Tuesday, March 26, 2013

Survival in the Great Depression

Survival is not something that most Americans are accustomed too. I do not believe the government published figures with regards to growth and unemployment, I believe we have been in a depression and that the US economy has truly shrunk every quarter since 2008 and this will only continue to get worse. I also believe the true underlying rate of unemployment is around 25% because of the manipulation of data. Fiscal easing has been a disaster for the US and a far greater correction will be the inevitable outcome.

Prosperous times and excess are more the norm, so how does one prepare for the almost impossible to comprehend price hikes in basic necessities such as food, energy and gas. These realities will start to hit home soon as a variety of factors hit simultaneously, by examining the varies causes we can make more educated decisions about how to invest, where to live etc:

1) Rising global temperatures due to the face that the earths orbit is an ellipse is guaranteed and there is nothing we can do about it. Expect the southern desert belt of America to expand north and the tundra bands to become the breadbaskets of North America. Expect to see food prices rise and land values in many regions drop.

2) Diminished water supplies from overuse of aquifers that have taken thousands of years to develop will result in water wars and massive shortages. Desert cities such as Phoenix will lose viability and shrink dramatically. Expect to pay more for water and see land values in many regions drop.

3) US dollar no longer the world reserve currency, expect the price of every thing imported to rise. This will create opportunities for those that can produce necessities locally that have previously come from China etc. Very affordable products will disappear as US starts to develop its own manufacturing base again with inflated costs and more expensive labor.

4) Loss of Mexican immigrant workforce as the US dollar ceases to create the value proposition for people to move north. Even though you have a hungry workforce in the US many of these jobs will not be replaced because of a loss of employers.

5) Canada will grow stronger and wealthier as a nation and as US dependence on Canada increases.

6) Global corporations no longer based in the USA and therefore joblessness increases. This will result in significantly more foreclosures and home values will drop 40% + removing equity, retirement opportunities etc.

7) Rents will rise as more people chose to rent rather than own.

8) US schooling and education becomes even worse resulting in long term damage and impact on the countries ability to reinvent itself.

9) Expect to US taxes increase, US corporations move overseas to avoid tax hikes and with the US no longer being their strongest market, divest US assets significantly hitting Commercial rental income and value.

What can you do to protect yourself"

1) Sell your property in the USA and rent until home prices fall and you have a far cheaper buying opportunity

2) Buy UDN ETF and other currency baskets that counter the drop of the US dollar.

3) Buy gold, it is a bubble but it is still one of the best long term defenses to inflationary pressures.

4) Create income streams from overseas, India, China and Russia will continue to grow. There currency will also become stronger so you will establish double benefits.

5) Reduce energy consumption with green technologies for homes. Solar and Wind power will reduce dependence on Electricity which will skyrocket in costs.

6) Eliminate all credit card debt, car loans, home loans that are not long term very low interest rates.

7) Reduce dependency on banks as much as possible, they may have been to big to fail in 2008 but that isn't actually true and allowing more to fall then would have corrected the market properly. When it happens next time round which wont be long do not expect to see anyone able to bail out banks. While the people who write debt and the people who service debt are not the same bad deals will be done because employees care about short term profits and end of year bonuses.

8) Expect to see property taxes rise dramatically.

Copyright Jonathan Rose 2013 - Creative Commons License Creative Commons License
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