The clouds of a 2006 Recession are starting to form on America's horizon.Politicians know that Recessions or Depressions are bad for their reelectionchanges. Bad economic times tend to create unemployment among the nice folksholding office at the time of economic stress. You can expect the Governmentto do everything possible to delay a Recession until after the November 2006election. However, the American economy is currently caught in an upwardmoving inflation and a Recession would still the fires of a runawaycurrency. The Real Estate Bubble may be about to burst. And, America'sfinancial institutions appear to be in increasing trouble over failedderivative bets.
If you are a Government bureaucrat with over tens years at your job, theodds are you have nothing to fear from a Recession. If you work in theprivate sector, you should carefully access your unemployment risks now andtake whatever action best meets your potential problems during a Recession.
If you are near the brink of bankruptcy, Congress wants to make your life aliving hell. They passed the "Bankruptcy Abuse Prevention and ConsumerProtection Act of 2005." There is no question that the current bankruptcylaws offer far more debtor relief from the burden of unmanageable debt thanthis new Act. If you have too much credit card debt, large medical bills,high mortgage payments, have a variable rate mortgage or have high carpayments, you need to carefully review your financial situation, now. If youthink that you could lose your job during a Recession, you have untilOctober 2005 to file under the present bankruptcy law. Under the new law,your creditors could take everything of value or leave you drowning indebt for the rest of your life. If you are close to bankruptcy, seek advicefrom a bankruptcy attorney. Do it today.
If you are like most Americans, you have too much credit card debt. Afterthe last Recession, the banks changed the rules of the Credit Card Game.Even if you keep current your monthly credit card payments, the bank canstill demand full payment of the balance on any credit card. If you areunemployed, you won't be able to meet their repayment demands. If theRecession starts after October 2005, your credit cards can easily leave youdrowning in debt for the rest of your life. You should plan now to eitherreduce your credit card debt or have a reliable way to repay the banksduring a Recession. If you think your equity in your home is your insurance,think again. One of the bubbles that appears about to burst is the RealEstate Market. Your home will be hard to sell and won't command its presentvalue. Your loss of equity precludes securing a second or thirdmortgage on your house.
Another strategy that is worth exploring with your financial advisor is tocash out now and move your liquid assets offshore. This would give you anest egg to start life over, but only if you are willing to live outside theUnited States. However, dunning calls from your creditors can't happen, ifyou are no longer living in the good old US of A. Your choice may be movingto a tropical paradise or living miserable for the rest of your life indebt.
Inflation and recession are the natural cycle of events under presentWestern Economic Policy. A recession curbs the excesses of adebt-ridden society, while manageable inflation keeps the lemmingshappy and over indebted. It's a middle class rock and hard place dilemmacreated by Governments to ensure the economy operates within controllableparameters.
While next year's timing of a recession may be off, another recessionis as certain as the sun rising in the east. This cycle will continue untilCivilization enters the Mother of All Depressions. If you are like thegrasshopper playing in the summer sun until the first snow flakes falls,you're dead. Be among the ants that see the future and plan for winter.
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ABOUT THE AUTHOR
He has been the Managing Director of Beowulf Investments http://home.earthlink.net/~beowulfinvestments/ since 1981 and is the Executive Director of the Global Village Investment Club http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/