Consider Stress-Testing Your Finances

[Skye]

https://www.axios.com/2024/02/05/sp500-magnificent-seven-stock-market

https://www.cnbc.com/2024/02/19/mag...ountry-in-the-world-should-we-be-worried.html

https://russellinvestments.com/us/blog/market-concentration-magnificent-seven

While I've been aware of the "Magnificent 7" stocks for some time, it's only the last few weeks it seems that's all I hear or read about.

If your not familiar with the term, it is a small number of technology-oriented companies:

Microsoft (NASDAQ: MSFT)
Apple (NASDAQ: AAPL)
Nvidia (NASDAQ: NVDA)
Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG)
Amazon (NASDAQ: AMZN)
Meta Platforms (NASDAQ: META)
Tesla (NASDAQ: TSLA)

This handful of securities have been driving financial market indexes, directly and indirectly for the last year or two. The last several weeks and days in-particular. To many, myself included, it appears to be a bubble, one that's lately become significant.

While meaningful, this is just one of several concerns:

- The economy in-general has been plowing ahead without recession for several years
-- While the pandemic was globally significant, the root cause was not financial excesses

- By almost any statistical measure, securities indexes are at or exceeding records

- G20 deficit spending is at record levels

- Personal debt and defaults are increasing

- We haven't had a significant financially-driven downturn since 2008

- Concentration of wealth and income disparity continue to increase

Edit:

- Everyone has forgotten about the previous bubble/s

- The rise of crypto

In summary, the excesses are piling up.

The point of this post is to ask anyone to take a pause, review their finances and financial situation. I'm not advocating any one person take a particular position. You know you. Financial instruments and related matters can be complicated.

So take a test drive, a stress test of your finances and career. Look back at history and consider how you'd fair. No one can say what's going to happen or when, but it seems we're a lot closer to the end of this than the beginning.

Be Safe.

Sponsored

 

[Crew4991]

Great comments Skye. Always good to be aware of risks in the financial markets.
Its really good that you pointed out personal debt and possible job security as well. We should all take a moment to analyze our individual situation and assess how we would weather a major change.

 

[308 Cal. Bullitt]

Agreed.

Pull a Fibanacci Retracement from the depths of the Great Financial Crisis, 'aka 2008'.
You will see the DJIA is very very close right now, today, to the same Fib levels that brought about the famous Market Crash of 1929. Triggering the Great Depression.
This 4.236 Fibanacci Extension level is very often the top of Bull Run markets. It's very very hard to get past that level in most investments within most stock & investment indexes. Even the ridiculous DogeCoin craze of mid '21, hit tFe 4.235 Fib level extension , & then rolled over, eventually crashIng by over 90+%.

Jerome Powell very conveniently forced himself, (willingly, & out of nowhere) along with a mandated order to all his employees at the Federal Reserve, to sell all holdings at the top of the 4.236 extension of the S&P 500, in Nov. 2021.
At that time the S&P 500 was at near that same 4.236 extension as it is now.

Jerome Powell & his employees sold the top. Not unlike Nancy Pelousy often buys near the bottom, out performing most every professional hedgfund manager thru out historical record.
After being allowed to trade stocks for over 100+yrs in that institution of the Federal Reserve, they just voluntarily forced themselves out if the markets?
How kind & considerate of these bankers.

How convenient that was also the same guy running the largest nations financial system in world history!!
If your going to get out of a market, ya do it at the top thou, right? Like Jerome did.
But yet nobody knows when that is, do they??

& yes, markets could continue to go up hirer from these late '21 locations right now, to new ATH's. Yet what exactly is the logical reasoning for this Exponential growth in these sectors??
One might want to ask themselves just how real these record markets are.
Not unlike early 1929.

Well, here we are bk there yet again, just a few yrs later, in both the S&P 500, & the Dow Jones Industrial Average, & it is much closer @$39k, to the 4.236.
Closer than it was in late '21.

Retail investors are being sucked into this vacuum of rising stock values, from the likes of Cramer & Tweeter, without any real validity as to what exactly is increasing values. (All opinion-not financial advice) This includes Bitcoin/Ethereum investors, which are both at typical 50% Retracements as well, after they ran to new ATHs, a few yrs bk as well.

Bozzo's (Amazon) has just sold off several billion dollars of his own stock in the last few weeks. When your already a muti Billionaire & have 5 of everything you dream of..
Do ya really need more yet more cash, when ya just gotta pay taxes on it, when selling??

Musk wanted that ~$13 billion in stock drawn that he planned for yrs ago, just in these last few weeks. The (crooked, imo) Delaware Court system, where he's incorporated, said nope. He cannot take his own stock from his own company. Whats he suddenly thinkin he needs that $13 billion for as well??
Fakebook-boy is buildin his lil Nuclear bomb proof underground bunker in Hawaii now, & everyone on that job has to sign a non-disclosure on it to keep that a big secret.

Billionaires had all started out goin to New Zealand, till they saw the crazy C19 nonsense there a few yrs ago, & many are now going elsewhere to build their bug out bunkers, on some land mass surrounded by ocean.. So plebs cannot get to them easily?

DC peeps, have very recently reported selloff trades in Congress. Cashing out of stocks, & not just from 1 or 2 companies. A few are bailing big, & quick.

Ironically, the small fines for Congressional members "forgetting" to report sales of stocks within the few month required window, is just chump change to them.
Wheen they conveniently forget to fill out the paperwork that notifies all of us taxpayers they are sellin.

Lot more going on than I plan to get into here. Caution, as you stated, would be wise right now. Had we started this thread, instead you yourself, the powers that be, would have probably deleted it, like many others we post we put up, stating facts they cannot have said out loud, so I am glad you did it 1st. We kept this pretty tame, so it should stand.

Edit: "Nasdaq" was replaced in all locations by the correct index name, the "S&P 500".

 

[Skye]

I thought I'd follow-up my previous post with a bit more detail.

If you're comfortable in your finances or consider yourself well-versed on the topic, you might not glean much from this post; it's intended for those who've not witnessed a 2008, 2000, or an earlier US financial meltdown. A novice, someone with limited experience or is unsure on this topic.

Earlier, I asked anyone to consider a review of their finances, to see how they'd fair in an economic downturn. This post, I'll highlight a few specific things you might want to look for, with more emphasis on savings and investments, highlighting the core topics of risk, diversification and asset allocation. In addition to that, it'd be a good time to review other items, like wills, property deeds, insurance policies and the like.

I'll list three books I believe are good primers for anyone wanting to study up on the topics that follow:

All About Asset Allocation - Richard Ferri

The Bogglehead's Guide To Investing -- Mel Lindauer, et al.

A Random Walk Down Wall Street - Burton Malkiel

These books cover core savings and investing subjects. While they do provide guidance and what-ifs, their emphasis does not offer specific buy, sell or trade advice. They are not get-rich quick books or "how to trade" books. Quite the opposite actually.

I do not have a financial services background. I do not have a formal education in business or the financial industry. I'm not going to give specific guidance on what to buy or sell. I will offer some topics or scenarios you might want to think about.

If you don't have one already, create a spreadsheet, ledger or some kind of document so you can track your finances. It doesn't have to be complicated, but it can be as detailed as you like. Inflows, outflows, costs, etc. You need to know where the money is coming from and going to.

With the spreadsheet, you'll be able to look ahead a bit. You'll understand upcoming costs, short and long-term. For example, you know what your month-to-month expenses are; you can plot those out and use as a guide. You're probably aware of several expenses coming due in the next few years which you can also input.

If you haven't already encountered them, they'll be several situations you cannot plan for. The "Oh Shit" moments that happen in everyone's life. Whatever you've been setting aside, you'll need to save a bit more for those. Planning for the expected can be pretty easy. The unexpecteds often bite.

Cash is nice. Most agree one needs three-to-six months of expenses sitting in ready cash. A checking account, savings or money market fund. Something liquid and readily available. FDIC insured if possible. While money market funds are not insured, the industry changed after 2008. Still not guaranteed, they're close to it. Checking accounts often pay close to no interest. Money market accounts, for that small sliver of risk, are currently paying as much as 4-5%. Many are designed to maintain purchasing power over the long term.

While three-to-six months of cash is welcome, I feel it's better to have 1-3 years of expenses set aside. That might seem excessive, but three-to-six months will be spent in-between jobs. You might need more to temporarily leave the workforce and care for a family member. Maybe your company is going to relocate you. You might need to cover your insurance deductible for home repairs. Think worst case and plan accordingly.

Factor in inflation. Whatever you are planning for, factor inflation into every expense. If you know you'll need some home or vehicle maintenance in three years, get a quote and pad it with an extra amount. Historical inflation calculators are readily available on-line. You can also study Present Value (PV) and Future Value (FV) calculations and program those into your spreadsheet.

If you're doing all that, you're actually doing well. Better than many. Long-term goals can involve other savings and investments (stocks, bonds, real estate, gold, etc.), which, while offering higher returns, are often uninsured.

The following information pre-supposes something is left in the till at the end of the month. If you're living within your means, great. If not, stop here and review your income and expenses.

If the money you are saving will be needed in the next three years or less, it should stay in cash, CDs and savings bonds. Something low-risk, liquid, with easy access and insured if possible.

Whatever path you decide in what to save in, study history and find a yardstick to gauge yourself by. The last 10+ years have often been exceptional to investors in several types of securities. We've been above many long-term statistical means for some time. I do not expect that to continue. History doesn't show that either. So, be realistic.

I've had several conversations where an individual cannot explain why they've been investing in something. Seemed like a good idea at the time. Maybe it's paid well. Maybe not. They don't really know. They still have it. If you cannot explain why you're holding something, you need to find out why and determine if it is still worthwhile to keep it.

The previous paragraph highlights the importance of performing regular reviews. If you're monitoring your investments daily, that's a tell something is not quite right. If you haven't studied a statement in the last year, that's a concern as well. It's finding a sweet spot. You need to be aware of things, while not constantly obsessing (and tinkering). You need to know where you are, and perform some modest course corrections, if needed. Anything else usually involves lower returns, greater fees and taxes.

Recognize the risk involved. Different instruments behave in different ways. Some things pay better, but are more subject to more volatility. Other items pay less, but are more stable. If you're comfortable with the certain risks, great. If not, adjust accordingly. If you cannot determine the risk, you shouldn't take a position in that security.

Everything you park your money into will involve risks of varying amounts. Cash for example, carries interest rate risk. You're money is safe, but if inflation is greater than the interest received, you're paying for that safety. There's nothing wrong with that, considering it's for short-term spending. But it could become significant if your retirement funds needed decades from now are mostly in cash.

At the other extreme is Nvidia. Nvidia makes a killer product and is currently leading the industry. They're raking in money by the truckload, 24/7. But there's a lot of hype built into the company, hype akin to the tech industry in the late 1990s. The risk with Nvidia is whether or not they'll continue to perform this way. Odds are, probably not. Companies cannot afford to continually update their servers and networks with the latest chips. Eventually, things will slow down. When that happens, Nvidia (and the industry) will come back to Earth. We don't know when or how quickly that will happen, and need to recognize that risk. If in Nvidia, we also need to find something un-Nvidia (and not another tech stock).

My comments are not to bash Nvidia or the tech sector. It's one example of many I could select.

Ensure whatever you're strategy you're engaged in is diversified, that the risks of differing types are spread out amongst multiple, non-correlated instruments. Some items are going to do well at any given time. Others, not so much, or even down.

I'd previously worked with someone whose concept of saving and investing involved southern CA real estate. He was buying houses, getting them prepped and renting them out. The idea was the rental income would cover the mortgage and he would eventually own the homes. At the time, he was managing five to six properties. He was making very good returns and doing well. But then the economy soured. Quite bad actually. People were leaving CA in the hundreds of thousands, if not millions, looking for work. His pool of qualified renters dried up. He ended up losing all but one house.

He wasn't diversified. He wasn't aware of all the risks. He and many others never considered CA real estate would tank. It'd been going up throughout most of their lives. Everything he had saved moved in one direction: down. The incident fundamentally changed his retirement plans.

At the other extreme is someone who has bought too many individual investments. They're aware of the risks and the need to diversify. Unfortunately, their holdings have become unwieldy. Mutual funds can help remove that complexity. Instead of buying X amount securities or sectors of the economy, one can buy a single holding, one basket of securities, tracking one sector of the economy to several countries'. The books mentioned previously highlight the advantages of using funds.

Related to risk and diversification is asset allocation, how much you put towards any given asset class (stocks, bonds, real estate, physical materials, etc.). Consider the topic as a dial. Someone younger with a longer timeline might accept cranking things up, for greater returns, with greater volatility and risk, weighting one class more than the other. Someone closer in need of those funds would dial it down; they need the money sooner and/or they don't want to deal with the fluxuations. No wrong answer here. Everyone has their own needs and risk tolerance.

As the market was melting down in 2008, many sold whatever they were holding and moved to cash. No one knew what what was going to happen from one day to the next. Changes in the markets from hour-to-hour were often significant. Cash was safe. Dump everything and move it there. But there were several pitfalls with this strategy.

The most obvious sellers locked in their losses. Until they sold, the losses were paper only. No one knew when to start buying in again, what a good price would be. Many waited for the "right time". Some waited years, in low-interest savings accounts. Eventually the masses determined where the value was and the markets began recovering. The ones who held onto and bought throughout, came out ahead. Those still in cash and waiting didn't get near the returns they could have if they'd kept a long-term perspective.

The sold-into-cash group were not keeping a proper allocation for the appropriate timeline. If your goal is at least three-to-five years out, if not decades, whatever is happening in the markets today won't have much of an impact. Longer periods can often tolerate more risk, commensurate with what you're comfortable with. As mentioned previously, your cash pile helps cover expenses often arriving three years or less.

The previous paragraphs highlight the benefit of dollar-cost-averaging. Most of us are not very good at predicting the future. While we accept that over years and years, many assets will generally become more valuable, it's not a straight line. Peaks and valleys. Buying a small portion consistently helps get you in at a fair price point.

I've witnessed many moving from one savings strategy to the next, when they realized the expected windfalls with the previous setup didn't occur. Many savers and investors experience less-than-market returns because they're often trading in-and-out of securities versus keeping to a long-term plan with regular reviews. Your goals will change throughout your life. But these should be modest course corrections over time and not frequent, wholesale changes.

Whatever you're working towards, remove as much emotion from the exercise as possible. Be as antiseptic as possible. Be cold. Be blunt. Look to the spreadsheet. Look at your financial statements. Tech and AI are booming right now. Everyone wants to get in on the next big thing. People often are overly-optimistisc when things are going good and overly-pesimistic when things aren't. You can use that to your advantage. Often, the best time to buy something is when nobody wants it.

Realize there are short and long-term cycles to everything. These cycles are natural. While you can review certain statistics and have a better understanding where the economy might be within a cycle, no one can predict the future. Wall Street firms have supercomputers and PHDs on staff. Most of the time, even they can't figure it out. Realize you're not going to find or develop a system to beat or foresee these cycles and plan accordingly.

Best of Luck in Whatever Path You Take.

 

[Balr14]

That is excellent advise and well written. I have lived through every downturn since the mid-sixties. I learned about 20 years ago to do everything possible to protect myself and my family. It isn't easy. We have been lucky to have a very good financial advisor, so we never over-reacted. That seems to be the biggest mistake you can make. We probably have too much money in savings accounts, too.

 

[Skye]

@Balr14 , you make some good points.

Hedging or protecting against losses can be just as important as pursuing gains.

I keep a cash position in money market accounts, primarily for bills I know are coming due in the next 1-3 years. Doing so keeps me from having to make any rash decisions with my actual investments. The money is going to be spent anyway. The accounts help me maintain purchasing power.

Like many, I've been laid off a few times throughout my career, with some family drama along the way.

 

[Balr14]

@Balr14 , you make some good points.

Hedging or protecting against losses can be just as important as pursuing gains.

I keep a cash position in money market accounts, primarily for bills I know are coming due in the next 1-3 years. Doing so keeps me from having to make any rash decisions. The money is going to be spent anyway. The accounts help me maintain purchasing power.

Like many, I've been laid off a few times throughout my career, with some family drama along the way.

I have been laid off several times as well, it's always a shock. In one case, I had been named employee of the year just a few weeks prior. Talk about irony! At least I got some nice gifts.

We protect a lot of our money in annuities, municipal bonds and money market accounts. Our IRAs are invested in pretty safe stocks. We still have way too much in savings accounts doing nothing. Most of my kids have invested in rental properties, which is very safe around here.

 

[NFG19]

Im waiting for NVDA to melt down! Those put contracts are gonna be lit! I’ve been thinking of getting some bitcoin, but I’m not sure if I want on that roller coaster ride. Lol

 

[Balr14]

Im waiting for NVDA to melt down! Those put contracts are gonna be lit! I’ve been thinking of getting some bitcoin, but I’m not sure if I want on that roller coaster ride. Lol

I bought some years ago when it first came out and sold it years later for a decent profit. I probably should have waited, but I always thought the whole thing was completely nuts! I think getting into crypto at this point is basically "chasing the market". The people making money from it are the ones involved in mining, marketing, selling and handling it, not the ones buying it.

 

[NFG19]

Someone stop loss hunting on NVDA lol

 

[MAGS1]

Good topic. Lots of young folks now entering the workforce or just a handful of years into their careers that only know a positive economy. They may have read about the dot com bust and the GFC (2008-2009), but living through those as an adult is a totally different experience. I try to keep those experiences in my mind, especially now since it’s been a long time since we’ve had a real downturn, but I fear too many of forgotten some of the lessons learned from the last go around (or are choosing to ignore those lessons).

Everyone’s situation is different so make sure you have a plan in place that’s appropriate for you. It’s not a one size fits all that’s for sure. Cash, while not always the best in terms of growing your money, is an important component. Make sure to keep whatever you feel is enough in a Federally insured account just to give yourself a little protection.

Diversification is key, even within the stock market. Have exposure to different sectors. I choose to play the long game with the market, I don’t have as high of a risk tolerance as others do to try to play the shorts and options games that others do. But others are willing to do it and some make a good amount of money. And some lose a lot when they guess wrong.

Do what’s best for you and your situation but have a plan of some kind!

 

[Balr14]

Diversification is key, even within the stock market. Have exposure to different sectors. I choose to play the long game with the market, I don’t have as high of a risk tolerance as others do to try to play the shorts and options games that others do. But others are willing to do it and some make a good amount of money. And some lose a lot when they guess wrong.

This reminds me of something from my foolish days... at one time, I thought I had the stock market all figured out, so I was going to get rich buying and selling options. I never realized most options are already fully leveraged by the pros and inside traders. So, I had $20k to play with and proceeded to lose almost all it over a 10 month period. I had about $400 left in my broker account and my broker asked me what I wanted to do with it? I was completely disgusted with the whole thing, so I told him to put it on UOP options for $15 that were due to expire in 2 weeks, because I liked the UOP Shadow 6 wheeler F1 car. The stock was currently selling for about $11, so the option was basically worthless, and I got a lot of them for my $400. About a week before the option was due to expire some big oil company tendered an offer of $17 a share for UOP stock. My options I paid pennies for were now worth $2 each! I sold them and made back my $20k plus a little extra and never tried playing the options again. When all my study and research was worthless and I only made money by blind luck, I knew I didn't belong there!

 

[klink]

Skye, your posts on this topic are timely, informed, and in my opinion, absolutely spot on. There are many cautionary tales to be told and investing as you have pointed out, nobody can predict the future. A lot of people are now suffering from fear of missing out, or FOMO. While this is understandable, it often drives irrational decision-making. Part of me believes that the artificial intelligence surge is in infancy, still, and therefore, tech stocks will be profitable for the foreseeable future. On the other hand, it’s been a great run for those that have been invested heavily such as myself. I’m 60 years old now and it’s becoming more important to preserve assets than it is to strike rich in the market. I haven’t struck rich by any means, but I have no debt, and I live comfortably with my wife and we are able to travel. I watch the market daily, not out of anxiety, but just out of sheer interest, and I marvel at what is taking place right now. I can’t agree with you more, I think it is very prudent that everybody take a good look at where they are right now and look at their time horizon, for when they need the money and balance, that with the risk that they are willing to take. Many people are not old enough to remember that between 2000 and 2014 the NASDAQ basically did nothing.
My hunch is that there is stormy weather ahead in the markets. The markets have been manipulated by the Fed for quite some time now and we are in an election year and God knows what is going to happen. Good luck to all.

 

[MAGS1]

This reminds me of something from my foolish days... at one time, I thought I had the stock market all figured out, so I was going to get rich buying and selling options. I never realized most options are already fully leveraged by the pros and inside traders. So, I had $20k to play with and proceeded to lose almost all it over a 10 month period. I had about $400 left in my broker account and my broker asked me what I wanted to do with it? I was completely disgusted with the whole thing, so I told him to put it on UOP options for $15 that were due to expire in 2 weeks, because I liked the UOP Shadow 6 wheeler F1 car. The stock was currently selling for about $11, so the option was basically worthless, and I got a lot of them for my $400. About a week before the option was due to expire some big oil company tendered an offer of $17 a share for UOP stock. My options I paid pennies for were now worth $2 each! I sold them and made back my $20k plus a little extra and never tried playing the options again. When all my study and research was worthless and I only made money by blind luck, I knew I didn't belong there!

It’s so hard to make the right calls unless you’re in it every day, which I’m not. It’s tempting because you can make a lot of money really quick but you can also lose a lot really quick. I sometimes envy those that have the risk tolerance to make those bets because I sure don’t. Market average annual return is somewhere around 8-9% over the last 50 years (don’t hold me to those exact numbers as I haven’t verified) and I’m averaging a little above that (around 10%) so I’m good with how I’m set up.

 

[Skye]

In my initial post, I highlighted several tells I believe are pointing towards our next economic decline. If I could summarize those matters in one word, it would be, "complacent." I believe we've become complacent towards several big picture, financial tipping points which will negatively impact the economy going forward.

One concern is the amount of debt the US has been accumulating, both within the GOV and the population as a whole. I'll go into a bit more detail on the topic in this post, focusing on GOV debt.

This recent article highlights the current rate at which the US GOV is indebting itself: $1T every 100 days. $10B a day. Roughly $.5B every hour or $7M a minute.

https://www.cnbc.com/2024/03/01/the...ising-by-1-trillion-about-every-100-days.html

The following links contain some easily-digestible charts which help quantify the amount of spending and where it goes.

https://www.cbo.gov/publication/58888

https://www.gao.gov/americas-fiscal-future

https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/

For a historical perspective, the last time we balanced the US federal budget was 2001. Before that: 1969. Times past, governments would deficit spend during unique and trying times: wars, natural disasters, recessions, etc.

Deficit spending during economic downturns is generally accepted as a net positive. Unfortunately, the US and other countries have accepted continuous deficit spending as the norm.

Friendly reminder: no politics please. With the exception of the period of 1998-2001, the US has been overspending for the last 55 years. We've been artificially stimulating the economy for decades. There's plenty of blame to go around.

When the federal government needs money to pay bills, it creates financial debentures of differing maturities: Treasury Bills (one month to one year), Notes (two to 10 years) and Bonds (20-30 years) . The time to maturity and notional interest paid are two attributes set by the GOV before offering them to bidders.

Buyers review what's for sale and associated risks to determine what they think is a fair price. If a buyer underpays at auction, the effective yield is greater to the investor, the money received less to the government. If the buyer overpays, the yield is less with the government receiving more.

As the government sells more and more debt, the risk of not paying it back increases. Buyers demand a better yield and bid even lower. The government receives less and less while effectively paying more for the same loan/s.

Over time, the debt bomb reaches a point of critical mass, creating a runaway effect where more-and-more revenue generation is focused on servicing debt. It's akin to taking out a loan with a loan shark. You can't make your payment this week, so that payment goes to the principle, which then increases future payments, making any of it even more difficult to pay back.

To sell more debt, the government has to offer ever more attractive yields. Doing so has a knock-on effect, forcing other entities offering their debt to increase their yields to remain competitive.

Throughout the economy, individuals, businesses and the government pay more in interest on their loans. Money which could have been spent buying a new car, opening a new product line or offering healthcare is re-directed towards interest payments. Less economic output. Fewer jobs. Less returns on investments.

Many feel we're already there or approaching this outcome now. It's my belief that we should not expect as great of economic output in the US as we have had before. The condition is one of an financial impairment with no foreseeable relief.

Times past, many would table ideas on how to fix the problem. No one openly discusses the issue now; repairing it would require significant changes to our standard of living. As an exercise, attempt to find $1T in savings towards balancing the federal budget. You can't do it without significantly affecting the population and economy. And the $1T doesn't begin paying the debt down either; it simply balances the budget and slows down the rate of debt growth.

Other governments have adopted austerity programs, as a way to reign in spending. I'd encourage anyone to google that term and read what those countries have done, as a precursor to what I think will happen in the US.

To make matters more urgent, many of the social services (Medicare, Medicaid and Social Security) are soon to begin paying out more than they receive. The effect will be reduced disbursements throughout the health care system (currently 20% of US GDP) and Social Security (projected cuts in monthly checks: 25-30%). Millions of people and a significant sector of the economy will be immediately impacted, while the GOV is already over-extended.

And there's the additional concern of any upcoming economic slowdowns, prime time for even greater amounts of economic stimulus, which unfortunately is a no-win situation. We've done nothing before, at the start of the Great Depression; things didn't go well. But if we do something, even temporarily, it will add to the existing problem.

It took us a long time to get here. It's going to take a long time to turn things around. No quick fixes. No easy outs. Pundits purporting how simple it is to correct these issues are not speaking the truth or being realistic. If it was so easy, someone would have already fixed it and taken credit.

Consider and plan accordingly.

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