January 07, 2004

Thrift is Cool...or Soon Will Be

Frightening/enlightening quote of the day: Consumer debt hit a record $1.98 trillion in October 2003, according to the most recent figures from the Federal Reserve. That debt, which includes credit cards and car loans but not mortgages, translates to about $18,700 per U.S. household. You can find the whole article by going to http://www.signonsandiego.com/news/business/20040106-9999_1b6debt.html . Included in the story is a touching anecdote about a woman who relieved her post-traumatic 9/11 stress by...shopping. That's the way to buckle down. Or just buckle, I guess. What really caught my attention in the article is the idea that everyone who remembered what happens when you get too much debt and too much speculation is....dead. Things have been forgotten which investors ought to have remembered. Simple things. Critical things. The things that make the difference between surviving a personal financial calamity...or being utterly ruined. You might call them the lost lessons of responsible finance. There's a whole generation of debt-riddled American's who don't remember an older era where you were more responsible with your money, didn't take the financial future for granted, and planned for the safety of you and your kids (and sometimes the extended family.) The tragic truth is, history shows a disturbing pattern. Just as one generation has forgotten the hard earned lessons of the past....the past repeats itself. It's happened over and over in financial history. And it's happening again. The whole "financial economy" is a bubble barely balanced on the edge of a knife. One tiny slip... Of course those who understand the past are NOT doomed to repeat it. You see, understanding the past gives you a glimpse of the future. Granted, no one can exactly predict WHAT's going to happen, or how it's going to happen. But you can have a pretty good idea. And this gift of foresight, you can stay one, two, even three steps ahead of the average investor. The past really IS prologue. But it doesn't have to be in a negative way. In fact, right now we see a very bright future for investors who are willing to look past the nervous propaganda of Wall Street. The world really IS changing in profound ways. The collapse of America's last and greatest bubble changes the rules of investment. And for those that have the guts to see it now, it's a once in a lifetime opportunity to profit from both the decline of the old order, and the rise of the new one.


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