The Problem Everyone Knows
Today’s article in Calculated Risk on the Unemployment Numbers highlights the worsening state of our economy as ALL of the excesses of the:
1980’s (beginning of heavy credit card use)
1990’s (stock market bubble and options to deadbeat executives who add no company value)
2000’s (real estate prices rising 10%+ year vs historical average of below 4% due to easy lending rates, and excessive Leveraged Buyouts – LBO’s – and private equity acquisitions of companies)
All of these excesses become unwound into a violent and enormous reversion to and BELOW (above) the mean for various economic measures – specifically, mean unemployment, mean productively, mean inflation, mean stock market/valuation levels, etc.
Leading to the Problem No One is Thinking About – Crime
What I want my clients to prepare for is to be ready as the lack of work creates the usual side effects – increased petty crime (typically theft, robbery, employee, etc), a probable increase in insurance scams (similar to the rear-end/chiropractor scheme), and perhaps more violent crime as a result of this.
Personal Planning
From a financial planning & personal perspective, it will be wise to revisit such things as liability insurance, home safety investment, and perhaps rethinking where you walk at night. The cities will certainly see more theft as unemployed teens with nothing to do may decide to go into the nice parts of town for some deviant recreation – if any of you have ever been a teenager, you know this isn’t unrealistic – especially if a kid has nothing else to do (perhaps also the kids’ parents can’t afford sports after school – more “free time”). In Summary consider the following steps in recession:
1. review liability insurance- you chances of getting sued frivolously could rise
2. consider safety in your residence choice – your neighborhood could be a target for thieves and muggers
3. add a home alarm system or some kind of security system – home break ins could rise
4. consider buying physical gold – our dollar will be worth less
5. Protect your personal information – credit card scams and ID theft is easy to do and hard to trace so try to limit how many credit cards you have and other accounts to track yourself and spot problems easier
I would take this very seriously – if you laugh this off now, you might not be laughing later.
Chris Grande
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