Risky Business
The financial bailout of the U.S. banking system is a dark cloud with a silver lining. The dark cloud, of course, isthat it put the U.S. on a track towards inevitable financial demise. There is no escaping the debt burden heapedupon the backs of U.S. taxpayers. In time, the bankruptcies will sweep through corporate America, then city andstate governments. Eventually it will reach into the heart of Washington and bankrupt America's government.But I'm getting ahead of myself...Until that happens, the silver lining in all this is that
Congress has bought us some time
before the worst-casescenario kicks in. We've all been given a temporary reprieve. Before the bailout, the financial collapse of theglobal banking system was imminent. But now, after the bailout, the risk of a sudden collapse has beensomewhat reduced and replaced with a long, slow march towards inflationary demise.Why is this good news? Because
it gives you more time to earn more money and save more money beforethe big bankruptcy hits
. How much time? It's impossible to tell, but if we can get through this immediate crisisand see things settle, we could have another 3-4 years before the dollar really collapses.Do I know for sure that it's 3-4 years? Nope. I don't have a crystal ball. It could be as short as 18 months or aslong as a decade. I can't tell you for sure what's going to happen in the next 3-4 years, but my best guess is thatthere's an 80% chance now that the big bankruptcy / hyperinflation events have now been postponed untilaround 2012. (There's also a 20% chance that it could all collapse within days or weeks, however...)With these expensive bailout schemes, Congress is playing a strategy of delays. By mortgaging the financialfuture of the U.S. dollar, they've been able to buy a little more time in the present. It will come at a huge cost, of course, when all those debts come due, but for right now,
you have a rare window of opportunity to takeaction
to protect and expand your savings by building your financial safety net.This window of opportunity has just been bought for you by the U.S. Congress. They've spent almost a trilliondollars in future money just to delay this financial collapse. My question to you is: Are you going to takeadvantage of this limited window of opportunity and do something about it?Of course! But what, exactly, should you do right now to protect your savings and enhance your income?
State of Bankruptcy
To answer that question, let's first examine this question:
Where does your money come from?
If you work for the government -- even a state or local government -- it's time to start seriously thinking aboutreplacing your income with a source that's more reliable. California is now broke. It's asking Washington for a $7billion loan just to scrape by until more tax revenues come in. (That's one bankrupt state asking another bankrupt state for a loan, in case you didn't catch the comedy there.) New York looks to be next, and manystates will soon follow...What will happen if California can't cover its costs?
The paychecks stop!
Teachers, law enforcement,administrative personnel, university employees... they could all find themselves suddenly without an income.
Anyone who works for the state is at extreme risk right now
of losing their financial livelihood.It's not just California, either. Dozens of other states are approaching bankruptcy right now, too. Why is thishappening all of a sudden? Because many states depended on taxes from sky-high real estate sales (andproperty taxes) to pump up their budgets. So as the real estate bubble ballooned from 2001 - 2006, states wereflush with revenues, and they expanded their spending. But now, with the real estate crash well underway, andconsumer spending behavior dropping sharply, ALL sources of state revenue are down: Sales taxes, propertytaxes, real estate taxes, income taxes and corporate taxes.The bottom line? California isn't the only state that's near bankruptcy. Expect to see MORE states announcehuge financial problems over the next 18 months.
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