Well, the word is finally out, and it came from the TOP! President Bush stepped forward and said “our economy is in danger”, and also, “faces a great challenge.” This all begs the question, where did this start and where is it going to end?

The war with Iraq might well have been the starting point. Consider this, the war costs $10,000,000,000.00 per month, a phenomenal sum. Our Federal debt now stretches out over the next three or four generations.

And, as I wrote in a previous article, each additional dollar which the Fed prints devalues each current dollar in circulation. What we have is a double whammy. Not only are we paying for the war, we are losing purchasing power because of the additional dollars in circulation – all ten billion – each month.

Then there were all of the risks being taken by Wall Street, a lot of which were in the mortgage business. And as the investors continued to raise the stakes and take higher risk, they brought down the requirements for buying houses and refinancing existing mortgages. This took place about a year or more ago.

The irony is that those who created some of the largest losses, C.E.O.’s, were terminated or left on their own and were well compensated for doing so. Most received multimillion dollar packages. But the problems which were created continues to grow.

We now have a set of economic circumstances like no other in this nation’s history. Real estate went down in value dramatically. When those people who were in two or three year adjustable rate mortgages needed to refinance, most couldn’t afford to. They hadn’t saved the money and the equity that they once had in their homes was gone. And on top of that, the standards had been raised and a lot of them no longer qualified.

People can no longer refinance their mortgage as readily as a few years back, and in essence use their equity like cash in an ATM, which removes tremendous sums of dollars from all sectors of the economy. This slow down of spending or the reduction of the velocity of spending has a ripple effect throughout the entire economy.

And I’m certain you know about the Federal Government bailing our Fannie Mae and Freddie Mac, the two largest buyers of mortgages. We’ve also had some well established Wall Street brokerages and some major banks go down. AIG was recently bailed out because of their size and importance, it was felt they could not be allowed to fail. And now we are facing a $700,000,000,000.00 bailout package.

Two things to consider. Have you seen this coming for a long time? And, What are you doing to prepare for and secure your and your family’s financial future?