The Coming Financial Crisis – Telltale Shifts in the Economy

Preparing for the coming financial crisis means we’ll need to take action now. My view is that the economy shifts, it doesn’t suddenly collapse. We’ll have time to correct our course if we know when and how to shift along with it. Clearly it’s time to learn to shift for yourself.

From where I’m sitting, there are plenty of shifts that have come into view over the last 40 years. They’re easy to see if we just look back to see what used to be and why. Let’s look at some of the marketplace shifts. They are the key to helping us forecast our future.

And then, let’s think about what sensible things we might do so we’re better positioned to contend with the changes that are coming.

Telltale shifts in the economy include:

• Record high oil prices and increasing demand for oil all around the world – driving up the cost of nearly everything we grow, process, manufacture and transport.
• Dwindling diversity in the marketplace – greater reliance on fewer providers.
• Greater dependency on employers for income – reduces the ability of an individual to increase their earnings.
• High levels of persistent unemployment and underemployment – leading to many more looking for public assistance, and fewer creating the wealth necessary to pay for it.
• Former members of the middle class experiencing homelessness – a clue that a large portion of our population are living too close to the financial edge.
• Unprecedented rate and number of foreclosures - a big influence on property values, the housing market, and the industries associated with building new homes.
• Longer life spans – increasing the number of elderly who require more care over a longer period.
• High levels of commitment and indebtedness at all levels of government – a formula for higher taxes and more “squeeze” placed on productive citizens.

Of course, these aren’t all of the indicators, just a few of the big ones that come to mind. Taken individually, none of these are earth shaking, but taken together as we’re seeing them now, they spell trouble for many of us.

In the next many editions in this series, I’m going to take each one of these indicators and  discuss why it should be considered a telltale sign that our economy is shifting in a direction that won’t be favorable. And, I’ll try to suggest a course of action that is reasonable.

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Clair Schwan doesn’t have a crystal ball, but he’s done fairly well being mentally, financially and emotionally prepared for the ups and downs of the economy. One thing is for certain, he’s never counted on the economy to remain as-is. He recognizes that things change, sometimes for the good, and sometimes in the opposite direction.