U.S. Dollar Decline "Red Alert."

The news on the U.S. Dollar today is daunting, Israel our largest Mideast ally demanded its loan payments be paid to them in Euro's. This marks yet another nation now added to the scores of nations joining the list. Nations that are losing faith in the U.S. Dollar.

This announcement has arrived shortly after the U.S. "Greenback" hit new record lows breaking a record of a $1.43 gainst the the Euro. Many central banks world wide have already and continue to diversify from the U.S. dollar.

The news today that triggered a "Red Alert" is a a dire warning from Rodrigo Rato, head of the International Monetary Fund who told the board of governors that the Dollar may suffer a rapid fall. This is due to the lack of assets backing up the dollar. Over the last five years the dollar has declined by over 50% in value.

The following video depicts a recent violent protest in washington against the IMF. While Fox is quick to discredit the protesters, keep in mind the points mentioned here.

What does this mean to you? This is my thought, as many of us know that most of the cheap products we enjoy are manufactured overseas. These products are expected to rise sharply in value creating inflation. This is is of serious concern because many Americans will be struggling with additional increases in Food and energy. This will make it more expensive to feed your family and keep warm this winter. To make this statement even more sad and frustrating "Bush" just massively cut the energy assistance program this winter leaving more American poor families children and elderly in the cold.

The dollar trap, will lead many people in town to begin overextending their credit to pay these increases. We always hope that our customers and employers will adjust prices and salaries to compensate for this inflation. Many employers will not be able to keep up and this will further expand our personal debt bubbles.

It is very important that in the coming year that we all not fall into the Debt trap. If that means taking more modest vacations, eating out less, and putting off the purchase of a more expensive home, renovation, or reduce utility usage, than do so.

Most big banks anticipating this coming dilemma have formed a superfund to share in the losses and many big banks are offering people struggling with debt a second chance.

Today I spoke with Countrywide officials who publicly announced that the have set aside money to finance a program to help people with Adjustable Rate Mortgages switch to fixed mortgages. They also have a Hope program for those who are already a few months behind on their home payments. They are eager to work with anyone who is at risk of losing their home.

This is particularly good news and I encourage anyone and everyone who can to take advantage of Countrywide's offer. There is one catch, however, if you have a fixed rate mortgage, or a high prepayment penalty, they will not be able to help you. The help they offer is generous but only able to help people partially. If you need to act act quickly.