Savings

I am very heartened that people are now saving money even though the stock market does not like it since consumers make up 70% of economic activity. In 2005 the saving rate was less than 1%, in 2008 it was close to zero, and to-date in 2009 it is at 6.9%, the highest since December 1993. Hopefully, since this recession has been more disruptive than previous ones, so that people won't forget once the economy gets back on track that they still need to save as a way of life. This action would help minimize the financial cycles that are part of the capitalistic system.

Is There A Big Picture?

Reading about Iran's runner-up decision moved me deeply as he declared that he is ready for martyrdom and will continue that path. He called for a strike if he is arrested. Throughout history, there have been moments like this and they seem to be a sign of destiny at work. Loss of many lives have been the sacrifice for any significant change in a country. I see Iran as a leader for change because it is occurring from within the country versus a country like Afghanistan who is trying to change with the help of outside influences like the U.S. presence there. I think that permanent change comes ONLY from within, collectively and individually.

North Korea seems to be attempting to act on what its leader has said, like the publicized threat to Hawaii with its missiles. Again, I think destiny is showing in this country. The outcome seems unpredictable, but it gives us all an opportunity to look at our lives; be thankful for what we have and make changes in the areas that we are dissatisfied. The world is inundated with flux now. This is the perfect time to prioritize what is important and let the rest go, the material and nonmaterial. The impetus of the changes in the world are helping all of us go through this process, willingly or unwillingly. Stay present (this minimizes fear's control), follow your conscience (stand apart from the crowd), and act when you know that it is 'just.' Each of us is responsible for how we behave.

Update on North Korea and California Predicament

The youngest son of North Korea's leader visited China last week, all done secretly. Our president said today that we will not continue the pattern with North Korea where they can renege on the agreements after receiving aid. The energy is intensifying to allow enough pressure for a direction to be shown. All of the earth's inhabitants will be affected in some way by whatever the outcome is.

For over 20 years, California has missed the constitutional budget deadline and as a result has the lowest credit rating of all the U.S. states. With a projected $24.3B budget shortfall (each estimate has been too low), the money box is empty in less than 45 days. The difference now is we don't have the tax revenue to bridge the gap. I would not ever have imagine that the governor and legislature would be working on eliminating the welfare system. It is time for this state to come to terms in learning to live within fluctuating means, determined by where the cycle of the economy stands. Too many years have been spent by going 'full throttle,' regardless of the income, and making up the difference through debt. There is enough history to come up with a plan that will put this state on firmer ground, and that plan should include the repayment of the existing debt over time.

North Korea

The leader of North Korea has stepped up the rhetoric with his intimidating words. He said, "... the chance of a nuclear war are the highest in the world." The consensus is that he has enough material to make 6 nuclear bombs.

The U.S. is emphasizing the importance of being firm with the sanctions. Unfortunately, stopping any ships headed for North Korea because of suspected nuclear materials may be the catalyst to push him over the edge. As I said before, my opinion is that he has nothing to lose, and only cares that his son take over and have the full power that he does. It seems that we may be destined to participate in another war, and this one with someone who can annihilate millions of people, and poison the air for an unknown number of others. This may be the event that I referred to in the last blog that sets the stage to affect all arenas of our lives. If this occurs, we will be exposed to another level of survival in addition to the affects we have felt from the collapse of the world financial markets.

The Dollar

Yesterday, the dollar was at 78.63, the lowest since 1971 when President Nixon abandoned the gold standard. This creates losses for those who hold Treasury bills, like China. They have lost an estimated $90 billion so far this year. 

Today, the Federal Reserve Chairman emphasized the need to 'begin planning now for the restoration of fiscal balance.'  He is concerned that about our long-term situation.  Our actions or lack of actions will have a direct effect on the confidence of financial markets.  Also, our total debt has contributed to a spike in long term interest rates. I wonder if these words are meant to help raise the dollar. One would argue that everyone is in the same boat as us and so the dollar will be okay.  My thought is that China is not in the same boat and has the opportunity through investing in their infrastructure to have a strong financial foundation.  The strongest financially will have the most influence on the world.