Great Depression Online Archive Issue:

There Is Hope

Great Depression Online
Long Beach, CA
December 12, 2008

Inside This Issue You Will Discover…

*** Financial Armageddon
*** The Heart of Scrooge
*** There Is Hope
*** And More

Financial Armageddon

“We're heading towards a financial Armageddon,” warned California Governator Arnold Schwarzenegger on Wednesday.

If you’re familiar with California politics, you know this story repeats itself every several years.  In substance, there’s really not much to it.  The beans were counted and they came up short.  And now the legislature can’t seem to get a budget together. 

The dilemma’s really quite simple.  There’s a $14.8 billion gap between revenues and obligations that not even the Golden Gate Bridge can span.  And it’s getting wider at about $40 million a day.

“Gov. Arnold Schwarzenegger said California’s budget deficit has widened by another $3.6 billion in just the past few weeks amid a worsening economy,” reported Jim Carlton for the Wall Street Journal, “and that the total shortfall of an estimated $14.8 billion will keep climbing until the state legislature acts.”

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~~~~~~~~~~~~~~~~~~~~~~~~~

If nothing happens soon the state will run out of cash by the end of February.  In our opinion, the sooner the better.

The Heart of Scrooge

Making windows and doors is a bad business to be in these days.  Not that there’s anything deliberately wrong with such a trade.  It’s just that no one wants windows and doors any more.

And when you make something that no one wants, it doesn’t take long before you’re out of a job.  Unfortunately for the workers of Republic Window & Door in Chicago, the owners of the window and door factory have the heart of Scrooge; workers were given the boot with just three days notice…less than three weeks before Christmas.

From what we gather, following a six day sit in, union leaders have come to an agreement with plant owner’s and Bank of America that, as reported by AP, amounts to “eight weeks’ salary, all accrued vacation pay and two months’ paid health care.

“…it works out to about $7,000 for each worker.”

Not bad for six days of sitting around.

There Is Hope

Others may not be so lucky.  For after years of robust growth and low unemployment, fueled by free flowing and expanding credit, the exact opposite is now happening.  And there doesn’t seem to be anything anyone can do about it.

While the Fed and the Treasury have opened the flood gates of fiscal and monetary policy, the credit that saps out flows like molasses in February.  And with unemployment rising, even those with jobs are tightening their belts. 

What good’s credit, if no bank’s willing to lend?  And what good is it if the average householder already has too much of its reverse…debt? 

So, too, those who still have a few bucks in their wallet are a little more selective about what they buy.  For who needs more cheaply manufactured plastic knickknacks anyway?

No longer will people add a couple extra bucks to the debt side of their ledger so they can stick a pair of plastic light up reindeer antlers in their yard.

And so it was that yesterday, the 11th of December, something truly extraordinary was reported.  Something so astonishing and shocking that most news outlets failed to mention it.  Something so mysterious and inexplicable that it has never…ever…happened before…

Yesterday the government reported that household debt fell in the third quarter for the first time ever.

What does this mean?

Why it means, one very important thing.

It means there is hope.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  If you’re looking for a prudent way to dip your hand back into the market.  Our friends over at Street Authority have just the stock.  If you’re looking for high yields, monthly payments and unprecedented safety from your investments, then you need to learn more about our “Income Security of the Month” for December 2008.  This stable preferred stock has a long track record of paying some of the most solid dividends in Wall Street history.  In fact, the preferred issue pays a monthly dividend totaling 10.3% annually and has outperformed the S&P 500 by more than +44 percentage points over the last year!

What’s more, the parent company of the “Income Security of the Month” invests exclusively in the most secure investments on the planet -- 99% of its portfolio is in securities with credit ratings of “AAA.”  Thanks in large part to this strategy, the preferred shares have outperformed 97% of the stocks in the S&P 500 during the past twelve months.  Learn all about it here: Income Security of the Month - December 2008.

 

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