RIGONOMICS:

Mark my words, 2009 in will go down as the year of the bailouts and no matter what anyone says or does there will be no way to stop the flood of handouts that are about to happen.

If President Bush could bail out Wall Street and Detroit with 700 billion taxpayer dollars, there is no way to argue against the $1 trillion President-elect Barack Obama wants to bail out homeowners with “toxic loans,” states that agreed to cover pensions they could not afford and any failing business that can say with a straight face, “It is not my fault.”

This is the year the federal government will try to save us from our own bad decisions — by writing a check.

My biggest concern is that with all the bailouts, the millennial generation will grow up thinking that if you make bad decisions, not to worry; it is really not your fault.

Past generations were allowed to learn from their mistakes. I am afraid this generation won’t be allowed the privilege. For most people younger than 35, this is their first real deep recession.

The federal government is bound and determined to make this recession as painless as possible.

Unless there is pain this generation will continue to make the same mistakes of the past. Only next time the damage to the economy will be worse.

The problems we have today are not much different than the problems we have had in previous generations.

What is today’s credit crisis is not really much different than the stock market crash of 1929.

Instead of lending to buy overpriced houses they could not afford, banks made 90% loans to buy stocks.

Both loans were made based on the value of the collateral, the home or the stock, and not the ability of the borrower to pay back the loan.

The ability to borrow cheap money raised the prices of the collateral.

In 1929 it was stock prices; this time around it was home prices.

As long as prices go up the loans can always be paid back by selling the collateral.

The problem is that sooner or later the bubble bursts and the value of the collateral cannot cover the loan.

This starts the downward spiral, which causes more loans to default. The big difference this time around is the government is trying to protect this generation from the pain.

Here is some advice for not only this younger generation but all of us to get though this recession. If you have a mortgage on your home refinance it now.

This advice may differ dramatically depending on what stage of life you are in, though.

For instance, someone nearing retirement should not be getting into mortgage debt for a house as a person in their 30s would.

The Federal Reserve is doing everything it can to lower mortgage rates to free up money for consumers.

Take their lead, as sub-5% loans will not last forever. If you are 45 or older make it a 15-year loan. The best retirement plan is a paid-for house.

Do not try to figure out how your investments will make your house payment when you retire. The best part of retirement is retiring your debt.

If you have a job and not a house, buy one. Forget what the so-called experts are saying about homes values dropping. This is Orange County, not Ohio.

When loan payments get close to what a house can be rented out for we have hit the bottom. We are there now. Do not worry about losing your job.

Even if unemployment hits 10%, it is 6.1% in Orange County now, there is still a 9 out of 10 chance you still have a job.

Those are great odds.

If you have job, work harder, longer and smarter. Employers go out of their way to keep employees who carry more than their own weight. Unless you are in a dying industry your job will remain though the recession.

Most importantly, always count your blessings. No matter what your circumstances, you have it better than someone else.

JIM RIGHEIMER is a Costa Mesa planning commissioner, a local developer and a GOP activist. He may be reached at jim@rigonomics.com.