americans had no income on which to survive.

The most current numbers for our latest economic crisis report that more than 5 million people are unemployed. The unemployment rate is at now at 8.1 percent, according to a report released March 6, 2009. This is the highest unemployment rate since 1983. Just in January of 2009, employers cut nearly 600,000 jobs, the biggest lost since 1974. Also, the Dow Jones industrial average took a large hit just a few days ago on March 2, falling below 7,000, for the first time since 1997.

Effects

Presidential elections have proven to be explicitly affected by economic crisis. In 1932, President Herbert Hoover ran for re-election against Franklin D. Roosevelt. Roosevelt overwhelmingly won the presidency, since most Americans blamed Hoover for the Great Depression. Americans felt he had not done enough to alleviate the affects of the decline.

The economic crisis and each candidate’s response to it became the defining issue of contest between Barak Obama and John McCain in 2008. Obviously, John McCain did not learn from history as he stuck with conventional Republican wisdom stating that the fundamentals of the economy were strong and that the economy would fix itself. What started as a close race ended with a resolving win for Obama.

Hard economic downfalls have also affected and undermined political stability. The Great Depression era saw tremendous political unrest. The decade of the 1930′s saw the rise of fascism and Nazism in Europe. Dennis Blair, Obama’s intelligence chief, claimed recently that the current economic crisis could pose the greatest threat to global security. In a growing atmosphere of fear, distrust, and insecurity, it is not difficult to see why.

Conclusion

There is much debate over whether the country is heading into another Great Depression like what was seen in the 1930′s. While today’s global economic crisis has yet to reach the staggering numbers of the Great Depression, most experts predict that the recession will deepen before it gets better as companies have more layoffs over the next few months.

Sources

“Why Your Bank is Broke” by Stephen Gandel. Time. time.com/time/business/article/0,8599,1874702,00.html

“Is the Economic Crisis a Security Threat, Too?” Bruce Crumley and Tony Karon. Time. time.com/time/world/article/0,8599,1881492,00.html

The Great Depression and World War I. Gerald D. Nash. St. Martin’s Press; New York: 1979.

The Great Depression: An Eyewitness History. David F. Burg. Facts on File; New York; 1996.

Brother, Can You Spare Me a Dime? Milton Meltzer. Alfred A. Knapp; New York; 1969.

Rebecca M. is a self-proclaimed history buff who has been interested in U.S. history for over ten years. She is also the author of a history blog called My Adventures in History. This blog is found at http://myadventuresinhistory.blogspot.com/

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By Karen Lynch

If you are like many of us these days you are concerned with saving money. Learning how to shop for sales, using coupons and taking advantage of all of the savings that are possible is definitely worth your time in these uncertain economic times.

We all shop for food and groceries, including personal products like shampoo and soap and cleaning products like laundry detergent and dishwashing liquid. It is easy to find coupons for many of these items and learning how to use them best to capitalize on the savings is to your benefit.

One key is taking the rules and breaking them. Not without permission of course, but if you don’t ask the question you’ll never know and if you do ask the question you might end up happily surprised and the worst that can happen is they say “no”. Here are a few useful questions that you can ask the managers where you shop that may end up saving you quite a bit of money.

Ask if the store offers its own coupons. You can check the stores website but if by chance the store does not have a website you can always ask the manager when you get there. If they do have them they will be happy to give them to you if you ask and if they don’t have them you just gave them a great idea to bring in business.

Ask if you can use the coupons on sale or clearance items. Many times a store will not let you use coupons on sale items and it will be spelled right out on the coupon but occasionally you will find a store that will allow you to use a coupon on sale priced items and that will save you a bundle.

Ask if they will accept competitor’s coupons. Many stores offer a price guarantee that says if you find a competitors ad with a lower price they will honor the lower price but few people actually ask if they will take the other stores coupons and usually they will say yes as it is in their best interest to do so.

Ask if you can use multiple coupons or if you can combine manufacturers coupons with the store coupons. Many times they will allow you to combine coupons and when you do you double up your savings. You can also ask if they will accept expired coupons. They may say “no” but they may say “yes” and you never know until you ask.

When it comes to saving money for your family you need to pull out all the stops. See what kind of deals you can work out with the stores and take advantage of every bit of savings that you can.

Karen Lynch is a freelance writer who is passionate about saving money for her family. She uses Grocery Coupons, sales and rebates to maximize her savings. She shares her tips and techniques for the family budget.

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By Sherrill St. Germain

Early hints of spring have evolved into unmistakable signs of nicer days to come: flowers vigorously blooming, trees greening up, oriole sightings. But the forecast this week calls for an unappealing string of rainy days. And so it is with the state of the economy. Ups and downs. Hopeful signs and unexpected threats. (I’m looking at you, swine flu.) Mixed messages, at best.

Yes, our economic transition from cold, dark, dreary days to bright, sunny ones seems to be lagging Mother Nature’s seasonal shift a bit, and it’s clear that we’re “not out of the woods yet.” It’s enough to discourage even diehard optimists and rattle even those in perfectly secure financial situations. So… how best to gut out the remaining challenges, and emerge from this particular forest in a position to bask in the sunshine that hopefully awaits?

The way to think about this came to me, as these things often do, in a different context, as business coach Gail Zona of Next Step Business described a recent group coaching class she’d given. The “Survival Skills” approach she recommends to businesses struggling in these hard times seemed to hit just the right note: realistic about current challenges but not resigned to eternal gloom. So I’d like to explore how this applies to our personal financial situations as well…

Essential to survival are three items, in order:

1. Water
2. Food
3. Shelter

Or as that translates to personal financial planning:

1. Cash reserves
2. Income
3. A plan

As nearly every scout (and client of mine) knows, it’s best to be prepared. So chances are you’ve got a cash Emergency Fund, the precise goal of which is to cushion against times like these. Unless your income is very secure, it’s not a bad idea to have more cash reserves set aside now than you ordinarily might. Or perhaps you had an Emergency Fund, but recent events drained it. Like a hiker without water, a financial plan without sufficient cash can’t function well for long. So if you find yourself in this situation, your top priority is finding ways to replenish, or at least stabilize, your cash position. But how?? The most direct route is often to slow cash outflows. Depending on how difficult your situation, “normal times” actions such as delaying home improvement projects, driving your old car a few more years, or cutting costs on Netflix, lattes, etc., might do the trick. Others in more dire circumstances may need to consider higher impact solutions such as combining households with other family members, getting a roommate, or moving to a lower cost home or community, even if it’s just as a stopgap measure.

In either case, aim to capture all “free money” available to you! Make sure you haven’t overlooked valuable employee benefits, such as Cafeteria Plans and Employee Stock Purchase Plans, at work. You may also be able to reduce cash going out the door by refinancing at today’s historically low mortgage rates or by taking advantage of recent stimulus measures. These include such things as tax breaks for first-time homebuyers, premium subsidies for COBRA Continuation Coverage, rules making attractive refinancing terms available to a wider range of homeowners, and more. And not having your income tax withholding set too high is an excellent way to gain access to your cash right now, instead of waiting until next April’s tax refund. So is not paying for insurance, or anything else, you no longer need.

So yes, staying hydrated will buy you some time, but you’ll also need to find food. Or, in personal finance parlance, without an income to replenish your cash stores, eventually they’re going to run out, as there’s only so much “not spending” you can do before the system completely breaks down. As survival expert Bear Grylls, the host of Discovery Channel’s Man vs. Wild, puts it: “If you’re going to self-rescue, you’ve got to move. If you’re going to move, you’ve got to have energy, and if you need energy, you’ve got to find food. The people who survive are… the people who leave their prejudices behind and do whatever it takes, no matter how unpleasant it is.” In his case, he’s referring to ingesting yak eyeballs and camel stomach juice, but the man makes a good point. Without adequate sustenance, you won’t have what it takes to come up with a plan to get from where you are to where you want to go. So times like these may call for out-of-the-ordinary measures for generating income. This might include selling assets you’d prefer to keep (Sno-Cat?), taking on a second job, or if you’ve been laid off and can’t find work in your industry, considering a career change or a temporary gig – whatever is needed to buy time and keep you in essentials until your options expand.

Coming up with strategies for, as Bear calls it, “self-rescue” is your final critical task for survival. Yes, your options may expand as a result of the return of better times, and I’m not one to discount a little good luck. In the meantime, assuming you’ll have to self-rescue, and planning accordingly, is the smartest way forward. This is another case where “Be Prepared” is an excellent motto. When teen hiker Scott Mason was lost in the White Mountains recently, knowing from Eagle Scouts that he could build a shelter from evergreen trees and start a fire using hand sanitizer gel put him in a position to survive long enough until help arrived.

To survive – and eventually thrive – financially, start becoming familiar with your options for several “What If” scenarios, both good and bad. What resources from the government/community, your former employer or co-workers, your alma mater, social networking sites, etc., are available to help? How might you use your current skills, assets, and knowledge in ways you previously hadn’t considered? For example, if you are IT professional laid off from a financial services firm, you may find job opportunities are better in other industries. If you are out of work for a while, you may find you have time to clip coupons, shop for deals, plan and cook meals at home instead of eat out, plant a recession garden, do your own yard work or other maintenance… Or you might finally getting around to organizing your home. If it’s been a while, who knows what you might find (lost gift certificates, that missing diamond earring, or in a recent personal example, a staple gun)?

As a final step, set milestones for when you’ll shift from Plan A to Plan B to avoid sliding too far down a slippery slope. For example: “OK, I prefer not to drive more than ½ hour to and from work, but if I can’t find a new job in 4 weeks, I’ll expand my range.” Or “If the credit cards aren’t paid off by November 4, I’ll take on that second job, & pay cash at all times.” Or “If our Emergency Fund isn’t at its target by July 4, we’ll delay our trip to Cabo until next year.”

You get the idea. The range and depth of appropriate responses to our current economic malaise varies dramatically from family to family, but the overall approach does not. Start by practicing the skills and carrying the tools to ensure survival, address survival needs in order of priority if and when you need to use them, and plan for self-rescue. With any luck, you’ll find yourself face-to-face with either a) a trail junction with legible map, or b) a search team that leads you to safety, long before you ever need to consider consuming yak eyeballs or camel stomach juice.

___________________________

Sherrill St. Germain, MBA, CFP®

New Means Financial Planning

Principal

(603) 465 3485

Get the FREE tip sheet “The ABC’s of Personal Finance: An A-to-Z Guide to Keeping More of the Money You Make” at http://www.newmeans.com.

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Just read notice in Washington Post.  This looks like something you won’t want to miss.

Live interview with Washington Post personal finance columnist Michelle Singletary and Celeste Owens, licensed psychologist, answering questions about how to deal with the stress brought on by the recession.

Live discussion today starting in a few minutes from this post time.

The Web chat will begin at Noon ET, but you can submit your questions now, or if you missed the broadcast, read the transcript later.

See original announcement here.

Picture of Celeste Owens, from Washington Post

By Rosey Dow

Do you have a coffee habit demanding to be fed every morning around 7:30 a.m.? Does your car automatically turn into the parking lot of your local convenience store or coffee bar? Here’s some great news. You can keep your coffee habit and still save thousands.

Step 1

Figure out how much your coffee stop is currently costing you. If you are a latte lover, a low estimate is $5.00 per fix. Say, you stop for latte 3 times a week. That’s $15/week times 52 weeks a year for an amazing total of $780/year.

Or maybe you go for the more ordinary cuppa java for $2.00 per morning 5 days a week. Holding that labeled cup in your hand as you walk into the office does give you a kind of status. Besides, you enjoy drinking your brew in the car on the way to work. At $2.00/day, 5 times a week, your yearly total comes out to a mere $520.

Step 2

Take the total per year and use it like a savings account.

What kind of amazing coffee maker would make you feel pampered? What features would it have? Fresh grind? Timed start? Steamed milk? Let your imagination run wild. This coffeemaker will be the pinnacle of your kitchen purchases, so make it worthwhile. I found a coffee maker with the grind and brew option that also has a timer for auto-start in the morning. It costs $99. You can probably do better by shopping around online or checking eBay.

If you loved frothy steamed milk, you can pick up a latte frother with a stand for under $30. It makes the milk frothy right in your cup in 20 seconds.

Now you’ve spent less than $130. You still have $650 left from your yearly latte account.

What about the sprinkles and the syrups and the whipped cream? All are available online or from your local coffee shop.

How much gourmet coffee, flavorings, and cans of whipped cream can you buy for $650? Probably enough to cover the next 3-4 years. You can even splurge on a name brand hot cup to carry in your car. Next year you can subtract the price of the equipment and save even more.

Step 3

Stock up on the equipment and supplies. Take 5 minutes to get the pot ready before bedtime and come down to a luscious aroma. Froth your milk in less than a minute, pour in the brew from fresh ground beans and add all the doo-dads you like.

Enjoy your mug at the kitchen breakfast bar, at your desk, or on your commute. Best of all, you’re not missing anything except the strain on your wallet.

And now I’d like to invite you to http://PainlessPennyPinching.com a place filled with budgeting advice, up-to-the-second sales feeds, and in open invitation to an online shopping site where you can get cash back for shopping at Wal-Mart, Target and 800 other stores.

Rosey Dow is CEO of ExpertsinFocus.com

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