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Will Obama be a Trustee Managing the Bankruptcy of the United States? by Michael Letcher
As citizens of the US, we've heard gigantic numbers in the media in recent years to pay for extraordinary events not initially considered when our government establishes its budget:rnrn$32 billion immediately following the September 11, 2001 attacksrnrnUp to $200 billion for Hurricane Katrinarnrn$500 billion and more for the War in IraqrnrnGiven the impact of extraordinary events like these most of us already expected that the federal government was going to face massive deficits this year - even before the financial crisis started.rnrnAs 2008 comes nears the end, however, we've been presented with an astronomical new set of numbers associated with the bailouts either already approved or still being considered by the federal government:rnrn$200 billion to offset the future losses of Fannie Mae and Freddie Macrnrn$700 billion for the Troubled Asset Relief ProgramrnrnUp to $1 trillion being considered in infrastructure projects to jump start the US economyrnrnAfter many years of simply not paying attention, I decided to do some on-line research on the financial condition of the US federal government. Quite frankly, I was shocked by what I discovered:rnrnThe national debt just hit $10.6 trillion dollars and is going up every single day.rnrn$451 billion was spent by the federal government to pay interest on the national debt during the fiscal year that just ended in September, 2008. Interest expense is now the 3rd largest item in the federal budget trailing only the Departments of Health/Human Services and Defense.rnrnThe Office of Budget and Management referred to the short term budget situation as sobering.rnrnBut here's something most Americans might not realize.rnrnOur leaders in Congress continue to push more regulation and oversight and seem to feel that this could have prevented the collapses at Enron, Fannie Mae, and Freddie Mac.rnrnSo I was shocked to learn that the Government Accounting Office (GAO) reported this month serious material weaknesses in the financial reporting processes of the federal government - preventing the GAO from expressing opinions on the financial statements of a significant number of federal agencies. The GAO concluded the federal government did not maintain an effective internal control over financial reporting - a system that could lead to waste, overpayments, and inefficient use of government resources.rnrnThe GAO is referring to the same federal government that's been telling you that it is going to closely supervise the billions lent to bail out financial institutions and the auto industry.rnrnAll of the numbers point to a mathematical certainty - that we are heading towards the biggest financial crisis ever - the total financial collapse of the government of the United States - Armageddon.rnrnTo pay for some of the most recent bailouts announced, the treasury department has announced its intent to borrow $550 billion in the 4th quarter of 2008 and $ 368 billion in the 1st quarter of next year.rnrnFuture borrowing on this scale might not sound like anything new to you. You've heard these kinds of numbers thrown around before.rnrnThere's just one problem.rnrnGovernments do not have an endless ability to borrow. Major cracks are already showing on the surface. Some of the biggest states in the country are having trouble selling their bonds to investors including the states of Florida and California - that's something most of us have never seen in our lifetimes. California is already approaching the federal government asking for billions to help them out of their current crisis.rnrnYou see, we've reached a point in our history where only the Federal government seems to have a fully functioning line of credit. But now that you know the staggering amount of money that has to be spent on interest to service trillions in debt, how long can the federal government keep borrowing?rnrnWhen will investors who buy debt from the Federal government finally decide they don't want to lend to Washington anymore? What's going to happen when those investors get cold feet about the ability of the Federal government to repay the debt? They are only going to do one of two things - either demand very high interest rates or simply invest their money elsewhere.rnrnOnce that happens, it will only take a few months before the Federal government has to shut down - one agency at a time.rnrnThat's why no matter how ambitious President Elect Barack Obama's plans for the future are, his presidency is largely going to consist of supervising the bankruptcy of the federal government - not further expansion of government social programs.rnrnNow I don't expect our new president elect to take this lying down. He will not quietly manage a bankruptcy while losing his chance to create a legacy. To avoid a total financial collapse that will make his presidency irrelevant, you should anticipate that he will let the Bush tax cuts expire and that he will impose brand new taxes - up to and including taking control of your personal assets and property.rnrnYou have to take the following steps to protect yourself as we move closer towards this financial day of reckoning - a day when the federal government won't be able to borrow want it wants to in the debt markets:rnrnIf you have bond investments, don't assume that your principal is not at risk - find out exactly who these bond funds invest in. If there is a risk of losing your investment, get out of that fund.rnrnInvest in precious metals including gold. They will be solid investments for many years to come. In post World War I Germany when it took a wheel barrel full of money to buy a loaf of bread, a person who could pay with gold had nothing to worry about.rnrnBuy real estate during these troubled times. Those who own their homes will be in a much better position than those who rent during a financial collapse. If you are not convinced, go back and look at what happened to those who owned homes in Brazil and Argentina when they were experiencing 100% inflation rates - quite honestly, landlords and not renters were in control.rnrnPay down your mortgage. Owning a home outright will be far better for you then having a mortgage.rnrnLast but not least, consider keeping at least an emergency stash of liquid cash in your house for the toughest of times.rnrnI wish our new president the best of luck in taking the mess that he is going to inherit. However, our crushing national debt is going to severely limit his options. I intend to prepare for the financial collapse before it happens - you should too!rn
Michael Letcher is a former Fortune 500 executive and is a licensed CPA. His on-line database can help you avoid Citizens Property Insurance Florida. Find out how you can get affordable, private Florida home insurance and his free newsletter by visiting =>rnhttp://www.homeinsurancebuyers.org
Article Source: http://www.earticlesonline.com/Article/Will-Obama-be-a-Trustee-Managing-the-Bankruptcy-of-the-United-States-/459400
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