A WORLD IN CRISIS, A WORLD OF HOPE

The housing crisis, falling stock markets, shrinking government revenues and rising unemployment all have us feeling more than a little anxious lately. On top of all that, we have a historic election for the President of the United States, the most powerful country on Earth and the country the rest of the world is both blaming for the crisis and hoping will lead us out of it. At the root of all our problems is the problem of debt. How much is too much and how do we go about shrinking it without sending the world's economy into a tailspin? I wish I had an answer.

As I've said here several times before, "You can't be better off tomorrow by spending tomorrow's money today." It's as simple as that. As long as we insist on living beyond our means by demanding loans we can't afford, houses we can't afford and luxuries we can't afford, our problem will continue and grow. It's total hypocrisy to point at the excesses of Wall Street, or the Government, as we live in excess ourselves.

For far too long the situation was twofold. The lenders were pressured by politicians to lend to people who couldn't afford it and in return the lenders got less regulation so they could offset their losses by engaging in shady market dealings that pushed the risk around to other countries and businesses. The return for this game of "hot potato debt" was a booming economy built on a shaky premise that couldn't possibly be sustained.

So what is the end result? Millions have now lost their homes to foreclosure, the housing market is flooded with too many houses that can not be sold, credit cards are being defaulted on because the equity the borrowers once used to refinance is gone (mark my words, this will be the next crisis.) Financial Rapture is upon us. Markets worldwide have seen their wealth disappear at 20, 30 even 60 percent. Countries like Iceland have gone completely bankrupt and Russia has frozen their stock trading. Buying is shrinking and the domino effect is reverberating throughout the Global Market.

For those of you that enjoy seeing the rich suffer out of jealousy, I have a wake-up call for you. The rich throughout the world pay the majority of the taxes. This is even more true in the socialist countries. As their wealth has shrunk, so has their tax burden. This is much like the way we want people to stop smoking at the same time we use their "Sin Tax" to fund health and education. If we get our wish, we are the ones to suffer. Capital gains is a thing of the past. In fact, the richest amongst us will be claiming losses, not "gains". Retirement accounts based in the stock markets are seeing huge losses (although better lately) and that will lead to increased burdens on social programs aimed at the elderly. Automaker pension programs are in danger of not being able to meet their obligation. The government will be forced to take over more and more of the burden while receiving less and less revenue. You don't have to be an economist to see tough times are ahead.

The bright side of all this is that we have finally had our veil lifted. John McCain and his Band of Merry Deregulators are being seen for what they truly are. Robber Barons. The Democrats, for their part, are being seen for what they truly are; irresponsible and too focused on the now. We are seeing the "It's all good" generation realize that it's not all good. You can't just hand money to people who can't afford to pay it back. You can't just rely on the Rich to pay all of your bills, you can't just live for today with no foresight into tomorrow and you can't push your responsibly to yourself, your children and your future onto the Government. This is the ultimate lesson on personal responsibility. If your benefactor disappears, can you survive without him? The next President of the U.S., whoever it ends up being, will find himself, from day one, in the uncomfortable position of explaining to the American public that we simply don't have the money that we had just one year ago. We can't create more programs with less revenue. The Entitlement Generation is in for a shock.

The bad news is that hard times are ahead without a doubt. My suggestion to all of you is to save, cut down on the unnecessary, and prepare for the worst while hoping for the best. The good news is that we are finally, once again, going to understand what is really important in this world. Our families, our friends, and our inner strength.... not our possessions, our appearance and our Ipods. H.C.