Filed under: Consumer Spending, Economic Outlook, Norhill Wealth Strategies Report, Protect your money, Retirement Investing, Senior Investing
The Debt Ceiling Crisis
Egan Jones, a small debt rating company, is about to announce early this week of a sovereign debt rating decrease. This is only remarkable since this company is usually far ahead of both Moody’s and S&P. They are also funded by investor groups instead of the companies they rate, unlike other major bond rating companies.
The President and Congress are far apart in their negotiations with only two weeks until the August 2 deadline. The President has offered three dollars of cuts for every dollar of tax increase. The Congressional Republican negotiators are asking for cuts in spending with no tax increase at all. On Tuesday Congress will vote on the “Cut, Cap and Balance” proposal. This will make $2 trillion of cuts with no debt ceiling increase. But the controversial apart is the proposal of the Balanced Budget Amendment. This is unlikely to pass since it requires two thirds of the states to ratify and 60 senators. Moody’s and S&P have indicated they will downgrade the US debt rating if the US debt ceiling is not increased with a commensurate plan to decrease future debt.
If the US debt is downgraded from AAA, it will create more expensive mortgages as well as more expensive consumer loans are linked to the 10 year Treasury Bond. The current ratio of US GDP to the debt is 106%. While the size of the US government is continually increasing, 72% of Americans favor a free market economy over one manage by the US government (according to a recent Rasmussen survey).
Retirees Are Scared
According to the Employee Benefit Research Institute, a survey of 1260 retirees showed that half of the respondents said they are either “not at all confident” or “not to confident” about their savings and income sources to fund a decent retirement. This is the highest level of pre-retiree uncertainty in the 21 year history of the survey.
Where the World’s Millionaires Live
While there are approximately 12.5 million households with a net worth of $1 million plus, the US came in first with 5.2 million. Japan was second with 1.5 million while China trailed with 1.1 million. But in terms of where millionaires most like to live, 15.5% of Singapore’s population were millionaires followed by Switzerland at 9.9%, Qatar is at 9% and Hong Kong at 8.7%. So if you think it’s expensive where you live, try moving to the high rent district of these countries.
How to Protect Your Money
As the economy continues to struggle investors are not only looking for ways to protect their money but also how to get a better return on their investments. Why Interest rates are not going up anytime soon and what you can do about it. David Gibson of Gibson Financial in Pontiac has some thoughts. Because of the weak economy the Fed is reluctant to raise the prime interest rate which translates to low rates of return for your money in the bank. David Gibson recommends financial products such as fixed rate annuities. They protect principal and can give a rate of return at about an average of 6% in many cases. David also commented on the Dodd- Franks Law, which limits speculation for the average citizen. According to David, this will not affect your ability to buy actual gold or precious metals, but will make it so you can not trade on the futures markets or ‘paper’ commodities unless you have $1 million in assets or an income of $250,000+. It’s designed so the average person doesn’t get clobbered and not have the cash to cover any losses. Rest assured, you can still buy the real thing when it comes to metals and commodities.
Warren Elkin of Norhill Financial is your safe money strategist. When it comes to your hard earned dollars, he can keep your money secure as it grows. Warren Elkin can be reached toll free at 877-476-5051- or by email at elkininc@aol.com. To learn more about him check out www.warrenelkin.com.
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