If you have money in the markets - whether it be in an IRA, 401K, or any other kind of retirement plan, savings, or investment account - you surely have been looking with great interest over the past two weeks at the markets.

The key word here is Volatility - both on the upside and on the downside.  One of the things which continues to amaze me (and we have seen this in the news media) is that when there is volatility on the downside, we begin to hear of all the Doomsday scenarios and all the problems and issues.  However, when we have volatility on the upside, all of those scenarios that we were hearing about on the downside seem to have disappeared.  The fact is that those issues that come out in the news media in reference to a severe downturn in the markets have not gone away.  The issues, which are mostly assumptions, on why the market is going up - and the belief that this could be sustainable - are just that, assumptions and projections.  These are not based on facts.  In my opinion, this gives much more credibility to the facts which are pointed out on the downturn. So why are we so quick to dismiss the bad news and the facts upon which they are based?

I have been doing a great amount of research on the causes and cures for the recent markets -I am putting together a conference based on it - so that the average everyday person can understand some of the causes, and also consider some of the possible cures. This, of course, is if we do not reach a "point of no return."  This would be a wonderful time to review an article which I wrote, and that is still on my website, called "The Reset Button."  In this article I reviewed some of the alternatives that we may soon be facing in this Economy, and I fear that we may be getting ever closer to pushing that "Reset Button." 

In the Greece crisis, we saw every European nation criticizing Greece for their spending policies, their inability to control their debt, as well as their inability to create income and a viable economy.  Talk about "The Pot calling the Kettle black."  France has had 29 consecutive years of deficit spending.  Spain, Portugal and Ireland are in an economic situation as bad as Greece.  The only country that has any responsible plan with a fiscally conservative attitude would be Germany; the rest of them are no better off than Greece. There is a good possibility that the Euro is doomed. The upside to that is that it would create a second thought about centralizing our currency with other world currencies. The down side is there could be a call for a world regulatory authority leading to a world government.

Last Sunday night, we saw a Trillion Dollar Bailout Plan for the EU.  Let me see a show of hands from anybody who believes that the United States is not intricately involved in that.  It has already come out that the United States plans on continuing to 'run the printing presses' so that the Federal Reserve might be available to help Europe out.  I am not sure what "help Europe out" means, but rest assured it means our tax dollars being spent in ways in which they should not be spent.  We have already seen this week - though not publicized - that the Federal Reserve has been buying Euros in an effort to shore up the Euro.  That is something that has never been done in the history of America. 

Look, by the Grace of God, I have been right more than I have been wrong in most of my calls about what has happened in the market and in the global economy.  But that is because I have tried not to lose sight of the facts - of the causes and effects.  Until the causes are fixed, the effects are destined to come back - perhaps worse than ever. 

The United States' economy is doing nothing to shore itself up.  Despite what you may hear, we are putting a band-aid on a gaping wound.  This Trillion Dollar bailout was not different than the United States' Stimulus Package or our bailing out of the financial sector.  What we continue to do globally is similar to knowing that a person has cancer with a growing tumor, and simply continuing to increase the pain medication to keep the patient comfortable, as opposed to removing the tumor and treating the disease.  What we have seen in the past two weeks, and for that matter the last 18 months, is a classic case of us popping more pain pills and prolonging the inevitable. 

The United States' economy has two incredibly irresponsible positions.  We have unsustainable debt, yet we continue to add to it and every day we take on more moral liabilities than cannot be mathematically sustained based on our current "tax and spend" system.  This is why I said that it is inevitable...not a possibility, but inevitable, that we will see a VAT tax (as I wrote about 12 months ago and again 4 weeks ago), or a National Sales Tax.  It is unavoidable and will be (in the eyes of our government) our only possible hope, yet the real underlying motive will be - not to help the economy, but to continue the spending. Governments around the world, including ours, will become desperate to generate revenue and will begin looking at every potential income stream.  Speaking of income streams, the next big crash in the markets will be a "failed bond sale" - when a government (perhaps the U.S.) cannot complete a sale because there are no buyers, or they make the move to increase the return on those bonds in order to make the sale. We are getting closer to that happening. There is no bailout plan for that catastrophe. Welcome, Hyperinflation.

So, here we are, a Nation with already unsustainable debt, and yet we continue to get involved in more moral liabilities.  A moral liability is simply this. If California goes bankrupt, we likely have a moral liability or obligation - a moral hazard - to bail California out.  If New York City goes bankrupt, does the Federal Government get involved in that moral liability?  As the oil spill continues to cost billions of dollars through this environmental catastrophe, do we have a moral liability to try to help the situation?  If the 27 States which are currently tremendously "underwater" in their pension plans can no longer afford to maintain them, do we have a moral liability to bail those States out?  If Social Security continues to go in the Red (which it will) do we have a moral liability?  If Medicare and Medicaid can no longer be sustained, do we have a moral liability?

The point of all of this is that, not only do we have incredible debt to which we are continually adding, but we also have moral liabilities - some of which are unknown to us at this point, and some which are very real and "staring us in the face."  We have no business, and in my opinion we have little moral liability, for the EU Nations.  I believe that the EU has a moral liability for Greece, and perhaps for Portugal, Spain, and Ireland; just as we - the United States of America - have a moral liability for California, and perhaps for New York City, Louisiana and the Gulf Coast, the victims of tornadoes, hurricanes, fraud and pension shortfalls, as well as Medicare, Medicaid, and Social Security. 

I am reasonably sure that we would make no attempt to ask the EU Nations or the Asian Continents if they would 'chip in' and participate in shoring up some of our States' Pension Plans.  Nor would we ask them to pitch in for the catastrophe along the Gulf Coast. 

So, is this a time to panic?  If nothing else it is a time to examine your strategy very closely.  You should be concerned about the liberties and freedoms we enjoy as a Nation, because there will be no choice but to see them erode until they are gone - if as a nation we continue down the path we are on: the ideology, insurmountable debt, moral liabilities and unsustainable spending. I am not sure that the November elections can begin to get us back on the right track, but I am willing to try and will work hard to see that it happens. 

We need a voice - we need lots of voices - in Washington, of those who are willing to stand up for this Country.  Not for themselves or their own pockets, and not for their own security, pride or ego - but to serve this Nation and to work hard for its people.This is a time when we certainly need to be on our knees.  

Many of you have asked me about our Town Hall Meetings.  Here we are going to talk about some of the solutions - some things we can do - just as we did last Fall.  We will be starting these up again in September, when I look forward to sharing my views, thoughts, concerns, causes and cures, and as we think biblically about what God would have us do with those resources with which He has blessed us.  Check our web site now and regularly to see the cities where I will be hosting upcoming Town Halls.

As we consider the current volatility in the markets, and the Trillion Dollar Bailout in which we in the United States are certainly participating, there are a number of things we must be considering. 

First of all, it is absolutely amazing to me that a year and a half after November 2008, our Government and this Administration (all of those on Capitol Hill) have still failed to realize what our problem really is.  They have yet to figure out that you do not solve debt problems - anywhere in the world or in the United States of America, or cure those problems, with more debt. 

As I said many months ago in my article, "Reset Button," one of the things that will absolutely happen - and which we will likely see sooner rather than later - is hyperinflation.  As inflation kicks in, it will create extraordinary problems for businesses, which are likely to cause more layoffs. Our government, however, will be able to do little to stop this. 

In Thursday's Wall Street Journal, there was a statement made by David Cameron, the new Prime Minister of the United Kingdom, whom I believe may be one of the only world leaders right now who seems to "get it."  He understands the problems and he understands the solutions.  He made a statement to liberal Democrats in the U.K., which stressed "fiscal responsibility and a commitment to civil liberties."  I hope that he can find the strength, wisdom and power to make some very serious changes in the fiscal state of the United Kingdom. 

As for investments in this market, I would suggest a few things.  One is to have no long-term bonds.  If you have any government bonds right now, and if you can get out from under them, you might want to do that.  You should only have short bonds. Yes - I do understand that they do not return much, but from a safety standpoint, it would be my recommendation.  As you know, and have heard me talk about many times, I do not believe in currencies.  I do not trade currencies, and do not want to own currencies - and now is certainly not the time to be dabbling in the Euro or any other currency for that matter. 

Certainly I think that real estate is a good option - if you are in a position of a buyer and not in the position of a seller.  I think that now there is an opportunity to possibly buy the house that you are looking to live in for the rest of your life - with as little debt as possible.  Remember to think small and inexpensive.  As far as real estate as an investment, this might not be the best time to begin to get into that, but I do like the idea of having "agricultural land" as an investment strategy.  This would be land that is currently being farmed, or that has the ability to be farmed in the near future. 

I also like metals.  I do not like metals as a source of hedging against inflation, or metals such as gold for a source of currency or as a "savior" to us if the economy were to collapse.  But I do like hard assets, such as I have cited above in reference to agricultural land. Part of a hard-asset portfolio would be metals: aluminum, copper, silver, and perhaps some gold, as part of your portfolio of hard assets.  I look at the fundamentals of some of the hard-asset companies, which I recommend on a regular basis.  Some of the fundamentals are not what I would like them to be, and as a matter of fact, do not even meet my standards as a buy.  For the first time in about twelve years, however, I am going against my analysis and buy recommendations, and recommending some of those hard assets anyway.  A great way of doing that would be through some ETFs. You can find some ETFs that I use on my stock picks page of the web site if you are a member.

From a commodities standpoint, I still consider gas and natural gas to be good, strong commodities to own.  The fact of the matter is that the energy crisis is only going to get worse.  Read my article about $100/barrel oil to see some of the details as to why I believe that.  I do believe, for sure, that the facts and mathematics bear out that it is inevitable for us to soon have $100/barrel oil.  The only thing that is saving us from that now is that consumption is still down in the United States. But global demand will be going up and will drive long-term prices up. As badly as we would all like to be free of fossil fuels and become energy independent, the fact is that we are not going to get there in the next 20 years without dependence upon natural gas and oil.

Of course, as things get worse, there will always be some industrial stocks which will rise to the top.  You need to continue to watch my "buy list" to see what they might be.  Remember that gold is at a record high. I know that many of you are saying, "I should have gotten into gold."  I still do not think that more than 10% to 15% of your assets should be in gold, and I believe that gold should only be purchased as an investment, and not as a safety net (should our currency collapse).

I believe that by the end of this year, gold is likely to be between 1500 and 1800 as a high for the year, and I would have difficulty buying even 10% or 15% of gold in my portfolio at this point.  But when and if you do buy, I would consider an ETF, such as the one I recommend on my "buy list" and my "stock list" with the symbol of GLD.  Gold is up about 16%. Some ETFs are up 30%, which is another reason to own the ETF - plus I like its liquidity.

I am still amazed at how many people believe that we are now "out of the woods" from an economic standpoint.  I hear commentators and read articles, which talk about November 2008 as being well behind us.  The fact of the matter is that November 2008 was just the beginning of something that has not even come close to ending yet.  The end will continue to be prolonged, as we persist in taking on debt and spending - and as we continue to throw money (Band-Aids) at the problems, and as we refuse to learn the lesson that we should have been learning from those days in November '08.

The Rasmussen Consumer Index, which measures the economic confidence of consumers on a daily basis, dipped slightly on Thursday to 86.2. The index is down five points from a week ago, but is up two points from its reading last month. Consumer confidence is up nine points from the level measured at the beginning of the year.

The Rasmussen Consumer Index and Investor Indexes are derived from nightly telephone surveys of 500 adults and reported on a three-day rolling average basis. The baseline for the Index was established at 100.0 in October 2001. Readings above 100.0 indicate that confidence is higher than in the baseline month.

The Rasmussen Investor Index reached its highest level ever at 150.9 on January 7, 2004. The lowest level ever measured was 52.5 on March 9, 2009.

The baseline for the Rasmussen Consumer Index was established at 100.0 in October 2001. At 80.7, overall levels of economic confidence are significantly lower today than they were in the aftermath of the 9-11 terrorist attacks.

While Europe struggles to keep Greece's battered economy from dragging down other nations on the continent, 79% of Americans are at least somewhat concerned that Europe's financial crisis will cause economic problems in the United States. That includes 38% who are Very Concerned.

A new Rasmussen Reports national telephone survey shows that just 16% of U.S. Adults are not very or not at all concerned that Europe's economic crisis will cause problems here at home.

Investors are slightly more concerned than non-investors.

As part of the international rescue response, the U.S. government is planning to provide up to $8 billion in loans intended to help stabilize the Greek economy. Only 20% of Americans, however, are in favor of the U.S. government providing loans for such a purpose.

Sixty-three percent (63%) are opposed to U.S. government loans to help stabilize the Greek economy. Another 17% are undecided.

Looking back, most voters still don't approve of the government bailout of the U.S. financial industry.

The survey of 1,000 Americans nationwide was conducted on May 7-8, 2010 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.

Eighty-five percent (85%) of Adults rate America's relationship with Europe as at least somewhat important, including 49% who say it is Very Important. Only 11% view the relationship as not very or not at all important.

These findings have changed very little over the past year since President Obama's trip to Europe last spring when he apologized for "times when America has shown arrogance and been dismissive, even derisive" toward its allies on the continent. He also stated that in the United States there has been "a failure to appreciate Europe's leading role in the world."

Eighteen percent (18%) say it would be better for the world if the United States became more like Europe. Fifty percent (50%) say the world would be better off if Europe became more like the United States. This marks a loss of four points on both sides from last April, with a shift into the undecided column. Thirty-two percent (32%) now are not sure which course is best.

Republicans are twice as likely as Democrats to say the world would be better off if Europe was more like the United States. The plurality (47%) of adults not affiliated with either of the parties agrees.

Democrats value the U.S. relationship with Europe more than Republicans and unaffiliateds do.

But Republicans are more likely than Democrats and unaffiliated adults to be Very Concerned that Europe's economic crisis will cause major problems in the United States.

Nearly two-out-of-three Americans (65%) is following recent news stories about the economic crisis in Greece and the rest of Europe at least somewhat closely. Thirty-thee percent (33%) are not following closely, if at all.

American adults still have mixed feelings about the state of the economy a year from today, but confidence in the economy's long-range prospects is at its lowest level in over a year.

The majority of Americans now feel that Wall Street's globalized economic activities are too complicated for the average investor to follow and that the government is not capable of adequately monitoring those activities.

While most Americans regard Great Britain, Germany and France as allies of the United States they are only willing to defend the first two militarily.

The President has said that America's European allies in NATO need to pitch in more to help win the war in Afghanistan. But just thirty-three percent (33%) of voters are at least somewhat confident that NATO will do all it can to help the United States win in Afghanistan.

• According to Moody's Investors Service's sovereign ratings analysis and Congressional Budget Office projections, the United States could have its debt rating downgraded by as early as 2013.
• Even after the recent - and highly publicized - oil spill in the Gulf Coast, 6 in 10 Americans still support more offshore drilling, according to the latest NBC News/Wall Street Journal poll.
• The White House joined Democratic tax writers Wednesday in support of a new tax on oil production. I wonder who will pay for that?
• What a surprise - the United Auto Workers will ask for the concessions they made for a taxpayer bailout back from Ford, Chrysler (owned by the UAW), and General Motors (owned by you, the taxpayer) when their current contract expires in 2011.
• Following last week's announcement that Freddie Mac lost $6.7 billion in the first quarter of 2010 and needed another $10.6 billion in bailout cash from taxpayers, Fannie Mae announced yesterday that it has lost $11.5 billion so far this year and needs a fresh $8.4 billion taxpayer bailout.
• The U.S. Senate defeated an amendment to end the federal bailouts of Fannie Mae and Freddie Mac, with only two Democrats joining all 41 Republicans to support the measure. 
• This is not a Joke: In the next three weeks, Congress is looking to enact more than $200 billion in new deficit spending.
• Sens. John Kerry (D-MA) and Joe Lieberman (I-CT) will introduce their new energy tax bill today, which will allow states to ban oil drilling within 75 miles off their coast, allow states to keep only 40% of energy development revenues, and force states to spend 13% of that revenue on environmental projects.
President Obama plans to instruct federal agencies to hire government workers faster so the government can better compete with the private sector for top talent. Or maybe that's the only way we will see unemployment start to come down before the November elections.

SOURCES: Rasmussen Reports, The Heritage Foundation, Gallup 
  

The Fear of Money
Have We Separated Finances from Faith?