Going down with the ship, The Stock Market in decline

Let's talk about what happens if the stock market crashes.  Because the average person can be affected in several ways at once.

Fist off, lets talk banks.  If you have a loan with a variable rate, the interest goes through the roof. The banks will no longer be able to loan money to businesses, both large and small.  And believe it or not there are a lot of companies that are dependent on banks just to make payroll because no one does "cash on the barrel head" deals anymore. 

So, how does a company deal with cash flow problems, they downsize.  They immediately cut overhead to stay afloat.  This will affect both hourly workers and management.  Office staffers will be cut, secretaries, maintenance, part timers, all the way up to mid level executives that can be done without during hard times.  Additionally, consumer industries will start reducing their additional inventory, that means less hours for the workers and more layoffs. 

Now comes the trickle down effect, the more unemployed workers out there the less money gets spent in other areas of our economy.  Food service, recreation, tourism, travel, airlines, the list goes on and on.  The small business owners feel the pinch as well.  When these businesses start going under, you begin to see the start of the depression. 

The government will begin to pay more and more out to the unemployed (so glad they increased the Unemployment Benefits back in July).  At the same time, more people will file for disability, retirement, and Social Security Insurance, further straining our weakened economy. 

Those of us who have a 401k or are invested in the stock market can expect to loose our investments, and with it our security for the future,  older Americans who have been living off the profits from their will suddenly be destitute. Middle aged Americans will see the fruits of their labor vanish before their eyes. 

OK, well that's just great, but what if you don't have a "stock portfolio". What if you are just John Smith American who works and lives paycheck to paycheck anyway. Well even if you manage not to lose your job, even if you don't have a mortgage, and your car is paid for, you're still going to get hit with inflation.  The price of a loaf of bread will triple, at least.  Gas will go back up over five dollars a gallon, when you can find it (remember, a lot of stores won't survive this thing).  There will be rioting, crime will go through the roof (and the cities will not be able to afford to hire more cops, they  may even lay off), and we can probably expect some type of medical epidemic that will sweep the country.  I say this because when you are depressed you tend to get sick easier, you also add the fact that people will not be able to afford to buy medicine or go to the doctor.

So the question I'll bet your asking yourself right now is, "Crap, what now?" 

There are a few things you can do just to be on the safe side.  First put back a little, now the dollar may be going through the floor, but the gold that backs it is still good.  So, start buying precious metals.  It doesn't have to be a lot, even if it's just some gold or silver coins.  If nothing else start saving your change.  Quarters nickels and dimes, they are worth exactly that, a paper dollar is just a treasury note, but change is hard currency.  Anything made of a precious metal, or gem is worth keeping as a backup plan.

Read up on gardening, even if you live in town, you can plant a small vegetable garden to supplement your grocery bill. Start teaching your kids now that eating leftovers is not a bad thing, Americans waste more food than any other society on earth, we are spoiled and we know it.  Also, don't throw away that shirt that got mustard stains on it last week put it away for later, you may be thankful that you did.

Buy books, it's sounds silly but books are a time honored means of entertainment, and you may wake up one day and discover that you can't afford the cable or satellite bill. Buy the classics, a good set of encyclopedias, and a couple of books on home medical remedies.

Discuss these things with you family, you don't want to be in the position where these things hit your family all at once.  Let them know that bad times come and go, and that you can get through them together.  Rely on you faith in god, your common sense, and a positive attitude to get through the ordeal....

Hopefully we will not have to put any of these things into practice, but it never hurts to plan ahead.