We will remind the good readers that it is not on them who might be in debt, but our great nation as well. As such, we can look to the US as an example of why being in indefinite debt is not a good idea. This is because the money will either have to repayed at some point, or financial ruin will occur.

As the dollar sags and other investments beckon, a shakeout looms. That is the subheading of this very informative article.

Consider this:

However, the dollar will remain vulnerable, especially as the U.S. faces the enormous financing requirements created by the retirement and health-care needs of the baby boomers. In the near future, the U.S. will require either ever more foreign capital or an increased rate of domestic savings.

Absent the latter, the U.S. is sure to eventually bump up against its foreign borrowing limit. The day of reckoning will be at the point when foreigners demand more for their money, either through a weaker dollar, higher interest rates, or both. On the way there, any more reports of waning interest in U.S. securities are likely to attract much more attention in the currency markets, to the detriment of the greenback.

The principle can be adjusted to fit personal economic situations as well. Just think, if you do not start saving, and instead spending above the means with a currency that might devalue soon and a looming economic crisis on the horizon, there will be a good change that you will be in a detrimental situation.

April 2007: Inflexion point of the phase of impact

GEAB N°12 is available! Global systemic crisis - April 2007: Inflexion point of the phase of impact / US economy enters recession

- Public announcement GEAB N°12 (February 16, 2007) -

As anticipated last January in GEAB N°11, the « fog of statistics » is now clearing and US economic trends appear clearly (retail sales at a standstill in January 2007, record high trade deficit in 2006, downward revision of US growth for 2006, Fed's confirmation of economic slowdown, serial defaults among mortgage lending organisations, continued collapse of US housing market,...). Therefore, according to LEAP/E2020, and contingent on the specific evolution of each component of the US economy, the month of April will account for the inflexion point of the impact phase of the global systemic crisis, that is to say the moment when all negative consequences of the crisis pile up exponentially. More precisely, April will be the time when negative trends will converge, transforming many « sectorial crises » into a generalised crisis, a « very great depression », involving all economic, financial, commercial and political players.

In April 2007, nine practical consequences of the unfolding crisis will converge:

1. Acceleration of the pace and size of bankruptcies among US financial organisations: from one per week today to one per day in April
2. Spectacular rise of US home foreclosures: 10 million Americans out on the street
3. Accelerating collapse of housing prices in the US: - 25%
4. Entry into recession of the US economy in April 2007
5. Precipitous rate cut by the US Federal Reserve
6. Growing importance of China-USA trade conflicts
7. China's shift out of US dollars / Yen carry trade reversal
8. Sudden drop of US dollar value against Euro, Yuan and Yen
9. Tumble of Sterling Pound

You can read the rest here.

Level of foreclosures in the US in December 2006

According to LEAP/E2020, the year 2007 will register at least a doubling in the number of foreclosures (3) due to the surge of record high numbers of mortgage loan refinancing on the market (close to 2,000 billion USD). 2 to 3 million homes will probably be filed in foreclosure and about 10 million US citizens thrown out of their homes in the course of this year. All those who doubt whether the US actually entered a “very great depression” should pay a visit to field reality and observe the devastating effect of the housing and financial crisis for millions of Americans (4). Scores of blogs appeared on the web trying to review the on-going housing disaster and the stream of human tragedies (5). Taking into account that a US citizen has three months between initial default on interest repayment and actual foreclosure, LEAP/E2020 estimates that it is indeed in April that the second wave of foreclosures will hit the US market.

Dubble Bubble

This article is quite interesting.

In pulling the rug out from under global bond markets, Alan Greenspan, chairman of the Federal Reserve, has done Wim Duisenberg, his counterpart at the European Central Bank, a big favour. He has undermined the popular myth that it is Mr Duisenberg and the ECB that have problems communicating with markets - unlike the Fed, which is a paragon of virtue and effectiveness when it comes to getting its message across. But who could fairly criticise the ECB now that the Fed has misled investors so badly and caused financial carnage by cutting only a quarter of a percentage point off interest rates at its June meeting - after sending numerous signals to the markets that a half-point cut was in the offing? Who could argue that the ECB has the monopoly on poor communications, given the Fed's subsequent communiqué - a badly worded and confusing text apparently intended to clarify and explain the Fed's stance on the economy? This is not the first time Mr Greenspan's credibility has come into question. To his critics he is the "double bubble" man.

The unpleasant truth is that Mr Greenspan and his colleagues first created the bond bubble with their radical rhetoric, then burst it with their conventional actions. Of course, few will shed tears for the bond market speculators who made the wrong Fed bet. But the extraordinary and unnecessary volatility the Fed has imposed on financial markets and the US dollar could have adverse consequences for the real economy. Mortgage rates surely will jump and threaten another of Mr Greenspan's bubbles: the housing market. Moreover, the Fed's loss of credibility will undermine its ability to guide the economy through the storms that are currently gathering. In particular, if deflation becomes a real problem in the US, the Fed's capacity to engineer looser financial conditions without cutting rates has diminished along with its credibility. This is an important consideration when ammunition is in such short supply. Some Europeans may take comfort from the Fed's troubles but this is not a situation in which bad news for the US is good news for Europe. The US economy must recover in order for Europe to do so, and the Fed's loss of credibility may well slow down the US recovery. Still, the frequent attacks on the ECB and Mr Duisenberg in both the markets and the media have often had as their implicit assumption the view that the Fed would do it better. This was always unfair. But now we know that it was untrue as well. Mr Greenspan is the "double bubble" man - not Mr Duisenberg. The Fed's fall from grace is valuable if only for putting the achievements - and shortcomings - of the ECB and Mr Duisenberg into proper perspective.

The writer is a senior fellow at the Hoover Institution, Stanford University

The Navy and Marines sail on! The Army is in need of help, AGAIN!!!!

LIVING WITHIN YOUR MEANS

We have recently discovered the best way for you to begin getting out of debt. Depending on your situation, your home might be the most expensive piece of property that you own, but it might also be the key to getting out of debt if it is big. The bigger the home, the bigger the costs. And the closer to global warming the world gets too! Its not funny, but seriously now, if you are living near the coast, and would like to be assured that your kinsmen down the line get their fair share of usable property and not just some slabs of land down under the deep blue sea, then go ahead and SELL YOUR HOME!!!

Sell it we suggest, but don't live on the streets. Sell it if you think you can tighten your belt for a few months or years, saving in earnest so that you can buy a home that fulfill the ultimate requirement for life: LIVING WITHIN YOUR MEANS.

Until then, admit the fact that you let life get the better of you, sell your home and live in one that you can afford.

I hope that no reader has to go off and sell his and her home, but it is the true thing to do if you look at yourself and determine that this is the best financial way forward possible.

As always, we are trying to bring to you good research that encourages you to get out of debt. This way, you will be able to, and there is no doubt about it, to get out of debt and then invest your money somewhere worthwhile.

We understand that there are various degrees of debt. That is hwy we encourage everyone to know their own situation before they go off and try to get out of debt. Therefore, if you have been following us for a while, it is time to begin seriously considering where to invest your money. Only you know what you like and what you do not like. However, we want to function in a way that will caution you away from investing in something you like because it might not be something that the market likes. Since the point of investment is to get returns on the investment, it is best not to begin digging out of debt because of bad choices. Let others make those bad choices. Not you.

Kondratieff Wave II

So far, the United States has experienced four Kondratieff Waves in its history.

The latest phase began in 2000 and is expected to last until 2010.

So, you can hope to have a safety net of a couple of more years...unless that is something unexpected, which is really expected but everyone would rather not expect and so ignores, occurs. In this situation, it will not be possible to easily get out of debt. Our researchers are still trying to get the formul down right before announcing whether or not an expected event will occur between 2007 and 2010, though right now bets are on that it will occur sooner rather than later. In which case, hold strong and don't give up. If you give up, then you'll wind up with even more debt in trying times.

Kondratieff Wave

Kondratiedd Waves are quite interesting. First some pictures and then some comments.