Welcome to the New Recession

My father has lived through the great depression and all six modern day recessions since the end of the Second World War. Now he is about to enjoy his eight economic downturn in the 88 years of his life. That's less than one per decade not a bad average for the old guy.

Dad says the great depression had little effect on his family though he could see the suffering on the streets of Chicago and the belt tightening in his own neighborhood. Dad's father was a chemical engineer and the owner of a private lab that had just perfected testing protocols for asphalt applications. A lot of asphalt was being laid during the depression with Roosevelt's WPA work on the national infrastructure, highway expansion and the military building of many airstrips. Grandpa's biggest customer was the federal government. Some people do quite well during hard times.

Everyone feels recession but it is not necessarily a bad thing. A simple recession without inflation is very doable. Dad explains you simply tighten your belt, juggle the bills, pay off debt and practice a bit of common frugality. This present day downturn will be hard on kids that have lived a life of easy indebtedness and instant gratification. Working stiffs invested in risky pension plans, mutual funds and 401k's heavy in equities will take a strong hit. The rich will see their wealth shrink as the market contracts, speculation dries up and places to hide and grow dollars grow scant.

Here's what's going to happen and what to do:
Credit will remain tight and quite expensive. Pay off existing debt, budget expenses and begin saving.

Commodity prices will fall as leveraged speculation becomes more expensive and demand shrinks as consumers become more selective. Retail prices will not respond immediately but will head lower in the long run as companies compete for customers. Be selective, buy the bargain.

Your present job might be in danger as company's cut costs. Start looking in new directions. Use your talents in developing markets.