Recession Planning
By
William Cate

The clouds of a 2006 Recession are starting to form on America's horizon.
Politicians know that Recessions or Depressions are bad for their reelection
changes. Bad economic times tend to create unemployment among the nice folks
holding office at the time of economic stress. You can expect the Government
to do everything possible to delay a Recession until after the November 2006
election. However, the American economy is currently caught in an upward
moving inflation and a Recession would still the fires of a runaway
currency. The Real Estate Bubble may be about to burst. And, America's
financial institutions appear to be in increasing trouble over failed
derivative bets.

If you are a Government bureaucrat with over tens years at your job, the
odds are you have nothing to fear from a Recession. If you work in the
private sector, you should carefully access your unemployment risks now and
take whatever action best meets your potential problems during a Recession.

If you are near the brink of bankruptcy, Congress wants to make your life a
living hell. They passed the "Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005." There is no question that the current bankruptcy
laws offer far more debtor relief from the burden of unmanageable debt than
this new Act. If you have too much credit card debt, large medical bills,
high mortgage payments, have a variable rate mortgage or have high car
payments, you need to carefully review your financial situation, now. If you
think that you could lose your job during a Recession, you have until
October 2005 to file under the present bankruptcy law. Under the new law,
your creditors could take everything of value or leave you drowning in
debt for the rest of your life. If you are close to bankruptcy, seek advice
from a bankruptcy attorney. Do it today.

If you are like most Americans, you have too much credit card debt. After
the last Recession, the banks changed the rules of the Credit Card Game.
Even if you keep current your monthly credit card payments, the bank can
still demand full payment of the balance on any credit card. If you are
unemployed, you won't be able to meet their repayment demands. If the
Recession starts after October 2005, your credit cards can easily leave you
drowning in debt for the rest of your life. You should plan now to either
reduce your credit card debt or have a reliable way to repay the banks
during a Recession. If you think your equity in your home is your insurance,
think again. One of the bubbles that appears about to burst is the Real
Estate Market. Your home will be hard to sell and won't command its present
value. Your loss of equity precludes securing a second or third
mortgage on your house.

Another strategy that is worth exploring with your financial advisor is to
cash out now and move your liquid assets offshore. This would give you a
nest egg to start life over, but only if you are willing to live outside the
United States. However, dunning calls from your creditors can't happen, if
you are no longer living in the good old US of A. Your choice may be moving
to a tropical paradise or living miserable for the rest of your life in
debt.

Inflation and recession are the natural cycle of events under present
Western Economic Policy. A recession curbs the excesses of a
debt-ridden society, while manageable inflation keeps the lemmings
happy and over indebted. It's a middle class rock and hard place dilemma
created by Governments to ensure the economy operates within controllable
parameters.

While next year's timing of a recession may be off, another recession
is as certain as the sun rising in the east. This cycle will continue until
Civilization enters the Mother of All Depressions. If you are like the
grasshopper playing in the summer sun until the first snow flakes falls,
you're dead. Be among the ants that see the future and plan for winter.

About the Author

He has been the Managing Director of Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/] since 1981 and is the Executive Director of the Global Village Investment Club [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]