Please read carefully!
6/8/2015 (4:30am Mountain) – I woke up this morning about two hours earlier than when I need to, something was bothering me. Actually, something has been bothering me for a couple of weeks now but I have hesitated writing about it. Well, that changed this morning.
I have absolutely no credentials in finance, the economy, the stock market or anything closely related to it. Although I do OK with managing the couple of IRA’s and 401K that my wife and I have. But those really don’t count in the bigger scheme of things.
What is of major concern to me at this point is the economy and the stock/bond market combination. I don’t think they look good, not at all. I combed the financial sites and news sources this morning for the last hour and here is what I am seeing:
- USA GDP (Gross Domestic Product) is down 150% since first quarter 2010.
- USA GDP is negative growth 2 out of the last five quarters.
- USA GDP is down 10 out of the last 18 quarters.
- USA economy slowed dramatically in last year, shrank in first three months of 2015 and experts expect second quarter to be slow as well.
- China’s economy is slowing dramatically, dragging world economy into a slowdown.
- US jobs reports look very bad, especially with record increase in people who gave up looking for work (workforce participation rate).
- In the last year the DOW is up overall about 5.5% but it also dropped (corrected) by about 4.5% during the same time period.
- Last six months the DOW is almost exactly where it was when it started but swung over 7% during that time (volatility).
- Last three months the DOW is down by 1.5% but swung almost 5% during that time (volatility and downward trend).
- Last month the DOW is almost exactly where it was then it started but swung over over 2.5% during that time (more volatility).
- Last six months the 10yr-Bond (Treasury) yield is up 15% indicating investors fled to security and are worried about the stock market.
- There is a significant outflow of cash from corporate bond funds.
- A large, and growing, number of financial experts are talking about stocks being overpriced and stocks due for a major correction and economy due for a downturn.
- The growing number of financial experts talking about the economy doing very poorly and US headed for serious problems.
- The growing number of stock market watchers are warning that companies are releasing “…’phoney numbers’ when it comes to profits. At least one of every five companies, these ‘adjusted’ profits were higher than net income by 50 percent or more. Many more companies are in that category now than there were five years ago. And some companies that seem profitable on an adjusted basis are actually losing money.”
- Relations between China and the USA are poor and getting worse.
- Relations between Russia and the USA are poor and getting worse.
I have no idea what all this means from a technical perspective but common sense tells me this isn’t good…and it is getting worse. Then I tie it into these items:
- How home ownership rate is down sharply in last 5 years and is steadily dropping.
- American household income is down since 2006 and dropping sharply since 2008.
- Workforce participation rate has dropped dramatically since 2010 showing many Americans no longer can find a job and have simply given up even looking.
- “Jobs created” numbers have not kept up with the birthrate in America since the “crash” of 2008/2009.
- Income and wealth gaps are widening.
- The national debt has grown at exponential rates since 2006 and double under Obama (7 years), currently stands at well over $18,000,000,000,000.00 That is well more than all salaries, goods, services and all other money transactions by all 320million people in the United States for an entire year.
- There is a historical number of US citizens now depending on food stamps to eat.
- There is a historical number of US citizens now depending on housing subsidies to have a place to call home.
And it is the last note that really worries me the most. There is absolutely no way that he US can ever pay-off its national debt. Zero! Nada! Zilch! The USA can never pay-off its debt…ever!
So what does that mean? I see only two possible and realistic answers:
- The country will continue to go into debt until the point comes where the dollar means absolutely nothing because everyone in the world no longer trusts us economically. The dollar then crashes and brings the USA into economic chaos and a serious “crash” occurs.
- The national leaders in Washington DC will decide that we must pay off the debt to maintain economic credibility in the world. The only plausible way that the debt could be paid off is via “inflation.” The government simply prints so much money that they can pass it around paying off the people and countries that hold US debt. Actually, the US wouldn’t “print” money. They would do it as they have been doing it for the last 7 years, simply creating it on a computer and calling it money as they pass it out to the banks to use. If this tactic is used, everyone holding US debt will realize that they are being paid off in “inflated dollars” and will dump US debt as fast as they can. That will tank the dollar and we will be an economic collapse that makes the Great Depression look like a Sunday picnic in the park with the family.
I am sure all of the experts out there have far different ideas than I do. They know more than I do, have more education than I do, and undoubtedly make WAY more money than I do. But something tells me that we are living in an economic house of cards and it won’t last much longer.
This article is not meant to panic you. I am not suggesting you go buy gold or head to some campground in the mountains. But what I am telling you…BE PREPARED!! Something bad is coming economically and the best thing you can do is be prepared to live as independent of the system as possible. The number one priority would be to have the ability to grow/provide your own food. The number two priority would be to have the ability to protect your family.
But then again…maybe everything will be fine, the economy will do well, the stock market will continue to go up, gas will stay cheap, you will get a raise every year and all will be just fine.
I know what I am thinking, now it is up to you to figure what is best for you and your family.
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