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With our country celebrating its birthday today, it’s only natural to ponder the health of the Republic … for our minds to turn to the multiple crises our nation is now facing … and to wonder how — or even IF — we’ll be able to overcome them.
Truth be told, in all my 63 years, I cannot remember a time when the people around me were more worried about America’s future. Even in the posts readers leave on my personal blog, some say they’re doubtful that our nation will survive.
Nobody understands that concern more deeply than I do. Ever since I began working with my father as a child, I have been made aware of the financial dangers around us. And ever since I founded my research company, I have sought to sound the alarm in time for investors to protect themselves and profit.
I’m proud of the fact that our team was ahead of the curve in helping investors prepare for the housing bust … the credit crisis … the great recession and bear market … and the sovereign debt crisis that still dominates so many of today’s headlines.
Nevertheless, millions of consumers and investors are now in desperate straits:
- Due to the real estate bust, home equity — the #1 source of retirement money for most Americans — has all but vanished in most parts of the country.
- Thanks to the stock market debacle that followed — with the S&P plunging by more than HALF — hundreds of billions in additional wealth and retirement savings were wiped out.
- And thanks to the great recession, about one in five Americans is out of work or underemployed.
These were once our forecasts and warnings. Today, they are facts of life — the daily reality for millions of our countrymen and women.
Moreover, I have never seen a time when the diversity — or intensity — of future dangers was greater than it is today. Even a casual scan of this past week’s headlines is a major cause for alarm:
“125,000 Jobs Lost”
“Consumer Confidence Down; Consumer Spending Plunges”
“Pending Home Sales Plunge Record 30 Percent”
“Construction Spending Dips After 2 Months of Gains”
“Manufacturing Slows in June”
And when you consider that all of this is happening despite the fact that Washington has spent more than $2 trillion attempting to stimulate the economy …
That, given the mood among voters and in Congress, there’s virtually no chance that another stimulus bill could pass either the House or the Senate …
And that, in its failed attempt to fight this great recession, Washington has not only plunged the country trillions of dollars further into debt … but has also debased our currency by creating trillions of unbacked paper dollars out of thin air …
It’s easy to understand why so many people fear for our nation’s future.
So you may think it’s ironic that, at a
time like this, I’m actually more
OPTIMISTIC about the long-term future!
Throughout history it has never been the downside of the business cycle — a fixture in all capitalist societies — that has been the greatest danger.
The greatest danger in every downturn has always come when politicians feel the desperate need to intervene in that natural cleansing process — and by doing so, only make matters worse.
The bad news is that Washington did intervene in this recession — and by doing so, ensured that the agony would be prolonged.
So now, thanks to Washington, we’re entering the second phase of this double-dip recession. And by all accounts, it may well be every bit as severe as the first.
The good news is, we know what’s coming. We know how to prepare. We know what must be done to protect our wealth. And we know what can be done to grow it as the stock market once again implodes.
And there’s another silver lining: It seems far less likely that Washington will be able to make matters worse this time around. Given the mood of the voters and Congress, there is likely to be no massive new debt binge to bail out another round of failed companies.
As a result, once this crisis is over, we have a real fighting chance to emerge as lean, mean, and less burdened by debt.
Yes, unfortunately, in the short term, stocks will collapse, the economy will grind into a second slump. Unemployment will likely rise again. Home values will likely fall even farther. Personal and corporate bankruptcies will return.
But since the day the Pilgrims founded the Plymouth Colony in 1620 —390 years ago — our nation has been in the business of enduring crises and then emerging to build a bigger and better future. And I have no doubt that we will do it again as we emerge from this crisis.
In the meantime, we’re bent on turning lemons into lemonade — much like my father did 81 years ago. When he saw the 1929 stock crash on the horizon, he borrowed $500 from my grandmother to bet against stocks and walked away with a fortune.
Today, we have access to inverse ETFs and other investment vehicles that make it easy to profit from a decline without accepting unlimited risk. And you have my word that the Money and Markets team will do everything in our power to help you turn adversity into advantage as the next phase of this crisis unfolds.
Our country has been through much worse before and we are still a great nation. We can survive — and ultimately thrive —this time as well.
Good luck and God bless!
Martin
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