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.

This Could Be Coming To A City Near You

Expecting to retire with a pension from your government? Is your money in an IRA, 401K or other managed accout with a financial advisor? Do you own mutual funds? Robert Kyosaki says in his book ‘Conspiracy of the Rich’, that “mutual funds are simply an unintelligent investment designed for the financially unintelligent” (page 145).

These are questions you need to answer and then begin to get informed on financial matters because there are signs the economy is recovering and many more that point to a looming collapse creating The Greatest Depression. There are several economists and business people that have been right in their predictions of the dot.com bust, the mortgage meltdown and the collapse of the Euro. These same people continue to predict the collapse of world economies, including the US. I have spent many hours and read several books, articles and collections of data and believe there is a higher probability of a depression than a chance of recovery. I sure hope I’m wrong, but I think it is important to prepare for the worst and hope for the best (preparation is a strategy – hope is not).

It is almost impossible to fathom any of our states going bankrupt and seeing state employees get reduced pensions – if they get anything at all, yet California, Michigan and Illinois are very much on the verge of bankruptcy. What we are seeing in Greece and soon to be seen in Portugal and Spain is a sign of what the US can expect if we continue on our current economic path (which may be too late to correct). The funny thing is that I see the polls and talk to a lot of people who agree that Americans will have to make many sacrifices from reduction in entitlement benefits, reductions in pensions and more to avoid economic disaster – but most are upset that it may happen to them – and will continue to vote with this in mind – making it tough for politicians to make the hard choices to fix the mess! I highly recommend reading this short article that was in the news today:

http://news.yahoo.com/s//ynews/20100504/wl_ynews/ynews_wl1925

These protests in Greece are from people not getting their pensions as expected. Social unrest is breaking out and we will see the same thing here in America. Our tax dollars, via the IMF, are going to bailout Greece, but this bailout only keeps Greece propped up for ONE year – then what? Delaying the inevitable by governments bailing out countries, markets, etc. is, in my humble opinion, completely wrong. Market forces should be allowed to work and make necessary corrections. I have a person that has been really accurate in assessing the economy and he calls Greece “the canary in the coal mine”.

The question is HOW to prepare for the worst. Will the stock market drop or increase? If it drops, how far will it drop? I have heard anything from 2,000 to 6,000 from very soon or in the next 5 years. After the Great Depression of the 30’s, it took the stock market 25 years to recover to its’ high before the fall. Do you have 25 years to wait for the market to return before you retire? Should you be in cash? The dollar strengthened over the weekend, but we are also in our third currency in the United States and as our government has cranked up the printing presses to print more money, the value of the dollar is rapidly decreasing. Should you own gold and other precious metals and if so, how? What stocks will perform better than others in uncertain times? How about real estate? Mortgage resets and lending requirements (both residential and commercial) could create many opportunities for investors to snap up real estate at bargain prices soon, but what type of real estate is better than another?

Originally posted 5-5-2010

I think it is absolutely critical for most people to take more control of their financial future. Most experts predict a transfer of wealth in excess of $50 trillion dollars to take place (it has actually been happening already – can you say ‘short Fannie Mae & Freddie Mac?’). This transfer will be from the uninformed to the informed. For me, I am preparing by getting better informed. I have set goals to get out of as much debt as possible and begin to manage my own money, getting out of all mutual funds and searching for investments that should do very well in our current state of the economy (and even better if it gets worse). If you want to know the books I have read and am reading or other places where I am getting my information, call or reply to this email. All of this is very interesting to me and I am way behind on getting prepared. I welcome your thoughts, opinions and ideas. I end this with a quote I heard recently from a pastor, “Awareness is not a substitute for preparation”.

Should You Seek Advice Today

Originally posted 5-20-2010

This morning may be an excellent time to call your investment manager if you are still in the stock market. Why do I say this? The DOW futures are close to it’s 200 day moving average at 10,200. We have lost almost 10% since the ‘one day’ mini collapse almost ten days ago. I spoke to a close friend this morning and he recently read a report (like this week recently) and it suggested (okay, WARNED) that we could see 1,000 point drops in a day – with no ‘fat finger’ mistake or whatever that was. All I’m saying is the market is pretty volatile and you better pay attention to the financial news because there are many forecasters warning that the stock market could crash to 5,000 or less (one said it needs to go to 2,000). I’m not sure how that will affect your IRA, 401K or investment portfolio, but the last stock market crash (GREAT DEPRESSION) took TWENTY-FIVE years to recover. I don’t know about you, but I may not have 25 years.

This morning, there are strikes in Europe again because the citizens don’t wnt reductions in their benefits. Think those issues and subsequent civil unrest won’t happen here? There is a teachers union asking for a $165 billion bailout of their pension fund and there is a nurses union striking because they need a $100 billion bailout for their pension fund. WE as Americans contributed to the one trillion dollar bailout in Greece (through the IMF).

One other note, a big blow to our “recovery” - which I have never believed was happening, is there were an additional 471,000 new jobless claims, the largest in three months (report comes out today).

Like I said, today could be a good day to call your adviser. Have a great day!

Economic Civil War?

We have all seen the riots in Greece and there is a good chance this scene will replay in Spain and other European countries soon. These riots are from regular people upset that the government is and will be reducing their entitlements, so it is the people against their government. But imagine this scenario, because I think this a possible new type of civil unrest we may see here in the US. Could we experience an ‘Economic” civil war? This would pit neighbor against neighbor as some will be retiring from government and other union backed organizations (politicians, police, firemen, teachers, federal & state employees, autoworkers, etc.).

It is clear that California is pretty much bankrupt, Illinois is in even worse shape financially and there are many more states in serious financial trouble. California is proposing five billion dollar in taxes (although this is extremely unpopular and unlikely to pass – which also means they have no answer to their debt problems), yet Illinois has no such tax increase in the works, so they truly have their heads buried in the sand hoping this will all just go away. Please note that I am not advocating new or higher taxes because I know we need to reduce the size of government, reduce, redo and even better - get rid of – the entitlement programs, and lower the tax burden of the American people. Additionally, we need to toss out ENTIRELY the tax code as it exists today and go to a consumption tax, that way if you buy something (usually because you are living and working here), you pay taxes. That means, even illegal aliens would still be contributing to our taxes – but the tax issue is another issue for another email one day!

So how could there be an ‘economic’ civil war? I can tell you, when one neighbor has to work well into their 60’s or 70’s before they can afford to retire and there are these groups of people retiring in their 50’s and the other neighbor is paying higher taxes for them to not work – I believe their will be civil unrest. When the government goes broke and can’t pay the promised entitlements, those employees will protest like the citizens in Greece are doing, but when neighbors see their neighbors receiving benefits unavailable to them and they have to work longer and pay more taxes to support those entitlements, it could get ugly in the neighborhood! It is estimated that American’s will have to pay 70% in taxes to pay for existing entitlements!

There is an economist (Russell) that just wrote a piece saying everyone better get out of the stock market immediately and get informed because you may not recognize our country by the end of this year. I hope he’s wrong, but…

Have a great day!