Trust Yourself

I was recently asked how it was that I knew to sell my property portfolio in the UK at the beginning of 2006, why I sold all my stocks in favor of gold and silver, and why I am convinced now that the recent actions by the Federal Reserve and the Treasury Department are likely to fail and will affect not only Americans but people all over the globe.

How did I get it right, when so many others missed it entirely? Well, I do keep an eagle eye on world markets, property prices, stock movements, currency exchange rates and commodities and I use a lot of “left-brain” analysis to draw some of my conclusions. However, this is not the only method that I employ. In addition, I utilise my “right-brain” intuitive abilities to see whether the actions of the authorities actually “feel right.” With all my financial decisions, I look at the issues from a completely rational point of view and then I draw on my instinctive and more emotional impulses to create a full picture of the situation.

If something “feels wrong” no matter how wonderful the deal may look – and I have been offered many “fabulous deals” – I would not get involved if my antennae were telling me that something was not quite right.

Here were a few of the early warning signs that made me feel uncomfortable and begin to question the decisions of the powers that be:
- I couldn’t make sense of how nations could consume beyond their means indefinitely.
- It didn’t make sense to me how a system that is based on a continual expansion of credit would make an easy transition to a no-growth or contracting environment.
- As a mortgage broker and financial consultant at the time, I could not see how people who were making less than $30k per year or who were even unemployed were given loans by the banks to purchase $500k houses with no money down and have any hope of every paying them back. Banks were becoming more and more irresponsible with their lending and there had to be consequences to these actions in the medium to long term.
- It did not seem possible that money could continue to expand faster than the economy in the long term

We are now moving into a period where many leaders and the media are hyping up the possibility that the economic crisis will soon be behind us and I would like to show you how you can programme yourself to listen very carefully to your own inner voice, even if you cannot articulate what is wrong – it’s very important to start to learn to trust your own instincts when a story just doesn’t add up. This will be happening more and more and it is up to you to start thinking and feeling for yourself. For too long now, we have been programmed to listen and trust our governments, our health service, our banks, our treasurers and the media instead of our own inner voices.

There were many investors involved with Bernard Madoff who recently said that they had suspicions and concerns over the years about the steadiness of Madoff’s returns. Yet, despite those worries, they kept their money with him. If they had trusted themselves and decided to move their money to an institution where they did not have these gut-level concerns, they would probably be in much better shape right now.
Here are a few major issues that do not add up at the moment that I am focusing on:
- how is it possible for a nation that is insolvent to borrow money from a financial system that is also insolvent to bail out insolvent financial institutions?
Does this make any sense to you at all? Until I can gain an appreciation for how we can borrow our way out of this mess, I will maintain a very protective stance on my finances and assets. I am very doubtful about the overall solvency of all our financial institutions and therefore I strongly resist any advice to go ahead and buy stocks because they are “very cheap” right now and they “always go up in the long run.” If you are hearing this kind of advice from your professional advisors or friends and family, ask them how it will be possible for nations that are already insolvent to continue borrowing money from a financial system that is also insolvent to bail out insolvent financial institutions?

- how are we going to return to a renewed period of economic growth based upon more consumption when baby boomers ( the wealthiest people in the economy) have seen their two primary forms of wealth – stocks and property – fail in the same decade?
Growth requires consumers to spend more money on more things, but older people generally down-scale their lives, cut back on their spending, pay down their debts and add to their savings.

I hear many commentators already calling for a bottom and searching for signs that a recovery in consumer spending is happening. The danger here is failing to appreciate the extent to which our recent excesses were simply over the top and are very unlikely to be repeated any time soon. The banks have far from declared all the liabilities on their balance sheets so there will likely be another huge wave of defaults that will require even more bailout funds.

In the US right now, the Fed is now "monetising debt" – i.e. printing money, and runs the very real risk of a massive devaluation of the US dollar. Of course, I would strongly suspect that this is actually the goal of the Fed, although they will not come right out and say that. Competitive currency devaluations have been a feature of every global financial crisis and are the preferred way of relieving the strains built up by the past periods of excess.

What should you do about this? Trust yourself, and take actions accordingly. Take responsibility for your actions by educating yourself well about issues that you do not fully understand, and do not trust or assume that the authorities know better than you do. Listen to your instincts, act on what you know to be true, and steer clear of the things that don't make sense to you. Most of all listen to that “inner voice” for it is usually spot on.

If you would like a personalised consultation of your situation with the current risks and opportunities facing you, please check out my website for further information: www.financemoneybusiness.com or email bg@financemoneybusiness.com
Good luck.

Internet Taxes - Urgent - please contact your representatives

The era of tax-free email, internet shopping and broadband connections could end this fall, if recent proposals in the US Congress prove successful. State and local governments this week resumed a push to lobby Congress for far-reaching changes on two different fronts: gaining the ability to impose sales taxes on internet shopping, and being able to levy new monthly taxes on DSL and other connections. One senator is even predicting taxes on email.

It is vital that these proposals are not successful and it is up to you US citizens to call your Congressmen and your Senators and tell them how outraged you feel about this taxation. It will affect EVERYONE who buys anything on the internet.

Senators and Congressmen will listen to public outrage and this is URGENT as this bill could be voted in very quickly.

For those of you who have never voted in an election before, you still have the right to an opinion. Your local representatives will listen to you. Find out which district you are in and who your representatives are and let them know.

Every internet sale would be subject to sales taxes. If you buy something on the internet and you are sending it to someone in another country, they too will be affected.

Please act now to stop this draconian taxation from becoming law.

Thank you.

Inflation - who says it's dead?

88% EROSION OF PURCHASING POWER - AND CONTINUING

- a dollar in 1950 will buy only 12 cents worth of goods today, 89% less than before

Inflation in my adult years has increased average prices by 1,000% or more. Here are a few examples:
- a postage stamp in the 1950s cost 3 cents; today's cost is 42 cents - that's 1,300% inflation;
- a gallon of 90 Octane full-service gasoline cost 18 cents before; today it is $3 for self-service - a staggering 1,567 % inflation;
- a house in 1959 cost $14,100; today's median price is $213,000 - 1,400% inflation;
- a dental crown used to cost $40; today it's $1,100 - 2,750% inflation;
- an ice cream cone in 1950 cost 5 cents; today it's $2.50 - that's 4,900% inflation;
- monthly government Medicare insurance premiums paid by seniors was $5.30 in 1970; its now $96.40 - 1,889% inflation;
- several generations ago a person worked 1.4 months per year to pay for government taxes; he now works 5 months.
In the past, one wage-earner families lived well and built savings with minimal debt, many paying off their home and college-educating children without loans. How about today?

Few citizens know that a few years ago government changed how they measure and report inflation, as if that would stop it - - but families know better when they pay their bills for food, medical costs, energy, property taxes, insurance and try to buy a house.

Is inflation a threat to society? Consider this famous quote:
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
Lord John Maynard Keynes (1883-1946), renowned British economist.

Beijing Property Show

More than 70 US real estate companies made their debut at the Beijing Spring Real Estate Trade Fair this week. They were showcasing US properties and hoping to attract some of China's wealthier citizens. This was the first time a US delegation visited China to sell property. With US house prices decreasing and the number of wealthy Chinese people increasing, buying real estate in the US has become a new trend in China.

Everything from private residences to villas, to commercial property and land. Prices range from USD$50000 to over USD$600 million.

Beijing citizens have snapped up hundreds of properties, however, it is important for Chinese investors to be aware of all the rules before making a decision. Whilst there are no legal barriers to buying real estate in the US, you may not be allowed to live in the US.

Enticements such as a "Green Card" are being offered to investors who purchase properties in excess of USD$500000. However, if you are a prospective investor, make sure you check out all the small print to see what the parameters of the deal are. Also, you should be aware that purchasing real estate in the US usually includes much higher fees such as property management fees, maintenance costs and various taxes. These additional costs must all be borne by the investor.

This is a radical change and is probably the first of many such moves by US real estate companies.

The end of the Depression is near???

We keep on hearing from the experts around the world that maybe this crisis is nearly over. We are coming through it. They will quote all kinds of dodgy information such as the fact that Wells Fargo posted huge gains this quarter, far above analyst's estimates....that Intel announced larger than expected profits today...that unemployment is falling...
I would suggest that you take it all with a pinch of salt. How can this crisis be over when there is still an unknown figure of toxic assets that are still sitting on banks' balance sheets. It has been said that JP Morgan alone has derivatives of over $90 TRILLION on its books! So the G20 figure of $5 trillion stimulus over two years pales into insignificance.
Look around you and see that this is far from over and it is time for us to start thinking for ourselves, to start taking responsibility for what we believe and see. It's time to kick the junk-news habit, listening to the "powers that be" and to start questioning all around us. At least with the internet there is a plethora of opinion, news and information out there - the new revolution is for us to THINK and to join up with like-minded people. It's time to make the decision that we are unwilling to be controlled any more. The systems have let us all down badly and it is time for a new world order.

The job losses are the worst since the Depression, credit cards and imploding, the housing market has not bottomed, governments will collapse, there will be a devaluing of all currencies, more hate groups will emerge, more crimes, more vandalism, protests will intensify, religiosity will rise, markets will fall further..........

Yes, it does not sound good, but isn't it better to be aware and to prepare, rather than being shocked and have the rug taken away from you?

What can you do:
Consider buying gold and silver -
Reduce your standard of living voluntarily before it is done for you
Don't buy everything you want - only buy what you need
Don't dream about getting rich- dream about covering your needs and being at peace with your neighbours.
Do something nice for at least one person every day.
This is the start to creating a new world - one that we will enjoy living in and feel safe and secure.

A New Monetary System

The G20 meeting is over and I think we are moving towards a new monetary system worldwide.

What you didn't hear much about in the press are the secret meetings hidden from the media to forge a radical overhaul of the world' monetary system. There is likely to be the creation of a new financial order based upon drastically new units of paper or fiat money to help wipe the world's debt ledgers clean.

How will they achieve this? By systematically and progressively devaluing existing currencies, especially the U.S. dollar, and re-inflating ALL asset prices.
If the plan shapes up as I think it will, my current target for gold of over $2000 per ounce could turn out to be much too conservative.

Over the next few weeks and month, keep your ears tuned to the media for phrases like “new financial architecture” … “new monetary system” … the “rules of the game” … “Bretton Woods II” … and other financial jargon. They are essentially the cover words that will ultimately spell a dramatic change in the value of money.

French President Sarkozy recently declared, “We must rethink the financial system from scratch, as at Bretton Woods” … and that it's time to “change the rules of the game.”

British Prime Minister Brown touts “a new global financial order,” describing this as a “decisive moment” for the world economy to adopt a “new Bretton Woods.”

At the recent World Economic Forum, Russia's Prime Minister Putin explains that “Excessive dependence on a single reserve currency is dangerous for the global economy.”

The People's Daily , the official newspaper of the Chinese Communist Party and the unofficial mouthpiece of the Beijing government, warns of the threat of a “financial tsunami” and urges action. “ The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.”

On March 23, the People's Bank of China (PBOC), China's central bank, proposed replacing the U.S. dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In the past, whenever an international financial crisis crops up, authorities in high places have often referred to a new Bretton Woods “solution” (i.e., changing the value of paper money).

This time, though, given the Great Depression II, it looks like the current generation of leaders is ready to walk the walk. Indeed, they may have no other choice.

Today, we are again facing a major, worldwide epidemic. Deteriorating economic conditions in the U.S., Japan, China, Germany, and elsewhere are virtually forcing nations into competitive devaluations to stimulate growth. It's become a “race to the bottom” to see who can drive their currency the lowest, to help their current account balance.

The result is a flood of fiat paper money such as we have never seen before. The potential for disaster in this free-for-all melee is not lost on the G-20 ministers and bankers. That's why I think that they plan a coordinated devaluation of world currencies en masse rather than each country going it alone.

While world leaders might talk about a “New World Order” in global economics, they give few details of how this might be accomplished.

The G20 Meeting - What Really Happened?

There are all kinds of positive statements coming out of this week’s G20 meeting in London. The media is encouraging us to believe that the crisis is behind us. The worst is over. A lot is being said that we are not hearing about.

We will see a lot more printing of money and the problems we have are going to get worse.

Something that has hardly been mentioned by the media is fact that the FASB (Financial Accounting Standards Board) has buckled under the banker’s persuasion to allow them to pretend that their assets are worth more than they really and they can inflate their earnings. This is quite unbelievable. Imagine if you or I were to say “oops, sorry, I made a few mistakes and I would now like to you forgive my loans and debts…please let me reflate my assets even though they are worthless.” What do you think the authorities would say? “No way!.” So why are we allowing our financial institutions to behave in this dishonest way? It beggars belief.

It’s as though the powers that be want to wish the problems away. Let’s sweep it all under the carpet. It’s shocking.

Let’s look at the consequences in a bit more details.

Say you paid $500000 for a property and you took out a 100% loan. The property is now worth $200000 and you are stuck with a $500000 debt. What incentive do you have to continue paying that debt forever and a day? None, I would think. So in the next 6-8 months, you can expect to see more and more people default on their loans thus giving the banks even more worthless assets to inflate on their balance sheets.

This is not going to go away. The sooner we wake up to the reality and start dealing with it, the better.