I Told You So

The news is so bad these last few weeks, I struggle with where to start.  Some have poo-pooed my warnings and urgings to prepare and store for what I believed was sure-to-come financial upheaval.  Since I started blogging about this in November of 2010, gold is now up from $1375 to now hitting $1700 an ounce.  Silver was just under $28 an ounce and is now bumping $40.

Food supplies are in danger due to drought and natural disasters, not only in the U.S., but in other parts of the world where we get some of our foods.  I was in Walmart the other day and was shocked to see multiple signs around the produce department stating that the supply was impacted due to drought conditions and prices certainly reflected that. The prices were over double what I normally see for Walmart produce.

Our country’s credit rating was dropped by Standard and Poor’s and more credit rating agencies are threatening to drop their ratings as well.  The chairman of the Chinese rating agency, that has also downgraded the U.S., says that the world is discarding the U.S. dollar.  Standard and Poor’s says it may even downgrade the dollar further!  The stock market is melting on the awful downgrade news. All the while, former Fed chairman Alan Greenspan says there isn’t a problem because we can always print more money. Guess where that will take us?  Straight to inflation, or possibly even hyperinflation.  That sounds like a good move – NOT.

So if you’ve been paying attention to the news and politics at all in the last few months, you should have shaken yourself out of any apathy that might have been resident in you and started to think about your future.  Take this as a huge wake-up knock on the head to get out of debt before interest rates rise.  Buy extra food and save up money and even some silver or gold to help you weather the probable downturn our country’s financial “machine”.  The machine isn’t working so well and it looks like it is going to break.  I personally don’t believe the “machine” is repairable with our existing Congress and their inability to cut our deficit and spending by any significant amount. 

Wake up. Smell the coffee.  Things are not same-old-same-old anymore.  The landscape is changing right in front of our eyes.

Image: scottchan / FreeDigitalPhotos.net

It’s All Greek to Me

Greece’s economy has been floundering for quite some time and as the government scrambles to stay afloat, the citizens are protesting those moves in sometimes violent uprisings.  What’s scary is the impact this all has outside of Greece.  In a Reuters article (6/24/2011), “European banks and insurers are scrambling” and “stocks continued to decline and credit default swaps for Greece, Italy and Portugal widened on the renewed concerns about a potential default. The Euro also declined against the US dollar for the third straight day.”

James Neuger (6/22/2011) of Bloomberg writes that,  “…European leaders’ failure to tame a crisis that is entering its 21st month and has world leaders growing anxious over the prospect of a new financial tsunami as they shake off the effects of the last one.”  He quotes Andrew Balls, the head of Pacific Investment Management Company European portfolio management, “The 256 billion euros in aid committed to Greece, Ireland and Portugal have done little more than buy time against a looming default.”  He goes on to say, “If you quarantine Greece, Ireland, and Portugal, take these countries out of the market, have them do their adjustments, then you can buy time for Spain, buy time for banks to recapitalize.”

Greece’s Papandreou and his new government is trying hard to restructure the spending and bring in austerity measures. The people don’t like it.  Protesters line the streets and police are called out to break up the mobs with tear gas.  Neuger writes about “Reform Fatigue” that is now in the streets; support of these floundering economies is fading as well. Some see a split coming for the euro.  The split is between the wealthier northern countries and the poorer ones of the south.  It is now being reported that Italy is facing serious financial difficulties after supposedly healing up from economic wounds in 2009 and 2010.  Moody’s is threatening to downgrade Italy’s credit rating.  A USA Today article (6/24/2011)  says that this “Italy’s  financial system has come under further scrutiny on fears of contagion from the Greek crisis.” The article states that, “The move comes after Moody’s put Italy’s public debt on review for possible downgrade over concerns about low growth and high public debt, which is around 120% of GDP is one of the biggest in Europe.”

It seems that, in today’s global economy, the impacts of one country stumbling are significant.  The investments of banks all over the world which hold the debt of these governments become unstable.  Countries that are stronger and hold investments in many of these powerful banks have to throw their good money after bad. Everyone suffers. An article from TheTrumpet.com (6/22/2011) noted Jean-Claude Juncker, head of Eurogroup – the eurozone’s finance minister, said, “…that the Greece crisis could affect Italy and Belgium, saying that “We’re playing with fire.”” The article went on to state that “The crisis could now be spreading beyond Europe’s most vulnerable nations.  If it continues, even France’s credit worthiness could be in danger.”

So what does this upheaval in European economies mean to us? The U.S. is not far behind.  We’ve been warned about our credit rating.  We have no money left.  We spend more than we bring in.  Our debt is unsustainable.  When (and I do hope it happens) they do initiate the necessary spending cuts needed to get our budget under control, I suspect we’ll see protesters, not unlike what is happening in Europe, hit the streets.  People like the idea of fixing our budget woes but hate it when those cuts hit them.  The alarming thing is that many cities have had to cut police and fire in order to meet their budgets.  That means the cities may have trouble keeping up with the potential issues that could arise.
What do you do?  Here are just a few things to think about:

• Pay off your own personal debt so you don’t get caught up in any interest rate hikes that are likely to come.  Live within your means.
• Become independent: don’t rely on government hand outs in any way shape or form – they likely will go away
• Be prepared for higher taxes, even on your 401k’s (yes, our government has even talked of that)
• Be prepared for angry citizens who don’t like the cuts that will be required

I know I haven’t even come close to covering everything you should do to steel yourself for the economic upheaval I believe is coming our way.  These are just a few things to think about.
Feel free to comment on other good ideas.

And They Said the Recession Was Over…

I remember hearing reports in 2010 that the recession was officially over in 2009. The National Bureau of Economic Research (NBER), an independent group of economists, reported that the recession started in December of 2007 and ended in June of 2009.  Well, I didn’t buy it.  Things still looked pretty bad to me.  My gas cost more, my food cost more, many friends and acquaintances were losing jobs and homes.  And it hasn’t seemed to get any better.  In fact, since 2009, my food bill has gone up for staples like milk, eggs, sugar, and fresh produce.

A May 25th article in Bloomberg by Alan Bjerga and Leslie Patton explain that U.S food-price inflation may top the government’s forecast because higher prices for meat, dairy and energy hit large corporations like Nestle, the largest food company in the world, McDonald'’s and Whole Foods (the world’s largest natural foods grocer).

Another Bloomberg article on June 8, 2011 by Sungwoo Park said “Gold May Gain as Rallies in Corn, Oil Fan Concern Inflation May Accelerate.”

The Daily Caller posted an article by Neil Munro (June 8, 2011) with the headline, “Federal Data Shows Troubling Unemployment, Underemployment Trends.”  That article states that, “Less than half of African-American men now have full-time jobs, and less than half of all white men will have full-time jobs in 2018…”

A recent CNN poll was written about in the left-wing site Huffington Post (June 6, 2011) by James Sunshine, stating that nearly half of all Americans believe we are nearing a great depression.

Time Magazine’s June 8th cover story: “What Recovery? The Five Myths About the U.S. Economy.” 

• Myth 1: This is a temporary blip, and then it’s full steam ahead
• Myth 2: WE can buy our way out of all this (Kat’s note: QE/stimulus packages don’t work)
• Myth 3: The private sector will make it all better
• Myth 4: We’ll pack up and move for new jobs
• Myth 5: Entrepreneurs are the foundation of the economy (Kat’s note: our current Administration’s policies have made entrepreneurship a complicated and difficult.  This suppresses that inherent entrepreneurial spirit that has long been the back-bone of the U.S. economy.)

So are you better off now than you were 2 years ago in 2009 when the recession ended?

Missing in Action

To my five faithful followers, I want to extend an apology for not blogging for weeks.  I’ve succumbed to job stress, illness, and then took a vacation; all of which contributed to the lack of time and/or energy to post anything.

That said, I have not stopped scouring articles and commentaries for important information about the state of our great country.  The news has not gotten better.  However, I am pleased that the price of gas has gone down a few cents.  I’m not optimistic about the long-term likelihood of that continuing though in that we are just now heading into summer when prices typically shoot up as requirements for special mixes for gasoline come into play.  I’ve had to adjust my budget for our road trip coming up in October (we’re driving down to the famous national parks in Utah).

Our family has been working hard to set ourselves up for success in this economy with the weakening dollar.  We’re stocking up our pantry so it won’t bite the budget quite so hard as these prices start shooting up.  We’ve all heard and seen the news; I’ve even blogged many of the articles about skyrocketing prices on sugar, coffee, corn, grains, and more.  I’ve already noticed a huge increase in my typical grocery bill for staples like eggs, milk, cheese, and produce.  I imagine fresh foods will go up dramatically just because of crop failures due to these massive storm systems that have wiped out the mid-west.  I know many crops in Mexico and the southern states got hit with uncharacteristic freezes and cold weather which means fruit is impacted as well.

So, when there’s a sale on anything, stock-up.  Instead of buying one or two cans, buy four or five.  Consider starting a small garden this summer and plant vegetables like lettuce, spinach, tomatoes and beans.  I’m looking forward to having my own organic garden this year, even with my tiny yard.

I also suggest checking out the Grocery Outlet and Summit Grocery (see their website here http://10lbsormore.com/) where you can get great deals on canned goods, but be sure to check the expiration dates.  I always look for dates that are over a year out; two or more years is even better.  Remember that highly acidic foods do expire much faster, so don’t expect to find a lot of expirations out more than a year. 

One thing you have to do and is very important - rotate your foods so you don’t end up with expired foods.  A cupboard full of expired foods is just a waste of money.  However, there are some foods that I don’t worry about expiration quite so much; things like boxed macaroni and cheese, popcorn, or pasta noodles.  If they’re a couple of weeks or even a few months past, I don’t worry about it.  We’ve eaten them anyway and are still alive and well.  Our family has adopted a “hot shelf” where we place items that are either recently expired or soon to expire.  That is our go-to shelf first when planning meals.

One other thing you may want to consider is getting a freezer.  You can find them cheaply on Craigslist if you want to go the used route.  I was able to get a great deal on fresh chicken breasts, ground turkey and more and because we had the freezer I could stock up.  We’ve also invested in a vacuum packaging machine which adds extra life to our frozen foods.  Instead of chicken lasting only a couple of months in the freezer in their original packaging material, the vacuum packaging machine means I can safely keep my foods for up to a year.

Stocking up means some peace of mind for my budget.  It also means that I am not making very many trips to the store just to prepare a meal.  We now have plenty of food to choose from on any given day.

Stock up and save!

Image: xedos4 / FreeDigitalPhotos.net

The End of America?

The Wall Street Journal’ Market Watch site posted an article by Brent Arends (April 25, 2011) that stated the International Monetary Fund (IMF) has set a date for when China will overtake the U.S. as the most powerful economy in the world.  They give us 5 years.

The article says, “According to the IMF forecast, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy. “

Their analysis looks at the “purchasing power parities” which compares what we, the people, actually earn and what is spent in our respective economies.

Ten years ago our economy was three times larger than China’s.  No more. The Journal quotes an unnamed European strategist as saying, “We are witnessing the end of America’s economic hegemony” [dominance].

The article is a real eye opener and I hope you read it: “IMF bombshell: Age of America nears end.”

Another brain shattering commentary, which is worth the hour long investment, is the “End of America” which was created by Porter Stansberry who has correctly predicted the collapse of other companies and banks.  Read the Market Watch’s summary of this video and a link to the video here. Get your beverage and your popcorn ready, it is a long video and it is pretty much just a listening event since there are no pictures; it’s like a very long PowerPoint slideshow, but compelling all the same.

Big question: what do we do?  Will our lives be affected?  What will this change for us?

Image: jscreationzs / FreeDigitalPhotos.net