I loved this parody of “Mr. Sandman.” “Ben Bernanke, please send me some green.” I loved the “ching-ching-ching.” Corny, yet enjoyable.

Happy Friday!

Over the weekend, Ben Bernanke indicated on 60 Minutes that the recession would come to an end this year, and that recovery would begin in 2010. I found this very interesting, in light of the fact that some economists (including “Dr. Doom” Roubini) believe that this could be a 36 month recession — dating from December 2007. And, of course, whether or not you think the recession will end in 2009 depends on whether you believe Bernanke. Some of the stuff he’s said in the past has turned out to be less than accurate.

To be fair, the economy, markets and other finance-related items are very hard to accurately predict. This is because a change in perception or confidence (factors dependent on human emotion, which can be irrational and erratic) can change the outcome of the markets. Additionally, circumstances can change quickly, leaving one with inaccurate predictions. Bernanke knows this — which is why he was careful to hedge during his 60 Minutes interview. Some of the points he made about an end to the recession in 2009 include:

• A financial market recovery is vital. If financials don’t turnaround, the economy may not begin recovery by 2010.
• The end of the recession does not equal complete economic recovery. Bernanke takes pains to make it clear that the end of the recession will come when the negative trends stop.
• Recovery will likely begin in 2010. But not until after the negative trends that are causing the recession have ended.

I’d like to believe Ben Bernanke. After all, if the economy gets better, most of our personal finances are likely to get better as well.

What do you think? Will the recession end this year? And will your personal finance situation improve by 2010?

image source: talkradio news via Flickr

Every so often, CNN Money releases a handy visual showing how much money has been devoted to “economic stimulus” — starting from December 2007 when the hapless efforts to avoid recession began. I like to post it here. As you can see, so far more than $11 trillion has been promised for economic stimulus efforts. Kind of makes the recently passed $789 billion look pretty paltry. I’ve been saying it for months: Most of our economic stimulus spending is not being passed in large packages. Most of it is adding up with $100 million here and $1 billion there. Also, look who the biggest beneficiaries are. Ben Bernanke has been vowing to help the banks, and the government certainly has been throwing plenty of money at them.

What do you think of these economic stimulus efforts, and where the money is going?

What would you do if the government handed you a check for hundreds of dollars? We found out a few months ago what would happen — and it wasn’t economic stimulus. I wasn’t happy with the original economic stimulus payment because I didn’t think it actually addressed any of our underlying problems with credit and consumer spending fueled by debt in our country. A second economic stimulus would do about as well as the first one. Plus it would add a great deal to our national deficit.

But the folks in Washington have decided that the best way to show their dedication to Main Street while stimulating the economy is to provide a second economic stimulus payment. I’m right there with David at My Two Dollars when he points out that just giving us money is not the way to go about stimulating the economy:

If they want to create a fund to pay for road repair or fixing welfare or something like that, fine - work on it and go for it. But a second stimulus check/package is not needed right now, won’t change the dynamics of our economy…

I have to agree. Someone please remind how well throwing money at the problem — whether a Wall Street bailout or government programs — has worked in terms of actually solving problems. Oh, right, it hasn’t.

Ben Bernanke supports second economic stimulus — as long as we the consumers can borrow more money

Ben Bernanke is all about a second economic stimulus package. And, frankly, that worries me. Bernanke hasn’t been right about much since he took over the Fed. His vote of confidence doesn’t make me feel much better. But the really scary thing is what he thinks should be added to a second economic stimulus package, according to the Wall Street Journal:

Mr. Bernanke said an “ideal” package would not only boost spending and economic activity but would also offset the severe credit tightening, which has “the potential to extend or deepen” the slowdown. “If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, homebuyers, businesses, and other borrowers,” he said. “Such actions might be particularly effective at promoting economic growth and job creation.”

So not only does the top economic guy in the country think we should be given money with the intent that we should go on a spending spree, he thinks that we should be able to borrow more money so that we can go on a debt-based bigger spending spree. The reasoning behind this, of course, is that we are a debt-based economy. Our entire economy runs on credit and debt. This is a big part of the problem. What we need is new thinking about money, debt and spending.

Giving us the ability to continue the same destructive practices that got us here in the first place will only lead to greater economic instability and an even larger crash next time.

What are your thoughts on a second economic stimulus package?

Today, Federal Reserve Chairman Ben Bernanke went before Congress and testified that economic risks remain. Indeed, departing from his usual, “the economy is on the road to recovery” line, Bernanke made it clear that he is uncertain about a great deal in the economy. He also pointed out that inflation is a very real concern. Extra concerning, in fact, since there hasn’t been complementary economic growth to blunt the effects.

I think he forgot to mention, though, that the orgy of interest rate cuts the Fed made to build “confidence” in the stock market played a very large role in the inflation we are seeing.

President Bush tells us not to panic

And, of course, President Bush also addressed the American people today, reiterating that our financial system is not on the verge of collapse and that panic is not a good idea.

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This morning, Ben Bernanke delivered an address to an international monetary conference in Barcelona via satellite. His message was mainly one of optimism laced with caution.

One of his cautions was this: That inflation could be a self-fulfilling prophecy. Yahoo News reports on the idea behind inflation as self-fulfilling:

If consumers, investors and businesses believe inflation will continue to go up, they will change their behavior in ways that aggravate inflation, turning it into a self-fulfilling prophecy.

Were consumer prices to keep climbing over a sustained period, that might “lead the public to expect higher long-term inflation rates, an expectation that could ultimately become self-confirming,” Bernanke said.

This is a good point. Be frugal, and plan for the future, but don’t panic. Get your personal finances in order, but be calm about it.

As long as you are prepared, and as long as you are reasonable about the steps you take, you will find that you can beat inflation. And if we all take a measured approach, it is possible that inflation may not happen. Perhaps we could make that our self-fulfilling prophecy.

I expect to see more questions for the Ask the Piggy Bank feature as we head into continued economic uncertainty. Today’s question, which is especially timely, is this:

What is stagflation?

This word has been floating around for a few weeks, but it’s really becoming prominent as Fed chair Ben Bernanke denies that it is happening. Here is a basic look at what stagflation is:

Stagflation is the combination of two words: “stagnant” and “inflation.” It is used to describe economic conditions in which growth is slow (or virtually non-existent), even though inflation is in effect.

Stagflation is considered a phenomenon, since inflation is usually coupled with economic growth. The rise in prices, coupled with the lack of a requisite increase in spending power by consumers, is what makes stagflation so dangerous.

As if we weren’t already worried about a recession. Yesterday Ben Bernanke made it clear to Congress that we are in an economic “freefall.” Joy. He even said that some of the smaller banks may fail (the large banks have bailout money and cash inflows from wealthy benefactors).

Don’t panic. Take a deep breath. And get your personal finances in order.

Yesterday, Ben Bernanke testified before Congress about economic stimulus and the possibility of more rate cuts. He did stop short of saying that the US would enter a recession. Instead, he pointed out that while economic growth will slow, negative growth was not a foregone conclusion.

The stock market wasn’t overly impressed by his testimony, and that means that it could be a good time to evaluate your investment portfolio for fundamentally strong stocks, buying those (while they are low) that are likely to recover.

Your personal finances may be in greater need of help as the recession approaches. Yesterday Fed chair Ben Bernanke talked to Congress about economic news. The man doesn’t often parse words, and what The Australian reports of Bernanke’s report is no exception:

“A number of factors, including higher oil prices, lower equity prices, and softening home values seem likely to weigh on consumer spending as we move into 2008.” These things might get worse. The latest report on jobs growth was disappointing, and if workers begin to fear for their jobs, confidence will fall further.

Next week I’ll be resuming a look at tips from Paul Farrell to help you beat the bear market. It looks like we’ll be needing them.