Thursday, September 1, 2011

The 10 States With the Worst Economies In America

The global economic crash hurt almost everyone, but not equally so. Last week, we looked at 10 states that are doing better than most in this grueling economy. Today, we'll consider 10 that aren't faring so well.

What accounts for their relatively poor performance? Three of the four states that saw the biggest real estate bubbles arise in the 2000s are on the list, beaten down by Wall Street hucksters promising them never-ending growth in home prices. People in California, Nevada and Florida, fueled by irrational exuberance, got badly “over-leveraged,” and when the house of cards fell apart, millions were left underwater. These states saw extremely high rates of foreclosures, and steep job losses as people pulled back on spending while credit market tightened. States themselves invested pension funds and other reserves in mortgage-backed securities, thanks to AAA ratings bought from ratings agencies like Standard and Poors, and that, combined with a massive drop in tax revenues, led to budget crises and public sector cuts at the worst imaginable time.
Others like Mississippi, the Carolinas, Tennessee, Georgia and Alabama are cheap-labor “right to work” states. These are the economies that were devastated during the Civil War, came back only after the United States began mobilizing for WWII and have never truly caught up with the rest the country. With some of the lowest average net worths in the country and large service sectors that rely heavily on consumer spending, they were less able to weather the economic storm. Rounding out their pain is a severe drought, which has devastated agricultural outputs.
Rounding out the list is Michigan, which may be seeing some “green shoots of recovery.” Michigan ranks fourth in high-tech workers and R&D spending, but has been hurt badly by the long decline of the auto industry, which was hastened during the 2000s by high fuel prices and an out-moded fleet of gas-guzzling products.
Here are the 10 states doing the worst, based on a number of metrics. It's not a comprehensive examination of their economies so much as a snapshot of this painful time in our economic history.
1. Mississippi
Mississippi didn't make the top spot because of how it's done since the crash – it's always been a relatively poor state. It gets top billing because while they were the fifth richest Americans prior to the Civil War, Mississippians are now the poorest people in the United States, ranking last in average incomes and household net worth and leading the nation in poverty.

Unemployment rate: 10.4 percent (Nationwide: 9.1 percent)
Share of unemployed out of work for more than 27 weeks: 43.9 percent (Nationwide: 44.4 percent)
Per capita income: $29,345 (Nationwide: $42,449)
Median household net worth, as a percentage of national average: 40 percent
Poverty rate (2008): 21.2 (Nationwide: 9.7 percent)
Share of the population without health insurance (2008-2009): 18 percent (Nationwide: 17 percent)
Foreclosure rate: 3.0 percent (Nationwide: 4.3 percent)
2. Nevada
Nevada has the highest unemployment rate in the country, and also ranks second in foreclosures. The state doesn't have a terribly diverse economy. There's mining and livestock, but tourism and gambling are the biggest sources of revenue for the Silver State. Nevada saw a huge construction boom during the 2000s, as a massive housing bubble arose out of the desert, and it burst just as tourism and gaming took huge hits in the recession. According to the Las Vegas Sun, “Gaming revenue fell by 16 percent, taxable sales fell 13 percent, visitor volume fell 12 percent, airport passengers declined 16 percent and convention attendance was down 21 percent” between early 2008 and 2009. Nevadans are second only to Californians in average household debt; they owe, on average, $73,000, about 50 percent higher than the national average.

Ron Paul: US bankrupt, FEMA wasteful

Republican presidential contender, Rep. Ron Paul, R-Texas, speaks at a restaurant at the Polk County GOP summer picnic event held at the Iowa State Fairgrounds in Des Moines, Iowa on Saturday, Aug. 27, 2011.
A prominent American lawmaker and presidential candidate says the United States is a bankrupt country and describes the Federal Emergency Management Agency (FEMA) as a flawed bureaucratic system.

Texas Republican Representative in the US Congress Ron Paul, who is also a candidate for the country's 2012 presidential elections, lambasted the emergency aid agency on Sunday as “a system of bureaucratic central economic planning,” which is “so far removed from the market and the understanding of what insurance should be about,” Fox News reported.

"We've conditioned our people that FEMA will take care of us and everything will be okay, but you try to make these programs work the best you can, but you can't just keep saying, 'Oh, they need money,' ... Well, we're out of money, this country is bankrupt."

Founded in 1979 and having more than 7,600 employees, the Agency is part of the US Department of Homeland Security and streamlines response efforts when disasters occur in the country.

Pointing to the costly American wars in Iraq and Afghanistan and the colossal US deficit, Paul went on to say "I propose that we save a billion from the overseas war mongering, bring half that home and put it against the deficit, and yes, tide people over until we come to our senses.”

The US has reportedly spent over $1 trillion in taxpayer money on its wars in Iraq and Afghanistan since 2001, with some experts estimating that indirect costs, such as interest on the additional debt, exceed the direct expenditure.

“FEMA has been around since 1978. It has one of the worst reputations for a bureaucracy ever” based on central economic planning, said the GOP presidential hopeful, adding that this “is a policy that is deeply flawed."

Paul also insisted that federal money often goes to contractors instead of disaster victims.

The comments by the American congressman came after Hurricane Irene pounded the northeast of the US on Sunday and left dozens of people dead and millions without power.

The massive storm also incurred an estimated $7-13 billion in damages.

This is while a recent report by a US Congressional commission revealed that the Pentagon has squandered over $30 billon of taxpayer money on contracts and grants in Afghanistan and Iraq.


Research Shows Rich Getting Richer Makes Poor Poorer

Research Shows Rich Getting Richer Makes Poor Poorer

IT NEVER ENDS - U.S. Bancorp Sues Bank Of America Over $1.75 Billion Pool Of Fraudulent Countrywide Mortgages

Yes, another lawsuit related to Countrywide.  When are BofA shareholders going to sue former CEO Ken Lewis for leading the worst corporate takeover in U.S. history.  Here's a rundown of the recent stories involving BofA lawsuits:
U.S. Bancorp, one of the nation’s biggest banks, became the latest large financial firm to sue Bank of America, filing a lawsuit over $1.75 billion of mortgage loans on Monday on behalf of investors of the loans.
Acting as trustee of a trust that included 4,400 mortgage loans originated by Bank of America’s Countrywide unit, U.S. Bancorp claims Bank of America, the biggest bank in the U.S., must repurchase loans in the mortgage pool because Countrywide had agreed to do so if it misled investors about the quality of the loans.
“The Trustee seeks to compel Countrywide, and Bank of America as its successor-in-interest, to specifically perform their obligation to repurchase all of the loans that the Trustee has submitted as breaching loans,” the lawsuit filed in New York state court in Manhattan says.
Continue reading...

UK plunges into debt danger zone after Labour's 10-year borrowing binge, says finance watchdog

  • Debt in Britain grew faster than any other major economy

  • The country must 'get to grips' with future spending on health and pensions

  • Britain’s debt levels are dangerously high and are damaging the economy, according to one of the world’s leading financial watchdogs.
    Debt in the UK grew faster than in any other major economy in the last decade to £180,000 per household.
    It means the country is in the danger zone following a ten-year borrowing binge under the last Labour government, a hard-hitting report from the Bank for International Settlements has revealed.
    Dangerously high debt: The British economy has flat-lined for the last nine months
    Dangerously high debt: The British economy has flat-lined for the last nine months
    Its chief economist, Steve Cecchetti, said: ‘Beyond a certain level, debt is bad for growth. At low levels, debt is good. It is a source of economic growth and stability. But at high levels, private and public debt is bad, increasing volatility and retarding growth.’
    The BIS said government, corporate and household debt in Britain jumped from 223 per cent of gross domestic product in 2000, or £2.18trillion, to 322 per cent, or £4.68trillion, in 2010. That is the equivalent of £180,000 per household.
    The 99 percentage point increase was the biggest of any leading economy and left Britain deeper in the red than any country in the Group of Seven industrialised nations except Japan.
    The watchdog warned that debt levels in Britain ‘will explode’ unless it gets to grips with future spending on health and pensions as the population gets older.
    Scrap Euro, says German business chief
    ‘The debt problems facing advanced economies are even worse than we thought,’ said Mr Cecchetti, who is based at the BIS headquarters in Basel, Switzerland.
    ‘As public debt rises and populations age, growth will fall. As growth falls, debt rises even more, reinforcing the downward impact on an already low growth rate.
    Hard-hitting: The report came from the Bank of International Settlements in Switzerland
    Hard-hitting: The report came from the Bank of International Settlements in Switzerland
    ‘The only possible conclusion is that those with high debt must act quickly and decisively to address their looming fiscal positions.
    'The longer they wait, the bigger the negative impact will be on growth, and the harder it will be adjust.’
    The Treasury welcomed the report – called The Real Effects of Debt – which was presented to central bankers and economists at the Jackson Hole summit in Wyoming last week.
    ‘This underlines the need for us to get a grip on our debt levels,’ said a spokesman.
    ‘Part of the reason the recovery is a challenging one is because all parts of the economy are having to adjust – and the numbers will continue to get bigger unless we get them under control.’
    The watchdog said the danger limit for government debt is 80 to 100 per cent of a country’s GDP.
    The threshold for corporate debt is 90 per cent of GDP and for household debt it is 85 per cent, it said.
    Once these levels are reached, debt starts to hold back growth, the report found.
    In 2010, Britain had government debt of nearly 90 per cent of GDP, corporate debt of 126 per cent and household debt of 106 per cent.
    Of the G7 economies, only Britain and Canada were in the danger zone for all three types of debt.
    The British economy has flat-lined for the last nine months, growing by just 0.2 per cent in the second quarter of the year following six months of stagnation.
    The subdued recovery at home has been weakened further by a slowdown overseas, particularly in the U.S. and the eurozone, Britain’s two biggest trade partners.

    IT RISES EVERY YEAR - It's the Spending, Stupid: A Historical Look at Federal Government Spending

    There are few constants in the universe: gravity, the sunrise, the oceans, the moon. Add another: spending by the federal government; it rises every year.
    We have failed to heed the lessons of economic history, with terrible consequences for our economy and country. And the most crucial of those lessons, particularly since the start of LBJ’s Great Society, is this: deficits have been caused not by a lack of income-tax increases but by recession and, most of all, by excessive government spending.
    Because I comment on this topic so frequently, especially in the context of Reaganomics, I constantly deal with these issues from a historical perspective. Here, I would like to make it easy for everyone to see the numbers themselves and understand the root of the problem.
    The answers are as easy as googling the words “historical tables deficit.” Two sources pop up: CBO historical tables and OMB historical tables. “CBO” is Congressional Budget Office; “OMB” is Office of Management and Budget. These are the official go-to sources for data on deficits, revenues, and government expenditures.
    Either source will work. To keep it simple, I’ll focus on the OMB numbers. At the OMB link is Table 1.1, titled, “Summary of Receipts, Outlays, and Surpluses or Deficits: 1789-2016.” That is an official scorecard of spending by the federal government since the founding of the republic.
    Looking closely at the chart is an eye-opening experience. As the first two columns show, receipts (i.e., revenues) and outlays (i.e., expenditures) moved up and down throughout our history. In 1965, however, something historically unusual, something literally deviant, began: Spending increased every single year, non-stop, consistently, without exception, into the Obama presidency, from 1965-2009.
    There are few constants in the universe: gravity, the sunrise, the oceans, the moon. Add another: spending by the federal government; it rises every year.
    Significantly, revenues don’t increase every year. The most dependable reason for declines in revenues is not a lack of tax increases, or high enough income-tax rates, but recessions. Since 1965, as the data shows, annual revenues declined seven separate times.
    At the start of the Great Society, in 1965, revenues and expenditures were nearly equal, with expenditures only slightly higher, leaving a manageable deficit of $1.4 billion. By 2009, however, annual expenditures ($3.5 trillion) had far outpaced annual revenues ($2.1 trillion), leaving a record deficit of $1.4 trillion.
    Continue reading...

    "Stop Spending, Stop Spending!" - Santelli Loses It, Calls Liesman A Communist
    CNBC Video - Rick Santelli, Steve Liesman, Joe Kernen - June 28, 2010
    Santelli annihlates fiat spending, and it's messenger Steven Liesman.
    Watch the entire clip if you have time, though the mayhem doesn't really get going until after the 7-minute mark.  Santelli and Liesman both come close to losing it.  These quotes don't do justice to the emotion.
    • "Go read some Austrian economist instead of the funny pages."
    • "I am ready to talk about Fred Hayek, John Hayek, and Selma Hayek."
    • "Go back to Russia where you understand the state and the citizen."

    Peaceful Solutions Impossible Problems 6/7

    Peaceful Solutions Impossible Problems 5/7

    Peaceful Solutions Impossible Problems 4/7

    Fix the Banks!

    Dees Illustration
    Greg Hunter
    USA Watchdog

    If there is one central theme to the ongoing financial crisis we face, it is an insolvent banking system.  It is so bad that the accounting rules were changed (after the financial meltdown in 2008) to allow banks to value assets on their books at whatever they think they will fetch far into the future.  So, the billions of dollars of underwater mortgage-backed securities and real estate sitting on the balance sheet is held at imaginary values to make many banks look solvent when, in fact, they are not.   This is opposite of the way the IRS values assets.  The price of something is based on what the asset is worth today.  This is called mark to market accounting.

    If any of the banks (especially the big banks) want to prove me wrong on this point, then they can simply value all their assets for what they can get for them today and the argument is over—fat chance!  I never see this subject ever brought up when the president of a big bank is interviewed.  I’ll bet you Jamie Dimon of JPMorgan would really squirm if he was asked what his bank would be worth if all the assets on the balance sheet were valued at today’s price.

    In January of 2009, I wrote a piece called “Default Option.”  I had the crazy idea that the big banks should be taken into receivership.  Yes, shareholders and bond holders would have been wiped out.  Tough—that’s investing.  The only people you would have to protect are the depositors and, at the time, it would have cost $6 trillion.  I said, “Letting those banks take the hit for their ill-advised, reckless investments based on greed will do many things.  Here are just a few.  Letting the reckless banks fail will limit taxpayer exposure, preserve our capital and our credit rating as a country. Bank failure will wash bad debt out of the system once and for all and protect the dollar from free fall.  Finally, I think in the end it will be cheaper and more effective than what has and will be done in the future to “fix” the credit crisis.”    (Click here to read the original Default Option post.)

    Fast forward to today, and we see the dollar is falling, gold is spiking and the credit rating of the U.S. has been cut.  My plan was downright miserly when you consider that the Fed (according to a recent GAO report) spent $16 trillion bailing out the world, with $5 trillion going to foreign banks alone.  If you really want jobs in this country, you need capital formation not–debt formation.  Capital invests in productive assets, and productive assets create real jobs!  We still have a crippled banking system despite spending trillions of dollars, and there are still no jobs!

    Read Full Article

    25 Signs That The Financial World Is About To Hit The Big Red Panic Button

    Most of the worst financial panics in history have happened in the fall.  Just recall what happened in 1929, 1987 and 2008.  Well, September 2011 is about to begin and there are all kinds of signs that the financial world is about to hit the big red panic button.  Wave after wave of bad economic news has come out of the United States recently, and Europe is embroiled in an absolutely unprecedented debt crisis.  At this point there is a very real possibility that the euro may not even survive.  So what is causing all of this?  Well, over the last couple of decades a gigantic debt bubble has fueled a tremendous amount of "fake prosperity" in the western world.  But for a debt bubble to keep going, the total amount of debt has to keep expanding at an ever increasing pace.  Unfortunately for the global economy, sources of credit are starting to dry up.  That is why you hear terms like "credit crisis" and "credit crunch" thrown around so much these days.  Without enough credit to feed the monster, the debt bubble is going to burst.  At this point, virtually the entire global economy runs on credit, so when this debt bubble bursts things could get really, really messy. Nations and financial institutions would never get into debt trouble if they could always borrow as much money as they wanted at extremely low interest rates.  But what has happened is that lending sources are balking at continuing to lend cheap money to nations and financial institutions that are already up to their eyeballs in debt.
    For example, the yield on 2 year Greek bonds is now over 40 percent.  Investors don't trust the Greek government and they are demanding a huge return in order to lend them more money.
    Throughout the financial world right now there is a lot of fear.  Lending conditions have gotten very tight.  Financial institutions are not eager to lend money to each other or to anyone else.  This "credit crunch" is going to slow down the economy.  Just remember what happened back in 2008.  When easy credit stops flowing, the dominoes can start falling very quickly.
    Sadly, this is a cycle that can feed into itself.  When credit is tight, the economy slows down and more businesses fail.  That causes financial institutions to want to tighten up things even more in order to avoid the "bad credit risks".  Less economic activity means less tax revenue for governments.  Less tax revenue means larger budget deficits and increased borrowing by governments.    But when government debt gets really high that can cause huge economic problems like we are witnessing in Greece right now.  The cycle of tighter credit and a slowing economy can go on and on and on.
    I spend a lot of time talking about problems with the U.S. economy, but the truth is that the rest of the world is dealing with massive problems as well right now.  As bad as things are in the U.S., the reality is that Europe looks like it may be "ground zero" for the next great financial crisis.
    At this point the EU essentially has three choices.  It can choose much deeper economic integration (which would mean a huge loss of sovereignty), it can choose to keep the status quo going for as long as possible by providing the PIIGS with gigantic bailouts, or it can choose to end of the euro and return to individual national currencies.
    Any of those choices would be very messy.  At this point there is not much political will for much deeper economic integration, so the last two alternatives appear increasingly likely.
    In any event, global financial markets are paralyzed by fear right now.  Nobody knows what is going to happen next, but many now fear that whatever does come next will not be good.
    The following are 25 signs that the financial world is about to hit the big red panic button....
    #1 According to a new study just released by Merrill Lynch, the U.S. economy has an 80% chance of going into another recession.
    #2 Will Bank of America be the next Lehman Brothers?  Shares of Bank of America have fallen more than 40% over the past couple of months.  Even though Warren Buffet recently stepped in with 5 billion dollars, the reality is that the problems for Bank of America are far from over.  In fact, one analyst is projecting that Bank of America is going to need to raise 40 or 50 billion dollars in new capital.
    #3 European bank stocks have gotten absolutely hammered in recent weeks.
    #4 So far, major international banks have announced layoffs of more than 60,000 workers, and more layoff announcements are expected this fall.  A recent article in the New York Times detailed some of the carnage....
    A new wave of layoffs is emblematic of this shift as nearly every major bank undertakes a cost-cutting initiative, some with names like Project Compass. UBS has announced 3,500 layoffs, 5 percent of its staff, and Citigroup is quietly cutting dozens of traders. Bank of America could cut as many as 10,000 jobs, or 3.5 percent of its work force. ABN Amro, Barclays, Bank of New York Mellon, Credit Suisse, Goldman Sachs, HSBC, Lloyds, State Street and Wells Fargo have in recent months all announced plans to cut jobs — tens of thousands all told.
    #5 Credit markets are really drying up.  Do you remember what happened in 2008 when that happened?  Many are now warning that we are getting very close to a repeat of that.
    #6 The Conference Board has announced that the U.S. Consumer Confidence Index fell from 59.2 in July to 44.5 in August.  That is the lowest reading that we have seen since the last recession ended.
    #7 The University of Michigan Consumer Sentiment Index has fallen by almost 20 points over the last three months.  This index is now the lowest it has been in 30 years.
    #8 The Philadelphia Fed's latest survey of regional manufacturing activity was absolutely nightmarish....
    The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009
    #9 According to Bloomberg, since World War II almost every time that the year over year change in real GDP has fallen below 2% the U.S. economy has fallen into a recession....
    Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.
    #10 Economic sentiment is falling in Europe as well.  The following is from a recent Reuters article....
    A monthly European Commission survey showed economic sentiment in the 17 countries using the euro, a good indication of future economic activity, fell to 98.3 in August from a revised 103 in July with optimism declining in all sectors.
    #11 The yield on 2 year Greek bonds is now an astronomical 42.47%.
    #12 As I wrote about recently, the European Central Bank has stepped into the marketplace and is buying up huge amounts of sovereign debt from troubled nations such as Greece, Portugal, Spain and Italy.  As a result, the ECB is also massively overleveraged at this point.
    #13 Most of the major banks in Europe are also leveraged to the hilt and have tremendous exposure to European sovereign debt.
    #14 Political wrangling in Europe is threatening to unravel the Greek bailout package.  In a recent article, Satyajit Das described what has been going on behind the scenes in the EU....
    The sticking point is a demand for collateral for the second bailout package. Finland demanded and got Euro 500 million in cash as security against their Euro 1,400 million share of the second bailout package. Hearing of the ill-advised side deal between Greece and Finland, Austria, the Netherlands and Slovakia also are now demanding collateral, arguing that their banks were less exposed to Greece than their counterparts in Germany and France entitling them to special treatment. At least, one German parliamentarian has also asked the logical question, why Germany is not receiving similar collateral.
    #15 German Chancellor Angela Merkel is trying to hold the Greek bailout deal together, but a wave of anti-bailout "hysteria" is sweeping Germany, and now according to Ambrose Evans-Pritchard it looks like Merkel may not have enough votes to approve the latest bailout package....
    German media reported that the latest tally of votes in the Bundestag shows that 23 members from Mrs Merkel's own coalition plan to vote against the package, including twelve of the 44 members of Bavaria's Social Christians (CSU). This may force the Chancellor to rely on opposition votes, risking a government collapse.
    #16 Polish finance minister Jacek Rostowski is warning that the status quo in Europe will lead to "collapse".  According to Rostowski, if the EU does not choose the path of much deeper economic integration the eurozone simply is not going to survive much longer....
    "The choice is: much deeper macroeconomic integration in the eurozone or its collapse. There is no third way."
    #17 German voters are against the introduction of "Eurobonds" by about a 5 to 1 margin, so deeper economic integration in Europe does not look real promising at this point.
    #18 If something goes wrong with the Greek bailout, Greece is financially doomed.  Just consider the following excerpt from a recent article by Puru Saxena....
    In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments!
    #19 The global banking system has a total of 2 trillion dollars of exposure to Greek, Irish, Portuguese, Spanish and Italian debt.  Considering how much the global banking system is leveraged, this amount of exposure could end up wiping out a lot of major financial institutions.
    #20 The head of the IMF, Christine Largarde, recently warned that European banks are in need of "urgent recapitalization".
    #21 Once the European crisis unravels, things could move very rapidly downhill.  In a recent article, John Mauldin put it this way....
    It is only a matter of time until Europe has a true crisis, which will happen faster – BANG! – than any of us can now imagine. Think Lehman on steroids. The U.S. gave Europe our subprime woes. Europe gets to repay the favor with an even more severe banking crisis that, given that the U.S. is at best at stall speed, will tip us into a long and serious recession. Stay tuned.
    #22 The U.S. housing market is still a complete and total mess.  According to a recently released report, U.S. home prices fell 5.9% in the second quarter compared to a year earlier.  That was the biggest decline that we have seen since 2009.  But even with lower prices very few people are buying.  According to the National Association of Realtors, sales of previously owned homes dropped 3.5 percent during July.  That was the third decline in the last four months.  Sales of previously owned homes are even lagging behind last year's pathetic pace.
    #23 According to John Lohman, the decline in U.S. economic data over the past three months has been absolutely unprecedented.
    #24 Morgan Stanley now says that the U.S. and Europe are "hovering dangerously close to a recession" and that there is a good chance we could enter one at some point in the next 6 to 12 months.
    #25 Minneapolis Fed President Narayana Kocherlakota says that he is so alarmed about the state of the economy that he may drop his opposition to more monetary easing.  Could more quantitative easing by the Federal Reserve soon be on the way?
    Things have not looked this bad for global financial markets since 2008.  Unless someone rides in on a white horse with trillions of dollars (or euros) of easy credit, it looks like we are headed for a massive credit crunch.
    What we witnessed back in 2008 was absolutely horrifying.  Very few people want to see a repeat of that.  But as things in the U.S. and Europe continue to unravel, it appears increasingly likely that the next wave of the financial crisis could hit us sooner rather than later.
    None of the fundamental problems that caused the crisis of 2008 have been fixed.  The world financial system is still one gigantic mountain of debt, leverage and risk.
    Authorities around the globe will certainly do all they can to keep things stable, but in the end it is inevitable that the house of cards is going to come crashing down.
    Let us hope for the best, but let us also prepare for the worst.

    More just say no to credit cards

    Five years ago, Rajendra Hariprashad thought he was living the American dream.
    The native of Guyana and former Marine carried balances on his credit cards, went out to dinner at least five times a week, and didn’t pay attention to the price of gas.
    Today, Hariprashad, owner of Ena’s Driving School in Queens, N.Y., pays off his credit cards at the end of the month. He’s making extra payments on the mortgage for the house he shares with his parents and hopes to pay it off in about 10 years. He shops around for the cheapest gas he can find and pays with cash to get a discount.
    Hariprashad, 34, says the recession forced him to change his ways. Business slowed because customers didn’t have as much money to spend on driving lessons. Faced with the threat of bankruptcy, he cut back on discretionary spending and used the money to pay off his credit cards. “Now, I have a clean slate,” he says.
    read more