A Solution to Crazy Markets
We feel strongly that people need solutions to the financial dangers we face today. Here's our first newsletter by veteran entrepreneur and advisor, David Sanders, Executive Director of Equity and Help Inc and former President of a billion-dollar company. Please let us know what you think of it - and pass it on. In a single day in August, 2015 the market cap (value) of Apple fluctuated by $150 Billion, 3 times the value of Lehman Brothers, whose collapse triggered the 2008 financial meltdown. Extreme fear has been driving markets worldwide. Some talking heads say "Sleep on, everything's fine," while others say "All is lost, this is the end." What is the real story? More importantly, what should we do now?
When America Catches Cold...
Today the world is so interconnected that it's acting more and more like a human body. Sudden trouble in one organ (or country) can rapidly affect the whole organism.
It used to be that when America caught cold, the rest of the world got pneumonia. In 1980, America's $2.9 trillion GDP (Gross Domestic Product) output was almost 3x it's nearest competitor, Japan, and nearly 10x China, a distant #7 at $0.3 trillion.
Fasten your seatbelt. Today China's $11.2 trillion GDP puts it in 2nd place behind our $18.1 trillion and almost 3x Japan's #3 output.
According to the IMF and World Bank, using what Forbes calls "The most viciously free market economy on the planet," China's GDP has grown 10x since our dot comm bust in 2000.
The US economy (using Marxist economics, "to each according to his need, from each according to his ability") hasn't even doubled. Even granting that China's government-manipulated figures are more fudged than our government-manipulated numbers, this is startling in anyone's book.
So what happens to the world - including the US - when China gets a cold?
Our stock markets just went nuts, along with all others the world over - FACT. The key point is: There is a considerable likelihood that there are other major market bubbles underlying the Chinese economy!
Danger, Will Robinson!
What happens to world markets if China has whooping cough or a heart attack?
One of my clients with an office in China called me to pitch investing in one of China's hundreds of "ghost cities," this one being built by a 3-star Chinese General. Hopefully their overbuilt markets won't react like some of our real estate bubbles. Will your investments crash in response to "Chinese market adjustments"?
Does the US have terminal debt syndrome? The FED will announce next month whether they'll raise interest rates from 0%. If they do, the interest costs on our $18 (soon to be $19) trillion in debt will rocket up. A little "gift" from the same bankers who jacked up your credit card interest last time you charged it to the limit.
But it gets even more interesting. The FED is sitting on $4.5 TRILLION worth of US Treasury bonds, most of which they purchased during their Quantitative Easing (QE) programs when interest rates were essentially zero. The value of bonds goes DOWN when interest rates go UP, so when they raise interest rates, the value of the FED's reserves will plummet.
The FED has razor-thin reserves, a tiny 1.3%, less than half of what Lehman Brothers had when they declared bankruptcy on September 15, 2008 and nearly dragged the whole US financial system down with them. What happens when the Federal Reserve goes bankrupt? Washington will surely try to sweep it under the rug, but Beijing probably won't.
What will happen to your investments then? If you are holding dollars and paper investments (stocks, bonds, etc.) tied to the dollar you're not going to be happy. So I highly recommend you move to safer ground. That's what Equity and Help Inc provides.
Shelter from the Storm
We've seen these kinds of issues coming for some time. They are real. For decades I've been researching solutions to survive any rough financial weather we may encounter. Here's a solution that I recommend you investigate. www.equityandhelp.com. I've been so impressed that I became Executive Director of this company and have written a special report describing today's economic issues in more detail, along with practical steps we offer to overcome them. I call it "Shelter from the Storm." Click on it to open it, or send me an email and I'll forward you a PDF. It's time to find actions to protect yourself and your family.