The CRASH of 2010 - This is NOT a Drill

Despite what the current administration says and would like us to believe, the current financial crisis is not over; in fact it's probably just beginning. If you're paying attention, it doesn't take a genius to figure out that we're on the verge of a catastrophic collapse in the market that could easily lead to a full out depression or at the very least a double dip recession that will take some years from which to recover. I'm not a doom and gloom kinda guy but I am a realist. One doesn't have to do a lot of research or listen to the various market pundits or the news to know something's coming.....AND IT 'AINT GOOD! Isn't it wise to hope for the best but plan for the worst.

The warning signs are all there and are very closely aligning with events that occurred during the Great Depression*.

* Government increase in spending to "forestall" any further drop
* Taxes going up to cover costs of additional spending (1932 from 25% to 63%)
* Volatile market (early 1930 the market hits bottom - again?!)
* Hundreds of bank failures (40% of the banks running in 1929 were gone by 1932 - 10,000 went under)
* Government "creating" jobs - (in 30's feds created all kinds of make work projects that didn't last
* Unemployment climbingg (unemployment hit 25% in 1933 - millions out of work)
* Less emphasis on private sector capitalization
* Growth of government "entitlements" (in 30's social security etc - now Health care, cash for clunkers!)
* More federal intrusion into our private lives
* More and more regulation and more

I think we have a tendency of mentioning the Great Depression as though it was a passing event in history. The truth is it took well over 20 years for the markets to recover. We also forget about the SECOND MAREKT COLLAPSE OF early 1930's. This was a double dip that took the markets lower than the plunge of 1929. No matter how much the government pumped into the economy or how many entitlements they enacted or make work jobs they created the economy still languished for many years.

We'd like to think that it couldn't happen again here yet it is. The Bible puts it this way "As a dog returns to it's vomit so a fool repeats his folly." Our government has lost it's foundation, has moved to the "dark" side. In my opinion, I believe history bears me out, this is an age old struggle between socialism and capitalism. The progressives made a big push during the 30's that hurt us dearly but today the push is harder for government control and the situation is far worse:

* the debt was 2x GDP in the 30's - IT'S 7X GDP NOW!
* Personal debt is much higher now than in the 30's (for the most part, people don't have the reserves to survive)
* Couple all this this with the largest population segment (boomers) are moving into retirement and from accumulation to preservation of their assets, which mean's spending is going down.

I was recently on a webinar with Harry S. Dent, Jr is logically predicting dire financial events to come. I'm not going to presume to be able to explain his logic here but you can check it out at his web site at
http://www.hsdent.com He has predicted this for a number of years. It would be well worth your time to check it out.

According to Dent, market collapses are tied to spending. When consumer spending went from 5.6% in 4th quarter of "09 to less than 3% in 1st quarter of '10 there was a sell off. There is a report being release on July 27, 2010 that will show consumer spending at less than 1%. This, Mr. Dent's research shows, will precipitate a massive collapse in the market. The impact is likely to be immediate but but occur sometime between July and Dec '10.

So what does this mean to you? How should you prepare? What can you do? With markets declining, States on the verge of bankruptcy, pensions, social security and savings in trouble, Banks going under by the hundreds (soon thousands) these are good questions. I HAVE A SOLUTION! And you'll learn what it is in my next post. So be sure to check it out soon!!

Safe savingsRoger Ely

* Great Depression info - great depression: