Do You Really THINK The Credit Crisis Is OVER???

As we all know, the market place that we live in today is 100% different and I believe its going to get a lot worse before we see better and this is why I’ve been telling everyone that I believe you need to get your super protected by setting up Self Managed Super Fund.

I will get into why I believe setting up a Super fund MUST be something that all people need to consider all little later but first, I want to going into detail why I believe we are going to see another big down turn in the stock market.

At the start of 2008 the stock market had one of it’s biggest down turn it has ever seen in history. The stock market got below the the 2003 lows, over 8 million jobs were lost, trillions of debt was created,housing in the US had one it’s biggest crashes of all time-like up to 50% in some areas, some of the longest standing banks where almost whipped but thanks to the government – they held on and so much more.

As you can see, just by reading that, the US economy has taken a massive hit and is not in good shape and if we are totally honest with our self’s, we know that it’s going to take a long time to fully recover and it’s not going to be all good with in 6-12 months time.

Since march in 2009 the markets have retraced about 62% of the entire move down of the global finical crisis and some people are starting to get back into the market, getting the confidence back to start investing again.

This is where I start to get into the real reason for this post because in my opinion the move back up was nothing but an after effect of all the trillions of dollars pored into the markets.

If you go back and study what really makes an economy grow, it’s nothing other than the mass public spending.

Let me explain.

When the mass public starts to spend, it’s a natural effect that the economy starts to expand, new mortgages are created , personal debt gets higher and higher, more spending on consumer goods which is causing companies to make profit year after year which is cause’s new jobs being created which is cause the economy to expand.

Now, that’s when the market is booming and the market has been going up since march last year and what do we see happening in the market right now?

New mortgages have drooped throw the floor, in fact, the start of 2011 there is going to a lot more loans to be re set and that means more defaults and more foreclosures and that means more trouble for the banks again.

What else?

Private debt has had a massively dropped, more people are saving and therefore companies are not making profit which is causing jobs not to be created which is causing the market have a slow down.

Now, talking about job losses. Did you know that as I type this, that the US government is poring more money in social security ( its called the pension or the doll here is Australia) than there getting back through tax’s etc.

Check out this video and you will see visually what the situation with the job loss has been.

You see with that many job been loss, there no spending going on.

At the moment we are paying back more money than we spending, in fact more than we have in the last 60 years.

looks at real estate , interest rates are at there lowest right now they have been in a century, but no one is buying property .. we have seen a 68 % drop just since 2005 in the number of new mortgages created. the lowest rate in the last century, what has happened, we have seen a dropped in new mortgages down to a level of 1996.

Thanks for Depressing ME John!

Hey, I’m not trying to depress you. what I’m trying to do is, education you on what I’m seeing, so you can at least protect yourself because *IF* we do see another major down then at least your are protected because if do see another major move down then…

Your Retirement Accounts Are On The line And Will be Effected If This Does Happen

I have been telling every I know that if they do have exposure to the market is some shape like direct shares or even retirement fund, then I strongly encourage you to consider put all exposure you have in the market to just cash. This is only applies if you have share and you are in for the long haul.

Listen, yes you might miss out on some up side but if this does happen then at least you are protect and in the end you will be in front because most account would have losses on there account and your still sitting in cash, so you can buy more if you know what I mean.

So, there are a few things we can do to go into protection mode.

First- Consider pulling all direct exposure in the share market into just cash and get education on how to make money on the way down.

Secondly- With your super account, you can set up a self managed super fund and just have all you retirement account just in cash.In Us its the 401k and I’m not sure what they have over there to do this. If you are in the US and your reading this.. please have a look at controlling your own 401k. once again, this is just so you are protected.

But –You Need To Set It All Up Legally

I’m not an accountant or a solicitor, but make sure that *IF* your going to do this, that you set up it all 100% legal.

This last weekend in the finical review there was a article on the:

ATO Tightens Net On illegal Super Schemes

To cut it short, the article went on talking about the Australian Taxation office are going through all Self Managed Super Funds because there is a lot of illegal schemes going around.

The ATO is currently going through 430,000 funds managing $400 billion to stop abuse such as illegal early release schemes and identity theft.

The article went on to say the ATO audited 1350 promoters of illegal scheme last year and raised over 10 million in tax and penalties.

So all in all make sure you set it all correctly, *If * you are going to do that and make sure you are honest with the ATO when setting it up.

Hope you enjoyed this article.

Talk soon.

John Howell

Please leave your comment below and tel me what you think?

Tags: Credit crisis, Stock Market, Trading and investing

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