The consumer is not as dumb as experts in Washing believe.

Homes are no longer ATM machines. Credit card companies have tightened their standards and many have increased interest rates. Even if a buyer wants a new car with the “Cash For Clunkers” program he must have super excellent credit to qualify.

All of this and more has contributed to a change in the savings rate from minus 1% to plus 7%. Believe it or not the whole world depends on the USA consumer spending. If we slow down the world goes into recession or worse.

China had been selling everything from tea sets to toilets and suddenly Joe Sixpack and his family quit drinking and are keeping the old potty. China has a “wealthy” population equal to the entire U.S. with another ONE BILLION population that must be fed, clothed and provided jobs. When we stop or even slow our purchases it very adversely affects their total economy.

Add all of Asia that also sells to us. Don’t forget Europe. The American consumer has kept the world afloat for the last 10 years.

The inmates now running the asylum (Congress in Washington) do not understand that raising taxes and increasing regulations will make things worse.

Each tax and regulation silently takes money out of your pocket. It is stealth stealing. It also stops the formation of new businesses that create new jobs.

The stimulus plan creates momentary work, but not a permanent job that new business does. When that “make work job” comes to an end it is back to the unemployment line. Eighty (80%) percent of the so-called stimulus package is short term make work.

I hate to bring this up, but back in the Great Depression most of the unemployed were used to working with their hands. They actually broke a sweat. Most of our new unemployed are not in that category. It will be difficult for many to put on work clothes, pick up a wrench or pour concrete. The wizards in Washington will be extending unemployment payments, but how long can that go on?

The American consumer has already slowed purchasing. As this recession deepens (and it will from the numbers I see) buying will slow more to essentials.

Corporate profits now are very shallow. Layoffs will continue unless a company can maintain itself with a profit. It will go out of business.

Joe Sixpack is not Atlas. He cannot carry the world on his back. He is not as stupid as Washington believes. He will not spend what he does not have or cannot afford.

No, the world economy cannot count on the Joe Sixpack to spend his way to their recovery.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know. Copyright 2009 Williamsburg Investment Co. All rights reserved.