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As Financial Reality Approaches…

As Financial Realty Approaches…

There is both hope and immense opportunity.

The cold hard truth is that the backbone of the world’s most successful financial system is broken. This is not a gloom and doom statement.  Actually it is positive recognition that we can prepare and make it through the financial mess that is imminent.

This statement also acknowledges that we have to look out for ourselves – because Big Brother will not. It’s up to us individually.

The solution does not include sticking our head in the sand and hoping the storm will pass without affecting us – like Congress, the White House, the Fed and big banks are doing. This is the main event. There are many ways to prepare and in fact be positioned to become wealthy amid the inevitable coming financial correction.

Abundant Opportunity Ahead…

Now is actually the time to take advantage of the abundant opportunities that are available in today’s markets. You still have time to make adjustments that can benefit you significantly in the times ahead. Adhering to the status quo and complacency are not the answer.

In order to survive the growing financial storm successfully, it is essential to listen to advisers who have a solid track record of making profit during a recession – as opposed to listening to those who created the recession in the first place through poor leadership, fiscal policy or financial management. We have to make smart choices NOW no matter what the talking heads and financial experts in the mainstream media tell us.

Perpetuating and expanding your investments managed by failing investment companies and banking institutions is not the solution.

Just this morning I read an article about the post office defaulting on:

“With cash running perilously low, two legally required payments for future postal retirees’ health benefits — $5.5 billion due Wednesday, and another $5.6 billion due in September — will be left unpaid, the mail agency said Monday.”    Associated Press

$5.5  Billion Worth of postal retirees’ HEALTH BENEFITS!!!  And that’s only the part that is due and payable tomorrow. Wednesday the 1st of August.

Here is what Fredric Rolando, president of the National Association of Letter Carriers, says about the situation:

He notes that the onerous health payment for future retirees — something not required of any other government agency or private business — is to blame for much of the post office’s red ink. He faults Congress for mandating the payments in 2006, saying they force the post office every year into a “panic mode that absorbs energy and resources” rather than focusing on longer-term innovation.

“The word ‘default’ sounds ominous, but in reality this is a default on the part of Congress,” Rolando said.

Read more here: Post Office Nears Historic Default on $5B Payment

Rolando blames the problem on Congress for making the post office pay for health benefits and Rolando is complaining saying no other Federal Agency has to. It’s as if he is saying the post office would be fine if Congress didn’t make us fund our debt obligation. Is Rolando’s implied solution to ignore the debt actually a viable alternative?

Who’s kidding whom?

uncle sam's debtThis whole subject – future Federal retiree health benefit payments –  is just the tip of the iceburg of unfunded liabilities hidden deep within the annals of “government bookkeeping practices”. There is no way to pay for this(these) disaster(s) unless Congress – or the Fed – creates the money out of thin air.

And how has that been working for YOU over the last 3.5 years?  It helped bankers, not the little guys. But who is paying for it?

The post office has been a financial disaster in the making for a long time. Were it a private enterprise they would have been out of business a long time ago.

The Post Office is only a minute fraction of the problem. It represents a growing magnitude of financial instability. It symbolizes the irrational behavior of burning up resources at an unprecedented rate – without the capacity – or a plan – to replace them. It reflects an obscene debt to equity ratio that goes far beyond the lack of common sense.

Financially this is not a flash flood that nobody expected. It is a tsunami that has been accurately identified and predicted by smart financial people for quite some time.

A few years ago I wrote an article entitled “What Does a Billion Dollars Mean?” That year the federal spending was $2931.2 Billion for 2008.

Guess what?

Look at the way Congress  spent money in 2011…

Let’s look at the “deteriorating fundamentals” using the research of Antony Davies, Ph.D., a Research Fellow at the Mercatus Center at George Mason University and associate professor at Duquesne University.

Dr. Davies has presented his research to many venerable associations and institutions like the Econometric Society, the American Economic Association, the U.S. Department of the Treasury, the U.S. Congress, among others.

According to Dr. Davies’ calculations, the Federal Government received $2.2 trillion from ALL revenue sources in 2011. But, the government spent $3.8 trillion. This resulted in a deficit of $1.6 trillion for the year. In essence, the annual inflow did not equal the annual outflow — and there was still a whole lot more “year” left over … after ALL the money was spent.

Source: moneyandmarkets.com

On the left is a screen shot of an analysis of what it means for the government to spend $3.8 trillion dollars in one year. Frankly I have no conceptual grasp of what $1 Trillion dollars  ($1,000,000,000,000)  or (1000 Billion dollars) means.

Try counting to a trillion…

But I can understand what spending $434 Million dollars an hour means – about half of which is borrowed.

That translates into 10,416 $ Millions (10,416 x $1,000,000) every 24 hours.

Try to get your head around the magnitude of what we’re talking about here.

See yourself sitting down at your desk with your checkbook and you are writing the checks.

If you take the number of $Millions per day being spent every 24 hours, it means you will have to write 434 (four hundred thirty four) $1Million dollar checks every hour.

That means you have to write approximately  7.23 (434 /60 = ~7.23) $1 Million dollar checks every minute, 24 hours a day, 7 days a week, 365 days a year.

Since there are 525,600 minutes in a year (60 min/hr x 24 hr/day x 365 days/yr).  That means you would have to write approximately 3,800,088 (7.23 x 525,600) $1  Million dollar checks  every year.

Talk about writers cramp…

Not only that, imagine that for every 10,416 $Million (10,416 x $1,000,000) dollars of checks YOU WRITE EVERY TWENTY FOUR HOURS, you only have about 5,000 $Million (5000 x$1,000,000) Dollars in your checking account.

Imagine yourself doing this 365 days in a row, having to borrow about $ 1,825,000 Million  ($5000 Million x 365) to do this. Imagine also how much interest payable is accumulating just on the $1,825,000 MILLION DOLLARS YOU BORROWED THAT YEAR ALONE…

Question:

” How long would YOUR BANK or THE GOVERNMENT let you keep that up if it were your account?”

Technically the govt runs out of money on July 31 every year, but they don’t quit spending – and worse than the numbers never go down, they always go up. So the rate of change of increase in the deficit is continually increasing. This has been going on for years and it is no longer sustainable.

There are 8760 hours in 365 days.

(notice the RED ink?)

Hunh?

In all sincerity, this “govt spending” vehicle is in free fall like a large truck that has lost it’s brakes with a full load going down a mountain pass. At a certain point brakes don’t really matter. It’s just physics. In this case, however, the driver of the truck still has his foot on the accelerator.

The question is are you  going to stay the course and hope that somehow the truck can avoid a massive collision – like many would like you to believe?

I am creating a plan for myself and my family and I am getting prepared. You still have time to protect yourself, but that time window is shrinking. I highly recommend you do your homework and take action. Personally I am subscribing to this financial information newsletter this week.  (BTW: This is not an affiliate link.)

Anybody who is advising you to continue with the old banking and investing model – that is essentially bankrupt – is either being dishonest with you, has a vested interest in selling you something or is uninformed financially.

Get prepared today. You are responsible for your own financial intelligence.

While it is true we face a massive financial problem as a nation, this is also an excellent time create wealth through taking advantage of opportunities that lie ahead.

Be careful who you listen to. See you on the other side.

I AM Michael Barrett and I AM Preparing for Financial Growth Not Failure…

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