The U.S. is going broke! There are no if, ands or buts about it, America is going bankrupt.
I wish Barack Obama every success in trying to resurrect the U.S. financial system but he has gotten in far too late and he is going to fail. If you'd like to watch the stunning speed in which our national debt is mounting by the second, please click on: http://zfacts.com/p/461.html
The corporate bailouts have been a colossal failure at a staggering cost to you and me, as the U.S. sinks so far into debt, it has no idea how it will pay it back. And if this wasn't bad enough, it is accumulating a stupendous amount of "toxic assets" from these giant corporations, as it races to insolvency.
The bailout process has been a sham perpetrated to save some of the most mismanaged but powerful political contributors using the money of hard working Americans.
But the situation is far worse than that, as so called "Stimulus" programs have also been a disastrous waste of money. Yet more of these programs are coming, and as Mr. Obama said, the U.S. will have "trillion dollar deficits for years to come."
So what is the answer? The U.S. must face the consequences of its horrendous actions. Wars, massive military spending, gigantic record breaking deficits, long importing goods it couldn't afford and shifting most of its manufacturing elsewhere.
Add to that unparalled corporate greed masked by false accounting, still not fully disclosed and lax, if any regulation. Now add rapidly growing defaults that started with real estate and are quickly spreading to car loans, credit cards and other debt and you have a towering tidal wave heading for us.
The U.S.'s creditors see this too and are beginning to wonder how the U.S. will pay them back. If such creditors as China and Japan close their check books, the U.S. government won't be able to pay its bills. That's how bad this mess really is.
The U.S. government can't borrow enough money right now to pay its bills, let alone for new "Stimulus" programs and so starting last September, it began running the printing presses to simply create more cash. This action in itself is a disaster waiting to happen.
Historically, the value of currencies have been tied to something other than the whims of governments. Usually, gold has been the underlying value. But since 1971, the U.S. has been off the gold standard.
This means the dollar has only the value you and I and others think it does. If we lose our confidence in it, it collapses into run away inflation. This is the track America is on.
So what can you do? If you want to protect your financial security and you can afford to invest, invest in useful tangible assets. As a 32-year real estate investor, I prefer residential real estate for even in the worst of times, everyone has to live somewhere and most people will pay their rent. As the dollar loses its value, the asset's value will rise.
To invest, select an area within an hour's drive of your home and get to know the area, its residents, its job base, its businesses, its shopping, its medical services, its schools, its police, etc. Do not buy in a second home community, because in bad times many of those properties are foreclosed.
Then, unless you are an experienced investor, start small. Buy a house or a duplex or a triplex. Finance its purchase with a down payment and a 30-year fixed rate mortgage. As time passes, you'll be paying back that mortgage with ever cheaper, inflated dollars using part of the money your tenants pay you.
Wait patiently for now as real estate values continue to fall but later this year and likely into next year, you'll have many attractive investment opportunities.
Other smart investments include businesses that will stay strong as the dollar declines. Well managed medical care and security businesses are two examples but don't invest if you're not knowledgeable and not going to be involved.
And here's an investment I strongly urge you to consider. Buy at least a small amount of gold. Buy it by the ounce or by a fraction of an ounce. Don't buy a "collector's set" or other TV promotions. As a safety net buy gold, such as U.S. Gold Eagle coins, as a commodity that will retain value as the dollar declines.
The current gold price is about $800 an ounce, and its price will fluctuate. But if the U.S. doesn't get off the track it is on now, over time it will soar in value when measured in U.S. dollars.
I'm no "gold bug" or "the sky is falling" type person. But this is a measure of the times we are confronted with and I'm encouraging you to diversify your holdings to include gold, even if it is in a tiny quantity.
If you are not an American, or you live outside the U.S. the value of your currency is likely to be affected by the U.S.'s irresponsible actions and so please consider what I've recommended for Americans.
Fortunately for all of us, life is about far more than money. I also encourage you to pray and/or to seek serenity through the pleasure of your family, meditation, exercise, smelling the roses or in reading good books or in so many other relaxing ways. And please help others.
Together we will get through this global economic collapse and times will become much better. We will hopefully also learn some valuable lessons from America's grossly irresponsible actions and even tragic conduct in Iraq and Afghanistan and become much wiser, more compassionate people.
Dick
Wednesday, April 15, 2009
The Financial Crisis Made Simple
You're in a plush Las Vegas casino playing craps and the action is hot. You're making big money.
It's like the bankers did in recent years at what also turned out to be the craps tables. As happened with the bankers, the tide turns and you lose all the money. And like them you keep playing.
But instead of winning again, soon you lose all your cash and the cash the casino loaned you. Rather than acknowledge the stupidity of what you did and take your losses, you desperately pull out all your credit cards and double down taking them to their credit limits.
You toss the dice and lose again. Then it hits you, you are due to win if only you don't quit, so you double down again using your house and car and your children's college fund as collateral. You shouldn't take this risk but you're so close to recovering your fortune, just one winning bet away.
You close your eyes and toss the dice. Before you open your eyes, the crowd's mournful cry tells you, you lost everything! You're broke and deeply in debt.
But how can this be? You've always been as solid as a bank and people think you are rich. Now you can't pay your bills and will go bankrupt, damaging everyone who trusted you and lent you money.
Frantic, you call your Uncle Sam and beg for help. He wants to help but he too is deeply in debt. "But all is not lost," he tells you. "I'll get you the money you need so you don't go bankrupt and you can continue to live a lavish lifestyle and pay your creditors."
Your Uncle Sam quickly goes to his biggest lender the Bank of China. But they say, "You're already so deeply in debt to us, we've only been carrying you so you wouldn't go bankrupt and we'd lose our money.
"We'll keep carrying you," they tell him. "But we're going to cut back on what we're lending to you. You've become too big a risk."
Later that day however, your Uncle Sam arrives in Las Vegas and showers you with money. Stunned but joyful and relieved you ask, "Where did this money come from?"
"You're very lucky after all," your Uncle Sam replies. "I have a printing press and can print everything you need. We can keep this whole ugly affair our secret because I changed the accounting rules. Your family will only know I bailed you out."
"But won't this money be viewed as counterfeit and lose it's value," you ask. "Not for awhile," says Uncle Sam. "And in the meantime, enjoy it."
Dick
Dear Reader, What I've described in the preceding story is true. And it gets worse. For example, while the public expressed its outrage at the $165 million bonuses AIG paid itself, Fannie Mae and Freddie Mac paid themselves $210 million in bonuses, with virtually no news coverage.
This system is badly broken and it's not going to fix itself. You have to get involved. Everything you've worked for is at risk. Please raise your voice and fight for it and you can succeed or it will be lost in your silence.
It's like the bankers did in recent years at what also turned out to be the craps tables. As happened with the bankers, the tide turns and you lose all the money. And like them you keep playing.
But instead of winning again, soon you lose all your cash and the cash the casino loaned you. Rather than acknowledge the stupidity of what you did and take your losses, you desperately pull out all your credit cards and double down taking them to their credit limits.
You toss the dice and lose again. Then it hits you, you are due to win if only you don't quit, so you double down again using your house and car and your children's college fund as collateral. You shouldn't take this risk but you're so close to recovering your fortune, just one winning bet away.
You close your eyes and toss the dice. Before you open your eyes, the crowd's mournful cry tells you, you lost everything! You're broke and deeply in debt.
But how can this be? You've always been as solid as a bank and people think you are rich. Now you can't pay your bills and will go bankrupt, damaging everyone who trusted you and lent you money.
Frantic, you call your Uncle Sam and beg for help. He wants to help but he too is deeply in debt. "But all is not lost," he tells you. "I'll get you the money you need so you don't go bankrupt and you can continue to live a lavish lifestyle and pay your creditors."
Your Uncle Sam quickly goes to his biggest lender the Bank of China. But they say, "You're already so deeply in debt to us, we've only been carrying you so you wouldn't go bankrupt and we'd lose our money.
"We'll keep carrying you," they tell him. "But we're going to cut back on what we're lending to you. You've become too big a risk."
Later that day however, your Uncle Sam arrives in Las Vegas and showers you with money. Stunned but joyful and relieved you ask, "Where did this money come from?"
"You're very lucky after all," your Uncle Sam replies. "I have a printing press and can print everything you need. We can keep this whole ugly affair our secret because I changed the accounting rules. Your family will only know I bailed you out."
"But won't this money be viewed as counterfeit and lose it's value," you ask. "Not for awhile," says Uncle Sam. "And in the meantime, enjoy it."
Dick
Dear Reader, What I've described in the preceding story is true. And it gets worse. For example, while the public expressed its outrage at the $165 million bonuses AIG paid itself, Fannie Mae and Freddie Mac paid themselves $210 million in bonuses, with virtually no news coverage.
This system is badly broken and it's not going to fix itself. You have to get involved. Everything you've worked for is at risk. Please raise your voice and fight for it and you can succeed or it will be lost in your silence.
How To Protect Yourself As The Economy Sinks
WARNING: What I'm about to tell you is very strong. It is the opposite of what most experts say will happen. Why should you believe me? In 2007, I published "How To Protect Yourself From The Coming Financial Crisis" on http://www.saneramblings.com far before most experts knew there was a problem.
Since then I've published updates that were also right, while the experts have been wrong as is obvious from the deepening financial disaster that confronts us all. I have nothing to sell you, no ax to grind:
Our ship hit an iceberg and is taking on water fast. The captain and crew are bailing out the water but they're rapidly losing the battle as the water rushes in and the ship will soon sink.
But the captain shouts, there are "glimmers of hope" and many passengers sigh in relief and return to their normal activities. But those who are more prudent quietly make their way to the life boats taking with them others who will follow.
How do you know this disaster is happening? When our financial ship hit the iceberg aside from the jolt, you may not have felt much more. But you will soon. Interest rates have been manipulated by the Fed to record lows. However, those interest rates will rise and then will skyrocket.
Here is why it will happen, how it will affect you and what you can do to protect yourself:
Why will this happen? The already staggering size U.S. debt is rising faster than a mushroom cloud over an atomic bomb explosion and is every bit as toxic.
As a result the Chinese and other major investors are fearful the U.S. will default on its debts or inflate its currency. Fed Chief Ben Bernanke calmed the global financial markets recently by assuring everyone the Fed would join with them and buy up to $300 billion in U.S. debt.
However, confidence soon fell through the floor as investors realized the Fed is creating the money out of thin air to buy that debt. Compounding their fears, the U.S. deficits are mounting faster than ever.
The current estimate of U.S. debt to be funded this year is $2.5 trillion but don't memorize that number because it will soon be higher. By comparison the Fed buying $300 billion of it is a drop in the bucket.
How will this affect you? Inflation. When the cost of money goes up so does the price of what you buy. At first the government will deny it but you'll know better as you pay higher prices at the grocery store, the gas station, and in your home for electricity and gas. The banks you bailed out will charge you more interest and fees and your taxes will jump as federal, state and local governments become strapped for cash.
What should you do? If you have long term financings planned, do them soon while interest rates are at record lows, and do them with fixed rate financing only. You will not see interest rates this low again for many years and you will be glad tomorrow that you locked in those low rates today.
Second, keep your job. Either become an expert in a field the public needs such as healthcare or become a jack of all trades by learning to perform many different functions.
Third, if you can afford it please invest in income producing assets. For example, buy residential real estate in major job centers, preferably in low crime, good school communities. Everyone needs to live somewhere and most people will make it a high priority to pay you. That money will be in ever inflating dollars as they pay off your property and give you income.
Forth, some sophisticated investors are already buying gold as a hedge against the dollar collapsing. You too may want to buy U.S. Gold Eagles or other one ounce or smaller gold coins.
Fifth, life is precious so enjoy each day you have. It costs nothing to give a hug or to smell a rose.
Because of the rampant greed and a broken system that rewards it with bailouts and stimulus plans, and a powerful dependence on military spending, the U.S. will pay whatever it has to get money. Please take some or all of these steps to protect yourself.
Eventually we will rise from the ashes, hopefully a better and more compassionate society, wiser from the experience. The good news is we are all in this together and together we can help one another, as we persevere and triumph together.
Dick
Since then I've published updates that were also right, while the experts have been wrong as is obvious from the deepening financial disaster that confronts us all. I have nothing to sell you, no ax to grind:
Our ship hit an iceberg and is taking on water fast. The captain and crew are bailing out the water but they're rapidly losing the battle as the water rushes in and the ship will soon sink.
But the captain shouts, there are "glimmers of hope" and many passengers sigh in relief and return to their normal activities. But those who are more prudent quietly make their way to the life boats taking with them others who will follow.
How do you know this disaster is happening? When our financial ship hit the iceberg aside from the jolt, you may not have felt much more. But you will soon. Interest rates have been manipulated by the Fed to record lows. However, those interest rates will rise and then will skyrocket.
Here is why it will happen, how it will affect you and what you can do to protect yourself:
Why will this happen? The already staggering size U.S. debt is rising faster than a mushroom cloud over an atomic bomb explosion and is every bit as toxic.
As a result the Chinese and other major investors are fearful the U.S. will default on its debts or inflate its currency. Fed Chief Ben Bernanke calmed the global financial markets recently by assuring everyone the Fed would join with them and buy up to $300 billion in U.S. debt.
However, confidence soon fell through the floor as investors realized the Fed is creating the money out of thin air to buy that debt. Compounding their fears, the U.S. deficits are mounting faster than ever.
The current estimate of U.S. debt to be funded this year is $2.5 trillion but don't memorize that number because it will soon be higher. By comparison the Fed buying $300 billion of it is a drop in the bucket.
How will this affect you? Inflation. When the cost of money goes up so does the price of what you buy. At first the government will deny it but you'll know better as you pay higher prices at the grocery store, the gas station, and in your home for electricity and gas. The banks you bailed out will charge you more interest and fees and your taxes will jump as federal, state and local governments become strapped for cash.
What should you do? If you have long term financings planned, do them soon while interest rates are at record lows, and do them with fixed rate financing only. You will not see interest rates this low again for many years and you will be glad tomorrow that you locked in those low rates today.
Second, keep your job. Either become an expert in a field the public needs such as healthcare or become a jack of all trades by learning to perform many different functions.
Third, if you can afford it please invest in income producing assets. For example, buy residential real estate in major job centers, preferably in low crime, good school communities. Everyone needs to live somewhere and most people will make it a high priority to pay you. That money will be in ever inflating dollars as they pay off your property and give you income.
Forth, some sophisticated investors are already buying gold as a hedge against the dollar collapsing. You too may want to buy U.S. Gold Eagles or other one ounce or smaller gold coins.
Fifth, life is precious so enjoy each day you have. It costs nothing to give a hug or to smell a rose.
Because of the rampant greed and a broken system that rewards it with bailouts and stimulus plans, and a powerful dependence on military spending, the U.S. will pay whatever it has to get money. Please take some or all of these steps to protect yourself.
Eventually we will rise from the ashes, hopefully a better and more compassionate society, wiser from the experience. The good news is we are all in this together and together we can help one another, as we persevere and triumph together.
Dick
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