That sound you hear… it’s millions of Americans cracking their nest eggs.
Inflation is at a 27-year high while personal incomes are down 1.6% from last
month.
And the results are twofold: We have less money to spend. And we’re spending
more for less.
Worse, that’s just one reason why one Wall Street analyst believes
we’re "facing the prospect of a depression and the end of the American
Dream."
This exclusive report reveals the two other economy-crashing catalysts and
how they will drive the U.S. into recession.
More importantly, it also gives four ways any investor can protect their
money - even profit - before and during the fallout.
It’s a must-read for anyone who owns property, stocks or is just plain tired
of wondering when the market will bottom out…
Three Reasons We’re Heading for Recession…
The Three-Headed Monster - Congress, U.S. Treasury,
and
The Federal Housing Authority:
Let’s be very clear about one point: The Fannie Mae and Freddie Mac bailouts
were necessary.
These two institutions are the centerpiece of the American Dream - home
ownership and a vibrant economy. If Fannie and Freddie collapsed, so would
everything leaning on them.
But the recent Housing and Economic Recovery Act of 2008 - passed through
Congress and the Senate, and signed by President Bush at U.S. Treasury Secretary
Henry Paulson’s urging in mere weeks - is the equivalent of lobbing a grenade
into a gasoline warehouse.
The act will allow 400,000 homeowners in danger of foreclosure to refinance
their mortgages into 30-year fixed-rate loans. The Federal Housing Authority
(FHA) will back up $300 billion of these loans.
Because all these folks need help, and because the FHA requires down-payments
of only 3%, those who can refinance actually might do so instead of just walking
away. Even more incentive: The FHA allows the down payment to be borrowed,
gifted or provided by charitable organizations.
The FHA will end up with subprime and junk mortgages where the borrowers have
"no skin in the game," and no upside incentive.
Also, these troubled borrowers will have less incentive to repay. In the end,
when those dead-end mortgages are abandoned, we the taxpayers will pay to bail
out the FHA.
In effect, Congress, the U.S. Treasury and the FHA have elected to take out a
subprime mortgage on the economy’s future - with already strapped taxpayers
footing the bill.
Inflation
Inflation is so rampant that it’s gotten to the point where government
reports say a 2.3% hike in consumer prices is "acceptable."
Acceptable? Hardly. It’s absurd, especially since personal incomes are not
keeping up with inflation.
As you’re well aware by now, gas prices have rocketed - climbing an
astounding 26% in the past year alone.
But less visible: the soaring price of food.
Kraft Foods Inc. said its prices will jump by 12%-13% this year, and even as
much as 25% in some of its cheese categories. Kellogg Co., ConAgra Foods Inc.
and Tyson Foods Inc. are also planning price increases.
Global chemical producer Dow Chemical Co. recently raised prices on all 3,200
of its products, some by as much as 20%, in the single-biggest price increase in
the Michigan-based company’s 111-year history.
The problem is going to get worse in the months ahead, as a survey by the
National Association for Business Economics (NABE) has found that almost four
times as many businesses plan to charge more for their goods and services next
quarter than expect to reduce prices.
Ben Bernanke and the Federal Reserve
This one may be the most obvious choice, but it’s probably the biggest
economy killer of the three.
The Federal Reserve’s job is to masterfully manipulate the public’s
perception of where interest rates are headed.
It actually intended to gain and keep our confidence in its ability to stem
inflation and strengthen the greenback. And it pursues these two objectives by
simultaneously managing the direction of interest rates and working to keep the
economy from dropping into a recession.
But as hindsight shows us, they achieved neither.
Instead, the credit crisis has blown our banking system apart.
