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Saturday, February 18, 2012

America, Crash Just Ahead

    Sad to say it sounds like another Crash is just around the corner. Just a matter of time. In spite of  hearing some nice things in the news.  Jobs are up. Unemployment is down. Some companies are posting record profit. Foreclosures have leveled off and the housing market seems to be hitting bottom.  That would all sound good except for one minor piece of bad news. Gas prices are predicted to go up.  Maybe as high as $4 by May. That is not good news because it was high fuel prices that drove the housing bubble to the breaking point.  Already hearing people talking about cutting back to survive. The 06/07 gas price spike was the catalyst that drove the housing market over a cliff.  Americans are definitely not much better off that they were back then.  Many have been working to dump debt.  If gas prices go up so does everything else.  Almost every thing is tied to the price of gas.  Slowly it eats the very small margin many Americans live by.  Most Americans do not have a cash reserve.  They live from paycheck to paycheck and pray nothing comes along to bust the bank.
    In the Great Depression it was about 3 1/2 years from top to bottom and that is where we are at right now.  The market is slowly climbing back up, but it is a house of cards and there is nothing to really support it.  There is plenty of money but those who have it are not willing to let it go.  Really you can hardly blame them.  What really burns me is to listen to the supposed gurus of finance telling people to keep investing in a broken system. It is madness.  Why keep shoveling money into a bottomless pit with very little hope of seeing a return.  There are lot safer ways to invest your money.  Just putting it in your pocket is better than investing in a system that you know is going to lose you money.  At least in your pocket you have control of it.
    One sign of the problem is the escalating prices of everything you need.  Food prices are up, utilities are up, every thing you need is up and as gas prices go higher they will continue to go up.  The only way I see to survive is invest money yourself and my preferred way to do that is real estate.  However that is not done by paying market prices and interest on a piece of property.  The idea is buy a piece of property at a tax sale for a $1000 or less.  No payment means no interest.  Then you can either move in it and dump the house and payment you are now paying.   Or you can put it on the rental market.  It will pay you back your investment five to six times over.  If you take half and put it back in and buy more property and rent it out on the market. You are building a source of income.   Beings you owe nothing on it you can afford to sit on it and pick good renters.  You can also afford to be a hair below the going rate which will make your tenants want to stay in your rental property.  If you keep working a side job and putting half the money from the houses back into buying more property.  In just six years you can have enough houses that you will probably not have to work anymore unless you desire to.
     You certainly can not do it buying houses through banks with payments and taxes you end up doing nothing for yourself.  The house payment on a bank financed house is usually to close to the rental price of most properties.  I am getting away from the whole point of this post.  It is to warn that hard times are coming and to rein in your spending and do not make any big commitments that limit your ability to react to what is happening in the economy.
     Oh but the market is going back up.  It made several false reversals in the Great Depression.  When all was said and done thought the market had fallen 89%.  The scary part is that the Fed is in such a sad financial situation it is not going to be able to do anything but watch the collapse happen.  When all the outside money quits flowing into our system because they no longer consider it a safe investment.  Or they fear losing their money and start bailing out on the U.S. the bottom could fall out.  Just based on what happened back then the bottom would be around 1560.  You say that could never happen. That is what happened back then.  Hoover kept saying it ain't that bad.  We will get through it.  We did, but not till it destroyed almost everything in the process.  It took almost 12 years to recover and the only way that happened was by a World War.  Maybe that is why we are pushing so hard on Iran to justify a way to build our way out of the debt.  However wars nowadays are not destructive enough.  When they are we jump in to fix the problems we created and end up being farther behind than when we started.
     Not to rationalize or change topic, but it sure looks like America has turned it's back on God, and now he is going to return the favor.  It says clearly that in the end of days hard times will be the norm.  Good luck.  Hopefully you can read this a year from now and tell me I was wrong.  I will be glad to hear it, cause we have to also get by the Mayan doomsday prophecies which predict the end in December of everything.  Sorry about all the good news.

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