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A Different Tone Would Do You A Disservice; You Must Swim Upstream

9 January 2011 10 Comments

Some people I talk to sometimes ask why I’m so down about the economy and why can’t I be more optimistic?  This is really a silly and stupid question/comment, but it’s still something that I have a legitimate answer to.  My answer is three fold:

1. I’m being honest

The reality is that I’m expressing my honest opinion of the economic environment.  I believe there are major issues with our economy and the consequences of it will affect all of us.  Some of us who see the economy for what it is will be better prepared and more equipped to deal with it in my opinion, which is why I write this blog.  I’m hoping to encourage people to wake up and look into this on their own and then take steps to prepare and improve their financial situation.

2. If things are going to be perfect moving forward, you won’t really need to do anything except “show up”

Secondly, if everything is going to be perfect, there’s really nothing to talk about.  If the economy is going to be growing exponentially continuously into the future, then there’s nothing to worry about.  Even if you lose your job, there’ll be another one waiting for you!  Your income should continue to increase and your investments should dominate.  You should be watching football.

Do you see what I mean?  Good things happen simply by participating if the economy is great and going to stay great.  Unfortunately, I don’t see it that way.  There are issues that exist, and there is something important to discuss.

3. Optimistic financial blogs are all about common sense strategies that you already know

As I just said, participation is essentially all that is needed in a great economy and ideal world.  If there is room for anything else, it’s only common sense stuff like diversify and spend less than you earn.  There’s really nothing more needed.  Alternative investments and working your tail off for alternative income streams is just a waste of time and too much stress.

The reality is that because most people are blind to the economic realities, this common sense material is essentially all you’ll read at most financial blogs.  These blogs will tell you about five basic principles of personal finance in about 300 different ways.

A different tone would do you a disservice

The reality is that I want to sound a warning about the economy we all live and work in, but also offer constructive advice and solutions to help “out run” this economic deterioration that should continue.  While I’m incredibly pessimistic on the economy, I’m incredibly optimistic on the ability to still do very well during it.

This is the positive tone that I offer: the fact that you can still do very, very well, even if things are very, very bad.  What this means however is that unless you’re proactive about your financial situation, then you will likely not do well.  The masses will struggle and be hurt significantly during this time.

The latest jobs numbers were another indication of this.  There was another record in discouraged workers.  More and more workers have simply stopped looking for work.  There are so many ways you can look at this.

First, could you imagine stopping looking for work?  What the heck are these people doing?  Watching soap operas?  Go work at the grocery store until you find a job you idiot!  That is what I would do.  Frankly, I’m disgusted that people “stop” looking for work and are content collecting unemployment.

Second, this statistic offers a glimpse into the continued economic reality of this country – even despite the fact that our experts tell us that the recession officially ended years ago.

Look, 2011 isn’t going to get better.  Even if things “feel” better for a while, it’s a mirage.  Even if the stock market goes up 20%, it’s irrelevant.  The economy cannot be fixed based on current policies.  Government spending, printing dollars, and inflation does not equate to positive economic growth.  The “wealth effect” policies of this government to where government thinks people will feel wealthy because the stock market is higher and then spend money is only making people broker.

So, your goal is to swim upstream in 2011.

First, don’t buy into this recovery and go buy a bunch of new toys.  Save your money and get ready to invest it.  Rather than spending your nights watching crappy television, you need to start working on another income stream.  You must out-run this depression.  Again, upstream.

While you’re swimming upstream, many will simply fall into the downstream current by halting their search for employment and looking to a politician and an unemployment check for a solution.  There is no salvation down this path.

Swim upstream.

10 Comments »

  • Mark said:

    Kevin, I agree with you that this is a good time to hoard cash for future investment opportunities (especially abroad). I don't necessarily think the US economy is doomed, but we need serious financial reform policies. Thought you might like this youtube video below, enjoy!
    http://www.youtube.com/watch?v=XnAT7FZpmg0

  • Arthur Garcia said:

    Kevin, another great post!! You are totally nailing these issues on their head. Too many people are in "cruise control" and they are hoping that Obama or someone else will help them out of this situation. The reality, as crappy as it sounds, is that the rich will get richer and the poor will get poorer. If you have cash and a job right now, this is an amazing time to acquire distressed assets and to "get in" on a great investment opportunity before the herd comes.

  • Tom G said:

    It's good to see a 20 something with strongly held convictions about financial success.

    Unfortunately, as someone with a little more treadwear, I can personally attest to the fact that some of the commentary is a little naive, especially when evaluating the state of the economy. I was working in the 70's and have seen MANY economic cycles and what we're seeing now is not even close to what was going on in some of the earlier recession/depressions. I remember not being able to get a minimum wage job, I remember inflation being higher than CD rates, I remember not being able to afford a color TV.

    There are a lot of reasons people stop looking for work, in any particular week, so to make a blanket judgment that smells of a moral comment is more than a bit petty and reflects the mindset of inexperience. Weather and holidays alone impact unemployment applications – don't be so quick to blame laziness!

    Arthur: Total agreement – the rich get richer and the poor get poorer. Be in the former category! There are plenty of distressed investments and the herd that's piled into bond funds, gold, and MLM schemes will soon be poorer in money and time.

    Kevin: You don't need to change your tone but having more facts and perspective will better service you if you really want to swim upstream.

  • 20smoney said:

    Tom, you're right, I haven't experienced what you have, however, I would say that if the Fed weren't intervening and printing money as they are today, that interest rates would be way way higher and the economy would feel just as bad as it did then. We're kicking the can down the road and making things appear to be better than they are.

  • xfiltrate said:

    Kevin, your brilliance is very evident. Unlike Tom G and the majority, you are in present time. To compare the world's economy to the economy of the "70s" or any other era is more than naive, it illogical. Why?
    Because in the past the United States "government" covertly and/or overtly destroyed anyone or any country that objected to the U S dollar as the world reserve currency. Today, as a basket of 4 other currencies attain world reserve status, the decline of the "buying power" of the dollar will accelerate. And more importantly, the United States,"government" is now a willing player in the demise of the US dollar.

    SDRs (Strategic Drawing Rights) are already in use for the purchase of oil. If you don't know what an SDR is, please come up to present time. And, many countries are now trading internationally in their own currencies.
    The Social Security fund has been squandered, mostly for financing foreign wars deemed necessary to preserve the dollar or for covert/overt operations that toppled many foreign governments for the purpose of gaining natural resources at very reduced exchange. We no longer have strategic positioning nor resources to continue to protect the dollar militarily, and most countries are now wise to the economic ploys, in the name of democracy, that have provided the United States with needed natural resources. This has been planned since well before the 70s by the United States.

    The corporate industrial base of the United States of America has been outsourced. Small business, the real back bone of the past, has been replaced by wall street derivative funds , hedge funds and the general pumping and dumping of all economic sectors. And, the time is fast approaching that the United States will be unable to pay the interest on the growing national debt of over 14 trillion dollars. The United States is able to survive financially because of the continued printing of millions of hundreds of millions of dollars each month. This fiat currency, pronounced "fee ot" can no longer dominate the world market and the United States has planned it that way as a scape goat for covering non existing social security funds, entitlement funds and an explanation of why the United States has defaulted on its' debt.

    The only recovery thus far, is merely a media event!

    If being in present time and being aware of reality is considered "swimming up stream," than perhaps, that is the real answer to the question why!

  • xfiltrate said:

    I apologize, 2 corrections to previous post:

    I should have added "credit default swaps, etc" – and I meant to say hundreds of millions, not "millions of hundreds of millions.".

  • Danielhendr said:

    Has anyone read "The Big Short". Very interesting book about the housing crash and credit default swaps and would recommend it to anyone that wants to know more about how we got in this mess.

  • xfiltrate said:

    To: red soled shoes http,

    Thank you sir or madam for so effectively illustrating my point regarding
    those who are living not in present time but in past or future time and unaware of reality.

    I might well enjoy discourse with you if you were only here in present time
    with some sense, no matter how opinionated of the topic.

    To: Danielhendr, thank you for recommending "The Big Short." Comments regarding "credit default
    swaps" or any data explaining how the insiders pump and dump the common investor would be most welcome.

  • xfiltrate said:

    Kevin, why has my last post, to red soled shoes http and Danielhendr gone missing?

    Here is a U S News and World Report article regarding Strategic Drawing Rights March 2009!
    http://money.usnews.com/money/blogs/capital-comme

  • xfiltrate said:

    Kevin and all, if anyone is interested a real time look at the economy of the United States, the real time US debt clock not only is precise and very detailed but as a bonus presents official unemployment stats and actual unemployment stats:
    http://www.usdebtclock.org/

    if you are interested in comparing financial statistics between the United States, the European Union and other countries, visit here:
    http://www.usdebtclock.org/

    Comments?