Hi folks.  If you are like me, you are watching the economic news get worse by the day.  And on this MLK holiday, I want to share some of my thoughts regarding the near term future of the United States.  In particular, I want to share with you my thoughts on the economy and the perfect storm that is approaching.

As you know, I live in Ohio.  Ohio is home to two of the poorest major cities in the nation.  Ohio is also highly regarded as the epicenter of the home foreclosure mess.  So as you read this post, keep in mind that I have seen the mess a bad local economy leaves behind.  However, my fear is that our nation’s economy is going to quickly fall to pieces.  Some say we may be headed for a recession, and I’m starting to believe it may become even worse and lead to an all out depression.

First, I think you may find it useful to read a book titled, “The Second Great Depression.”  The author of this book, Warren Brussee, clearly believes an economic depression is on the way.  His book predicted that a depression would start in 2007 and last until 2020.  He may be slightly off on the start of the depression, but his book clearly shows you why we all need to be prepared for potentially one of the worst economic disasters in United States history.

From my point of view, an economic perfect storm is approaching.  We have the following signs that significant economic turmoil is near:

1. Sustained loss of jobs to a cheaper overseas workforce
2. Low paid workers imported to fill jobs
3. Record home foreclosures throughout the nation
4. Banks taking on huge losses because of the foreclosure crisis
5. Value of the US Dollar declining quickly
6. A stalling GDP
7. Health care costs consuming more of the average citizens budget
8. Energy prices that continue to drain consumers of more money
9. Inflation driven mostly by high energy prices
10. Stagnant wages
11. Consumers significantly reducing their discretionary spending
12. Businesses reporting lower then anticipated earnings
13. A Federal budget that will not be balanced in the short term, mainly because of war costs
14. A panicking President and Federal Reserve Chairman pushing an economic stimulus package

And there are certainly more items of concern that I could add to this list.  For example, our country is in a deep downward spiral and yet our elected officials still have not addressed social security and medicare shortfalls.

The only thing missing that would make this a perfect economic storm is high unemployment.  But wait…  Unemployment is low because Americans are hard workers.  Many Americans that lost their jobs took significantly lower paying jobs just to pay the bills.  On average, these workers took a 17% pay-cut.

The fact that an economic stimulus package was quickly announced by the President, and is expected to soon become law, shows the immediate need to shore up economic activity in the US.  Consumers make up 2/3 of our economy, but such a stimulus package will do nothing to stop the bleeding.  It will only result in very short term relief for Americans and the businesses that benefit from our spending.  What should you do with your tax rebate?  My advice, is to put it under the mattress.

There are ways you can prepare for economic turmoil.  Rather then getting into the details, I will simply link to a page written in 2001 by the Mayor of El Cerrito, California.  It covers some basics, but the bottom line is that you should consult a professional financial planner.

Folks, I urge you to stay tuned to your television sets and prepare for the economic hardship that is going to hit our country.  Years of failed leadership, by our elected officials, is finally going to manifest itself in our personal lives. 

Like it? Share it!