Real Estate

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Bring on the "Fiscal Cliff"

Lots of talk in the news nowadays about the "fiscal cliff" America is facing and how damaging it will be to the world economy.  A divided Congress that can't seem to get their act together to pass a budget or bipartisan legislature, and the Obama administration that may not be the best at negotiating, is said to be holding the world "hostage" by not raising the debt ceiling immediately and coming to a stalemate on entitlements and revenue.

However bad this fiscal cliff will be for the short term, one can't help but wonder if the fiscal cliff will be actually good for America's future in the long term.  Apparently, our elected officials in Washington can't come to an agreement and increased taxes for everyone is a more likely possibility rather than one class of American citizens paying more in taxes than the other.  In the short-term, perhaps in the first quarter or two of next year, the economy may take a little nose dive...but long-term, given our debts and deficits, perhaps a tax increase and reductions in government spending (i.e., a fiscal cliff) won't be the worse thing America has seen.

The wealthy, even with the threat of increased taxes, will still find ways to invest and make money tax-free...mostly because they will probably invest a portion of their wealth in muni-bonds, which are usually exempt from Federal and State taxation as I state in my book on tax loopholes, TAXLOOT and in my article about where the wealthy will be looking to invest for 2013 (click here) .

Notwithstanding, the Federal Reserve has vowed to keep printing money in their ineffective Quantitative Easing campaigns (QE1, QE2, QE3, QE4, QE Infinity)...this is no doubt currently causing far more trouble at home and worldwide when it comes to devalued currency, inflation, and asset bubbles bursting in the near future.

Traditional investments, such as stocks and bonds, might not perform the best over the next 2-4 years...but other alternative investments - such as real estate, commodities, etc. might be a better pick as the world economies figure out a way to synchronize.

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American Unrest & Global opportunity

Univ of CA protest after 32% tuition hike

As the holiday season approaches, consumers are temporarily spending money to buy the latest electronic gadgets, clothes, etc.  But as we went out after Thanksgiving to take advantage of the excellent prices on several items, our US Treasury borrowed $24 Billion just on Black Friday alone which puts our debt levels at the highest peak in history.  I suppose it was their day to take advantage of the US taxpayer...yet again.

The debt levels continue to steadily increase in our country as we watch the National Debt Clock tick away as if we're watching a bomb close to detonating.  We know eventually something has to happen - there's no way our national debt can simply keep rising into infinity.  There's no way that other countries will simply continue to loan us money without some application of austerity measure similar to what's being implemented in the EU.

The aftershocks from such a calamitous event would be disastrous at home and for the global economy.  The economic duress we're under today will probably become even worse and cause more American unrest than what we're feeling today....  unless there are strong measures in place to prevent our country from further decline...which Congress has failed to do repeatedly.  As college tuition default rates climb, bankruptcies increase, our savings rate and the home foreclosure rate continue to be a nuisance on our economy - an investor has no choice but to seek out global opportunities in search of alpha (profitable investments).  Instead of buying that next gen- Ipad or LED flat screen TV, use that discretionary income to invest in real assets.

And most of the global opportunities for real assets will be in real estate, agriculture, land, gold, silver, and other commodities to name a few.  If the economy does get better, there will be an increased demand for the items mentioned above and the owners (or investors) of these items will stand to make a generous profit.  However, if the economy continues to get worse and our dollar keeps its trend of decline, then these commodities will become even more expensive as the government continues to implement its Quantitative Easing efforts to devalue the currency (or in their words, continue to pursue policies that target inflation).  [Has anyone noticed how consecutively wrong Bernanke has been in his statements to Congress about the state of the economy?  Perhaps it's just me....I digress...]

But, for sake of argument, let's say I'm completely wrong about everything that I've ever stated on my website, and American currency rises from the ashes like a Phoenix....  if this is the case, then you have nothing to lose or worry about except increased taxes, less entitlements, and global competition.

However, if I'm right, then what's the harm in taking out an insurance plan for your wealth's sake?  And give yourself peace of mind by protecting some of your wealth and converting some of your dollars for real assets such as, real estate, agriculture, land, gold, silver, and others?  Instead of TVs, Ipads, etc.?  Start investing little by little every month and you'll soon realize the benefits.  Worse case scenario - you will have diversified your money into investments that will pay for themselves in the future.  Best case scenario - you will have made an exceptional profit as the dollar declines as our country's role in the global economy is decided.

Just a thought.

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US declines currency manipulator label for China...

U.S. Declines Currency Manipulator Label For China - WSJ.com

Interesting link above from the Wall St Journal today on how the US Treasury falls short on calling China a currency manipulator!  Well now...we can't accuse our country's second largest lender (we're the first) of being a nasty currency manipulator now can we??  That would make relations bad...lol

Can't bite the hand that feeds you....

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