For the Sake of Kids Now!

We hear politicians hell bent on destroying any governmental “social” programs saying that we have to make these drastic cuts for the sake of our children or grandchildren.  Hinting that we are placing a burden on their future, “mortgaging” the future is the term most stated.

I think they and us need to be grounded to the reality of the “Right Now” when it comes to children in America.   Let us consider facts and not rhetoric.

There are 314 counties in the United States where at least 30% of the children are facing food insecurity.  Food insecurity is the household-level economic and social condition of limited or uncertain access to adequate food. Food insecurity rates among households with children are substantially higher than those found in the general population, reports Feeding America, which along with network members supplies food to more than 37 million Americans each year, including 14 million children and 3 million seniors.  In Washington D.C., the “child food insecurity rate” is 32.3%.

Children in the United States are three times more likely to be prescribed antidepressants than children in Europe are.

It is estimated that up to half a million children may currently be homeless in the United States.  Perhaps the greatest victims of the economic nightmare that is unfolding right in front of our eyes are our children.  The overall economic numbers are really bad, but when you examine the impact that this economy is having on children things get really horrifying.  Today, 1 in 5 American children live in poverty and 1 in 4 American children are on food stamps.  Experts tell us that about 50 percent of all U.S. children will be on food stamps at some point before they reach the age of 18.  Up to half a million American children are homeless even as you read this.  And yet we continue to insist that we are the wealthiest nation in the world.  Well, if we are so wealthy, then why are so many millions of our children suffering so desperately?  More than 20 million U.S. children rely on school meal programs to keep from going hungry.

There are more than 3 million reports of child abuse in the United States every single year.  A report of child abuse is made every ten seconds.  Almost five children die every day as a result of child abuse. More than three out of four are under the age of 4.  It is estimated that between 60-85% of child fatalities due to maltreatment are not recorded as such on death certificates.

90% of child sexual abuse victims know the perpetrator in some way; 68% are abused by family members.  Child abuse occurs at every socioeconomic level, across ethnic and cultural lines, within all religions and at all levels of education. 31% percent of women in prison in the United States were abused as children.  Over 60% of people in drug rehabilitation centers report being abused or neglected as a child.

About 30% of abused and neglected children will later abuse their own children, continuing the horrible cycle of abuse.  About 80% of 21 year olds that were abused as children met criteria for at least one psychological disorder.  The estimated annual cost of child abuse and neglect in the United States for 2007 is $104 billion.  Abused children are 25% more likely to experience teen pregnancy.  Abused teens are 3 times less likely to practice safe sex, putting them at greater risk for STDs.

How can we even consider ourselves “civilized”, let alone thinking we are the “best” in the world as a civilization when we currently face realities like we now face?    In fact, we should be doing the exact opposite of cutting programs, and instead should be heavily investing in our CHILDREN NOW!!

How long do we remain silent as the education system, Medicaid, and school nutritional programs are being slashed beyond bare bones?  How long do we allow the imbeciles to dictate the current and future course of the very foundations of the principles that made America…. America?

It is my strongest hope that the next election cycle, each and everyone of us will step up to the full responsibility of being a citizen.  That means we will all vote and we will all vote based on being truly informed.

The Arab Spring, The European Summer, and An Americans Fall

As the economy continues to collapse and various sovereigns try to institute the austerity programs that are being demanded by the bankers, we have reached the point I have been writing about for over a year.  The riots have broken out on every continent.

In the last week alone there have been major riots in England, Chile, Israel, China, and the US.  These riots are in addition to  the riots that are on-going in Egypt, Libya, Syria, Iran, and Lebanon.  There is no longer any doubt that the Global Revolution has begun.

Words and discussions certainly can help us understand, but understand what?  The fact these riots have begun is simple.  When hope is no longer visible to the masses and basic essential needs of food, shelter, employment, and health care are not met, all Hell will break loose!  Any military veteran will tell you that the most fearless warriors are the hungry ones with no other options.

But I think the following photo journal  of the week’s activities will say it all

The London Riots

The Riots in Chile

The Riots in Israel


The Riots in San Francisco

The next few months are truly dangerous times.  The level of tension is high and the actions of those in charge to stabilize the situation are woefully absent.  My advice is if possible, stay isolated and prepared to survive on your own for 1-4 weeks.  I fear a gross over reaction from various enforcement forces and certainly a military action against the various domestic citizens.  Secondly, most of the riots are involving massive looting which only justifies the over reaction of the various police and military.

Some Points You May Want to Consider!

As we watch the current economic situation, there are several questions that surface.  Are we headed for another dip recession (I personally believe a double dip recession is crap, as we are in the second depression)? Is there going to be any improvement of the economic crisis or is it getting worse?  However, I think the most important question that most of us face is should I do something with my investments, especially 401Ks?

I am NOT a financial professional, although I do have degree in International Finance.  This is NOT to be considered in any way as financial advice, but I feel compelled to point out some activities that are currently afoot in the financial markets that you should 1). Watch closely and 2). You may want to consider taking some actions to protect what little investment you may still have.

If you watched the markets last week globally, you saw some real ugly volatility in the markets across the board.  Markets moving wildly up and down in the range of 2-5% daily!  That is NOT normal even in an uncertain market place and is indicative of some real anxiety among professional traders.

You and I do NOT spending our every waking hour to watch and act on our investments, so we are the sheep in this market.  So what should we do.  I don’t know about you, but I have become a real bear.  Most of us don’t make “short” plays nor does our 401Ks allow us to participate in some more of the sophisticated “hedging” strategies.  So what can we do?

The simple answer is above all else, don’t  watch the value of our portfolios get any worse.  I think any of us that have “skin” in the markets are teetering on a cliff.  Get out, park everything in money markets and let the dust settle.  Consider these “experts” thoughts of the few days.

Consider this excellent article by By Andrea Coombes, MarketWatch

More retirement advice
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Timing your Social Security benefits
Fix Social Security by hiking retirement age
Delaying benefits can pay off on Social Security

This doesn’t mean you must throw 70% of your retirement-plan assets into stocks. Your precise allocation will depend on how many years out you are from retirement, your ability to ignore the daily headlines and focus on the long term, and other factors. What’s most important is diversifying across a broad array of asset classes, rebalancing regularly and controlling your expenses.

Getting out while getting’s good

Maybe you’re envying your neighbor who moved all his money into cash in July or early August, before the Dow Jones Industrial Average DJIA +1.90%  fell a gut-wrenching 635 points on Monday, Aug. 8, then proceeded to seesaw, closing up 430 points on Tuesday, down 520 points Wednesday, and up 423 points on Thursday, closing out the week down just 1.5%.

Certainly, your neighbor was not alone. The U.S. debt-limit debacle, Europe’s debt crisis, ongoing fears of the dreaded double-dip recession and a general crisis of confidence prompted plenty of people to jump out of stocks in recent months.

Investors pulled a net $13 billion out of equity mutual funds in the week ending Aug. 3 (the most recent data available) — that’s the week before those four massive DJIA moves — up from the net $9.3 billion investors withdrew a week earlier and the less than $4 billion pulled out in each of the first two weeks of July, according to the Investment Company Institute, a mutual-fund company trade group. See the ICI mutual-fund outflow data.

Sure, your neighbor seems prescient. But does he know when to get back in? “Markets go up just as precipitously and as fast as they go down,” Evensky said. Read how the DJIA notched a gain of more than 7% in the three trading sessions through Monday, Aug. 15.

Retail investors like you and me are known for pulling out of the market — and then missing the rebound. From 1991 through 2010, the average annual return of the S&P 500 SPX +2.18%  was 9.1%, but the average equity investor return was a measly 3.8%, according to Dalbar, a financial-services market research firm.

Why? Because investors bought when stocks were on a tear, and sold when they fell in value. “It’s not because they owned the wrong investment,” said Scott Thoma, CFA, member of the investment policy committee at investment firm Edward Jones, in St. Louis, Mo. “It’s because they bought high, and they sold low.”

Focus on what you can control

Plenty of regular investors fear the system is rigged against them — that big-money investors with sophisticated trading software are stacking the deck against the little guy. But even the sophisticates fell hard “during the tech crash, during the last crash and probably during this one,” Evensky said.

Instead of worrying about them, Evensky said, focus on what you can control. For one, mutual-fund expenses.

David Swensen, chief investment officer at Yale University, said in a recent opinion piece in the New York Times that “even Morningstar concludes … that low costs do a better job of predicting superior performance than do the firm’s own five-star ratings.” Read Swensen’s piece on mutual funds.

While 401(k)s and other defined-contribution plans are far from perfect, most offer access to cheap index funds.

You also have some ability to diversify your holdings. In addition to U.S. stocks and bonds, consider emerging-market stocks and bonds, commodities, Treasury Inflation Protected Securities (TIPS) and real-estate investment trusts (REITs), among other options. Get ideas by looking at how the Lazy Portfolios are invested.

If you don’t have access to much variety in your 401(k), consider investing in that plan up to the full employer match, and then investing some money through an IRA to get access to more investment options.

You’re also in control of rebalancing. Once you’ve decided what percentage of your portfolio to invest in each asset class, revisit your portfolio quarterly. If necessary, sell investments that have grown beyond your target allocation, and buy more of those that have dropped below your target.

Understand risk

Investors tend to focus on market swoons, but that’s not the only risk you face. “In our definition, risk is not reaching your long-term goal,” Thoma said.

And don’t confuse certainty with safety. “Putting your money in CDs may feel very certain — you know you’ll get every penny back — but it’s very unlikely to be safe for most investors because there’s not going to be enough money to pay the bills after you factor in inflation,” Evensky said.

Another risk: Taxes. You’ll owe income tax on that 401(k) nest egg when you start pulling the money out. Read more: Higher tax rates loom for 401(k) savers.

And keep in mind, that “lost decade” wasn’t so for everyone. If you put $10,000 into the S&P 500 in 2000, you’d have about the same amount in 2010, Thoma said. But investors who put in $10,000 over time in regular monthly installments? “Their money would have grown to over $14,000 during that timeframe, if you were in a 65/35 portfolio,” Thoma said.

“It’s because you invested over time,” he said. “A lot of your money was invested lower and benefited from that recovery. That’s where people have to focus more often than not.”

So, the bottom line is pay attention, be sure you have the flexibility to move in and out of the stock market and mutual funds without penalty and fees.  Since we are now at point where we are at what is called a “Death Cross” in the markets (that is where the 50 day moving average is crossing over the 200 day moving average, it is a bear market). So it is a time to be a bear!   Your broker may say otherwise, but he or she has “skin” in your game either way!  It’s your money and you should call the shots!