Helpher811

/rant on
As with many of the posts here, I do not claim to be an expert, and can barely grasp many of the concepts that economists call upon to explain the current situation, however I do see some basic fundamentals that often get blurred.

We, as consumers, play a vital role in the economy. However, there are those that invest, build and nurture businesses that help complete the cycle. It is well and good that someone with a good job lives within their means, and saves for that future, ever so unpredictable. The work that person does helps a company gain profits, which are redistributed to these that invested, and often founded, the employer company. Those investors can then choose to invest that money into the company or other ventures.

Economies improve when the money flows around, employer, consumer, investor, bank, etc. at a good pace. What is "good" is up for eternal debate. But, generally, money that doesn't flow, for whatever reason, is a way to slow down economic investment, and therefore social improvements. For example, a large company may be borrowing credit from a bank to pay for inventories and salaries on a regular basis, due to their invoices for products/services usually don't get paid instantly ( 90 days is common ). Investors put money into the company, hoping that as a part owner, they will get a piece of the profits, usually in a long time frame like years.
If the company wants to expand the business, hire more people, get more inventories, then they will need more money from the banks and investors. If they can't get it, they won't expand quickly, and that can be seen as a slow down in spending, therefore the cycle slows down.
This seems very general, but in many countries and economies, this is the cycle that is often referred to the "economy", and if you look closely at currencies and interest rates and other such financial realms, this is really the engine of an economy. If investors and banks decide to invest and lend money less frequently, and control credit more tightly, businesses do slow down. Whether that's good or bad is dependent on a million things, but basically, after several bad investments, with lots of people losing money, then it's easy to follow the crowd and not invest or lend so much. Extremes are never good and are often short-lived in any economy, and many people believe tighter credit requirements and less frequent investments are not so good right now ( if there's no investor willing to start a bakery, then there's not very many bakers being hired).
Consumer spending can help to compensate, and careful governmental regulation and spending can do a lot, but America is not based on idea that the Federal Government should decide if Apple should open a new R&D facility and how much to charge in interest for the loan. Business owners, investors and consumers need to let the market work out the bumps, and perhaps some governmental change is needed, but often that's a political discussion loaded with hard to pin down facts and hidden agendas.

As for a few posts earlier, the fluctuation in the US currency is an issue. But to say it is bad for the economy is not completely accurate. I work with a few US based pharma and telecom testing equipment manufacturers and the weaker US dollar is giving them record profits. They will definitely be expanding, and willing to invest in risky technologies and businesses, more so than other mortgage-based industries. A technology-intensive industry, with a heavy accent on services will always do fantastic when the local currency is down. The US still leads in technology for sale economies and ease to start business with crazy ideas. The funny wrinkle comes in when businesses start getting their raw materials and talented labor from around the world, making the local currency issue dampened ( Indias boom for call center jobs and a developing middle class seems great until you look at the inflation they are living with. Hold your breath for that one, some young Indian cubicle warrior is going to need some serious money advice when the government over-reacts, IMHO)

Facts are, a lot of businesses and individuals lost money, due to bad judgement, bad information or just bad tequila. Whatever the reason, boarding up the stores and moving out is not really going to help anyone, and keeping the nose the grindstone can. Perhaps we won't be in the former glory when it comes to construction jobs at new cookie-cutter suburb housing development or super low rate super easy mortgages, but then maybe that's for the better.

With all the bad news going around, GDP still grows. Theres a lot of other countries that can't say that, and they don't have bright young people looking to start the next big thing reaching for their shores.

/rant off