Are You Prepared For The End Of The Recession

Are you prepared for the end of the recession?

Chances are, like many people, you are simply trying to get through it as best you can and haven’t given any thought to what happens once the economy starts coming out the other side.

The problem is, when the economy does begin to improve, your financial position may actually become much worse.

You may be wondering how things could get any worse, with global economies slumping, and multinationals folding, but the truth is, individuals may be much worse off after the recession, than during it.

I am not referring to the people already suffering financial stress due to a lost job, or home foreclosure; rather to everyone who has kept their house and job, but is still affected by the recession. Most people have been affected in some way, even the very rich have had to make changes in their lifestyle either through circumstances, or fear of how bad the recession may become.

With this recession being the worst since the 1930’s, reports are indicating the fist signs of green shoots coming back into economies. While this may yet turn out to be a false dawn, it is encouraging that things may be on the way to turning the corner.

Why Things Could Be Worse After The Recession

Taking a hypothetical position, let’s say that these green shoots continue to blossom into full blown growth; how could this possibly make things worse? Well if you haven’t been following all the developments, you may have missed some important details about the depth of government debt.

When $700 Billion Isn’t Enough

Remember that $700 billion bailout that was designed to solve all the US’s problems and prevent it spiraling into a sustained recession, well it turns out, it wasn’t quite enough. Just last year, $700 billion sounded like an awful lot of money, but it is amazing how quickly such a large figure seems so mundane.

The real cost of the bailout has risen considerably above this figure and today stands at $15 trillion. Yes, you read that right, the real cost is presently $15 trillion. To put that in context, in 2008, the US gross domestic product was $14.2 trillion, so the bailout is now more than the US makes in an entire year.

Here is an image to show you what $1 trillion looks like.

This image is only of $1 trillion; the real debt is 15 times this amount, so you can do the visualisation of what this looks like. Does that give you a better idea of just how bad things are? How about looking at is another way, that is $50,000 for every man, woman and child in the U.S. and 16 times the $899.8 billion of currency in circulation, which is just plain scary.

The reason things may get a lot worse for everyone is that the interest on this debt has to be paid and don’t even think about trying to pay the debt, just meeting the interest alone will be bad enough. Once the economy looks like it has turned the corner, that is when the pain will start, with interest rates rising, unemployment rising, wages dropping, higher taxes and inflation raising its ugly head. I wont go into the economic reasons for these predictions, as the topic is too large for this post and there are numerous sources of information on the Web that will teach you the economic mechanisms for managing government debt that you can research yourself. The purpose here is to make you aware and hopefully get you thinking enough to start preparing to put actions in place that will minimise its impact on you and even allow you to prosper.

Believe it or not, there are plenty of people prospering in the present environment, as always happens in a recession, if this is not you, now is the time to thing seriously about prospering after the recession. In future posts, I’ll be gving ideas on how you can prepare and prosper now and into the future, so you can be better prepared for the future.