As the debt crisis continues to dominate overseas, the warning bell is sounding for the US
The Europe crisis has still not been sorted out properly, and a lot of astute investors are left wondering what will happen and how things will play out. Things will not play out well at all for those poor Europeans, and the effects will also spread to the US and Americans also.
The pain is already showing itself and being felt by MF Global investors who had accounts. Jon Corzine the Director or MF Global sent the company bankrupt by chasing higher yield bonds in Europe which was a very costly mistake. Corzine thought if anything was to go wrong, Wall st would come to his aid and bail him out like all the other banks and institutions. But unfortunately his timing was way off.
There will be lots more of these stories to come as the financial world starts to implode. But the federal reserve wants to rescue the Europe banks with more liquidity by cutting their rates yet again. In the end that is not going to put anyone ahead.
People do not understand that now the Europe crisis is out in the open, the banks that have had the most exposure to the European financial crisis are JP Morgan, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs. They too are in serious trouble and relying on more bailouts to help them keep afloat.
But a lot of the American families are in trouble, but do they get any sort of bailout. No. They are collectively victimized and used in this ponzi scheme and their money is actually being used to help keep the banks afloat even though they keep doing the wrong thing. At the same time the purchasing power of the dollar is losing strength and helping cripple the economy.
The real scary thought is that the European crisis is actually small compared to what is happening in the US right now. So when it comes to the US shores you must be ready. The doom and gloom is out and about, but realize there are 3 solid ways you can protect yourself before the financial crisis 2.0 hits the US shores.
Here are 3 lessons we can learn to help you prepare and even profit from this mess.
1) The problem is much larger than the government and media is letting on.
Ben Bernanke told Congress back in 2007 that the mortgage crisis was under control and he did not see things getting worse. Fast forward several years and look where we are. Things are a mess.
Also when the debt ceiling was raised to $ 15 trillion, the truth really lies in the hidden debt and unfunded liabilities which now tops a staggering $ 116 trillion.
2) The government are thinking short term but not fixing the real problems at hand.
The government love to keep things on a leash by coming up with radical short term solutions to some of the biggest financial problems we have seen in the last 100 years. They will work short term, but really not solve any problems for anyone later down the track.
The debt crisis has been downplayed since day one, and on the surface the solution is keeping people in a false sense of security. Right now the IMF and the Central Banks are up to their eye balls in Greek debt.
Another drastic measure was to introduce budget cuts over the next year. That is not saving money that is only taking it away from those places needed when things are recovering. So it will make the recovery longer and drawn out.
3) The Volatility on the markets are making it a very risky environment.
Every time we hear something from the European regions traders jump. The market right now tends to swing very violently to the smallest of news. On each little report that comes out, traders react instantly making it impossible to pre-emt the major moves on the market.
The Dow Jones is tend to react wildly one day in a positive direction, and then traders seem on edge and react negative to the smallest of news then next day. The roller coaster on the market is likely to continue and make it a very risky environment especially with the European news not finished and another crisis likely to hit the US shores soon.
One moment you hear the debt crisis is fixed and banks are saved and investors jump. Then next moment you hear more complexities and and more missed debt that needs to be fixed and again traders panic. Fear and greed are taking over the markets and traders do not know what to do, or what to think.
The only thing the government has right now under their belt is the printing press. But that is not going to solve the longer term problems. Short term it is a good fix, but they are not looking out 5 to 10 years down the track. The effects will be catastrophic.
The media and government officials keep claiming that they are surprised by this crisis in Europe, but we do not have to be surprised. If you understand what is happening right now over in Europe you will realize that it is a dress rehearsal for what is coming to the US and it will not be good for anyone. The debt in the US is much bigger and more complex and financial crisis 2.0 is going to be bigger and badder than anyone expects.
Right now gold sees to be the flight to safety for astute investors that they are jumping in left right and center to try and secure their families financial future. That seems like a pretty rock solid bet for both the short term long term.