How To Protect Yourself From The Coming Financial Crisis (posted with the author's permission)
http://saneramblings.com/phpBB/viewtopic.php?t=217&sid=4afa5a9f7386407b362314369e301d62Are you prepared for the coming financial crisis?
We Americans haven't seen one like this since The Great Depression, as the dollar's value will get cut in half, real estate will lose 1/3 of its value and millions of people will lose their jobs.
As a veteran businessman and long term investor, I offer you suggestions to help protect you and your family and as many other people as you and I can reach.
Soon, everything you buy in dollars will cost more. The price of gas is just the start, and that price will fluctuate up and down, but the long term trend will be up.
And with it, so will the cost of groceries and other products you buy because the rising fuel prices make it more expensive to deliver them to the markets.
Those businesses not in a strong enough position to pass along price hikes will either fail, or have to slash expenses such as by laying off employees.
If you've recently traveled to Europe, Japan or Canada, you already know how expensive everything has become when paid for in U.S. dollars. And soon much of what you buy from retailors such as Wal-Mart and Home Depot will become more costly as well because a lot of it is imported.
As a result, dollars are flowing overseas so fast, that nations such as China, Japan, South Korea, as well as the Persian Gulf oil producers, Russia and others are flooded with them and need to invest them before they decline further in value.
They're buying U.S. assets and they're loaning the U.S Government money. Those who loan the money are in a strong position to dictate terms.
They can raise interest rates to make their loans more profitable, and to ensure their loans will be paid back they can encourage raising of taxes and the cut back of benefit programs such as Social Security and Medicare and other reductions in essential services to Americans.
And the cost increases won't stop there. After next year's elections your taxes will rise to pay for the Bush Administration's vast overspending on weapons and war.
All of these factors will combine to throw a lot of people out of work.
So what can you do to protect yourself from the coming financial crisis?
1) Consult with a reputable and objective investment advisor before doing anything. Someone not trying to sell you anything and who can take an unbiased look at your current finances.
This includes tax advise, because taxes are already eating up nearly half your paycheck. It is hard to become financially secure with nearly half your income gone.
2) Invest in income producing assets so that you're not solely locked into the declining dollar. My favorite is residential real estate because we all have to live somewhere and paying the rent is a high priority to most people.
This real estate ideally will be in major job centers, not in 2nd home communities or time shares because in tough times, people walk away from them.
If you choose residential real estate in which to invest, please be aware the market is beginning a sharp drop in value. This is a good time to save your cash because values are falling faster than your dollar is and plan to invest in the months to come when purchase prices will be much lower.
3) Invest in strong foreign currencies or buy assets in countries with strong currencies, as some major investors have been doing. But please be well informed because you could lose everything you invest if you're not knowledgeable. You may find it best to select a well-established, highly credible mutual fund to make these investments for you.
This same approach applies to commodities speculation such as in gold or oil futures.
4) If you can, run an income producing business, preferably one that can adjust its costs during times of financial turmoil and one offering products people need in good times and bad such as food, medical care or other essential items.
Another good business choice in major U.S. cities is to run one catering to immigrants, or get into the travel business, specifically catering to visitors because the U.S. is becoming a cheap place to visit for those with stronger currencies.
5) If you work for a living, preferably be employed by a dynamic company in a fast growing field, whether in medicine, computers, debt collection, energy or other choices that play to your skills.
Also military contracting and law enforcement will provide a strong base of employment for a long time to come.
6) In hard times many financial institutions will fail. Put your savings in FDIC insured accounts.
7) This final choice is one of conscience. Make charitable donations. One of your best investments is to help make the world a safer place as you offer a helping hand to those in need.
Please understand, the U.S. is still a great country and has the world's largest economy. It remains a highly desirable place to live and to work. And for now, people overseas will continue to loan us money to pay our bills.
An informed populace would not have allowed the Pentagon's uncontrolled spending in concurrence with Congress to put us on a road to bankruptcy. Nor would it have let the Bush Adminstration trash our Bill of Rights, while Congress looked the other way.
To correct America's ills won't be easy. It will take a concerted effort, a unity of the American people to restore our nation's finances, its Constitutional government and to end the nightmare the U.S. is unleashing on itself and on the world. But it can and I hope it will be done.
Dick
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