Be careful out there

I had finished my workout.  Yes, I’m back on the wagon.  Those road trip/moving chips and candy and desert-because-I-deserve-it calories, have come back to bite me in the butt.  Or to be more precise, to jiggle on all the body parts that one doesn’t want to jiggle. 

Yes, I triumphantly lost 12 1/2 lbs to see in my 50th birthday and then I promptly gained back 8.  Sheesh!

Anyway, that wasn’t what I wanted to blog about. 

I was in the change room at the gym and I heard this older (than me) woman talking with her friend.  She sounded scared.  She was saying how the only things she buys to eat are things on sale, how she’s cut out buying coffee out, meals out, how she decides what her meal will be by what she still has left in her cupboard and when that’s gone she doesn’t know what she’s going to do.  Cutting back where ever she can and still she’s barely scraping by.  And my heart hurt for her.  And there are so many people in her position right now.  Their retirement funds and savings are not producing any income, and I thought to myself, the terrible thing is, what this woman doesn’t realize is that it is going to get much worse before it gets better. 

See, the debt situation worldwide is way worse than people are aware.  California is seriously on the verge of bankruptcy and it is a much larger population than Greece.  They have not been able to pay their debt obligations and have had to issue IOU’s, they haven’t been able to pay all their employees.  They are short on their budget by around 20 billion dollars, and the cut back they are implementing only save around 2 billion.  If you live in California do not hold municipal bonds. They may have to default on them.  If you live in the States and have municipal bonds, please check the credit rating of your state.  I know that you get a good tax break if you buy Municipals in your state, but it won’t do you any good if they have to default on the payments and you loose your capital.

And Greece is just one country in the Euro zone, MANY have a similar debt to GDP ratio.  I don’t know what is going to happen there.  Britain is carrying an unsustainable debt load as is the US.  How they are going to fund social security, medicare and the new health reform is beyond me?  The numbers don’t add up.  And Canada (which is considered one of the countries that is stronger fiscally) next year Canada’s debt is going have risen up to 68% of it’s GDP.

Richard Russell of the Dow Theory Letters wrote this recently. 
“Do your friends a favor. Tell them to ‘batten down the hatches’ because there’s a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don’t need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won’t recognize the country.“

Now I don’t know if he is right or not, but he has lived through A LOT!  He is 86 years old and smart as a whip.  And he is not the only one issuing dire warnings. 

Anyway, I know this is a reoccurring theme sometimes on my blog.  It’s one of the reasons that I stopped writing it for a while.  Because I didn’t want to bore you to death with financial mutterings, but I worry about all of you out there and I want to warn you to be safe and be careful and get out of debt in whatever way you can.  And downsize and have an emergency stash, because who knows what’s around the corner and it’s better to have a safety stash and not have to use it, than to be blind-sided if the s—t hits the fan.  And the financial fundamental around the world are not looking good. 

I don’t know if it’s going to be deflation or inflation, or deflation and that then swings into inflation/hyper inflation, nobody does. 

I do know that it is tricky times right now.  Nothing is straight forward.  I do know that NOTHING has been fixed in the banking/financial sector.  The problems are still there.  I do know that you all must be careful.  Don’t risk what capital you have chasing after income.  Be safe.  Don’t take unnecessary risk.  Find a way to earn more and spend less.  Save. 

Much love, Meg

Posted by Meg Tilly on Wednesday, May 19, 2010 in Chewing the Fat