Tag Archives: financial crisis

Markets go Up and Markets go Down

Although this may seem incredibly obvious, many people say that markets always go up. I remember during the real estate bubble that popped in 2008, agents were saying,

Real estate always goes up.

It’s pretty obvious now that is a lie. But it works for them. The clueless would-be investors that believed them bought up properties like there is no tomorrow. And for them, there wasn’t much of a tomorrow. Most of the properties went into foreclosure and were repurchased by more savvy investors.

Shanghai Composite Index

Shanghai Composite Index 2011 – 2016

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Is this the Start of the next Bitcoin Bubble?

Bitcoin has started to rise again, and it looks like it might be the start of the next Bitcoin bubble. Although many people have known about Bitcoin for years, most people have not purchased any coins and do not understand it.

Image courtesy bitcoincharts.com

Image courtesy bitcoincharts.com

How is this bubble different?

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The Next Step for Bitcoin

Bitcoin has gone through its second bubble, and it is interesting to see how it survives. Although many people thought that the price would crash to a small fraction of its high of $262, it seems to have stabilized in the $100 to $120 range.

Image courtesy BitcoinCharts.com

Image courtesy BitcoinCharts.com

The popularity of Bitcoin has exploded over the last 6 months, and it was clear that the bubble would burst. However, it seems that Bitcoin has gained enough traction to make it survive through the price crash. The chart looks quite strong at the moment, but only time will tell if Bitcoin continues to rise in value.

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How to Profit from the Falling Dollar

The dollar has lost 35% of its value in the last 8 years, making Americans 35% poorer. And, for a wide variety of reasons, it looks like the dollar is going to get weaker. However, just because most other Americans are getting poorer doesn’t mean that all Americans have to become poorer. In fact. financial meltdowns are one of the best opportunities to make a ton of money in a short period of time.

One of the most useful resources that I have found that teaches how to profit from the falling dollar is The Collapse of the Dollar and How to Profit from It. I like it because it is both easy to understand and has clear, actionable strategies that we can use.

Here are some strategies that the book explains:

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Is the Recession Over, or is the Global Depression just Starting?

Now that the recession appears to have abated and everyone is saying that we can relax, I think it’s time to reevaluate the situation. If you consider that the country’s financial situation has worsened significantly, it’s pretty clear that we are not out of the proverbial woods. The government spending of trillions of dollars may have stopped the recession, but it may also have set us up for a worldwide depression.

financial-crisisThink I am full of doom and gloom? Absolutely not. Both Matt and I are extreme optimists. But consider these facts: depressions happen on average once per lifetime, or every 80 years or so. It’s been 80 years since the last depression. The government is running budget deficits on a scale that has never been seen before, and has no way of paying back the money. The housing market has leveled off, but there is nothing to help it recover after the current first time house buyer’s stimulus wears off. The unemployment rate is getting higher, and there is nothing to slow that down. The US automakers have recovered for this month, but only because of $3 billion dollars of free money for (mostly American) clunkers. As soon as that stimulus effect wears off, the American car manufacturers will be in even worse shape than they were last month.

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Why Most Financial Advice Is Useless

It’s no secret that we are in a serious financial crisis. Some of the largest companies in the country are facing bankruptcy. Foreclosures are at an all-time high. Layoffs are creating hardship for millions. Many people’s retirement accounts are down 50%. People are wondering how they’re going to survive.

Part of the reason that this financial crisis has been so damaging to millions of people is that they took bad financial advice. Most people who have a 401(k) or IRA account had no idea how to invest their life savings. So, they met with a financial advisor. This advisor may have been provided to them by their 401(k) company, or perhaps they found the advisor on their own.

Most financial advisors recommend putting your money in a combination of stock funds and bonds funds. The traditional idea is to put more money into stock funds when the client is younger. Unfortunately for the client, stock and bond mutual funds are the worst possible investment they can make. There are a few good reasons that these mutual funds are widely recommended and are the de facto investment vehicle for most Americans: Continue reading

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Can Obama Solve America’s Financial Crisis?

As I wrote about in a previous post, Obama has taken massive action in the first few days of his administration. That is really outstanding. He has already distinguished himself as being different from most politicians, and is already starting to follow through on his hundreds of campaign promises in a big way.

All that is wonderful. The problem is that America is in financial trouble far deeper than most people imagine. So far, the government is spending about $800 billion to help the economy. Consider this: Social Security has $10 trillion in liabilities. That is over 10 times as much as the recent economic stimulus package. What radical changes is Obama going to make to solve this huge problem?

Besides Social Security, we have an even bigger problem: Medicare. Medicare has liabilities of $62 trillion! So, adding these two liabilities together, we need 100 times as much money as the government is spending already! How is Obama going to solve this unbelievably challenging problem?

Unfortunately, most Americans are not even aware of the problems of Social Security and Medicare. They blissfully assume that the government will take care of them in the future. But I suggest you, that ignorance is not bliss. There will come a day in the near future when these benefits will be significantly reduced or disappear altogether.

Most people don’t want to deal with the fact that our government has put the country hopelessly in debt. We are soon coming to the point where we will not be able to make payments on the national debt, and the entire structure of the American economy will change radically. I just hope that Obama can find some way to solve these daunting problems.

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The Foreclosure Crisis: A Symptom Of Financial Illiteracy

One of the top stories on the news each night is the real estate market and the foreclosure crisis. As housing prices continue to fall and the economy weakens, record number of people are losing their homes to foreclosure. Now it’s Obama’s job to try and fix the problem!

While it’s true that millions of people got loans that they really couldn’t afford during the real estate bubble, I don’t think that’s the real cause of foreclosure. The problem is that 90% of Americans are six months away from being foreclosed on. Why? Because they spend a little bit more money than they make on their job, and their use as much as possible on their credit cards.

It’s really part of the American way. President George W. Bush borrowed more money than any president in history. Now our national debt stands at over $10 trillion, and is growing at record pace. Obama has even committed to spending more money to solve the problems of people who didn’t manage their finances properly!

The news says that Obama has to fix “The Foreclosure Problem.” I suggest you that there is no foreclosure problem to fix. What needs to happen is that he needs to set up ways for the American people to learn how to manage their finances better. Living paycheck to paycheck and spending as much as possible on stuff like cars and plasma TVs is not going to lead to a strong financial situation. We need to learn how to manage our finances better so that when we have a financial challenge, it does not turn into a financial crisis.

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