Friday, March 16, 2012

The Weekly Update 3-16-2012

Now would be a good time to visit the following website:


If you take a moment and look at what is happening to our countries tax revenue versus our spending you should notice that: 

1)  we have significant debt.

2)  our expenses (costs or bills) exceed revenue (income).

In fact, it would be like you or me owing the bank $15.50, earning $2.46 and spending $3.79.  In other words we spend 54% more then we make which increases the amount of debt we have every year.

How long do you think our banker would let this go on before we got "the call" to have  "the Chat" about our mutual problem?  I would guess not very long.  But, this bank customer is the biggest in the world and they have been historically good for their loans.  Okay, they get a bit more time and creativity, but there will be a time when "the call" comes. 

When "the call" comes for a government, it comes in the form of lower to dramatically lower bond prices, which conversely means higher interest rates.  Think Greece who saw interest rates sour to 70%+ when the debt holders started to hear the death rattle!

Can that happen here?  I do not know, or pretend to know the future,....unlike when I was 18 and knew everthing....  :-) ...  That said, I would again suggest you take a close look at the debt clock website posted above.  Let it talk to you.  Then think about what investments will benefit and which will not.

For openers, bond like investments could go down in value and investments that do well in times of uncertainty should do well.  I am not in a position to make recommendations on this venue, but you are welcome to call or email me for a discussion.

This would be a bad time to fall asleep at the wheel!

Jim Lunney, CFP, RIA  1.800.800.6364

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.

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