Funny about Money

The only thing necessary for the triumph of evil is for good men to do nothing. ―Edmund Burke

Batten Down the Hatches! Prepare for the next recession NOW

So Mr. Trump, our mentally ill President, just crashed the economy with one of his acts of lunacy. The Dow is down over 600 points, and that was after showing some signs of instability in the past couple of weeks.

Like it or not, China is a major trading partner for the US. Shut it off, and we cut off our own nose to spite our proverbial face. Trump’s act of spite will harm every business in this country, large or small. Mine, for example, the smallest of the small: Trump just closed my business. China has always been pretty woozy about sending money beyond its borders, so when you’re selling a service to clients on the mainland, getting paid can be a challenge. When I decided to quit using PayPal and found that Bank of America couldn’t figure out how to accept a wire transfer to a business that has an apostrophe in its name(!!), that left only Western Union as a way to transfer payments owed. This was questionable enough as it stood, but now that the Moron in Chief has cut off trade with China, it presumably will be impossible.

Presumably, indeed, I will never be paid for the two difficult academic articles I just finished editing and preparing for publication. And presumably after this The Copyeditor’s Desk will get no (zero, zip) further business from its bread-and-butter clients in China.

That is about as micro- a micro-example of this fiasco as you can get.

On a far more macro level, there’s a reason the market lost over 600 points before it closed. This country does a lot of business with China. Cut it off, and you close a lot of businesses, end a lot of commerce, lose a lot of jobs.

And lose a whole lot of income for the American middle class.

Mark my words: The Trump recession will make the Bush recession look like a walk in the park. If you have any illusions that you can survive it, now is the time to prepare yourself and your affairs. How?

  • First, pay off debt. Pay all your outstanding credit cards right now. If you owe a lot on a mortgage, it may be wise to sell your house while it’s still worth something and rent someplace until such time as this recession comes and goes. If you have a car loan, pay it off if you can, or get rid of the car if you can.
  • Do not take on any new debt. Do not buy a car. Do not buy a new house or apartment. Do not go off on some expensive vacation or indulge yourself with anything that requires you to charge up more than you can pay off at the end of a billing cycle.
  • To the extent possible, place investment funds in money market, CD, or other relatively “safe” instruments. These will not make money for you, but they won’t lose much, either. Get out of securities.
  • Charge nothing on a credit card that you cannot pay at the end of the billing cycle out of your bank account. Pay off credit cards at the end of each month or, if that is a challenge for you, simply stop charging on credit cards. If you can’t pay for something with cash, don’t buy it.

If you’re a retiree with most of your life savings in an IRA, 401(k) or 403(c), the timing of this latest moment of lunacy could hardly be worse. Along about now, retirees with deferred investment instruments have to make their annual “required minimum withdrawal”: a forced withdrawal of a percentage of savings, so that you will have to pay taxes on it. With the market extremely depressed, two things happen:

A drawdown generated by the required percentage will be substantially less than normal (think of it this way: 10% of $100 is $10. But if one day your $100 loses $60 (say 1 stock market point = $1), then you get 10% of $40. That would be $4. Which ain’t a-gunna be enough to live on. And of course the remaining $40 will not rebound to $100 or even to $96 very soon, because it will be short 10% of the funds you would, over time, reinvest to recover the value of your losses.

There aren’t a lot of ways to prepare for a little catastrophe like that. One way or the other, you’re not going to have enough to get by. But you’ll be a lot less likely to have your house foreclosed out from under you and your car towed off to the impound yard if you don’t owe anything on them.

I have to say, for the first time in my adult life, I’ve begun to think seriously about decamping to some other country. Permanently.

Apparently one of the best places you can go to live as an expat is Panama. A little town called Boquette, to be precise. Check out the real estate in this place! How about the view from this hovel, 3520 square feet in a gated community, for about $100,000 less than I could get for my house today…

Crime levels are low in Boquette. The local expats say there’s lots to do and the weather is great. Medical care, we’re told, is more than adequate and is reasonably priced.

Two of my friends have already moved to Mexico. They’re both ecstatically happy. One is a native speaker of Iberian Spanish…but Spanish is easy to pick up if you don’t already have it. Especially if, as happens to be my case, you speak two other Romance languages and have a spattering of Latin.

Lookit this thing: it’s easily a hundred grand less than I could get for my house here, and it’s freaking gorgeous. Much, much nicer than my house, and 1478 square feet larger.

The time may be a-comin…

Author: funny

This post may be a paid guest contribution.

6 Comments

  1. OMG! You may be right. Of course, a lot of financial experts have been predicting a recession in 2020/2021, but it looks like Trump will be making it even more devastating than it needs to be. Surely the Republicans will NOT be backing him for a second term. Of course, most of ’em didn’t back the Orange Turnip in 2016. But once he got into the White House, nearly all of the party jumped on the Dumb@ss Bandwagon. *sigh* Too bad they can’t raise Ronald Reagan from the dead.
    Now to the Democrats – they need another Bill Clinton or Barack Obama. The current crop of “candidates” just ain’t cutting it. I like Joe Biden, but he puts his foot in his mouth almost as often as W. did. Also, he’s just too old. *sigh* I would have liked to see another Pres. Clinton, but it ain’t gonna happen again. (She won the popular vote, so many people don’t seem to remember that.)

  2. A friend of mine said yesterday at dinner “Well, I *was* going to retire, but now the stock marked crashed 600 points, so I guess I’m not”.

    My last car loan payment is Tuesday, and I’m 374 days from paying off my house – and I’m not taking on any more debt. Just going to hunker down and keep my eye on the prize.

    • Wow! Congratulations on the pay-offs! That’s an accomplishment.

      One thing’s for sure: having a paid-off roof over your head goes a long way toward recession-proofing. If I hadn’t contravened my investment advisor a couple of years before the last recession and paid off the loan on this house, I would’ve been out of luck. Without a job and with the market so far in the tank it was _underneath_ the tank, I couldn’t have paid the bills on a bet.

  3. It’s pretty much Elizabeth Warren for me. Yes, Biden has a lot to recommend him, but YES, he’s too damn old for the job.

    Republicans? I’m sure they climbed on the Trump haywagon because they could see populism was on the rise all around the world. By and large it’s still ascendant and, God help us, will be for awhile. I’m sure the Trump billions didn’t hurt, either: Republicans understand how much it costs to rent the White House for eight years….

    Much like Hitler’s handlers, they may not have realized just how out-of-control he would get.

    If the worst of the recession is delayed until after the 2020 election, the Republican rank-and-file will be undisturbed. Most of them understand little about how the economy works, other than that when jobs are offshored, pay rates for Americans fall because American workers are put out of decently paying (union…) jobs and forced into scutwork or the gig economy. They also don’t understand how disinformation campaigns work, or that Putin and Trump (and their American allies) are masters of disinformation: Trumpeters truly cannot distinguish between lie and truth.

    If the recession comes crashing down on us before then, maybe it will get the attention of at least the brighter Republican voters — like a hit upside a mule’s head. That could put Trump out of office at the end of his first term.

  4. Gonna go the other way….If the Democrats win back the White House the Recession will come and quickly…IMHO. As they “unwind” the last four years of madness….raising taxes….addressing the TRILLION dollar debt…and patch up relations with trusted allies….restoring lost benefits. It’s gonna be painful…There may be hope as Mr. Walsh throws his hat in the ring for the Republicans. A LOT of folks are not fans of Mr. Trump’s behavior BUT feel they have no choice…Mr. Walsh may offer that choice. I like Joe Biden…but he’s too old and am afraid the job would kill him and it might just turn into Obama 2.0…and as for Warren…don’t feel like she could be trusted and the mystery has not been answered as to how she acquired so much wealth as a “humble professor”…My 2 cents…

    • Gaaaahhhh! We’re all gonna LOVE living in Boquette!

      Seriously, this is what I would expect, too: The Republicans lay the groundwork for recession and the Democrats inherit the mess just as it explodes into a geyser of garbage. If the Republicans can manage to dump Trump and put in someone sane, that might change matters. One hopes.

      Personally, I’m just not seeing anyone among the Democratic candidates who lights my fire. Warren, to my mind, comes under the heading of “least bad of the bunch,” especially if we just MUST have a woman to satisfy our political-correctness cravings. Biden, yes: but the man will be lucky to live another four years and is highly unlikely to make it through eight. No: make those “five” and “nine,” because it’ll be a year before the election.

      What about Pete Buttigieg? Think he’s got a shot?

      Other than Warren and Buttigieg, the Dems aren’t fielding a single other candidate that I would allow in the back door of a dog house, much less in the front door of the White House.

      And that is why, IMHO, we need a third political party: the Party of Common Sense.