It wasn’t long ago that the cry of a fair day’s pay for a fair day’s work was the cry of American workers. My thoughts were all over the map thinking about the fight for women’s rights, equal pay for minority workers and the enactment of child labor laws. It was an emotional setting, stranded in international waters, on a vacation cruise with our sons, watching my candidate of choice, John McCain, graciously admit defeat to Barack Obama in such a classy way and then listening to Obama accept his President- Elect position with his class act speech. My choice of candidate didn’t win, but, I felt a deep sense of pride as an American, accepting the fact that a young, black, Harvard educated couple, will be residing in the White House for at least the next 4 years, breaking all barriers and ceilings as I could hear in my mind the words and voice of Martin Luther King giving his “I Have a Dream” speech.

 

The stock market’s reaction was swift and severe with the DJIA falling 900+ points during the two days immediately following the announcement of the President-Elect. Wall Street obviously doesn’t subscribe to “Change” very well! All of us, Wall Street included, need to embrace our new President and hope that he will understand that keeping his promise to increase taxes on anyone would be extremely detrimental now, given current circumstances. When JFK was elected President, he lowered taxes as did Reagan immediately upon his entering office, resulting in the greatest period of wealth creation in our nation’s history. Perhaps President Obama will study this and take heed, apply the lessons of the past and we can all mutually prosper.  

 

The next wave of the financial crises is upon us, losses in the portfolios of insurance companies and the resulting slide in their stock prices. This I predict will be followed by a decline in commercial real estate prices, including REITS, due to lack of corporate expansion and growth, followed further by a second wave of bank failures due to credit card losses. People who are out of work cannot pay their credit card balances and this will trigger the next banking fiasco. Home equity lines of credits will be denied, declined and turned-off by the same banks that issued their mortgage holders their credit cards. Defaults and late payments are on the rapid rise by an ever increasing population of credit card holders. There is only one thing that can trump this ad that is the failure of the federal pension guarantee fund.

 

General Motors and Ford are betting their entire existence on the introduction of the electric car slated for 2012; if they can survive that long. There are reports of merger talks to save a combined company as the financial advisors of each understand that neither one can survive alone. It is my opinion that the electric cars introduced in 2012 will ultimately fail and not because of the vehicles themselves, rather the batteries that power them. If my prediction is correct, GM and or Ford will fail and their pension obligations will fall to the federal government. All of the companies that support the auto industry will suffer failures as well throwing additional pension obligations to the federal government. President Obama will be forced to tax the middle class, upper-middle class and the wealthy to recapture all of the assets that the pension guarantee fund will be doling out as there is no money otherwise. If the pension guarantee bailout happens before we have recovered from the current banking and credit crises, the effects will be devastating making the great depression look like a walk through the park.

 

The calamity in each of these crises’ is that all were predicted and ignored by the government, the leaders of finance in corporate America and the financial services and investment management industries. WE THE PEOPLE will suffer for the financial gain of a few threatening the very fabric of our nation. I believe the United States of America, is the oldest surviving democracy in history and I also am convinced that the USA we were born in, is now forever changed, not because of the inauguration of the first black President, but, because of the state of the nation he will be inheriting to govern. Our children and grandchildren will not be better-off than we are. Opportunities are fewer, kids are less prepared, parents will not be able to assist them and worse yet, my generation will be forced to work at least 15 years longer than the previous generation. Adult children have moved back in with their parents in the past, but, in the near future, it will be parents moving in with their children, for financial survival. Like 20 and 30 year old clothing becoming stylish again, we will see three generations of family living under one roof again. Families will pool their assets to purchase larger homes, raise their families, care for their elderly, share a vehicle and simply to purchase groceries. While this might seem a wild prediction with severe reductions in independence and lifestyle, it will also reunite, redefine, strengthen and bring the American family back to a time when dinner was served every night at the dinner table, gatherings around the family TV or radio afterward with unavoidable and welcomed involvement of each others lives within the family. Neighborhood, a word almost forgotten, will reemerge with the concept of some entire families of cousins, aunts, uncles and grandparents all living on the same block as it was 50, 70 and 100 years ago. This lifestyle might be a return to an older generation not only in demographic terms, but, also in the measurement of a family’s wealth; in those days strength through family ties was considered an asset equal to money. 

 

Regardless of the state of the Union, the economy, the job market and our personal situation, it is imperative that we all return to the fundamentals of proper financial planning immediately. In the old days it was referred to as the 5 P’s: PRIOR PLANNING PREVENTS POOR PERFORMANCE! Below lists 12 rules to live by and I hope you feel comfortable in adopting them for yourself and family.

 

First, we must live below, NOT within our means. Second, we must plan and save for major purchases and only use credit for emergencies. Third, we must enforce the rule, “if we don’t need it, we are not buying it!” Fourth, we must save a percentage of every dollar we receive. Fifth, we must invest in the stock market a percentage of every dollar we receive. Sixth, we must give to charity, as there are always people who are in need that we can afford to help, either with our time or our money. Seventh, we must invest in our personal growth through continuing education to be able to prosper in the workplace, to stay sharp and alert and eventually teach other interested parties when called upon. Eighth, we must start and continue a regime of personal exercise and good diet, as not to become a burden to others. Ninth, we must spend quality and quantity time with our families enjoying and enriching each other’s lives. Tenth, in everything that we do, we must do our best or it’s just not worth doing. We must have self respect and pride. Eleventh, every day it is important that we make at least three people smile and ask ourselves if we have made a positive impression on others for the day. Twelfth, we must pray everyday to a higher authority for if we do not, then we become the highest authority, lacking the wisdom, humility and aptitude to handle such power. 

 

Do you desire some help or coaching with your retirement, estate and protection planning? None of our American Prosperity Group representatives charge a fee for their time or obligate you to take any action. With that thought in mind, why not give us a call to arrange a mutually convenient time to spend some time together. There is no cost and you have everything to gain. I hope to visit with you very soon so call today to schedule a convenient time for a visit.