Is Another Depression Coming?

The global economy led by the U.S. and Europe is already crumbling. To save the Euro Zone from collapse will require Germany to bail it out, something neither it or the International Monetary Fund have the money to do. Meanwhile Portugal, Ireland, Italy, Greece and Spain are sinking and England is right behind them, which means European banks and other lenders have huge but undeclared losses and may need massive bailouts.

While in the U.S., the job market is a disaster and it is growing worse. And there is no such thing as "a jobless recovery." Small business, the U.S.'s primary "jobs engine," in many cases is struggling to keep its doors open. Wherever you live, failing businesses are all around you as are "For Lease" signs. With the falling job market, many buyers can't qualify for mortgages, home foreclosures are mounting and the real estate market is sinking. And from the Fed having pumped so much stimulus money into the economy, inflation at 3.6% is growing, which reduces the buying power of a paycheck. The U.S. economy is 70% consumer consumption yet consumers are overwhelmed in debt and not buying goods other than what they need.

Meanwhile, the U.S. government, by far the world's biggest debtor nation is drowning in deficits, yet still spending staggering sums it doesn't have on wars and on its military industrial complex. While the Washington politicians are in gridlock, even as our economy is crumbling. It's no wonder the Dow gyrates wildly up and down. There is so little confidence in the U.S. dollar, investors prefer owning Swiss Francs, the Japanese Yen, Gold and other valuable commodities rather than the U.S. dollar.

So where is the foundation for an economic recovery? If you have an answer, please share it. But in the meantime, you would be wise to slash your overhead and cross train, as you further develop your skills so that you have a better chance to keep your job if you are fortunate enough to have one. Because this is the U.S., it is hard to believe the U.S. government would default on its debts but that is exactly the path it is on. As the government takes in just 61 cents for every dollar it spends and is in gridlock, don't fool yourself to think it won't default. And when it does, we will need each other more than ever, for we will all be effected.

Dick
If you would like to know more about the economy, please see "Economy Sinks Markets," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903639404576516054025747710.html and "A Shaken Europe Looks for Bolder Fixes," The Wall Street Journal http://online.wsj.com/article/SB10001424053111903596904576516663024370704.html