What the Treasury giveth, it taketh back, sort of.  The Secretary of the Treasury Henry Paulson said on 11/12/08 that the 700 Billion dollar rescue plan originally designed to buy troubled or non-performing mortgages and other assets from banks isn't going to be used for that purpose anymore.  Instead the Secretary said the money will be utilized to build up capital in the banks to help them return to better health.  I guess it is sort of like giving them an aspirin and telling them to call in the morning.  With the way the stock market is reacting I think you and I will be taking the aspirin.

It seems as if the Treasury Department has rethought their plan and decided that it is better to get the banks to loosen up money for consumers in the form of loans and credit card borrowing.  Actually, this is a much needed impetus if our consumer driven economy is to recover.  Clearly two thirds of the US gross domestic product (GDP) growth comes from you and me when we spend our hard earned dollars (and we have stopped spending).  Retailers-entering what should be their strongest sales period of the year-are posting double digit declines in year over year sales and profits.  This has been caused, according to the experts, by worsening unemployment and lack of consumer confidence.  Who can blame any of us for being nervous based on the performance of the stock market, unemployment at a 14 year high and what some folks are saying is the start of a potential collapse of the US auto industry.

The good news (if you can call it that) is that Connecticut seems to have entered a recession as far back as late last year (while still fairing better than most of the country) and is below the national average for unemployment (6.1% Vs 6.5%).  Who knows but maybe this means Connecticut will lead the US out of the recession as well.  A concern for unemployment lies in lower Fairfield County where many of the employees of Wall Street’s firms live.  We may see a jump in Connecticut’s unemployment rate if the predictions of massive layoffs in the sector become reality.

What does all this mean?  I guess it suggests that we have returned to our conservative “Yankee Roots” and are saving not spending.  Is this a good thing or a bad thing?  It really depends on each person’s individual situation.  Is it harder to get credit today than last year? Sure from some places but there are still plenty of solid financial institutions around, including Personal Care America Federal Credit Union, that are ready, willing and able to lend.  Should you be taking out loans at this time?  Maybe, it all depends on what you will be doing with the money and what your individual circumstances are.

After all…It’s Only Money