There is plenty to be nervous about

I would not say that I am afraid, for I am not; but I will readily admit that the incredible things happening with the weather and economy make me very nervous.  There is a huge difference between being afraid and being nervous.  One is counterproductive and the other is the natural reaction to uneasy situations.

Just four years ago I would have been working 20 hours per day finding relief supplies for tornado victims in the St. Louis area and flooding victims in southern Missouri.  I know my days of trying to “save the world” after every disaster ended some time ago, but I am still deeply impacted as I see images of destruction and hear reports of catastrophic flooding soon to cause untold problems in many areas.  Throw into the mix some of the worst wildfires Texas has ever seen and you have a truly troubling situation building.

I study weather and I have seen from multiple sources that the upcoming month of May will be MUCH COOLER than normal throughout much of the USA except along the Gulf coast.  The last two times this happened were 2005 and 2008 which were years that produced hurricanes Katrina, Rita, Wilma; and 2008 which produced hurricanes Gustov and Ike.  Many experts are already warning of the imminent possibility of multiple strikes by huge hurricanes along the United States coastline this summer.

For a very long time I used to study and try to understand economic concerns.  What is currently happening is so distressing that I no longer have the desire to try and figure out what is happening and about to happen.  Contrary to what media outlets are saying, there is a period of hyper-inflation just around the next bend.  We are already seeing it in the constantly rising prices for gasoline and food.

It is estimated that nearly 15% of all Americans have had to raid their retirement accounts to find resources for emergencies.  I know this is true for I am one of those 15% and am not proud of it.  But, when all other sources of income are removed, and expenses pile up; there is no place left to go but to the IRA or 401k that was supposed to provide income for 25 years or more after retirement.

Recent studies have indicated that the housing market for super expensive properties is rebounding and doing fine.  Those with plenty of money are spending it on lavish homes that cost well over a million dollars.  Those homes in foreclosure are also being purchased by people with money and then rented out to desperate people who have lost their homes.

Meanwhile those homes in the $100,000 to $600,000 range just sit there.  No one qualifies for a loan and no one has the money to pay the huge down payment to move up or down.  Most of us live in these kinds of homes and are stuck in them for many years to come.

I cannot do nothing about the weather or the economy so all I can do is pray for wisdom for those deeply impacted by both.  May God grant us all great patience and understanding so as to make the right decisions and have the means to help our neighbor, brother, parent or child in need.

Dealing with the the terror and fear of failure

Fear has a way of gripping, seizing and otherwise stopping people in their tracks. Fear of failure has to be the greatest of all fears next to the biggest one—fear of death. When the fear of losing all one has worked for to obtain confronts a person, the instinctive reaction is first panic and then irrational actions. Both of these reactions generate negative results which compound the problem.

Fear is like a disease which creeps into the mind and slowly but surely takes over thought patterns and influences the decision making process. Fear is irrational and thus the decisions made out of fear are irrational. Fear is counterproductive and thus when allowed to influence our thinking it generates results which only serve to foster more fear.

The purpose of a terrorist attack is to generate fear and panic more than anything else. The immediate destruction is important, but the long term fear is the main objective. Terror is not a nice word, and to terrorize is one of the ugliest words in the English language. Nothing harms people more than to live in a state of terror for in that state there is no freedom but only bondage.

Fear and terror are the cruelest of all slave masters and they rule with an iron fist. When a person, community or nation is ruled by a tyrant utilizing fear tactics, the resulting submission is obtained at the cost of individual initiative and personal liberty. Living under the cloak of fear produces nothing but bondage and a timid lifestyle void of any risks and joy.

The greatest realm of fear currently is of course finances. With the ongoing, and seemingly never ending onslaught of negative news regarding everything from the Stock Market to house foreclosures to job losses, etc there has settled over the world a growing fear that things will never be as they were during the years of prosperity fueled by unbridled greed. As the reality of horrible mistakes made years ago catches up with the current situation, things just keep getting worse due to the enormous deceit and evil practiced by so many for so long.

Times are tough and getting tougher by the day for millions of people. The numbers of us who have to deal with the gnawing fear that within a few months there will not be enough money to even pay the mortgage, let alone all the other bills, is growing daily. Those who have lost 50% or more of their net worth and have gone from equity positions to being “upside down” in their homes are the ones most at risk of yielding to fear.

Somehow there is a way out of the wilderness and that way can be found if fear is kept at bay and sound practices of financial stewardship are practiced. As is evidenced by the current flood of negative earnings reports by major corporations, Americans have been cutting back on purchases which is the only sound and logical thing to do in times such as these. But, in so doing this, the ripples spread throughout the whole economy as one sector after another suffers a downturn in business. It is, indeed, a vicious cycle.

Whether all the bailouts and stimulus packages which have come and are coming will really do much to stimulate the economy, promote job growth and halt the foreclosure crisis is open for debate and won’t be known for months or years. What is a known reality is that if fear is allowed to take hold and dictate decision making whether in Washington or everyone’s kitchen table; the results will be opposite to what everyone desires and the problems will compound.

In these troubling times, it behooves the wise person to first be patient and secondly be prudent. Now is not the time for outlandish and risky moves. If ever there was a time to dig in and hang on, it is now. Budget your resources as best you can with the mortgage being most important followed by utilities and other living expenses. The vultures circling who lured us into getting their credit cards will just have to live off the scraps for awhile. The tactics being employed by the major banks by cutting credit lines and raising interest rates for even good customers is deplorable and I pray it backfires on them.

Normally I would never advocate paying the minimum per month on a credit card bill, but if it comes down to paying more or losing your house; it is a no brainer. In due time all this will work out one way or the other and we all will either be living in tents somewhere or the ship will right itself and the good times will come again. Until then, the main thing is to stay calm and not panic. Refuse to act out of fear and of course trust in the Lord for guidance, provision and wisdom. That is all any of us can do.

The Perfect Economic Hurricane is Ready to Come Shore

At this time a year ago gasoline averaged around $2.98 per gallon and diesel was only $2.72.  Oil was trading at $72 per barrel.  Oil today is trading for over $140 per barrel.  Gasoline today is averaging just over $4.00 per gallon in the United States.  Diesel fuel today is still over $4.50 per gallon in most locations.  These are facts and not mere speculation. 

The longer these kinds of prices stick around, the more this crisis is hitting home for most people.  United States drivers are so used to price hikes and drops in gasoline, that the idea of constant $4.00 per gallon gasoline has finally forced them to change their buying and driving habits. 

With the exception of Honda, every automobile/truck manufacturer showed breathtaking declines in sales in this country in June.  Some, such as Chrysler and Ford showed declines large enough to send chills down the most seasoned experts.  In a clear “sign of the times”, Chrysler announced Monday that it was closing the plant in Fenton, Missouri which produced many of its minivans for years.  No one ever thought they would see the day Chrysler minivans would no longer be popular.

Who would have thought a little over a year ago that headlines would announce in July, 2008 that the SUV was quickly becoming extinct?  Who would have dreamed that in rapid fire succession, each of the giant US auto makers would announce plans to close most assembly plants making even pickups PERMANENTLY?   It seems like only yesterday that GM, Ford and Chrysler couldn’t sell a small car to anyone.  Now they are all making a mad dash to develop and make hybrid vehicles which get good gas mileage.

For those who say the high cost of fuel hasn’t greatly affected most Americans; why else would there be the dramatic changes we are seeing out of Detroit?  The longer gas prices stay high, the greater stress is put on the average family’s budget.  When every trip to the gas pump results in an outlay of $50-100, the grim reality of this crisis rears its ugly head.  For those families stuck with a SUV, a pickup and a minivan; this reality has been the trigger to cause the mortgage crisis to balloon as it has.

Recently we looked at our personal financial situation.  Our income is 100% flat.  We have no more income today than we had three years ago.  Not only have energy prices spiked within the past three years, many items tied to energy prices have spiked also.  The price of food has dramatically increased as well as food for our horses and dogs.  For the first time in many years, our electric cooperative had to dramatically increase rates in April.  Living in an all electric house meant a huge increase in the monthly bill.

We used to have a fairly nice mutual fund account with along with two small Roth IRAs.  As of yesterday, the mutual fund account had lost EVERY penny it had gained the past three years just since January.  It now has in it exactly what was originally invested in it back in 2005.  The two Roth IRAs have LOST value and are worth less now than when started and added to over the last few years.  These were balanced and very conservative funds.

So, here we sit with the same income as in 2005, the same amount of savings as in 2005 (no gain) but the cost of just about everything up 20-100% since 2005.  Guess what?  We are hurting and in trouble.  We have cut back where we can.  We have moved out of the upstairs of our home to save the electricity of cooling it this summer.  We have parked the two gas guzzling vehicles I used to travel all over the country in and try to drive our Corolla whenever possible.  We have cut the horses feed as well as the dogs.

We try to eat from our stash in the three freezers in the garage, especially meat.  We only go out to eat once every six months instead of once a month.  We cut the cable to bare minimum.  We make no trips other than those necessary to work, go to doctors and shopping locally.  We have cut back wherever we can and still we keep falling further and further behind.  When the cost of living keeps going up without a corresponding rise in income; the resulting shortfall in available funds quickly reaches a crisis point.

We are not alone in this predicament.  Millions of other Americans are reaching the point where they must see either an increase in income or a dramatic decrease in the cost of energy and food or they will break.  Add into this mixture the incredible drop in stock prices and the resulting wasting away of profits from mutual funds and retirement accounts, and there are all the ingredients for the perfect storm of economic disaster.

Unlike the early 1970’s when wages increased as quickly as prices, and the resulting inflation just about killed this country; amazingly there has not been the hike in income the past six months to match the incredible increases in the price of everything.  Truckers have “eaten” the high cost of diesel to stay competitive.  Retailers have held the line on prices and seen less profit to stay in business.  Americans have tried very hard to not allow the explosion of energy/food prices to ignite a round of inflation which would destroy the economy.  But, how much longer can this happen?

Soon, unless the price of fuel drops dramatically, the price of just about everything will increase radically.  This is called runaway inflation, and we are at its very doorstep.  Businesses, companies and individual contractors of all types have done their best to not raise prices; but the stark realities of $4.00 gas and $5.00 diesel are starting to set off the chain reaction of inflation that was sure to come.  Hold on and pray for the best as the coming economic hurricane blasts ashore in this country and blows away thousands, if not millions of households in a wave of runaway inflation.