In the past newsletters, I have cautioned how there’s going to be an economic downturn. It’s just a matter of when we’re going to have it.
Recent figures show that the housing market in California is starting to get soft. Historically when this happens it starts to move towards the east coast. It could be very rapid and as the last one in 2006 where everything came crashing down. Many people were caught unprepared.
Many countries are having very serious financial issues which could spread to the United States in a very short period of time. Prosperity is in short supply in Europe these days. Countries like Italy and Greece are in a tailspin due to massive government debt in spite of the fact that they have very high tax rates.
Unemployment rates across much of the continent are appalling. Failing banks are constantly being bailed out. The disastrous low birth rate is creating a time bomb for most national pension funds. Many people are not going to have any retirement funds at all because they’re either not funded are underfunded.
As an example a few weeks ago the government of the Netherlands charged and prosecuted one of its own citizens. He is a 64-year-old Dutchman from the town of Sittard near the German border. He sent angry emails to the president of Turkey. The person he criticized was Recept Erdogan the dictator of Turkey. When it comes to ruling with an iron fist Erdogan makes Vladimir Putin looks like an amateur.
The reason I tell you this is these types of occurrences in Europe could cause one of these countries to fall economically. This would have a domino effect throughout Europe which could affect us as well.
We here in the United States are not much better off than many countries In Europe. We’re up to our ears in debt. It’s getting to the point that we as a country may not be able to meet the interest payments on our national debt. There is no fiscal responsibility in Washington. All the politicians do is spend money faster than the government prints it. Imagine if you were to run your own personal finances that way. First of all, you’d get arrested but the government doesn’t.
This brings me to this question – how are your family finances? Are you preparing for a storm that is eventually going to come or are you just continuing to spend the way you have in the past and hoping nothing happens? Someone has to pay for this mess. The taxpayer is going to end up footing the bill and bailing out banks and companies just as we did in 2006.
If you work for a company or the government you should find out whether or not your retirement or pension plan is fully funded. The chances are it’s not. Many cities, Chicago being one of them, didn’t have the money to fund their retirement program and they had to raise taxes just to fund its worker’s pension program. Illinois also has similar problems. They spend, spend, spend and give no regard to where the money is going to come from other than borrow and burden the taxpayer with unnecessary debt and interest payments.
In the United States today the average citizen has 50% of his earnings going towards taxes of some sort whether it be Social Security, Medicare, city, state, sales tax, property tax, or transfer stamps on real estate. And the list goes on. What are you doing to conserve your nest egg?
If you don’t have a savings program start one immediately. I don’t care if it’s just setting aside $5 a week. At least get started. Also pay down your debt and stop making purchases on the credit card.
Don’t wait until disaster strikes before you do something. Then it’s too late. If you haven’t done anything up to this point you are living on borrowed time.