I TOLD YOU SO

This is a reprint of an article written last December, though it was not published until January 8. Today’s news reports that the National Bureau of Economic Research stated today that the economy reached a peak in December 2007, and has been declining since.

Now I am predicting the next six months will make the last three months look like good times, in spite of last week’s bear market rally. From last December---

It’s time to build up your cash. As I predicted earlier, foreign nationals are buying us out, lock stock and barrel. Because of the sub-prime mortgage debacle, Morgan-Stanley has sold a $5 billion stake to Chinese interests. Merrill Lynch, likewise, sold $6.2 billion equity to Singapore interests. Recently Citigroup sold a $7.5 billion interest to Middle Eastern country Abu Dhabi. These interests are selling us more in petroleum or consumer goods than we can export to them, and using the surplus of our own money to purchase our country.

We were the world’s leading producer country from the time of the Second World War to the middle 1960’s. Since then, we have become the world’s leading consumer, and it is the consumer spender who has kept our economy afloat, making up a staggering 71% of our gross domestic product. Too much of this spending has been done through plastic credit cards. For many years, the increase in home values enabled consumers to pay off staggering credit card balances through increasing their home equity debt. Now, because of the sub-prime mortgage crisis, decreasing home values largely block this method of rescue. As a result, credit card accounts which are 30 days behind has jumped 26% to $17.3 billion. Those 90 days behind have jumped 50% over one year ago. Actual defaults have risen 18% to almost $961 million, according to the SEC.

The Conference Board publishes the Consumer Confidence Index, and Leading Economic Indicators, in an effort to predict the future economy. Usually, 3 consecutive months in the negative indicates a coming recession. October and November were both negative. When the 6 months cumulative total goes below a -1%, this also indicates recession. The 6 months cumulative total for November was -1.2%. Unless Santa Claus spends himself crazy for December, the future looks grim.

Does any of this interest you, or are you more concerned about who wins “Dancing with the Stars, or who is victorious in the Super Bowl? Our forefathers established and left us the greatest country in world history. Most of us have children or grandchildren who must look to us for their legacy. Are we going to fail them? When in 2000, the US voted 46% of the eligible population, we ranked about 139th out of 171 countries. Australia voted closer to 95%.

If you don’t vote, you have no right to complain. But worse than that, you will have no place to look for economic rescue. We must return this country to its founding principles. Next year is a presidential election year. Casting an ignorant vote is as bad as not voting. You have plenty of time to do an in depth study of all the eligible candidates. I urge you to get busy.