mrfrugal

What the hell do we do now? Our 401k’s have lost half their peak values in the span of three months.  The national unemployment rate is around 7.5%, companies are asking to have government handouts and to top it off Britney Spears is back in the tabloids. Again, I ask you what are we to do now.  Let’s start by cutting the fat around your house because let’s face it; the only people we care about are ourselves.

First, cut your energy costs. You must realize that once energy has been exhausted through an outlet it is gone and never coming back.  If we cut our energy costs we cut our reliance on the dirty companies such as oil and coal.  When these industries are brought back down to earth with lower profits the better it will be for all of us. Less medical bills to start and you’ll have more spending cash for that trip to Vegas.

Second, shit the hell if I know. This economic situation is new to me.

Just because gas prices now hover around $3.27 a gallon doesn’t mean you can go out and buy that SUV.  Well, the current economic conditions will help you keep that SUV on the lot anyway.  But even so, we must keep steady and continue to conserve gasoline to help our economy as a hole.  If you don’t waste money on gasoline we can add money to our savings accounts or buy some goods from the hardware store to keep our houses up.  With a recession on hand you can not afford to give you money to corrupt regimes such as Saudi Arabia and Venezuela. We must keep our economy growing along with emerging economies.  We must continue to be smart with our money and it starts with our consumption of fossil fuels.

If you have been reading my blogs you will know that I was correct concerning the slide of the Euro and Pound against the Dollar. I wrote one article in July and one in early August stating that the Dollar is coming back. What does this mean for the middle income consumer? INFLATION. Inflation may come down on us hard if the price of oil does not continue to decrease, the Federal Reserve raises interests rates from there current level or Russia disrupts economic markets in Asia, mainly China.

Let’s face it, if the price of a barrel of oil continues to drop as a still foresee then transportation costs of our goods will decrease. It is that simple. Plus, even if the would economic view is a little grim that will mean less oil we will have to use to run our cars, heat our homes and offices. A win win I say. Don’t worry; this outcome is most likely to happen.

If the Federal Reserve keeps rates at there current levels then we should be fine. But if the Fed jumps the gun and raises interest rates to curve inflation then we will be in a world of hurt because the housing market is still on a tender foot.

Russia, what can I say but I hate the country. Russian politics have hurt that country more than it has helped but that does not mean the Russian people will not go along with the crowd. But now that I think about it China may need to cash in there US reserve bills and lower the dollar again which will help our exports.

Man, the US is looking good baby.

All right people, if I am not good when predicting the state of commodity prices (oil mainly) and the strength of the dollar then nobody can.  I said two weeks ago that the dollar would rally against the major currencies pushing the price of oil down since the value of a barrel of oil is priced in US dollars.   In the past two weeks the US dollar has strengthened against all major currencies. Today, it takes $1.48 to equal 1 Euro, a 7.4% drop in the Euro from July 15 to August 15, 2008.

What does this mean for you and me, less amount it costs to fill you gas tank, less money to get are goods to the supermarket and less money to fuel our military.  Now here’s what you should do to capitalize on these current events.

1)      DO NOT use more fuel than what you have been using these past months just because operating costs are lower for your gas guzzler.  The extra cash should be about $6 a week but hey, six bucks is six bucks.

2)      Put your extra cash to pay down you debt or put the cash in you savings account.

3)      The trip to Europe is looking better everyday, but do not leave now, wait until winter to head across the pond. Flights and hotel rooms will be less expensive doing off peak season.

The rise of the dollar and drop in oil prices is good news for us Americans so long as the dollar does not gain too much on other currencies. Our exports are rising but will fall with to strong a dollar. 

This will be my last blog concerning oil for a while unless something dramatic happens in the market.

Damn, was I right or was I right when I said the price of oil would fall like a rock. This change in oil prices has multiple affects on our economy and I will talk about two at present.

1) The dollar will gain against the major currencies since investors were running away from the dollar and putting it in barrels of oil. Now that the price of oil is “stabilizing” we will see the dollar rebound by more than 20% against the Euro alone this year. Our exports should still be sound since the dollar is still unstable due to the current housing situation which in turn is keeping the value of the dollar from spiking unexpectedly.

2) On the immediate home front inflation should subside because most inflationary pressure was brought on by high energy costs, mainly oil. The price of food will decrease over the next two months because shipping cost will be lowed. Your costs to run your vehicle will also be lowed just as long as you do not increase your mileage. Put your savings from this decrease in oil to either lower your credit card debt or your car payment. DO NOT BUY CHEAP CHINESSE GOODS with your savings.