Archive for October, 2008

Well for the time being things have levelled out. Or so it would seem. The Federal Reserve in the United States has lowered wholesale Interest Rates to 1% and the Share Market has regained some of their loses.

Is the worst over? No I don’t believe so . Good news however small will be injected into our thought patterns through the media, particularly with Christmas almost upon us. As human beings we thrive on positive news and often screen the negative….but there have been so many warnings out there for so long ….most people just simply blocked them out.

My prediction is that this years Christmas Shopping spend will be a lot less than those of the past…If I am wrong I will be more than surprised . If credit is used to pay for Christmas gifts in this environment it will be a receipt for disaster.

If there is less retail spending then many businesses will be effected in the new year. But like all cycles there is always an up cycle and a down cycle .For 5 years it has been up but it was growth largely fueled out of debt. There will be many opportunities in this market place where some people will make huge amounts of money. Many will try to emulate these “wise ” people who say to buy Gold or Silver or Shares, Stocks and Bonds.

But the same way Millions of dollars have been wiped off the value of companies, the same way many people have seen their personal wealth slashed or in many cases destroyed…. there will be some who will not learn from the lessons of what has been the biggest Financial melt down in 70 years.

What you must not do….

Use credit to pay for goods, UNLESS you can repay the cost immediately. Because the United States Government has effectively printed more money to soften the blow there will be a long term pay back. The cost of living will go up to reflect the cost of the Bale out.

Increased Taxes, more controls on credit , higher cost of credit. Maybe regulations to prevent banks ever allowing such lapse lending criteria to be used again. ( a little far too late!)

You must start regularly saving .

For the long term. Start a child aged 17 and invest say $40 a week until aged 24 then keep up with the annual inflation as a top up….they  will have in excess of $900,000 at age 65 …if it is left to compound. No rocket science involved just using sound financial practices. Not bad for an initial investment of $14,000 .

Done ever go outside in the middle of a hurricane. When things are still . It is called the eye of the hurricane. Many people think it is all over and it is safe to go out. This is the time that many people die.

It is exactly the same now. We dont really know the long term replications of the Financial difficulties the world is experiencing. The media becomes tired of the same old thing. Besides there are juicy election scandals going on. An earthquake or two. a civil war and the cricket…etc. But be warned when the election is over the hard decisions WILL need to be made.

And I am sure there are thousands of Mortgage brokers, Insurance Agents and Real Estate Agents hanging out for the smallest of pieces of ” good ” news so they can continue to feast on the banqueting table of plenty that has been their domain for so long.

Maybe we all need to lose weight…not the physical stuff but the burden of debt and consumption that has blighted the Western Affluent World for So long.

Maybe buying a Pig, Goat or a sheep, a book or two or a well for clean drinking water for each member of your family this Christmas will not only help people in desperate need , but will reverse the plague of consumerism that has plagued the “rich ” nations of the world for so long. I invite you to look at he TEAR Fund site on this website after you have posted your comment and placed your little flag on the country where you live.

We will talk again soon!!

Lindsay Walker

30th October 2008