The worldwide economic crisis has opened up a lot of new opportunities. Read on to know more about these benefits of economic recession.

1) Better Bargains

One of the benefits of economic recession is that there are now more bargains available everywhere. Stores are lowering their prices and promos just keep popping up out of nowhere. Even designer labels have opted to offer recession-friendly lines for those who want to stay fashionable (yet money savvy) at the same time.

These wonderful bargains also apply to travel opportunities! Think amazing discounts on airfares and hotel promos. Thanks to the current economic situation, you can take advantage of all these budget deals!

2) Better Budgeting

Before the recession hit us, we wouldn’t think twice about spending half of our salary on clothes or on restaurants. This practice has led us to become unwise when it comes to money matters.

Now though, everyone is learning to tighten his or her purse strings. We are now thinking twice about whether we should replace our mobile phone with a newer and more expensive model. We now know when to curb our spending habits and when to treat ourselves to a nice spa session.

We are learning to prioritize; and in the end, we become more responsible when it comes to handling the budget.

3) Better Perspective

One of the most important benefits of economic recession is having a better perspective on things.

You can’t exactly do much to help the economy, but you can at least learn how to make the most of it.  You start becoming more appreciative of your blessings and learn not to waste anything.

A better perspective also means that you are more creative when it comes to solving problems. If you survive this economic downturn, you can survive anything. In the end, you come out with a whole new set of skills you wouldn’t have developed were you not pushed to grow.

Indeed, there are benefits of economic recession most people miss out on. Don’t look at its most obvious consequences. Don’t let the negativity eat you up. Instead, look at the brighter side and find reasons to keep making everyday worth waking up for.

Having read this article, I hope that you’ll gain a new perspective on the economic situation and that you’ll learn to take advantage of its more positive results.

Now if you use range trading as your primary day trading strategy than you must stay out of the currency market when a very market moving report such as the Nonfarm Payrolls (NFP) is released. However, if you are a breakout trader than you would be looking for the day when an important economic report is released to drive some sizeable price action.

Now, suppose you use an automated trading system like a forex robot than knowing some fundamental analysis is good for you. Knowing when to turn on or off the automated system based on the incoming economic releases can have a big impact on the overall performance of the trading strategies.

Fundamental traders tend to thrive on the release of economic reports. The most market moving economic reports are the US economic reports. Almost something like 90% of the currency transactions in the global currency markets are done against the US Dollar either as a base currency or counter currency.

Now, you must know this fact that not all economic releases are created equal. Some economic releases may have a significant and lasting impact on the currency markets while others may have no effect.

Since US Dollar is the most heavily traded currency in the world, you should be aware of the US economic releases that have the potential of moving and shaking the currency markets. The most market moving economic report right now is the NFP Report. This has become important more so with the recession in the US economy and rising joblessness.

When the NFP Report is released the market reacts in a knee jerk manner for the first five to ten minutes and try to compare the actual with the expected. Once the market has digested the unexpected, things starts to settle down and volatility decreases.

The other most market moving economic release is the FOMC Meeting releases. FED is responsible for setting the interest rates in the US economy. FOMC (Federal Open Market Committee) Meeting decides whether to increase or decrease the interest rate in the US economy.

Now, the market is always watching. Analysts are following what is happening behind the scenes in the FED that might result in a interest rate increase or decrease. What the market does not like is a surprise or the unexpected. So you need to be aware of the economic release calender if you are a day trader!

   There are many economic blogs that are hugely popular among the visitors. These include the following:

   *Blog by Greg Mankiw – Nicholas Gregory “Greg” Mankiw is an American macroeconomist, currently working as a professor in Harvard. His economic blog combines both resources for his students and various articles on financial matters, thus acting as an excellent source for anyone interested in economics.

   *Conscience Of A Liberal: This economics blog is managed by the famous economist, Paul Krugman, who received Nobel Prize for Economics in the year 2008. This gives a person an in depth understanding of this subject from the view of both academics as well as the industry experts.

   *Calculated Risk: This blog offers an insight into various diverse fiscal issues such as housing and security. The posts by different user groups also bring to the fore various financial issues, which affect the daily lives of common people.

   *Economist’s View: This economic blog collects and presents information related to the financial matters from all the content floating on the Internet. It collects them and puts them all in one place.

   *Freakonomics: Also having a book by the same name, this blog illustrates on various weird happenings taking place in the world of money. Although it is more suitable for people looking to be entertained rather than informed, the analysis done within the text acts as a helpful resource for “econoblogging”.

   Features Of An Economic Blog

   A good economic based blog has following features that define it:

   *Regularly updated content.
   *Properly organized sequence of contents.
   *A possibility of interaction with blog writers along with having an option for the readers to post their comments.
   *Rich quality.
   *Contents syndicated through the usage of RSS feeds.

   Misuse Or Demerits

   Although these blogs are highly informative and create awareness among the people regarding the financial scenario, there are several demerits that can be associated with the same. These are as follows:

   *Some of the so-called economics blogs are nothing but spam due to their irregular maintenance.
   *Many blogs tend to provide inflated and exaggerated content to their users. This leads to incorrect information getting circulated in the market.
   *The content of many blogs is many a times completely out dated. This may be due to the owners running out of quality topics to post.

   Thus, there are various good and bad aspects of an economic blog that needs to be taken care while looking for credible information on net. However, the good outweighs the bad! They act as a perfect platform to diversify the investment options among various assets.

No one is entirely free until he or she is free economically. An understanding of this and the realization that there are potentials to be harnesed for your economic freedom will spur you on towards pursuit of economic freedom. One of your biggest pursuits should be to be economically free. Why? Quite simple. Because the rich rules over the poor.

 God has released His grace for prosperity and economice freedom for us. All we need to do now is to tap into that grace for our economic liberation. In II Corinthians 8:9, the word declared “For ye know the grace of our Lord Jesus Christ, that, though he was rich, yet for your sakes he became poor, that ye through his poverty might be rich.”

To be economically free, you must engage in business, backed up with the grace of God.

But what is business?

The Oxford Advanced Learners Dictionary defines business as THE ACTIVITY OF MAKING, BUYING SELLING OR SUPPLYING THINGS FOR MONEY. Inevitably therefore, you must have an enterprise that you are engaging in for the purpose of economic generation.

To engage in any business venture and remain in it, suceeding, apart from a host of others, you need you principal qualities, viz;

1.) Passion

Passion is defined as intense, driving, or overmastering feeling or conviction. A strong liking or desire for or devotion to some activity, object, or concept. Merriam-Webster

To succeed in any business venture therefore, you need drive towards it. I encourage you to locate what you are passionate towards that could lead to economic freedom for you.

2.) Zeal

Zeal is defined by Merriam-Webster dictionary as eagerness and ardent interest in the pursuit of something. It is similar to Passion

So, let’s look at how to plan and start a business.

Since business ultimately is about making money and making profits; and since money is usually given in exchange for goods and services rendered therefore, to plan and start a business,

1.) You Must Discover the NEED

- Problems and Problem Areas could be a way or a source to step into business line.

- What are the needs in your area?

- What are the needs that are observable, that you can see or perceive?

Several years ago, a close friend could not secure employment after his college degree. Having tried several openings and written a number of job tests and yet none of them resulting in his employment, he asked himself some critical questions. What is the perceived need in my environment? What am I qualified or trained for? How much do I have?

After assessing himself he discovered he had just .30 left with him.

In answering the question of the need, he observed that there were several high school leavers that were in need of personal coaching classes in order to pass the qualifying examinations into the university. And since he was a graduate of mathematics/statistics he got to work immediately with the .30 he had.

He got a desktop publishing centre to do an artwork (poster) advertising his about to start coaching business, made a number of photocopies and distributed. Naratting his experience years later, he declared that that day alone, he got about 5 clients. From that time onward, there was no looking back from one level to another. As I write this article he’s already married, from a business that began with .30.

What are the needs that you can observe? Do you mind starting small? Think about these.

Cheers!

Izuchukwu Ezeume

http://www.theempoweredlife.net

Myth #3 – Government Spending Can Efficiently and Effectively Stimulate The Economy

The next myth that needs to be put to rest is the myth that government spending is an effective way to stimulate the economy and create real jobs. This is a timely topic as the nation continues to struggle with very high unemployment (about 10%) and sluggish economic growth. The Obama administration launched their stimulus economic program last year and some in the political class are calling for another shot of stimulus spending since we are still in the economic doldrums.

But did the first stimulus package to any good? You can obviously make the case that it did not since unemployment is still so high, with over 14 million Americans still out of work. A vast majority of the 5% or so economic (GDP) growth in the fourth quarter of 2009 can be proven to be from the temporary jolt of government stimulus, and deficit spending, spending that has resulted in no long lasting effect as economic growth has fallen off throughout 2010.

Furthermore, the Obama administration claimed in October, 2009 that the stimulus plan had created or saved 650,000 jobs. It also reported that 0 billion of the stimulus funding had been spent. If you do the simple calculation, using only Obama’s numbers, you see that each of the jobs created/saved cost about 7,000 each to be created or saved. You cannot reduce unemployment through stimulus spending if it costs over a quarter million dollars to create or save one job that likely pays significantly less than that.

The sad truth that most in the political class do not understand or do not want to understand is that stimulus spending is an ineffective and inefficient way to spur the economy. It does not create jobs, it creates short term work, work that usually vanishes once the stimulus spending is gone, as illustrated by the decline in economic growth over the past year or so once the stimulus was spent. Governments cannot create wealth, they only can take wealth (via taxation) and redistribute it, usually less effectively than the free market. If that wealth had not been taken as taxes, it would have still entered the economy but would have entered the economy via individual citizens making individual choices. All the stimulus spending did was move around the money that was spent, it was not incremental spending to the economy.

A perfect counter example to this myth is what happened at the end of World War II. Consider the following information, mostly gathered from official U.S. government sources The first number is the year, the second number is Federal budget in millions of dollars, the third number is the unemployment rate and the fourth number is the GDP in billions of dollars:

1940: 68, 14.6%,1.4
1941:653, 9.9%, 6.7
1942: 137, 4.7%, 1.9
1943: 555, 1.9%, 8.6
1944: 304, 1.2%, 9.8
1945: 712, 1.9%, 3.0
1946: 232, 3.9%, 2.2
1947: 496, 3.9%, 4.1
1948: 764, 3.8%, 9.1
1949: 835, 5.9%, 7.2
1950: 562, 5.3%, 3.7
1951: 514, 3.3%, 9.3

Combine these facts with the facts that in 1945 there were, conservatively, about 10 million members of the armed services coming home to start civilian life and jobs (about 7% of the overall U.S. population). Did the U.S. government implement a stimulus spending program, significantly growing the deficit in order to create jobs for these returning members of the armed forces? It does not appear so from the above numbers:

- From a wartime high of about billion in 1945, the Federal budget was reduced by about 40% in just one year in 1946 (from billion to billion)
- By 1948, just three years after the war ended, the Federal budget and spending was under billion or almost 68% smaller than it was in 1945.
- However, despite these drastic cuts in Federal spending and about 7% of the population coming home to look for a job, the average unemployment rate for the six years immediately after the war was about 4.4%, a level that the Obama administration would kill for today.
- 7% of today’s U.S. population equates to the creation of enough jobs for over 20 million Americans, enough to keep today’s unemployment rate well under 5%.
- During the same time period, overall economic growth increased year over year for all but one year of the six years after the war and the U.S. government ran a budget surplus in four of the six years after the war (not on the chart).

Let’s review what happened after World War II – despite a massive influx of new people into the economy and the draconian reduction in Federal government spending immediately after the war ended, unemployment levels stayed low, the economy grew robustly, and the Federal government enjoyed budget surpluses for several years (four out of six) immediately after the war. No stimulus programs, no Cash For Clunker disasters, no skyrocketing national debt, minimal deficit spending. All of the things that the political class is doing to day that are not working, the government in the 1940s did the opposite of and it worked beautifully.

Kind of reminds of the old Seinfeld episode where George Costanza does the exact opposite of what he has been doing because that behavior has always resulted in failure. Maybe the political class should learn a lesson from George and our analysis above: lose the myth that government stimulus spending actually works. When you start to look like George Costanza, you have a big problem, political class.

Let Americans keep most of their hard earned wealth, to spend it freely and personally how they want to spend it. They showed in the 1940s that their spending it on what they want and need is the surest way and most efficient way to grow the economy. America came out of the war a healthy, robust nation with the strongest and freest economy in the world without any government stimulus spending.

 
Myth #4 – We Have Skyrocketing National Debt Because The Government Does Not Collect Enough Taxes From Americans

So far we have proven that 1) the so-called Bush tax cuts for the rich were not the determining factor in the skyrocketing deficits, 2) that Social Security is really a scam and that the free market would have been a much better investment alternative for most Americans over the years, and 3) economic stimulus spending is a cruel joke that only moves money around in the economy and does not create wealth or real jobs.

The final myth to be killed in this two part series is the falsehood coming from the political class which says taxes must be raised in order to tame our deficit problem, i.e. the government has not collected enough taxes and that is what is causing the deficit to balloon. Of course, since this is a myth, nothing could be further from the truth. The basis of this fourth myth analysis is a great article at the Heritage Foundation website written by Brian M. Riedl entitled, “The Three Biggest Myths About Tax Cuts and The Budget Deficit.” He frames this myth as follows: “Declining revenues are driving future deficits.” In other words, in his opinion, it is a myth that the deficits are caused by the government not collecting enough taxes.

To prove this point, Mr. Riedl does a simple analysis where he takes three economic data series from 1960 to 2020 (estimated from 2010 to 2020 as proposed in current government budget documents) and divides two of the series by the third to create two ratio streams. The denominator is the country’s annual GDP and the two numerator series are the amount of money that the government spent every year and the amount of money that the government collected in taxes and fees every year. From 1960 to 2009, the ratio of government spending to GDP averaged 20.3% and the ratio of government revenues to GDP was 18.0%.

The spending to GDP ratio was generally under the long term average from the 1960s to the late 1970s and from about 1985 until about 2007 and above the long term average from about 1980 to about 1984. The key point to remember is that for most of the Bush administration, the long term spending to GDP ratio was below the long term average. The revenue to GDP ratio bounced around the average of 18.0% throughout the entire period. It is expected to stay around the long term average through the year 2020.

While the revenue ratio stayed around the long term average through the past ten years or so, the spending to GDP ratio has skyrocketed since Obama took office, rising to around 25% in 2009, 2010 and 2011 (estimated) before expecting to decline to about 23% and then constantly rising until it hits an astronomical 26.5% in 2020. Thus, according to this simple ratio analysis, it is the large run up in spending, relative to the GDP of the nation, that is causing the deficits, not the fact that the government does not collect enough in taxes. That ratio has remained relatively stable for the past fifty years.

Mr. Riedl does a further analysis, determining that government spending for just Social Security, Medicare, Medicaid, and interest on our national debt will jump from about .6 TRILLION a year to an annual average of .5 TRILLION a year. Since the Federal government is currently collecting about .1 TRILLION in 2010 to fund the entire Federal budget, tax collections would have to increase 66% just to cover these four budget items in the next decade. Other government costs such as defense, student loans, Federal employee salaries, etc. would also have to be paid for with additional taxes.

Consider another example. Since the current Federal budget is about .5 TRILLION, if we keep all other expenses flat and added in the extra .9 TRILLION a year from the increase costs of these four line items, the total annual Federal budget would become .4 TRILLION. In order to keep this level of expense at the long term average of 20.3%, the U.S. economy would have to grow from its current size of about TRILLION to over TRILLION within a few years. This is not going to happen.

Thus, myth disproved. It is not insufficient tax collection driving the deficit, it is sky high government and political class spending driving the deficit, primarily in the four categories o Social Security, Medicare, Medicaid, and interest payments. There is not enough revenue and wealth that could be taxed out of American citizens to overcome this outlandish spending. Which makes it critical that numerous steps be implemented as soon as possible to tame the wild increase in government spending:

- Start reducing Federal government expenditures across the board by 10% a year for at least five years, using the savings to start paying down existing national and providing tax relief and a true economic stimulus to the country’s taxpayers.
- Funnel some of these expense savings into the three or four most deadly diseases facing the country today in order to reduce Medicare, Medicaid, and overall medical spending.
- Start fixing Social Security finances immediately including raising the retirement age to at least 70.
- Convene a panel of experts, a panel which excludes all politicians and lobbyists, to determine the underlying root causes of escalating health care costs in this country and implement a plan to attack these root causes, dumping the ineffective and prohibitively expensive Obama Care reform legislation.
- Implement term limits for all Congressional members in order to remove the stigma of making the hard economic decisions required to reduce government spending.

Thanks to Mr. Riedl and the Heritage Foundation for helping us destroy this myth. Now that the four myths are destroyed, it is time to start dealing with reality and start putting plans in place that might actually take reality into consideration and actually succeed in putting our economic house in order.

There has been a lot of controversy among economist about the true content of economic theory or its subjects matter. The subject matter and scope of economics has been variously defined. Each definition is incomplete inadequate and because of various conflicting definition, some confusion has been created about the nature and scope of economics.

The subject matter of economics has been divided into two parts: microeconomics and macroeconomics. In Microeconomics we study the economic behavour of an individual, firm or industry in the national economy.It is thus a study of a particular unit rather than all the units combined.We mainly study the following in microeconomics:

1)   Product pricing

2)   Consumer behavior

3)   Factor pricing

4)   Economic conditions of a section of the people

5)   Study of a firm and

6)   Location of a industry.

In macro economics, we study the economic behavior of the large aggregates such as the overall conditions of the economy such as total production, total consumption, total saving and total investment in it.It includes:

1)   National income and output

2)   General price level

3)   Balance of trade and payments

4)   External value of money

5)   Saving and investment and

6)   Employment and economic growth.

The problem of scarcity and choice making can be depicted using the tool of production possibilities curve. The basic economic problems of what, how and for whom to produce can be solved in many ways by an economy. If it gives the whole charge of the economy, to private ownership we get capitalist economy, to public ownership we get socialist economy and jointly to private and public ownership we get mixed economy.

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