The Traditional Rules for Creating Prosperity Have Collapsed…

Will — Tue, 01 Dec 2009 06:01:53 +0000

Today is the start of a series that outlines one of the biggest opportunities of our lives. The possibilities are huge. Events are taking shape now. Before you can take full advantage of the opportunity, let’s examine some facts and history that will put it into its proper perspective.

On September 22, 2008, Lehman Brothers, the world’s largest bank, announced its insolvency. Within minutes, the value of the stock market plunged to historic lows, clobbering investors and individuals all over the world. Not long after that, some companies that were deemed “too big to fail” were bailed out by the US government with borrowed money! Uncle Sam did it even though the majority of US citizens were opposed to it, and our broke Uncle knew it.

Millions of Jobs Have Disappeared. The Media Tells Us That Our Current State of Affairs May Be The “New Normal”. (Personally, I question that assesment because I believe that Americans will rise to any challenge laid before it and overcome it.) We all have seen traditionally good American jobs leaving the country for some time now. For example, a lot of large scale manufacturing has moved overseas where labor costs are much lower than they are here. What kind of jobs are replacing those good manufacturing ones? You already know the answer to that question, don’t you? Does that answer bother you?

This year, the government is the biggest “creator” of jobs there is. Every one of those jobs is paid for not out of profits earned from a company, but from taxes you pay. The private sector is still reeling with a reported 10.4% unemployment rate. In fact, if you were to apply the 1980 formula used to calculate unemployment to today’s numbers, the unemployment rate would be 22%!

For the people who have followed “the rules” all of their lives, this current economic nightmare has been quite a punch in the gut. While Russian caviar and Kobe beef are being served in secluded offices in Washington DC, millions of Americans are losing their homes. People are watching their retirement and investment accounts value dwindle in the marketplace. Even though the stock market has recovered some this year, there are many people who feel that this recovery is a fragile one at best, and are nervously waiting for the other shoe to drop.

After We Get Through The Recession, We’re Going To Encounter An Even Bigger Problem.

I want you to read this very carefully… what I’m about to tell you may shock you and may alarm you. But, it should not scare you because you can take action. The “Old Rules” are dead and gone. They are never coming back. Period.

What is going on in our country today? Have we been brainwashed from birth about what we can expect later in life? Maybe so.

Over the course of the next few years, 78 million people will stop working. They’ll quit paying taxes, quit paying into government programs and start to draw the benefits they have been promised by the federal government and their former employers. The first wave of Baby Boomers began signing up for early retirement from Social Security last year. Two years from now, they will start signing up for Medicare. There’s just one big problem. Despite the Federal government’s promises to these millions of people, the Feds have not saved any money in order to keep their word.

Things are no better in the private sector. The sour icing on this cake is the fact that about one-third of all Baby Boomers work for an employer who has promised some kind of post-retirement health care. Almost none of that is funded either. Many employer sponsored pension plans are underfunded. Think of the Big Three automakers deal with the UAW. Former employees were being covered under the same health insurance provided to current employees until GM and Chrysler were restructured. Those promises now broken, they’re part of a government plan.

The government’s insurance plan to protect those private sector plans from underfunding is underfunded itself. Depending on the markets, there are promises to pay retirees somewhere between 500 billion and one trillion dollars. What this all means is there is a huge disparity between what the Baby Boomers think is going to happen in their retirement years and the funds that are there – or more specifically, the funds that are not there.

The bottom line is that an entire generation is going to be let down. It will be a hard landing because the Baby Boomers are not going to have the life they were promised after they retire, or the taxpayers are going to have to pay an enormous bill. Or both.

There is going to be a lot of very angry Americans who will be forced by circumstances largely beyond their control to find new ways to earn money. There will also be a lot of younger Americans who will be very put out because they are going to have to pay the bill that’s come due.

That’s enough for today. The next post will take a look at how we got into this predicament.

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The Traditional Rules for Creating Prosperity Have Collapsed…