Why We Are Truly In Trouble
As you’ve read by now, I am building a SHTF plan that I fully intend on having to use. A large part of the reason I believe that is I cannot I continue to be baffled by politicians and other finance talking headings telling everyone that things will get better. Even President Obama said as much in his State Of The Union address. However, I remain skeptical that things will turn around. The reason…I need to understand what events will cause a shift in our current path. Let’s break it down into the main areas that are likely impacted.
What makes anyone think housing in the US will rebound? Who exactly is in the position to buy homes? Young folks out of college are struggling to find work. Young couples already in homes are likely underwater or breakeven at best and not in the position to move up. Middle aged couples usually don’t make moves unless it’s work related or to move up. Older folks are likely to stay in their existing home and, with the rising cost of living, certainly not looking to take any risks.
In addition, you have many home owners in some stage of foreclosure. As they sell or are forced out, they will likely move to a rental and not buying another home. It’s very unfortunate but with the lack of buyers, the prices will stay depressed or be dragged down even further. While many are calling a bottom, how do you justify the argument?
Verdict: It’s won’t be housing that turns around.
With unemployment officially at 8.3 % and unofficially at 11+%, it stands to reason that quite a few events need to take place to reverse that trend. Consumers and businesses are not spending. We can’t expect businesses to start hiring when the economy is so fragile. If you were running a small business, would you chance hiring people right now? I certainly would not as there is too much risk. So, with all the uncertainty is it a surprise that people have given up on finding work?
Verdict: High unemployment looks to be here to stay
3. Stock Market
Many believe that the market will rally? What I’m unsure of is what news will cause this rally? Dropping or flat unemployment, European countries defaulting, S&P country downgrades? Even individual companies are missing on earnings and those that hit earnings are doing it despite decreasing revenues (read as continued cost cutting). There’s only so much companies can cut until they reach the bone.
The other issue is capital that is leaving the stock market. Many families in trouble have had to tap their investment savings (if they had it) or worse, their 401ks. Worse still is that many pension funds have become more conservative after the beating they took over the last several years. They assume 8% returns which is just something that doesn’t happen any more.
Verdict: The market seems poised to remain flat for the time being
4. The World
While the US is quite a mess, there is enough going on overseas to significantly impact our world. Do we really think the world will become more stable in the near future? The euro is likely to collapse causing a major ripple effect to the US economy. The tensions in the Middle East are at all time high and I believe most people feel that war with Iran is inevitable. Syria is killing their own people and Libya and Iraq are more unstable than they were 2 years ago. Things will certainly get more complex and we can potentially see the SHTF there.
Verdict: We’re likely no too far off from the SHTF
So, I really have a hard time understanding what positive change will start the ball rolling in the right direction. Rather, I believe things are headed in the other direction. The elections in the US help drive my point home. Ron Paul seems to be the only candidate that cares about bringing this country out of debt. However, he is not likely to win the Republican nomination much less the presidency. People don’t seem to care about or understand how the debt impacts our economy. I believe people are too wrapped up in their lives to really pay attention to what needs to be done. That doesn’t bode well for us.
My friends, all I can say is please have your family and loved ones prepared. There is little harm to be ready for the TEOTWAWKI by building a good SHTF plan.