cloud computing,,,It's the Economy Stupid

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Hi Ake

For just about seven years now, we've been waiting for the economy to improve. I have a question for the middle class; do you see an improvement? Is your pay keeping up with inflation? Are you paying more for borrowed money, and getting less for the money you save?

I have been following economics in general for 30 years and in particular the period since the last crash. Now, it seems to me that not only is the economy not getting better, it's at best flat, or getting worse.

The middle class has been paying a heavy price since that time. For example, the interest rate that you on your savings is minuscule, while interest rates on your credit cards and auto loans are sky-high.

Other areas of concern are the small increases in pay, or even being able to find a job at a decent wage, or any job at all in some cases.

Also, it is very difficult right now to get a mortgage unless you have at least 20% for a down payment plus closing costs. Although mortgage rates are currently fairly low, they are not at their all-time low. But even at the current rates banks are putting real estate buyers through rigorous credit testing because of the climate that was created by them, whereas people who bought homes during the peak years back in 2007, found it easier to walk away from their mortgage because they were paying more for their homes than they were worth.

Although home prices have rebounded somewhat, it is expected that another downturn will occur at some point in the near future. This will make it more difficult for the banks and the borrowers alike. From the banks perspective, more people will be walking away from their homes leaving the banks high and dry, which in turn will make it even more difficult for borrowers to get a loan.

This will not only affect mortgages, but may put a strain on credit card holders as well, and again will force the Federal Reserve to keep rates low, which will keep mortgage rates low and interest on your savings low.

How the Federal Reserve controls bank rates is a subject for another article. Anyone who is old enough to get a loan or have money in a savings account should know exactly how the Federal Reserve works. It's only fair to warn you that the Federal Reserve is not part of our federal government but a privately owned bank or consortium of bankers.

Although this is not an in-depth article on the economy there should be enough information to get you thinking about what's really going on in the economy and how it affects you directly and indirectly.

Wish you the best.

Ake.

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