Financial Predictions for 2009-2010

There are a series of different events happening around the world that I feel are interrelated and important to be aware of:

War and Civil Unrest
Firstly, Israel started its biggest emergency drill in the nation’s history this week to prepare civilians, soldiers and rescue crews for the possibility of war. The five day drill comes amid the nation’s rising tensions with Iran.

The US has sent another 17,000 troops to Afghanistan where they are fighting insurgency, but who knows whether this will be enough or whether Obama will need to send even more troops into the region.

So we have vast funds being spent on defence and war with great uncertainty as to the outcome.

Bank Deposits
The FDIC fund has dwindled to dangerously low levels. At the same time, the number of problem banks continues to grow at a rapid pace. Whilst Congress has already approved a $500bn line of credit to the FDIC, make no mistake that line of credit is going to have to be tapped. And there is absolutely no guarantee over time that your funds are secure. Other governments around the world have guaranteed bank deposits, but many of these countries are highly indebted and there are doubts as to whether the governments will have the money to fund the banks should they collapse.

Make sure that you have some liquid funds outside of any banking institution just in case they call a “bank holiday.”

Gold and Silver
Northwestern Mutual Life Insurance in Milwaukee, has bought gold for the first time in 152 years to hedge against further asset declines. They have accumulated about $400 million in gold. The CEO Edward Zore commented: “the downside risk is limited, but the upside is large, we have stocks in our portfolio that lost 95%, but Gold is not going down to $90.”

Gold has gone up 10% in recent weeks and should definitely be part of your portfolio. Silver too, priced very reasonably right now, will be a store of wealth for the future and also useful to barter and trade with. It is likely to go through the roof once the US dollar really begins to fall.

Unemployment
Unemployment is rising around the world with reported figures always coming out too optimistic when in fact the situation is worsening. In the US we could see unemployment rise to 25% which in turn will increase crime and threaten the stability of the country.

Pulling all these different strands together, especially with the extra $30bn of taxpayers money going into GM, it seems to me that the economic system is going to implode. We live in a credit driven world and the problem is that the governments will never be able to pay off the interest on the debt.

I see more huge disruptions, more foreclosures, more bankruptcies, higher unemployment, increase in crime and a devastating change in our economy.

Here’s what you can do:

1. Be aware of everything that is happening and make up your own mind about what is true. The media want us to believe that we have the “green shoots of recovery” but you need to think for yourself and check out your intuitive responses.
2. If you are prepared in your thinking, then you can prepare for yourself and your family. It is those who are going along with the crowd who are going to come out the worst. Also, be ready to express your outrage at the government’s actions – it’s time for the people not to sit down and take it any more. Part of the problem is that we have been too complacent – we need to be ready to fight for what is right.
3. Have some liquid funds outside of the banks or any financial institution – preferably about 6 months living expenses.
4. Buy some gold and silver as your insurance policy and also for trading and bartering should the need arise
5. Increase your personal security and if you can move to a quieter more rural area.
6. Be ready to be flexible and to change – volatility will increase and you may need to change your strategy according to the unfolding of events. Stay alert and aware 24/7.