AM I NEXT?

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Am I Next? Recession. Change. Job Loss.

CHANGE AHEAD: NOT "IF" BUT "WHEN"

Stephen Levine August 16, 2017

One need only look at the deep divisions in the United States political infrastructure, our leadership, and the large-scale infiltration of Wall Street Wizards into the Administration and it becomes a real possibility that we will encounter what the financial pundits and prognosticators euphemistically call a "serious market correction." A time when valuations, especially of companies who earn little or no profits and must maintain their borrowings to survive, are readjusted -- maybe not to a rational reality, but maybe to a realistic expectation of reality.

I somewhat regard Tesla as sort of a canary in a coal mine. The story and hype drive the stock price ever higher with the only profits apparently coming from the sale of government-approved pollution credits. Take these away, and you have a company that has never produced a profit. Now, we see something else that is somewhat disturbing. Instead of selling equity or a combination of equity and debt, Tesla appears to be moving forward with a pure debt offering. Perhaps they think that they can repurchase much of this debt at dramatic discounts during the correction. In any event, investors who purchase debt tend to ignore the "story" and look for company dynamics which indicate that the debt can be serviced and then repaid.

Of course, you have the Federal Reserve as a wild card as Janet Yellen leaves her leadership post for someone new. Not that the policy will change all that much, but it will be a convenient signal to the markets. Like those who try to predict black swan events, one might ask what would happen if the worst case of the Fed selling their bonds into the broader market at a loss. Because of accounting rules, they are not even required to record those losses against their capital base. But, it doesn't matter because the Federal Reserve is backed by the full faith and credit of the United States.

So what I am saying is that something will happen in the future. It is not a matter of IF, but of WHEN. Therefore, one might decide to take a prudent course of action. One, reduce your standard of living and try to eliminate any high-interest debt. Two, downsize by converting unused or unwanted assets into cash. And three, work on developing multiple independent streams of revenue to compensate for the potential loss of your job through no fault of your own.
 


InChange, Job Loss, Recession TagsChange, Recession, Job Loss
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AM I NEXT?

A website dedicated to your survival in today's crazy and chaotic world and helping you to future-proof your life and career.

Am I Next is a website dedicated to your survival in today's crazy and chaotic world and helping you to future-proof your life and career. 

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