Investors and traders are in a quandary, trying to figure out if the economy is, indeed, improving.

One measure of growth is consumer spending. Consumer spending accounts for 70% of GDP, and it is the engine that has kept the economy growing over the past decade.

Well, consumer credit has fallen for eleven straight months. The recession has taken a harsh toll on the consumer. We have about 17 million people out of work. These persons certainly are spending only for basic necessities.

This morning the big news of the day was the drubbing of European stock markets as fear spread throughout the region. Fear was generated by concern that some European countries could default on their sovereign debt. Among them are Greece, Spain, and Portugal.

Greece's budget gap is 12.7% of GDP Greece has to slash spending and may need IMF assistance.

Investors sold investment deemed risky such as commodities, gold and stocks and moved their money into bonds. This started a selling frenzy in commodities with oil falling $3.14 per barrel to $73.14 per barrel. Brent crude fell $3.79 per barrel to $72.13 per barrel.

Congress is patting itself on the bank for making a few minor changes in credit card costs, including:

• Starting in February, card statements will include the amount of interest and fees paid for the year to date.
• The statement will include the size of monthly payments needed to become debt free in 36 month.
• Card companies will give cardholders 45 days before changing the interest rate.

Why are these such minor changes? First, according to Kapner writing for Financial Times, the average American household has $10,000 in credit card debt. At a rate of 18%, it would take 48 years to become debt free by just paying the minimum each month.

Sales of existing homes plunged 17% in December, the sharpest drop since records began in 1968. The sales pace fell to 5.45 million annual rate from 6.54 pace the previous month.

Part of the reason for the drop was attributed to the termination of the first $8,000 tax credit for first time buyers. That kept buyers away from the market. Since then Congress has extended the tax credit. Realtors expect a pick up in sales going into the Spring season.

Many of us seem to be able to spend money very quickly. We like to get out the credit cards and head to the mall. Financially, this is about as healthy for us as eating an entire gallon of Ben & Jerry's ice cream.

Contrary to what most people think it is not necessary to eat every day and good portion of the world fasts on a regular basis. In fasting people abstain from eating solid food and drink only water or juice for a period of time. Some religious and health advocates recommend regular fasting for daylight hours, one day, three days or even up to weeks at a time. Contrary to what you might think you will survive and you will not be as hungry as you think...

Those of you who follow Laszio Birinyi know that he uses an unusual approach to stock market predictions. One of his research tools is following the money flow in and out of stocks.

In 2007 he predicted that recovery in banks would fizzle as bad loans would lower revenue and reduce earnings. At the depth of the market's sell off last year, he predicted a rebound in stocks based on the excess money flow created by the near zero interest rates. He predicted then we were in the early stages of a new bull market.

Around the new year, many people set goals to stick to a budget or to manage their money better. It can be hard and sometimes it is only a matter of weeks before they fall back into the bad habits.

No matter how much money you make, at times it seems like it is never enough. People who make $20,000, $50,000 or $100,000 can all be caught in the financial pickle and much of it has to do with how those incomes are managed. Here is a challenge for you to help you watch your spending.

Looking for a little free financial advice this weekend? Kiplinger's Personal Finance magazine and the National Association of Personal Financial Advisors (NAPFA) are going to give you some from Friday January 22 through and on January 26. The two are going to team up to sponsor "Jump-Start Your Retirement Days."

Normally, Kiplinger's requires a fee to answer these financial questions, charging anywhere from $150 to $300 an hour, but here it offers consumers free retirement advice online or by phone.

Now here's an eye opener. Warren Buffet's Berkshire Hathaway (BRK.A) has decided to split its shares 50 for 1. This would drop the price of the company's cheapest stock down from about $3,247.00 per share to $65. The class A shares, never split, still trade at about $97,500.

The Fed's Beige Book summarizes economic activity compiled from data obtained from the 12 Federal Reserve districts.

Here are some notes from the Beige Book:

• Most districts reported that consumer spending was up a bit during the recent holiday season, but still below the 2007 level.
• Retailers in Philadelphia and San Francisco noted small gains, but they didn't amount
• to much.

Bill Gross is one of the world's biggest investors. In his recent monthly letter he cites the dangers of ultra high deficits in the US.

But first, we must cite Gross' comments on the state of our democracy. He said: "Our democracy does not work anymore, or perhaps more accurately, when it does, it works for special interests and not the American people." "When special interests even singular citizens write a check, it represents a perversion of democracy, not the exercise of the First Amendment..."

Here's another priceless quote: Referring to the money spent by health care lobbyists, he said: "What amazes me the most of all is that politicians can be bought so cheaply."

The minutes of the recent Federal Reserve Meeting showed a continued concern over housing. Some members of the committee favored continued purchases of mortgage backed securities. The Fed is scheduled to end its purchase of $1.25 trillion of mortgage backed securities by the end of March. Those in this group held that pulling the plug in March was too soon.

Some members were comfortable with the current stabilization in the housing market and argued that ending the program was the right policy move. Fed officials said that in general, they see continued improvement in the housing market going forward.

The Netherlands has one of the lowest unemployment rates in Europe. At present it stands at 3.1%, according to the Wall Street Journal (subscription requiquired).

You may be wondering how the Dutch hold their unemployment at such low levels. The Netherlands saw the need to develop an aggressive jobs program following the 2008 world crisis. The government poured roughly $2.9 billion into a fund to help businesses retain their employees.

Can you imagine this! Anastasia Kelly, chairman for legal, human resources, corporate affairs and corporate communications resigned effective December 30. She claims to be eligible for severance pay under the company's executive severance plan of $2.8 million dollars.

The employees at American International Group, Inc. (AIG) have so far been able to mix arrogance with incompetence to a new level. First off, it was their incompetence that took AIG to its knees. AIG had to be bailed out to the tune of $180 billion dollars by the U.S. government. The government owns 80% of AIG.

There's a baseball play-by-play announcer with a pretty good team, whose made a small fortune uttering phrases like, "I tell you what you can do with that prediction: You can take that prediction and throw it in the East River. That's how much that prediction is worth."

In general, the same can be said about economic/budget projections. A little advice regarding economic and budget projections: don't work yourself up in to a lather over them.