Market Turmoil Hits Home

The last three days have resulted in stock market losses not seen since September 11Th 2001. With nearly a 11% drop in the Dow Jones in just 72hrs. IRAs, 401ks and just about every Milford stock portfolio felt the shock.

There were lots of people today staring at the markets in complete despair as they assessed their personal losses yet again. This all at a time when everything from energy prices, to property taxes and food costs are on the rise. Making matters worse Milford is now under a credit crunch with 350 active foreclosures on homes whose value have been either stagnant or in danger of a further decline.

The global and American economic situation is dire, and is now hitting home and sobering even the most optimistic people in our town. Finding a safe haven for retirement funds is becoming increasingly difficult as America's once largest banking institutions like Merryl Lynch, AIG, Freddie Mac, Fannie Mae, and Lehman Brothers continue to show signs of distress and failure.

No one knows for certain if we have seen the worst of this economic crisis, but few have even prepared for the potential for negative events that accompany a severe economic situation. A recession is defined as two quarters of back to back negative growth, but what do we call Five or Six or maybe even Ten. Just 18 months ago the Dow Jones was at 12,500 and now it would appear possible that the index could breach the 10,000 mark making our economic misfortune in the coming months potentially worse then the height of the terrorist acts of 9/11.

On Wall street the blame game is in full swing, fear is high, our federal leaders are worried about contagion and a panic that could spread to every sector that is still in somewhat good condition. This is rapidly becoming clear that our brokers and portfolio managers are out of control and are unable to reasonably guarantee the safety and sanctity of any investment that bears even the slightest risk.

The economic climate in town is one of loss, uncertainty, and worst of all a feeling of helplessness in what to do next. Some a while back called for the purchase of Gold others have gone more ominous and advocated for the purchase of food as you cannot eat Gold. It would appear at the moment that all investors are in a bind and are facing some very hard choices.

Retiring Overseas Soon To Be Esoteric

As a young kid I grew up in Perugia Italy, a little town located in the province of Umbria. Umbria is a place made famous for food wine and Etruscan architecture. It was also the place that my father and brother chose to study veterinary medicine. Today both are doctors each with their own practice and my sister and I have gained a wealth of memories.

My mother was born in Sicily in a little town called San Fratello. The town was ancient when I visited there in the late seventies as It had no running water and an agrarian population that subsided by raising farm animals and growing food crops. My personal favorites, were grapes, figs, olives, prosciutto, and lots of wine.

This life was very unique, especially when compared to the grandiose lifestyle back in the United States. America being relatively new had large streets, and great big skyscrapers in every city. Italy was tight, and catered to the ancient Roman lifestyle of horse drawn carriages. Today the eco-friendly population has adapted modern day automotive technology to cater to the tight cobblestone streets that are the signature of the Roman antiquity. The photo below is of a 500 the car we used as a family back in the late 70's.

My mother and father had grown very fond of Italy as a result of their wonderful experiences, and today, have thought about retiring there. They are both already in their retirement years and have found themselves struggling to reallocate their assets in order to achieve their retirement objectives.

Like countless others they have had difficulty selling their business real-estate, have lost substantial sums of money in the market post 9/11 and today were once again reminded that America's falling dollar is making my mothers birthplace more unattainable. The reality is, that only those people who are capable of incurring such staggering losses, like the super rich, will have access to an overseas retirement.

All too many people and businesses have already fled the country, some businesses like Pfizer in Groton Ct. cannot flee fast enough as they have recently accelerated the closing of their plant. America has fallen upon hard times for reasons that few people understand or really know, but put simply our country has borrowed more than it could afford to pay and is now suffering the dire consequences.

As our nation continues its march toward a recession, or possibly a recession or worse, we all pay. We pay for our leaders mistakes at the gas pump, when we travel to other countries, when we sell our home, when we buy food, when we go to collect our social security, when we buy a car, pay our Dr's bill, or collect our 401K's and IRA's.

The most horrible position a nation can be in is where we are headed now, "Stagflation" a condition where a stagnating economy and inflation co-exist. This is the hardest condition for our leaders to cure because adjusting interest rates, and manipulating the money supply no longer work after a certain point. To put this into perspective imagine a see-saw where you fix one end of the problem and the other end gets worse and vice versa.

The next six months will determine what we as individuals will need to do to realign our lives for the new America. Should the economy continue to deteriorate then we will need to compensate in advance to prepare for a prolonged period of harder times. I will comment more on this as the new CPI or inflation figures emerge.