How can you protect yourself if the U.S. economy collapses?

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Mon Jan-03-11 05:10 PM
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How can you protect yourself if the U.S. economy collapses?

How can you protect yourself if the U.S. economy collapses?
posted with permission from http://sane-ramblings.blogspot.com/

The reason the U.S. economy will collapse is surprisingly simple. It is based on consumers borrowing money they don't have to buy goods they can't afford, most of which are made overseas.

Meanwhile, the housing market is growing weaker with prices falling and sales slumping and there are already a mountain of foreclosures and more to come. Closely related to this is the dismal jobs market in which 15 million people are unemployed and several million more are no longer counted because their benefits ran out or they have jobs but are paid much less than they used to be. And despite what you read, there is no such thing as "a jobless recovery."

At the same time, the U.S. government is having to pay higher interest rates to borrow 5, 7 and 10 year money. This is because investors are becoming nervous about the government's skyrocketing deficits and how it will pay that money back. To combat this, the Fed is trying to slash those rates by printing more money to use in buying U.S. government debt, creating the mis-impression there is more demand than there actually is. But knowledgeable bond buyers won't be fooled by this publicly undisclosed action and it will make them more nervous.

But what matters most to us with the U.S. government debt is what I call a ticking debt bomb, meaning if the government didn't borrow another nickel, just having to pay higher interest rates on its current debt, even just 3 or 4 more percent, will send its costs through the stratosphere.

But you may say, "Things aren't so bad. What about the sharp rise in earnings of America's biggest companies?" Yes, they're doing great borrowing cheap money thanks to the Fed and by slashing their manufacturing costs by producing outside the U.S. and by capitalizing on fast growing markets as in China by hiring Chinese people to produce the products there.

"But what about the U.S. stock market," you may also ask. "It's practically back to pre-collapse levels." It is but remember this is a rigged game. There is no different oversight or tougher regulations than existed before the collapse. And of course Wall Street bonuses are now the highest ever, which encourages rampant speculation.

How can you protect yourself? Become invaluable where you work. Cross train and at all times be thinking about how you can help your firm make money or save it, for that's how its top management thinks. And continue to educate yourself so you have valuable skills to offer the marketplace in case you lose your job. Also, pay down your debts so that your credit cards and other borrowings don't bury you.

The U.S. will eventually come out of this mess but so far, it hasn't really been hit with the full force of the tsunami which is still building. In the last two years, to offset the affects of the last tsunami the Fed bailed out everyone "too big to fail," as it often printed money or took over "toxic assets" to do it. Now the fed is running out of options and along with the U.S. government, is spending us into oblivion.

There is one thing more to remember and it is the most important of all: Life is short and it is precious. Take care of your health. And no matter what happens, you are not alone for we are all on this spiritual journey together, one transcending money and petty politics. However strongly we will all be impacted by what is to come, please try to enjoy each day of your life. Smell the roses, read great works, enjoy fine films but most of all, devote yourself to your family and friends as you appreciate the priceless joy they bring to you.