What now, what's next?

November 20, 2007:

Dear Reader,

Are you prepared for the coming financial crisis?

We Americans haven't seen one like this since The Great Depression, as the dollar's value will get cut in half, real estate will lose 1/3 of its value and millions of people will lose their jobs.

As a veteran businessman and long term investor, I offer you suggestions to help protect you and your family and as many other people as you and I can reach.

Soon, everything you buy in dollars will cost more. The price of gas is just the start, and that price will fluctuate up and down, but the long term trend will be up.

And with it, so will the cost of groceries and other products you buy because the rising fuel prices make it more expensive to deliver them to the markets.

Those businesses not in a strong enough position to pass along price hikes will either fail, or have to slash expenses such as by laying off employees.

If you've recently traveled to Europe, Japan or Canada, you already know how expensive everything has become when paid for in U.S. dollars. And soon much of what you buy from retailors such as Wal-Mart and Home Depot will become more costly as well because a lot of it is imported.

As a result, dollars are flowing overseas so fast, that nations such as China, Japan, South Korea, as well as the Persian Gulf oil producers, Russia and others are flooded with them and need to invest them before they decline further in value.

They're buying U.S. assets and they're loaning the U.S Government money. Those who loan the money are in a strong position to dictate terms.

They can raise interest rates to make their loans more profitable, and to ensure their loans will be paid back they can encourage raising of taxes and the cut back of benefit programs such as Social Security and Medicare and other reductions in essential services to Americans.

And the cost increases won't stop there. After next year's elections your taxes will rise to pay for the Bush Administration's vast overspending on weapons and war.

All of these factors will combine to throw a lot of people out of work.

So what can you do to protect yourself from the coming financial crisis?

1) Consult with a reputable and objective investment advisor before doing anything. Someone not trying to sell you anything and who can take an unbiased look at your current finances.

This includes tax advise, because taxes are already eating up nearly half your paycheck. It is hard to become financially secure with nearly half your income gone.

2) Invest in income producing assets so that you're not solely locked into the declining dollar. My favorite is residential real estate because we all have to live somewhere and paying the rent is a high priority to most people.

This real estate ideally will be in major job centers, not in 2nd home communities or time shares because in tough times, people walk away from them.

If you choose residential real estate in which to invest, please be aware the market is beginning a sharp drop in value. This is a good time to save your cash because values are falling faster than your dollar is and plan to invest in the months to come when purchase prices will be much lower.

3) Invest in strong foreign currencies or buy assets in countries with strong currencies, as some major investors have been doing. But please be well informed because you could lose everything you invest if you're not knowledgeable. You may find it best to select a well-established, highly credible mutual fund to make these investments for you.

This same approach applies to commodities speculation such as in gold or oil futures.

4) If you can, run an income producing business, preferably one that can adjust its costs during times of financial turmoil and one offering products people need in good times and bad such as food, medical care or other essential items.

Another good business choice in major U.S. cities is to run one catering to immigrants, or get into the travel business, specifically catering to visitors because the U.S. is becoming a cheap place to visit for those with stronger currencies.

5) If you work for a living, preferably be employed by a dynamic company in a fast growing field, whether in medicine, computers, debt collection, energy or other choices that play to your skills.

Also military contracting and law enforcement will provide a strong base of employment for a long time to come.

6) In hard times many financial institutions will fail. Put your savings in FDIC insured accounts.

7) This final choice is one of conscience. Make charitable donations. One of your best investments is to help make the world a safer place as you offer a helping hand to those in need.

Please understand, the U.S. is still a great country and has the world's largest economy. It remains a highly desirable place to live and to work. And for now, people overseas will continue to loan us money to pay our bills.

An informed populace would not have allowed the Pentagon's uncontrolled spending in concurrence with Congress to put us on a road to bankruptcy. Nor would it have let the Bush Adminstration trash our Bill of Rights, while Congress looked the other way.

To correct America's ills won't be easy. It will take a concerted effort, a unity of the American people to restore our nation's finances, its Constitutional government and to end the nightmare the U.S. is unleashing on itself and on the world. But it can and I hope it will be done.

Dick Kazan

November 28, 2007:

Dear Reader,

Yesterday, Federal Reserve Board Vice Chairman Donald Kohn made public remarks that Wall Street interpreted to say the Federal Reserve is prepared to lower interest rates further. Based on that interpretation they drove the Dow Jones Industrial Average up over 300 points for the day.

The Wall Street community desperately wants interest rates lowered because they think it will spur on the Economy and help bail them out of their gigantic real estate loan disaster.

They're wrong on both counts. Lower interest rates can't spur on the Economy if corporations and individuals don't borrow enmasse and reinvest those funds into the Economy.

Corporations and individuals are cutting back, rather than looking to go deeper into debt to keep spending.

As for the real estate loan fiasco, that hole is so deep, and global it's going to suck in everything in its wake and lower interest rates won't even start to bail it out.

To get a sense for the magnitude of this problem and the inadequacy of Wall Street's proposed solution, picture the Titanic sinking and as the water rushes in, passengers using their tea cups to try to bail the water out.

And here's even worse news. If the Federal Reserve does cut interest rates, it will further slash the dollar's value, which is already sinking quickly.

It will strongly encourage the U.S.'s trade partners and lenders to raise prices to compensate them for the increasing decline of the dollar's buying power and to use the dollars in their possession to buy more of the U.S.'s assets.

I don't think many Americans will view this as a good thing.

In any case, we the American people will pay a substantial price for wasting our money on weapons, war and other irresponsible acts of our government. We will get through this together and hopefully learn from our mistakes and not repeat them. And you and I will be wiser for the experience.

But in the meantime, brace yourself for a very scary ride.

Dick Kazan

December 7, 2007:

Dear Reader,

Yesterday, the Bush Administration announced a mortgage bailout plan for homeowners threatened with the loss of their homes.

It actually is meant to bail out Wall Street and the major lenders who profited so handsomely from doing these mortgages and now face the harsh consequences of their irresponsible actions.

This bailout will fail because of the sheer size of the problem, because of the Bush Administration ineptness and because of the diverse interests of the investors worldwide in these mortgages.

Plus none of this will put the millions of people in construction who will lose their jobs back to work, nor will it help the employees of the retailors who sell furniture, appliances, electronics and other new home related items as many of them will also lose their jobs.

Think of this huge fiasco as the Titanic overwhelmed by the rushing sea now being bailed out with buckets instead of tea cups. It will hardly slow the fate of the ship.

There is more bad news. Credit card defaults are rising sharply and headed to record levels, as are auto and truck loan delinquencies.

So far the Bush Administration has announced no bailout plan for these borrowers. Brace yourself for a huge run of bankruptcies and repossessions and many retailors and restaurants facing a big drop in business, with layoffs to come from among their employees as well.

But dear reader, we will get through this together. In the last century the U.S. survived two World Wars and the Cold War as well as the Korean and Vietnam Wars and The Great Depression.

Today, we are faced with the coming financial crisis and with the threat to our democracy by the Bush Administration and the Pentagon. It is in troubled times such as these that heroes arise, and often from where no-one anticipated they would come.

But in the meantime, to protect yourself and your family, please follow the steps I've outlined in "How To Protect Yourself From The Coming Financial Crisis," and look for further advice to come on this website, www.saneramblings.com.

Dick Kazan