The banking crisis is over. Everyone can breathe a sigh of relief, but make it a quick one because there is a recession coming. Governments all over the world have thrown everything but the kitchen sink at the recent banking crisis. This calamity which was primarily caused by liberal politicians who wanted EVERYONE to own a house and by unethical mortgage salespeople, who placed unsuspecting clients with huge mortgages, is being put behind us because the government is going to step in and take the heat for the losses.

In the weeks ahead, we will see banks returning to normal lending and doing deals except for prospective borrowers with poorer credit and small down payments. In short, banks will return to lending the way it used to be, to qualified borrowers. So with the huge banks and insurance companies enjoying bulging balance sheets thanks to the government, the rest of us have to work through a recession of unknown severity.

This recession is caused by consumers running out of money and nerve to continue spending. As long the value of their home rose, there was more to spend with each refinance of the home equity loan. With residential real estate falling in value, the source of funds is gone. Also, higher energy prices caused consumers to prioritize their spending and gasoline always won. The change in spending habits has increased unemployment and the consumer’s attitude becomes one of apprehension, fear and a definite lack of desire to spend money frivolously.

Retail sales are falling and most retail companies expect one of the worse Christmas shopping seasons. To top it all off, we are going to have a new president next January so the degree of uncertainty rises. As it appears my choice for president will be returning to be part of a shrinking minority in the Senate, the next few years look somewhat dismal.

So, we need to consider the survival tools through a recession. First off, cash is king. If you have money in the bank, leave it there. Do not be thinking you can make a quick buck by catching the stock market at the perfect moment. One might as well go to the nearby gas station and buy some lottery tickets. The chances of success are about the same. However, if there is savings in process in a 401(k) or other similar savings tool, keep it up. All the stock funds are having a sale on low priced stock.

If there is no cash saved for emergencies, then by all means start saving by cutting back on any unnecessary expenses. Examples that come to mind are eating out, excess entertainment expenses, multiple trips to the coffee shop and driving just to be driving. Usually there is a lot of fluff in our spending habits that can be trimmed back to save some cash. If there is outstanding debt, make sure you have an emergency fund of several months of expenses in place before working on decreasing debt as quickly as possible.

Most likely unemployment will continue to increase. While we all hope it happens to the other person rather than to us, layoffs can hit almost anyone. Jobs will be hard to come by so be ready to take something out of your comfort zone to make ends meet. Perhaps this will lead to a new career. There have been many new fortunes started on the garbage pile of unemployment.

Another strike against a thriving economy is our huge government debt. The economic crisis, the war on terror and the increase in government will make this even bigger in the years to come. Most likely our national leaders will try to find ways to increase taxes in the name of paying off the deficit. Even more likely is that any tax money they do pass will only slow down the recovery and increase the number of government programs.

The deficit may lower the dollar in relation to other currencies which could improve our exports if the other countries are not in a worse recession. Exports could be one of the early methods to come out of our slowdown. The key is find ways to put people back to work with businesses can be make money and pay a fair income tax resulting in a good profit for the business’ risk taken.

So batten the hatches because we are in for some tough times ahead. We will each feel the effects but more importantly we each can take responsibility to make the necessary changes to make it through and be part of the solution.