Here are the facts:

• 1 in 6 owe more than their home is worth.
• Oil prices are tumbling down.
• Problems are not just in the US, but worldwide.
• We are giving 700 BILLION dollars to bail-out wall street! Do not rush this, make sure every situation goes well so the market does not explode again!

Important stocks to watch and hope they bounce back up. General Electric, Citigroup, Bank of America, General Motors and Morgan Stanley.

History can be important. In past years when the stock market went down to 8,000 points, it stopped dropping. Many investors believe the stock market will go right back up after it hits its low around 8,000 points. If you remember in the last year, the Dow Jones Industrial Average was 14,280.00 and that was a stock market high.

Keep your eye on a few stocks that are usually strong but are now only hanging in there. General Electric (GE) is around 20 dollars a share. After the stock market hits the low of 8,000. Buy, Buy, Buy! The government will fix this problem in a few days and everything will go back up! So make sure you know what to buy and don't buy stocks just because they are cheap. Smart investments make smart investors.

Image source: msn.com

Henry Paulson is the secretary of the US Treasury and his article on the Foreign Affairs Magazine for the September/October 2008 Issue shows a perspective that the prosperity of the United States and China depends heavily on helping China further integrate itself into the global economic system through trade, investments and the integration of the financial markets. According to Paulson, the launch of the U.S. - China Economic Dialogue (SED) was an important step taken in 2006 by President Bush and Chinese President Hu Jintao in expanding the relationship of these two superpowers over the long term. Despite the long history of interaction between the two nations, they both have had misunderstandings in various areas. Thus the SED began to play a big role in enabling policy makers from both sides to meet each other as equals and to work toward a strategic goal. Early on, China always was very defensive of its national interests, especially against foreign demands thus the US, in particular, was perceived as arrogant aggressive bully in China even when these foreign powers were legitimately pursuing their interests with China. However, since the creation of the SED under President Bush, legitimate high level avenues of diplomatic contact was made possible for China and the US to corporate and avoid such misunderstandings.

After its creation, the SED began to focus on a number of issues including the rising growth imbalances, US-Chinese economic relationship, energy security, environmental sustainability, trade and investment issues, product safety and China's position in the global economic system. Unlike the image the Americans have about China, china is actually facing a growing crisis behind all the façade of power. The same reason that spurned growth in China is now becoming an obstacle to Chinese social stability and sustained economic growth. The Chinese growth was all based on exports and investments in its capital, which has led to rise of rapid energy consumption, environmental damage, an unequal amount of infrastructure in the coastal China compared to inland China and increasing tensions with trade partners due to Chinese market policies and trade surpluses. China also faces a population crisis as the traditional source for retirement benefits were their Children but the one child policy and the dangers in society have drastically made China's biggest resources - their children a scare resource. So now China must find a way to help the rapidly aging population with retirement and health benefits.

As two of the biggest consumers of oil, China and the US share a large interest in energy security and developing alternative energy sources. Chinese policy to set price caps on subsidized oil and electricity to promote stable social life has failed as it led to wasteful consumption. Now the control of energy demand has become a growing concern in the country among the middle and upper class. The US also has begun to address the issue of inadequate protection of intellectual property rights in China through the SED and also began to press China into opening its closed market practices to foreign businesses. In the years to come, three possible choices exist for Chinese - US relations: robust engagement, dispute resolution through multilateral and bilateral enforcement measures and punitive measures - being that the first two tend to work better with China than punitive measures.

1. Money has flowed out of dollars into euros since August last year. Federal Reserve Chairman Ben Bernanke's been trying to pry the U.S. out of its housing mess, he's cut interest rates to artificially low levels (2%). Meanwhile, the Europeans haven't given enough weight to the risk of recession, and therefore haven't cut rates. The last move was a hike in rates to 4.25%.
2. Last week Federal Reserve decided to not increase the interest rate (still 2%). When the interest rates in one country are higher than another (all things being equal), money will flow to the country that pays higher interest rates.
3. These days US dollar is incredibly cheap versus its major trading partners - the cheapest it's ever been.
4. Prices in Europe are insane for Americans. Everything is so expensive: taxi fare, hotel cost, food ... the US dollar falling lower, crashing trough the psychological barrier of over $1.50 to the euro. For several months year 2008 European currencies are as expensive as they've ever been.
5. Whereas countries that use euro are forbidden to overspend by more than 3%, the U.S. government routinely overspends by more that 6%. With the economic stimulus package, a further 1% has been added to debt loan. Governmental debt is a problem for U.S.A.
6. American's personal debt, which is high, is also a problem.
7. In the other side, United Kingdom has even higher personal debt level than Americans. This means United Kingdom is vulnerable to all the same problems as the US. Although United Kingdom doesn't use euro, its problem may affect euro.
8. May be it is not a prediction about long-term interest-rate movements, but as we look ahead, the interest-rate trends may reverse. With credit has become harder to obtain, Europe is sliding toward recession. Manufacturing is down in part because European companies can't compete anymore because of price reason. Their products are too expensive at these exchange rates.
9. United Kingdom and the rest of Europe originally thought they were immune to the problems U.S. is experiencing. But it's turned out they're not... So the interest rate advantage Europe has enjoyed over the U.S. could be ending.
10. Interest rates are a key tool central bankers use to head off recessions. Soon, Europeans may need to cut interest rates to "save" their economies.
11. Meanwhile, U.S. has already done this. Federal Reserve may need to raise U.S. interest rates from their artificially low levels.
12. The euro "rubber band" is stretched as far as it's ever been stretched. That means expect a rise in the dollar, and a fall in the euro.

Invariably right after such commercials aired, I would receive hundreds of phone calls from people who, of course, wanted me to help them take advantage of some of that “free money.” I unfortunately then had the pleasure of being the wet blanket who had to tell them that it wasn't quite as simple as it seemed.

It would be easier if the advertisement was just plain false. However, the truth is that it is not. The gentleman in question doesn't lie in what he says. He simply doesn't bother to tell the whole story. Therein lies the problem.

It is true that the federal government gives away hundreds of thousands of dollars of grant money every single year, specifically for the purpose of starting new businesses. However, often times such money is slated for specific types of industries, certain locations of the country, and/or certain groups of people. And a set of restrictions is also established with regard to “how” and “when” the grant money can be spent. Those minor details are not found out until the book - which the ad was crafted to sell - is purchased. Only then, do people find out that most average citizens just don't qualify.

For the most part, people must realize that pinning their hopes on “free money” is not particularly realistic. Think about the old saying “you don't get something for nothing.” It definitely applies here. Even those types of businesses that are actually eligible for grant funds will be expected to risk something of their own.

Even businesses seeking grant funds or a small business loan, may be expected to provide some equity into the deal. For the purposes of a small business loan that is at least 20%. Sometimes the equity can be in the form of tools, equipment, inventory, or other goods that the business already owns. Sometimes, however, it must be cash. Either way, there is almost never a totally free ride. Nor should there be!

Anyone wanting to start his or her own business must be willing to sacrifice something. It they don't, chances are they won't ever take the business 100% seriously. If it is too easy to back out when the going gets rough, that is exactly what some people will do - run.

Real entrepreneurs understand this concept and embrace it willingly. The risk is, after all, half the fun and half of the reward. Building something out of nothing is one of the greatest pleasures that life has to offer. It gives human beings a sense of self-satisfaction that cannot be easily matched. On the other hand, if they allow someone else to take all of the risks, it is unlikely that the end result will be as satisfying at all.

“Free money” sounds like a great concept, but it isn't really what is needed. Successful businesses are built on the blood, sweat, tears, and, yes, even the money of their owners. It is the very fact that sets them apart from all the rest.

Don't get me wrong, those who fit within the parameters of small business grants can - and should - take advantage of the money. Just don't rely solely on “free money” as the means for starting a business. Doing that is shortsighted and takes away a lot of the fun of building something all on your own.

Look for my next article “It's Not Raining Loans, But They Do Exist” for more information on obtaining money to start a new business.