Originally posted 4-27-2010

I know some of you think I have lost it, but I think we all need to get better informed and prepared financially. So here goes my rant, read it if you want. If you do read it, please let me know your thoughts. Thanks!

http://news.yahoo.com/s/ap/20100427/ap_on_bi_ge/eu_greece_financial_crisis

The US Economy is still in an economic recession and headed towards depression despite what the mainstream media would lead us to believe. I could be wrong of course, but there are some things to pay attention to in the immediate future:

Home sales rose sharply last month and will likely be better this month. Sounds great, right, but what happens when the homebuyer tax credit expires this Friday? Without further help from the government, home sales will likely resume their decline. When interest rates start to increase, it will spell disaster in an already struggling residential market.

There is another wave of mortgage resets coming even larger than the ones that started our economic spiral, but this time it will be harder for our government to bailout the banks because of public sentiment. At the same time, there is a large number of commercial loans facing a similar crisis and no one seems to have an answer for these two big issues facing our economy.

We continue to hear about signs of an economic recovery and consumers are feeding off of this to begin spending money again and investors are bullish on the stock market based on the positive news. Most of this is because of the Federal Reserve and similar European Reserve cranking up the printing presses and that won’t last much longer. This is a jobless recovery and I would suggest is only making matters worse and extending the economic crisis, much like the entitlement programs created by FDR did after the Great Depression .

More analysts are thinking the Federal Reserve will begin increasing interest rates soon. Increased interest rates and the likelihood that they will have to slow down the amount of money they are printing will be a tough challenge on an already struggling economy that has become dependant on low interest rates and bailouts.

As the article states above, there is still BIG trouble in Europe. Greece had their debt reduced to junk status and last week their interest rates increased 50% in just one week. Even with the bailout from the EU, Greece is toast.

Greece’s president, Papandreou won an election in 2009 by pledging to tax the rich to help the poor (can anyone see a similarity here in the US???) Next up for Europe will be Portugal, Spain & Italy and this will send shudders throughout the world that the EURO has failed.

About the same time Europe is dealing with their financial crisis, the US will have to deal with the bankruptcies of California, Michigan and Illinois. In addition, there are huge budget shortfalls in 80% of the country. State entitlement programs are almost $3 trillion in the red. We have a debt crisis in the United States where there are few options and even if we raise taxes to 100% it will not meet our debt obligations.

The US will likely see hyperinflaltion (watch for this term to emerge in the media soon) within the next five years and raising interest rates as early as the next twelve months. There are some that think the stock market will crash – to between 2,000 – 5,000. Simply moving your money to cash isn’t a good idea either because the dollar is devalued every time the feds print more money. We have a fiat currency (a currency backed by nothing other than the credit of the government issuing the currency) and no economy operating with fiat currency has ever survived. An interesting fact, our current dollar is the THIRD currency we have had in our relatively young age as a country, so don’t think it can’t happen again – and soon.

There are steps you can take, but time is running out. A pastor used this phrase a few weeks ago and I liked it, (thanks Pastor Jimmy), “Awareness is no substitute for preparation”. You need to be aware of what is REALLY happening, but you better get prepared now. I joined a special group that is showing me how to not only get prepared, but how to prosper in the days ahead. If you would like to learn more, please call me or reply to this email.