by  futureofdollar.com ©

         INTRODUCTION

 The World is concerned that the dollar cannot play the role of the main reserve currency any longer after the financial crisis sparked by the collapse of the U.S. mortgage market led to the worst global recession since the 1930s. The Government’s stimulus packages, financial bailouts, the need to support liquidity in Treasuries, keeping interest rates at the lowest level under the circumstances of low economic growth, high unemployment and low tax collection make it print more dollars. This leads to a high risk of substantial inflation, or hyperinflation in a long-run.

 With a $12.3 trillion national debt and $55 trillion in unfunded obligations for programs such as Social Security, Medicare and Medicaid, with total Federal Reserve and Treasury bailout commitments now at $11.8 trillion, of which $3.6 trillion has already been spent the U.S. need to take steps immediately to protect themselves from the potential loss of the purchasing power of their U.S. Dollars, inflation.us warns.

 Although there is still no significant inflation data in the United States international stock and commodity markets grew abnormally within the last eleven months. Analysts called it the “flight from the dollar” or “diversifying risks.” 

 There are many factors evidencing against the future of the dollar as a global reserve currency. In the present article futureofdollar.com pays attention to the crucial points of analysis after conducting an extensive research on the topic. 

       Part I 

       WEAK FUNDAMENTALS OF THE U.S. ECONOMY 

 Nobel Prize winner Paul Krugman states that “a country whose fundamentals are persistently and predictably deteriorating will necessarily have a [currency] crisis at some point.” (1) 

1. National Debt 

 In the middle of February 2010, President Obama signed into law the bill increasing the public debt ceiling from $12.394 trillion to $14.294 trillion.  This is a second increase in the upper limit on the national debt in less than two months. 

 Last time, in December, House Majority Leader Steny Hoyer commented that the Congress simply had no other choice: otherwise the United States would have to default on their debt obligations what would be another catastrophe for financial markets. (2) 

 ”The Financial Management Services of the U.S. Treasury estimated that the total obligations of the U.S. government exceeded $90 trillion,” David Ross from Radiant Asset Management indicated in his research. (3) They include hospital insurance, supplementary medical insurance, and social security. “[T]he collected money (which Treasury has borrowed and Congress spent) falls far short of what is required to fulfill the long-term obligations of those programs, even if it had not already been spent. Almost all of the $90 trillion are promised obligations with no established method of payment.” (4) 

 ”Including unfunded obligations, the U.S. moves to 1st, well above Taiwan and Zimbabwe, for the highest debt to GDP ratio… U.S. total debt plus unfunded obligations total 625% of GDP.” (5)

 The Peterson-Pew Commission on Budget Reform stated that “the United States would almost certainly experience a debt driven crisis,” that “could unfold gradually or it could happen suddenly, but with great costs either way.” “The excessive debt would. . . affect citizens in their everyday lives by harming the American standard of living through slower economic growth and dampening wages, and shrinking the government’s ability to reduce taxes, invest, or provide a safety net.” (6) 

2. Unemployment 

This past February, the economy lost 36,000 jobs after losing 26,000 jobs in January and 109,000 jobs in December, and the unemployment rate held at 9.7 percent. (7) 

In January, the unemployment rate fell from 10.0 to 9.7 percent. According to Reuters “a sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of ‘discouraged job seekers’ rose to 1.1 million in January from 734,000 a year ago.”  (8)  The number of discouraged workers rose to 1.2 million in February. (9) 

Gallup reported in the end of February 2010 that “19.9% of the U.S. workforce was underemployed during the month of January, translating to close to 30 million Americans who are working less than their desired capacity.” (10) 

In its March summary of commentary on current economic conditions by Federal Reserve Districts, the Beige Book, the government finds that “labor markets generally remained soft throughout the nation.” Although “[t]he pace of layoffs slowed in most Districts. . . hiring plans still remained generally soft.” (11) 

3. Budget deficit 

 IMF’s Managing Director Dominique Strauss-Kahn noted at the 10th Annual Herzliya Conference in Tel Aviv that the global crisis had created a problem of fiscal sustainability for many countries that could take decades to fix because of the huge debts built up during the crisis, especially in developed countries. (12) 

 The United States reached a record budget deficit of $1.415 trillion in fiscal year 2009 that ended in September. (13)  The deficit will probably again exceed one trillion dollars in the current fiscal year as it is already over $651 billion. 

 The excess of spending over revenue in the U.S. was $220.9 billion in February 2010, as opposed to a deficit of $193.9 billion in February 2009, the Treasury Department announced in its monthly budget statement.  It was the 17th straight month in which the government posted a deficit, CNNMoney.com said. (14) 

 In the beginning of February 2010 Obama transmitted a $3.8 trillion budget for 2011 to the Congress with a record $1.6 trillion deficit. (15) 

During the debate on the national debt the Senate “rejected a proposed bipartisan commission to recommend ways to reduce the U.S. budget deficit,” Bloomberg reported. “The legislation would have required that the panel’s recommendations be voted on by Congress without being amended.” (16)  Instead of the initial idea of the commission discussed by Congress, President Obama is trying to establish a government-based deficit commission that would lack any requirement for Congress to act on its advice. Specialists consider it a symbolic rather than a concrete step. 

4. Economic impact of U.S. international military operations 

 The cost of conducting wars in Iraq and Afghanistan pushed the budget into the red during the presidency of George W. Bush. The situation deteriorated after the beginning of the financial crisis when the government adopted measures such as stimulus packages, financial bailouts, the need to support liquidity in Treasuries, etc. Moreover, early in December 2009 it has increased its nonproductive expenses by approving 30,000 troops to be sent to fight in Afghanistan. 

 All economists agree that one of the basic nonmonetary reasons of inflation is the existence of significant nonproductive government expenses such as military expenses. 

 Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said Obama may have too much on his plate. “You can’t fight a war, a financial crisis, a recession, and add health-care coverage to the uninsured at the same time,” he said. “It is simply the recipe for disaster.” (17) 

 However important goals of the war could be, military operations are, undoubtedly, very costly for U.S. citizens especially at the time of the financial crisis and growing deficits. Moreover, the situation is not getting better considering that around 40 percent of the war financing has been borrowed from abroad, Joseph Stiglitz, the Nobel Prize Winner, shows in his research “The Three Trillion Dollar War: The Real Cost of the Iraq Conflict.” 

 Explaining why wars are expensive he points out that military expenditures are not only limited to direct operation costs but also include (the bigger part) human casualties, future disability costs, loss of income, increased oil prices, opportunity costs, veterans’ social welfare, nonproductive spending, loss of confidence in the future economic situation, increase in the national debt, and so on. 

“The Obama administration has just asked Congress for a defense budget of more than $700bn… – almost 5% of GDP – for next year,” Guardian.co.uk reported in the end of February 2010. This is exactly 1/3 of total budget receipts for the FY 2009.

 ”If we try to stay the course, we are going to spend more and more money,” Stiglitz stresses. “The fact that we financed the war totally by deficits means that when 10 years from now we decide we want to repay that, which I don’t know if we will, the amount that we will have to raise our taxes will be that much larger because the debt will be that much larger.” 

5. China’s peg to the dollar

 So far China is enjoying low yuan rate giving its exports competitive advantage in relation to those countries with appreciating currencies against the U.S. dollar. 

 As the result China is actually “stealing” jobs from many countries since with appreciating currencies their companies are not able to compete with Chinese producers.

 In relation to the United States this means that the country should not count on sooner recovery. China’s peg to the dollar makes imports into the U.S. cheaper. This supports high level of unemployment in America. Unemployment prevents the growth of GDP and reduces revenues. 

       Part II 

       LACK OF CONFIDENCE 

 Defining major reasons of currency crises Paul Krugman states that the most important is a lack of confidence. The “investor lack of confidence – is a defining feature of a currency crisis,” he argues. (18) 

 Below are opinions of a number of people from different parts of the world whom many of us know quite well. Their opinions concern the U.S. dollar and the U.S. economy. 

 Nouriel Roubini, the New York University professor who predicted the financial crisis, said that the greenback may weaken for the next three years. (19) 

 Warren Buffett, a successful international investor: “There is the likelihood of significant inflation down the road.” (20) 

 Robert B. Zoellick, the World Bank President: “There is little the United States can do about the sinking value of the dollar except restore growth in its economy.” (21) 

 George Soros, a successful international investor: “Irrespective of the situation in the stock markets or condition of the economy we shall see further shift from the dollar into real assets in a long run.” (22) 

 Jim Rogers, a successful international investor: “Printing money to help the U.S. economy will weaken the greenback and Treasuries in a long run.” (23) 

 Joseph Stiglitz, Nobel Laureate in Economics: The greenback will continue to head downward for the time being, given the huge U.S. trade deficit and global trade imbalance. (24)  “[M]any factors going into the decline of the U.S. dollar. But clearly one of the factors is an overall loss of confidence, loss of confidence particularly in the future economic situation.” (25) 

 Fan Gang, a prominent economist and adviser to China’s central bank: “This crisis is a U.S. dollar crisis, which takes a relatively long time to clear up. The problem involves the U.S. currency and U.S. debt; eventually it has to be solved through U.S. dollar depreciation.” (26) 

 Yuri Luzhkov, City of Moscow Mayor, Russia: The world is on the brink of a radical devaluation of the American currency. Therefore, Russia has to abandon its dependency on the dollar as soon as possible. American currency reserves are supported by nothing and industrial production in this country is very low. (27) 

 The list of well-known people with similar thinking is endless. In its research futureofdollar.com faced a difficulty of finding successful investors, economists or foreign politicians with the opposite thinking. There are just a few of them. Most of them are the U.S. government officials whose job is to restore the confidence in the U.S. economy with a part of this job being speaking in ‘positive’ terms. 

 People in this group either believe that:

*the recession is over and the U.S. economy will have a sharp rebound, or

*that the dollar will remain the primary reserve currency for a long time because during this last financial crisis investors found the dollar a safe haven, or

*that there is no inflation threat, relying on the U.S. government data, or

*simply stating that “we will sink or swim with the dollar.” 

 For instance, Barack Obama is confident that the dollar is “extraordinarily strong” because investors are confident in the ability of the U.S. to lead a worldwide recovery. (28) 

 The Chairman of the U.S. Federal Reserve Ben Bernanke believes that U.S. asset prices aren’t out of line with underlying values, and central bank policy will ensure that the “dollar is strong.” (29) 

 The U.S. Treasury Secretary Timothy Geithner forecasts that the dollar will remain the world’s “dominant reserve currency.” (30) 

 Therefore, we came to a conclusion that, unfortunately, the U.S. economy and the dollar are losing confidence. The U.S. government must work even harder now to restore it. 

       Part III 

       DIVERSIFICATION OUT OF THE DOLLAR 

 Maurice Obstfeld and Kenneth Rogoff observe that “there is a long-term trend of official reserve diversification away from U.S. dollars, especially among the fast-growing, reserve-hungry emerging and developing economies, and this trend continues in recent data.” (31) 

 It is hard to argue that the future of the dollar nowadays significantly depends on such developing countries as China, India, Brazil, Russia, and others. These countries accumulate very large dollar reserves and U.S. debt. 

 Let’s explore their recent positions regarding the U.S. dollar with an attempt to predict its future. 

1.  China 

 Already for an extended period of time China was quite aggressive in diversifying its reserves and protecting from weakening dollar, recommending its private sector to do the same. 

 The Chinese Ministry of Finance started selling bonds worth 6 billion yuan in Hong Kong in late September 2009, a major step to internationalize its currency at a time of concern about the dollar. (32) 

 Same month China bought the equivalent of $50 billion of the first bond sale by the International Monetary Fund, a purchase that might raise Beijing’s standing in the fund and help the government’s quiet campaign to expand the reach of its currency. China took the unusual step of paying for the IMF bonds with 341.2 billion yuan — which is not traded on global markets — rather than dollars. (33) 

 The country signed currency agreement with Argentina and agreed to credit South Korea, Malaysia, Indonesia and Belarus with its own currency. (34) 

 In the mid-September 2009, the International Monetary Fund announced that it was going to sell 403 tons of gold. Chinese central bank showed its willingness to buy the whole offer. (35) 

 The People’s Bank of China showed its intention to decrease its dollar reserves. Chinese authorities will increase their euro and yen reserves. (36) 

 China and Brazil established international payments in national currency of the Republic of China. Zhuhai Geli corporation received a transfer of several million yuan from San Paolo in the fall of 2009. (37) 

 The country was seeking to expand its African oil reserves by bidding for up to a sixth of Nigeria’s crude reserves constituting approximately 6 billon barrels. Valuing near $30-50 billion Chinese offer is higher than that of the current owners. China has been buying oil resources around the World for the second year already. (38) 

 Chinese companies may invest about $4,4 billion into Peru’s mining sector within the next three years according to the statement made by the Prime Minister of Peru Javier Velasquez. (39) 

 Nearly 44% ($14,3 billion) of the total volume of China’s investments within the first nine months of 2009 were coming into mining and production sector. Representative of the Asian Development Bank noted that investing in the mining sector by purchasing stocks corresponded to a long-term strategy of the country to achieve resource security. (40) 

 China Investment Corporation (CIC), a sovereign wealth fund responsible for managing part of Chinese foreign exchange reserves, “has been quietly accumulating stakes in resource firms including Canada’s Kinross Gold Corp. and Potash Corp. of Saskatchewan according to a filing with securities regulators.” (41) 

 CIC chairman Lou Jiwei “recently said that CIC would focus on investing in emerging markets in 2010. In October, the CIC chairman said the fund had allocated $110-billion for foreign investments and had already deployed about half of that.” (42) 

 ”In addition to its $3.5-billion interest in Teck, CIC has a $652-million stake in Brazilian iron ore and nickel giant Vale SA, a $4.7-million interest in copper miner Freeport-McMoRan, and a $9.1-million holding in steel producer ArcelorMittal.” CIC has also acquired stakes in a number of high-profile brand name companies in North America such as Research In Motion Ltd., Apple Inc., News Corp., and AIG Inc. (43) 

  China cut its holdings of U.S. Treasury securities by $34.2 billion in December 2009, but still remaining the largest foreign holder of U.S. debt. (44) 

2. India 

 Suresh Tendulkar, an economic adviser to Indian Prime Minister, was urging the government in the summer of 2009 to diversify its $264.6 billion foreign reserves and hold fewer dollars. (45) 

 The IMF sold 200 metric tons of gold to India in the beginning of November 2009. The $6.7 billion sale is “the biggest single central-bank purchase that we know about for at least 30 years in such a short period,” said Timothy Green, author of “The Ages of Gold.” “The only comparable event was the U.S.’s steady purchases in the 1930s and 1940s.” (46) 

3. Brazil 

 Brazilian Central Bank president Henrique Meirelles said the country is considering the gradual elimination of the U.S .dollar in trade with China, Russia and India. (47) 

 In October 2009, the Brazilian Central bank announced that an agreement was reached with Uruguayan economic authorities to apply the so called SML system in bilateral trade operations. (48) 

 Brazilian Finance Minister Guido Mantega said that Brazil would spend 10 billion US dollars on buying International Monetary Fund bonds to boost the fund’s resources. This “radical change” will help Brazil to diversify its resources, he added. (49) 

4. Russia 

 The Central Bank of Russia increased the share of Japanese yen and Swiss franc in reserves in the middle of 2008.  Japanese yen currently accounts for around 2 percent of Russia’s reserves. The franc’s share is smaller because of the limited liquidity. 

 Russian President Dmitry Medvedev said at the St. Petersburg International Economic Forum in June 2009: “We should not exclude the possibility of a scenario in which the dollar will be subject to a serious inflationary pressure.” (50) 

 Russian reserves consist now mainly of the U.S. dollar and the euro. However, it is quite possible that Russia will add Chinese yuan in there, said Alexei Kudrin, Russian Finance Minister. The lack of convertibility of the China’s currency and of the free movement of capital was the main current obstacle. (51) 

 Brazil and India are interested in settling bilateral trade with Russia in national currencies, said Alexander Potemkin, an advisor to the Russian central bank chairman, echoing Moscow’s drive for more use of national currencies and less of the U.S. dollar.  “There was an initiative within the framework of the BRIC. These countries intend to create the conditions for direct payment for trade in national currencies,” he said. He also said that Russia had a reach experience of reciprocal payments in national currencies with China. He estimated that settlements in yuan and rouble already account for around 2 percent of Russia’s trade with China. (52) 

 Moscow also discusses trade in national currencies with other countries including Turkey and Vietnam. (53) 

 Russian central bank first deputy chairman Alexei Ulyukayev said in November 2009 that Russia was going to add the Canadian dollar to its gold and forex reserves in the next few months, but its share would be insignificant. (54) 

  Russia, Belarus and Kazakhstan, members of the Customs Union of the Commonwealth of Independent States, can adopt a single currency as early as in 2012 according to Russian First Deputy Prime Minister Igor Shuvalov. (55)  Specialists estimate that Russia, Belarus and Kazakhstan will save at least 1 percent of the total amount of transactions (tens of millions of dollars) avoiding payments in dollars and euro. (56) 

 Russian President Dmitry Medvedev criticized delaying the creation of a new international financial system, and announced that the French President and himself were going to take the initiative as long as “Bretton Woods Agreements do not reflect current economic situation anymore.” (57)  “Both President Sarkozy and I worry about the new international financial architecture, it is not just far away from the perfection, we have not taken serious steps on this issue,” Medvedev said. (58) 

5. Other countries 

 In April 2009 the Latin American leaders signed into effect a new South American currency, to be called the ‘sucre’. ALBA leaders (representing Venezuela, Cuba, Bolivia, Honduras, Nicaragua, and Dominica) say the sucre is necessary to help defray the regional effects of the world economic crisis by substituting their trade in dollars with a new alternative currency. The ALBA countries and their allies plan to use the virtual sucre by early 2010. (59) 

 In the second quarter ending in June 2009, central banks around the world invested 63 percent of their new cash reserves into euro and yen, and put only 37 percent into dollars. (60) 

 Kuwait, Saudi Arabia, Qatar and Bahrain signed in June 2009 an accord to create a joint monetary union council, a prelude to establishing a Gulf central bank and launching a monetary union and single currency. The remaining two members of the Gulf Cooperation Council (GCC), the UAE and Oman, did not sign after deciding to withdraw from the project. The GCC states have set 2010 as the target to launch the monetary union and single currency, but many experts believe that target is too ambitious and unrealistic. (61) 

  Turkey announced in the end of October 2009 that it was switching to national currencies in trade with Iran and China, ending dependence on the dollar and the euro for about 20% of its commodity turnover. (62) 

 The International Monetary Fund sold 2 metric tons of gold to the Bank of Mauritius on the basis of market prices prevailing on Nov. 11, 2009. (63) 

 Shortly thereafter the IMF sold 10 metric tons of gold to the central bank of Sri Lanka for about $375 million. The purchase is part of Sri Lanka’s plan to diversify its reserves and it has been gradually accumulating the metal in the past nine months. “Gold is a good anchor and hedge to have in these volatile circumstances,” said Nivard Cabraal, the bank’s governor. “We think it’s a good time to buy.” (64) 

 In the beginning of January 2010 Canada announced that it might sell about 1 billion euros of 10-year bonds, its first issue of debt in the European currency in more than a decade. This strategy will help attracting new investors, while debt denominated in U.S. dollars is becoming less popular among the creditors given the declining value of the U.S. currency. (65) 

  It is obvious that the trend of the diversification out of the dollar persisted through the whole year of 2009 and is continuing in 2010. 

       Part IV 

       WAY OUT 

 Peterson-Pew Commission on Budget Reform suggests that “the United States must show its creditors that it is serious about stabilizing the federal debt over a reasonable timeframe. Both spending cuts and tax increases will be necessary.” 

 Most of the economists would suggest that the U.S. anti-inflation strategy should include:

* suppression of inflation expectations and stimulation of savings;

* reaching balance between budget receipts and expenditures;

* increasing the mass of commodities; and

* strengthening national currency by establishing an unconditional priority of inflation targeting over other government programs (such as military expenses, unemployment rate regulation, influencing the national currency market, etc.). 

 Will the U.S. assume such a pain by reducing spending and fighting the deficits? Probably not, taking into consideration the words of Sir John Templeton, the John Templeton Foundation, who said in 2005: “The psychology all over the world is that people will not re-elect leaders who want them to be thrifty. The voters will elect the government that spends more money.” (66) 

 Many analysts are pretty sure that the weak dollar policy is beneficial to the U.S. Therefore, whatever the authorities say, there will be no resistance to dollar depreciation on their part. 

 Most experts already doubt that the solution of the problem depends much on the U.S. and call for global measures. “We must reform the international monetary system,” Yu Yongding, a former Chinese central bank adviser, stated in mid-November 2009. “A good monetary system should make us confident. But we don’t have confidence in the U.S. dollar now,” he added. (67) 

 George Soros is convinced that we “need a new currency system and actually the Special Drawing Rights do give you the makings of a system,” he told the Financial Times. 

       THE FUTURE OF THE DOLLAR 

The future of the dollar is in jeopardy now as it is evident from the article. 

This subject is the primary focus of futureofdollar.com. We follow latest developments in this area and provide our readers information from reliable sources. 

This analysis was prepared by http://www.futureofdollar.com  © 

March 11, 2010 

      Notes:

(1)   Paul Krugman, Currency Crises, 1997;

(2)   Reuters, December 17, 2009;

(3)   David Justin Ross, The Future of the Dollar and China: The Threat of Collapse and the Move Towards a New Reserve Currency, October 27, 2009, Radiant Asset Management, LLC;

(4)   Ibid.

(5)   Ibid.

(6)   budgetreform.org, December 14, 2009;

(7)   U.S. Department of Labor, March 5, 2010;

(8)   Reuters, February 8, 2010;

(9)   U.S. Department of Labor, March 5, 2010;

(10)                      Gallup, February 23, 2010;

(11)                      The Beige Book, March 3, 2010;

(12)                      IMF, January 31, 2010;

(13)                      The Department of the Treasury;

(14)                      CNNMoney.com, March 10, 2010;

(15)                      Bloomberg, February 1, 2010;

(16)     Bloomberg, January 26, 2010;

(17)     Bloomberg, January 8, 2010;

(18)     Paul Krugman, Currency Crises, 1997;

(19)     Bloomberg, February 4, 2010;

(20)     FOX Business Network, June 24, 2009;

(21)     The Economic Times, November 13, 2009;

(22)     Reuters, October 26, 2009;

(23)     Bloomberg, October 28, 2009;

(24)     The Korea Times, October 28, 2009;

(25)     The Three Trillion Dollar War: The Real Cost of the Iraq Conflict, book discussion, April 8, 2008;

(26)     Reuters, December, 2009;

(27)     RB.ru Russian Business, September 1, 2009;

(28)     Bloomberg, March 24, 2009;

(29)     Bloomberg, November 17, 2009;

(30)     USA Today, March 25, 2009;

(31)     Maurice Obstfeld and Kenneth Rogoff, Global Imbalances and the Financial Crisis: Products of Common Causes, November 2009;

(32)     People’s Daily Online, September 28, 2009;

(33)     The Associated Press, September 3, 2009;

(34)     The New York Times, September 4, 2009;

(35)     CommodityOnline.com, September 21, 2009;

(36)     RosBusinessConsulting, November 6, 2009;

(37)     NEWSru.com, October 28, 2009;

(38)     Vedomosti, 28 September, 2009;

(39)     Bloomberg, 25 November, 2009;

(40)     ChinaPro.ru / Vedomosti, 25 November 2009;

(41)     The Globe and Mail, February 8, 2010;

(42)     Ibid.;

(43)     Ibid.;

(44)     Xinhua, March 1, 2010;

(45)     Bloomberg, July 4, 2009;

(46)     Bloomberg, November 3, 2009;

(47)     Merco Press, October 29, 2009;

(48)     Ibid.;

(49)     Bloomberg, October 4, 2009;

(50)     RIA Novosti, June 5, 2009;

(51)     Bloomberg, October 24, 2009;

(52)     Reuters, November 25, 2009;

(53)     Ibid.;

(54)     Reuters, November 2009;

(55)     Rossiiskaya Gazeta, March 9, 2010;

(56)     RBC TV, March 10, 2010;

(57)     RIA Novosti, March 1, 2010;

(58)     Ibid.

(59)     Venezuelanalysis.com, April 17, 2009;

(60)     CNBC, October 14, 2009;

(61)     ArabianBusiness.com, October 11, 2009;

(62)     RIA Novosti, October 28, 2009;

(63)     IMF Press Release, November 16, 2009;

(64)     Bloomberg, November 25, 2009;

(65)     Bloomberg, January 5, 2010;

(66)     NewsMas;

(67)     Bloomberg, November 17, 2009.

THE PROPHECY

â??yada yada hi dharmasya,  glanir bhavati bharata, abhyuthanam adharmasya tada tmanam srjamyaham Paritranaya, sadhunam vinasaya ca duskrtam dharmasamsthapanarthaya,  swambhawami yuge yugeâ?

This is one of the most favorite quadrant or shloka in the Bhagawat Gita. Lord Krishna is saying this to Arjuna who is the warrior about to wage a war that will go down the annals of the history as the greatest war of  all– The kurukshetra war in the Mahabharata. This event took place in the year 5000 BC approximately. I shall explain this quadrant a little latter in this article.

The urge to write this article came from the very successful film â??2012â?. As per the Mayan calendar the end of the earth is in the year 2012 as the Mayan calendar stops at that year. There is no further calculation after that year. An Indian scientist first detects the beginning of the end in India and then the story unfolds. It is all about the much talked about apocalypse where the earth is destroyed by massive floods, earthquakes, and violent earth tremors and volcanoes. The perfect recipe for a global disaster which spares none and unleashes a trail of horror and gloom where mankind is destroyed, the earth changes its geography and everything seems to be alien to anyone who might survive such violent and devastating force. The strange thing about this impending disaster is that it has been predicted in the Vedas, as distant as 5000 years BC.

“Prophecy consists in knowledge and in the manifestation of what is known. The knowledge must be supernatural and infused by God because it concerns things beyond the natural power of created intelligence; and the knowledge must be manifested either by words or signs, because the gift of prophecy is given primarily for the good of others, and hence needs to be manifested. It is a Divine light by which God reveals things concerning the unknown future and by which these things are in some way represented to the mind of the prophet, whose duty it is to manifest them to others…â?

“”

The famous quadrant  from the Bhagavad Gita,which I mentioned in the start of this article, the holy book of the Hindus, is the basis of their belief that God (Lord Vishnu) takes birth on the earth as an Avatar or incarnation and as a savior of the humanity in order to cleanse the world of evil and re-establish Dharma or Law. The translation of the Quadrant is as follows, “Whenever there is decay of righteousness…  and there is exaltation of unrighteousness, then I Myself come forth…  for the destruction of evil-doers, for the sake of firmly establishing righteousness, I am born from age to age.”  when the human society reaches the nadir of moral and cultural values, and lose all awareness of what is right and wrong. The Vedic texts called Puranas tell the story of various Avatars of Vishnu, including his last avatar Buddha. The texts also prophesize of a future Avatar of Vishnu called Kalki who will appear at the end of the present age called the Age of Kali (untruth) or Koli Yug. Hindus believe that time revolves in a cyclical manner beginning with Satya Yug or the Age of Truth. Then comes Treta Yug, Dwapar Yug and finally Kali Yug. After that comes annihilation and re-initiation of the Satya Yug or Kritya Yug – the age of purity. Thus, the Hindus do not believe in the End of the World but in the cyclical nature of Time. The perspective of the Hindu religion is, thus, much wider than the Semitic religions and it automatically implies the fact that there were other human civilizations before the great flood, which is also mentioned in the Hindu texts. In fact there has been such global disaster in the past, like the great flood which has mention in practically all religion in the world. There were civilization before the great disaster and after the disaster the civilization again bloomed by the help of selected few ,( as in the case of Noah or in the case of manu ).

When the practices taught by the Vedas and the institutes of law, shall nearly have ceased, and the close of the Koli age shall be nigh, a portion of that Divine Being who exists of his own spiritual nature, in the character of Brahma, and who is the Beginning and the End, and who comprehends all things shall descend upon the earth. He will be born as Kalki in the family of an eminent Brahmin, of Shambhala village, endowed with the eight superhuman faculties. By his irresistible might, He will destroy all the barbarians and thieves, and all whose minds are devoted to iniquity. He will then re-establish righteousness upon earth; and the minds of those who live at the end of the Kali age, shall be awakened, and shall be as pellucid as crystal. The men who are thus changed by virtue of that peculiar time, shall be as the seeds of human beings, and shall give birth to a race who shall follow the laws of the Kritya Age, the Age of Purity.

In Vishnu Puran, one of the many Vedic scripture, Kalki is said to born in a village called Shambhala. Some interpret this as indicating a village of the same name in the Indian state of Andhra Pradesh. I would not jump to that hasty conclusion. The name may be allegorical. Buddhist scriptures also mention a place of the same name, an invisible, hidden kingdom, which will be visible during the end of the Kali Yug. Another interesting thing is the reference to God as “who is the Beginning and the End”. Compare this with 22.13 of the Revelations : I am the Alpha and the Omega, the Beginning and the End. The two religions, separated by time and space (Hinduism being much older than Christianity) are thought to have little in common, you shall find some amazing similarity of events mentioned in the Kalki Purana with those of the Biblical Revelations.

Kalki is born to a man named Vishnujasha and a woman named Sumati in the Hindu month of Baisakha, which starts from 14th or 15th April and lasts till 14th or 15th May. So, Kalki will be born 12 days from the full moon day (after 14th/15th April), which can be anytime between 26th April to 15th May. I[2]. V.31 also says that he had three elder brothers. According to I[2] V.32, the King of the land where Kalki is born is named Vishakhjupa. As per I[2] V.4, the mission of Kalki’s life is to destroy Koli – the equivalent of the Anti-Christ (in whose name the present age is named). Koli signifies a person as well as the vices which are peculiar to this age. As per I[3], V.25 Kalki was given a white horse, which he rode during his conquests all over the world. In fact Kalki is always symbolized as riding a white horse. Compare this with the Revelations :  In 19:11 of the Revelation â??I saw the heaven opened, and behold, a white horse, and he who sat on it is called Faithful and True. In righteousness he judges and makes war.â?

The Hindus have a strong belief in â??Karmaâ?. It is karma which determines the life in the future. Many a times we see innocent children made to beg in the streets of India. I have asked this question to myself as to why these innocents have to suffer so much. The answer I got was from my guru Maa Shree where she told me that it is the â??prarabdhâ? that makes that child bear this terrible fate. Prarabdh is the accumulated karma in oneâ??s life time. Whatever we do in this life time is accounted for and a ledger folio is prepared in the house of justice of the god. Good deeds are handsomely rewarded in the same birth. If the person has been saintly in his action and words and has always been virtuous he is relieved of another human birth and this is called as the â??mokshaâ?. But if the deeds that he does is villainous in nature, cruel, immoral and unjust then he accumulates punishment which is so much so that one birth is not enough. He has to be born as a human again and go through the hell of being a beggar, or a criminal jailed for life or to a life of extreme hardship. This is the concept of Karma among the Hindus. This concept is individualistic as well as collective and the Prophecy of the impending apocalypse is linked to this concept of karma.

As is the karma performed by all human beings world over… as per the doctrine of mass karma whatever awaits mankind results from our karma of the past. In the system of God there is no disorder. In the house of God there are no free lunches. Everything results from law of karma that can never err! There is no place for miracles in the house of God… nor is anything premeditated! If the mankind is doomed to failure in the coming future… if the mankind fears the coming of the worst in year 2012… The whole mankind at large is responsible for it. We as masses have killed true essence of life… the air we breathe… water we drink… Earth will live on (the sacred mother earth)… all have been polluted beyond repair! In the circumstances, a renaissance… a total upheaval is the only solution. One amongst us shall don the mantle of a messiah… an Avatar (God manifest in human form) to cleanse the society of its ills

According to Hindu cosmology, the universe is cyclical, passing through four world ages. Each yuga, as they are called, is shorter and less pleasant than the previous epoch due to the degeneration of morality. Currently we are in the last, the Kala Yuga, in which dharma (correct behavior), is only one-fourth of its beginning quality. At its end, the Kali yuga,  religion will disintegrate and society will become more secular. When the world becomes hopelessly degenerate, it will end in catastrophe and a new mahayuga (“great yuga”) will begin. One thousand yugas is one day in the life of Brahma, the godhead of Hinduism. At the end of each day, the universe comes to an end and is restored into the Brahma for an equally long night, during which time it exists only potentially. He reappears at dawn, and creation begins anew. The present age is the first day of the 51st year of Brahmaâ??s life. He lives 100 years, each of which comprises 360 days and nights. Then he dies, and the universe is dissolved into nothingness that lasts for another cosmic century. Then he is reborn to live another 311,040 billion years.

The Kali Yuga allegedly began in 3012 BC, so apparently we have many cosmic hours to wait for it to end; nevertheless, many people believe that the end is nigh. At that time, the Kalki (White Horse) Avatar, the tenth and final incarnation of Vishnu, will arrive. The heavens will open and he will appear on his white horse with his sword “blazing like a comet”. He will destroy the wicked and restore purity. Entire continents will sink and rise in the process.

The Vishnu Purana (4: 24) advises us as follows about the conditions at the end of this civilization:

“The leaders who will rule over the earth will be violent and will seize the goods of their subjects. The caste of servants will prevail and the outcasts will rule. Short will be their lives, insatiable their appetites; they will hardly understand the meaning of piety. Those with possessions will abandon agriculture and commerce and will live as servants or following various possessions. The leaders, with excuses of fiscal need, will rob and despoil their subjects and take away private property. Moral values and the rule of law will lessen from day to day until the world will be completely perverted and agnosticism will gain the day among men.

“The causes of devotion will be confined to physical well-being; the only bond between the sexes will be passion; the only road to success will be the lie. The earth will be honored for its material treasure only. The priestly vestments will be a substitute for the quality of the priest. A simple ablution will mean purification, the race will be incapable of producing divine birth. Men will ask: what authority have the traditional tests? Marriage will cease being a rite. Acts of devotion, however scanty, will not produce any result. Every way of life will be equally promiscuous for all. Those who own and spend more money will be the bosses of men who will have only one aim, the gaining of wealth however dishonestly. Every man will consider himself as good as a Brahmin. Men will be terrified of death and fear scarcity; by this alone they will keep up an outward appearance of religious feeling. Women will not obey the orders of their husbands or their parents. They will be selfish, abject, liars, fallen and given to evil ways. Their aims in life will be sensual satisfaction only.

“When the practices taught by the Vedas and the institutes of law shall nearly have ceased, and the close of the Kali age shall be nigh, a portion of that divine being who exists of his own spiritual nature in the character of Brahma, and who is the beginning and the end, and who comprehends all things, shall descend upon the earth. He will be born as Kalki in the family of an eminent Brahmin of Sambhala village, endowed with the eight superhuman faculties. By his irresistible might he will destroy all the barbarians and thieves, and all whose minds are devoted to iniquity. He will then reestablish righteousness upon earth; and the minds of those who live at the end of the Kali age shall be awakened, and shall be as pellucid as crystal. The men who are thus changed by virtue of that peculiar time shall be as the seeds of human beings, and shall give birth to a race who shall follow the laws of the Krita age, the Age of Purity.

The Buddhist teachings describe the Kalachakra (Wheel of Time), which revolves in cycles like the Hindu yugas. According to the Maitreyavyankarna (“Prophecy of Maitreya”), Buddha will incarnate as Lord Maitreya (“The Buddha Who Returns”) at the end of the present cycle after major geological catastrophes have so changed the face of the planet that he can walk from continent to continent. During his reign, humanity will attain salvation, and even the gods will be liberated from their desires.

In Chapter 26 of Digha Nikaya, we are told:

“At that period, brethren, there will arise in the world an Exalted One named Maitreya, Fully Awakened, abounding in wisdom and goodness, happy, with knowledge of the worlds, unsurpassed as a guide to mortals willing to be led, a teacher for gods and men, an Exalted One, a Buddha, even as I am now.  He, by himself, will thoroughly know and see, as it were face to face, this universe, with Its worlds of the spirits, Its Brahmas and Its Maras, and Its world of recluses and Brahmins, of princes and peoples, even as I now, by myself, thoroughly know and see them.”

“Maitreya, the best of men, will then leave the Tushita heavens, and go for his last rebirth.  As soon as he is born he will walk seven steps forward, and where he puts down his feet a jewel or a lotus will spring up.  He will raise his eyes to the ten directions, and will speak these words, ‘This is my last birth.  There will be no rebirth after this one.  Never will I come back here, but, all pure, I shall win Nirvana.” The Gautama Buddha also made this prophecy concerning the advent of Maitreya:

“And the Blessed One said to Ananda, I am not the first Buddha, nor shall I be the last. In due time another Buddha will arise in the world, a Holy One, a supremely enlightened one, endowed with wisdom, auspicious, embracing the Universe, an incomparable Leader of Men, a Ruler of Devas and mortals. He will reveal to you the same eternal truths, which I have taught you. He will establish His Law, glorious in its spirit and in the letter. He will proclaim a righteous life wholly perfect and pure, such as I now proclaim. His disciples will number many thousands while mine number many hundreds.â??

“Ananda said, â??How shall we know Him?â??

“The Blessed One said, â??He will be known as Maitreya.â??

In the sacred text Anagatavamsa, the sage Sariputta asked Buddha Arahant about the future Buddha, and was told:

“I am now the perfect Buddha;  And there will be Maitreya too

Before this same auspicious aeon

Runs to the end of its years.

The perfect Buddha, Maitreya,

By name, supreme of men.”

“At that time, the ocean will lose much of its water, and there will be much less of it than now. In consequence a world-ruler will have no difficulties in passing across it. India, this island of Jambu, will be quite flat everywhere, it will measure ten thousand leagues, and all men will have the privilege of living on it. It will have innumerable inhabitants, who will commit no crimes or evil deeds, but will take pleasure in doing good… Human beings are then without any blemishes, moral offenses are unknown among them, and they are full of zest and joy. Their bodies are very large and their skin has a fine hue. Their strength is quite extraordinary. Three kinds of illness only are known — people must relieve their bowels, they must eat, they must get old…

“Maitreya, the best of men, will then leave the Tushita heavens, and go for his last rebirth into the womb of that woman [Brahmavati]… As soon as he is born he will walk seven steps forward, and where he puts down his feet a jewel or a lotus will spring up. He will raise his eyes to the ten directions, and will speak these words: ‘This is my last birth. There will be no more rebirth after this one. Never will I come back here, but, all pure, I shall in Nirvana!’…

“For 60,000 years Maitreya, the best of men, will preach the true Dharma, which is compassionate towards all living beings. And when he has disciplined in his true Dharma hundreds and hundreds of millions of living beings, then that leader will at last enter Nirvana. And after the great sage has entered Nirvana, his true Dharma still endured for another 10,000 years…”

The Buddha also described the decline of religion in the latter days of this age:

“How will it occur? After my decease there will first be five disappearances. What five? The disappearance of attainment (in the Dispensation), the disappearance of proper conduct, the disappearance of learning, the disappearance of outward form, the disappearance of the relics. There will be these five disappearances.

“Here attainment means that for a thousand years only after the Lord’s complete Nirvana will monks be able to practice analytical insights. As time goes on and on these disciples of mine are non-returners and once-returners and stream-winners. There will be no disappearance of attainment for these. But with the extinction of the last stream-winner’s life, attainment will have disappeared….

“The disappearance of proper conduct means that, being unable to practice jhana, insight, the Ways and the fruits, they will guard no more the four entire purities of moral habit. As time goes on and on they will only guard the four offenses entailing defeat. While there are even a hundred or a thousand monks who guard and bear in mind the four offenses entailing defeat, there will be no disappearance of proper conduct. With the breaking of moral habit by the last monk or the extinction of his life, proper conduct will have disappeared…

“The disappearance of learning means that as long as there stand firm the texts with the commentaries pertaining to the word of the Buddha in the three Pitakas, for so long there will be no disappearance of learning. As time goes on and on there will be base-born kings, not Dharma-men; their ministers and so on will not be Dharma-men, and consequently the inhabitants of the kingdom and so on will not be Dharma-men. Because they are not Dharma-men it will not rain properly. Therefore the crops will not flourish well, and in consequence the donors or requisites to the community of monks will not be able to give them the requisites. Not receiving the requisites the monks will not receive pupils. As time goes on and on learning will decay. In this decay the Great Patthana itself will decay first… While a four-line stanza continues to exist among men, there will not be a disappearance of learning. When a king who has faith has had a purse containing a thousand coins placed in a golden casket on an elephant’s back, and has had the drum sounded in the city up to the third time, to the effect that: ‘Whoever knows a stanza uttered by the Buddhas, let him take these thousand coins together with the royal elephant’ — but yet finding no one knowing a four-line stanza, the purse containing the thousand coins must be taken back into the palace again —  then will be the disappearance of learning…

“As time goes on and on each of the last monks, carrying his robe, bowl, and tooth-pick like Jin recluses, having taken a bottle-gourd and turned it into a bowl for almsfood, will wander about with it in his hands, thinking, ‘What’s the good of this yellow robe?’ and cutting off a small piece of one and sticking it on his nose or ear or in his hair, he will wander about supporting wife and children by agriculture, trade and the like. Then he will give a gift to the Southern community for those of bad moral habit. I say that he will then acquire an incalculable fruit of the gift. As time goes on and on, thinking: ‘What’s the good of this to us?’, having thrown away the piece of yellow robe, he will harry beasts and birds in the forest. At this time the outward form will have disappeared…

“Then when the Dispensation of the Perfect Buddha is 5,000 years old, the relics, not receiving reverence and honor, will go to places where they can receive them. As time goes on and on there will not be reverence and honour for them in every place: from the abode of serpents and the deva-world and the Brahma-world, having gathered together in a space round the great Bo-tree, having made a Buddha-image, and having performed a ‘miracle’ like the Twin-miracle, will teach Dharma. No human being will be found at that place. All the devas of the 10,000 world system, gathered together, will hear Dharma and many thousands of them will attain to Dharma. And these will cry aloud, saying: ‘Behold, devatas, a week from today our One of the Ten Powers will attain complete Nirvana.’ They will weep, saying: ‘Henceforth there will be darkness for us.’ Then the relics, producing the condition of heat, will burn up that image leaving no remainder. This again is the concept of the Karma to certain extent, this is collective Karma.

When I was very young I read a book called â??chariots of fire by Eric Von Danikenâ? in which I remembered that I read that the earth has gone through tectonics upheaval about five times in the total history of the earth. The polarity of the earth changed five times as per Daniken. The question at that point of time was not the authenticity of the idea but the evidences that he collected and analyzed to have come to a point where he could have written his findings. In these lines when I read about Edgar Cayceâ??s prophecy regarding the end of the earth I  was stunned to learn about the same phenomenon that Eric Von Daniken had mentioned, Edgar Cayce could not have known in the year 1930s. Edgar Cayce foretold something which will excite every one as the concept at his time was unthinkable In the late 1920’s and early 1930’s, Cayce was the first to describe the concept of the shifting of the pole as a result of the crust of the Earth moving independently from the core of the Earth to bring different a surface area over the spin axis. During the past 30 years, this concept has received more and more attention by geophysicists, some of whom now seriously argue that the crust does move independently. Some geophysicists now also argue that the best way to explain a variety of paleo sea-level and other data is that it moves and shifts fairly frequently and more rapidly than previously imagined.

Cayce predicted changes to the Earth surface to begin some time between 1958 and 1998. The cause of these dramatic Earth changes will be the shift in the world’s magnetic poles around the year 2000. Cayce predicted that when this pole shift occurs it would begin reversals in the world’s climate so that:

“..where there has been a frigid or semi-tropical climate, there will be a more tropical one, and moss and fern will grow.”

Cayce’s prediction of a pole shift occurred in 1998. According to NASA’s Goddard Space Flight Center, in 1998 something changed the Earth’s gravitational field which moved the magnetic poles closer together. The NASA article explained that as the ice on the poles melted, ocean currents moved water toward the equator, which factors researchers believe to be partly responsible, in conjunction with shifts in atmospheric patterns, for this ongoing shift in the Earth’s magnetic field. This NASA finding affirms Cayce’s prediction of a pole shift. The year the battle of Armageddon will occur in the spirit realm (may be happening already)

Cayce predicted that the so-called “Battle of Armageddon” described symbolically in the Bible would begin in 1999. Cayce foresaw that this “battle” will not be a war fought on Earth. Rather, it will be a spiritual struggle between the “higher forces of light” and “lower forces of darkness” for 1000 years of Earth time. The reason for this struggle is to prevent souls from lower afterlife realms from reincarnating to Earth. By preventing souls from the lower afterlife realms from reincarnating to Earth, only enlightened souls will be permitted to reincarnate. The result will be 1000 years of building a world of peace and enlightenment. After 1000 years, souls from lower afterlife realms will be permitted once again to reincarnate to Earth. By this time, the so-called “kingdom of heaven” will have been established on Earth.

Rig Veda, the oldest of all the Vedic scripture, is also an astronomical data store house. In the Rig-Veda the pole star of today was not the polestar of the time when the Rig Veda was being formed. Which means that the earthâ??s crust has shifted since then and the equator of today was the arctic of that time. That might also explain the Piri Ries maps where the arctic land mass has been correctly mapped which is at this point of time is buried under four kilometers of snow.

The Earth has moved into the Aquarian Age, due to an actual astronomical event known as the Precession of the Equinoxes. Aquarius is the zodiacal sign of humanity, truth, and science (the search for truth). Truth sets us free.

Aquarius brings us into the influence of the all powerful Violet Ray, which is the frequency of freedom. The Piscean Age, ruled by Neptune (sacrifice) and Jupiter (religion), was a sacrificial and religious period initiated by Jesus, The Christ. The Aquarian Age, initiated by The Cosmic Christ of the Violet Flame, The Lord Saint Germain, and The Ascended Masters of Light, is governed by Uranus (freedom) and Saturn (creator of forms)… This is a spiritual age of unprecedented freedom and liberation for all of humanity.

The Violet Flame is being consciously invoked by planetary Lightworkers, to assist in our transformation into freedom. The Violet Ray, a direct transmission and emanation of light form the Great Central Sun of All Creation is serving to transform and transmute fear on an atomic and sub-atomic level. The Violet Flame is accelerating an evolution/revolution into a higher frequency of light where “there shall be no more death, neither sorrow, nor crying, neither shall there be any more pain; for the former things are passed away.”

In another grand astronomical event, our whole solar system is intersecting a photon belt (zone of light and higher consciousness) in its grand cycle around the Pleiades. In fulfillment of prophecy, cycles within cycles are culminating together as we rapidly evolve into The Eternal Here and Now (the Fifth Dimension). This is substantiated by Hindu cosmology which reveals that we are now in The Diamond Age. The Diamond Age, an age of intense purification, is a transitional period between the Kali-Yuga (an age of ignorance/sin) into a Satya-Yuga, a glorious Golden Age of Light (the Aquarian Age, the New Heaven, the New Earth). The initiation of the Satya-Yuga occurs at a precise moment, “A twinkling of an eye”…

The Mayan Calendar places this cosmic moment in the Earth year 2012… This prophetic moment constitutes the Earth’s Permanent Ascension into the Fifth Dimension, a higher harmonic of light where peace, love, freedom, and multi-dimensional realities co-exist in joy. Also the Earth becomes an official member of the Intergalactic Confederation of Planets. What this means is that our beloved Space Brothers from other advanced, intergalactic civilizations will be free to visit, and share their awareness with us.

In the Message of Aquarius you will find information about the periodical transformation of the planet, how new continents and seas are formed and how the old ones are destroyed, following precise planetary laws. (Nothing is left to chance and happens at random). This is supported by the destruction or sinking of past continents: Atlantis, Lemuria, the Hyperborean continent, etc. By the same law, the end of the present continents is imminent, and will be followed by new continents in which a new humanity will live.

From a humanity to the next one a group of people is always preserved. A group of people capable of understanding and being in tune with the renovation of the planet. They will be helped and preserved in order to be the first inhabitants of the new continents. The precise requirements to be part of a new ‘planetary exodus’ are described at lengththroughout the more than two hundred pages of the book, as well as the methods and systems to attain this. Methods and systems which have over the centuries remained veiled in the form of universal allegories, such as the Plant of Immortality, Noah’s Ark, the Tree of Life, David slaying Goliath, Horus slaying Seth, the catching of the Salmon of Knowledge, and many others.

If the 26,000 Great Year Cycle of the Mayans is ending in 2012 (coinciding with the lesser 5,125 year cycle), it is highly significant because it may also relate to â??the greater wheelâ?? and its cycle of 26,000 years â?? finishing one cycle and starting another. The twelve zodiac signs take 26,000 years to precess the full circle of 360 degrees, the same time span as it takes for one zodiac sign in the greater zodiac.

The world is entering the Age of Aquarius on both the smaller and greater wheels, an event that has only occurred six times (this is the seventh) – in the history of this Fifth Rootrace, hence a time of great opportunity. [1]

Nevertheless, we are on the cusp of these cycles, 500 years for the lesser wheel and 5,000 years for the greater wheel; it is doubtful (as mentioned by other authors) that something will â??happenâ?? on December 21, 2012. We are going through a process of unprecedented change during this cuspal period. If the above date is accurate, then this is an advantage for students of astrology and cycles – as it may allow some accuracy to use this as a time marker to work forward or backward.

Another factor to consider is that the 26,000 year cycle coincides with a 104,000 years cycle of the â??fourth Sunâ??. (104,000 = 26,000 X 4) In other commentaries this author has dated the fifth subrace of the Fifth Rootrace (5.5) as starting around 100,000 years ago.

Indeed, in this fifth branchrace of 5.5 (5.5.5), the race has reached its apotheosis, and in this Kali Yuga cycle of destruction, is ready for a major shift. According to the Mayans, Humanity will shift to the â??fifth sunâ?? phase, “El Quinto Sol”, where a golden age of higher consciousness will emerge.  As discussed earlier, there are â??yugas within yugasâ?? and a Satya Yuga (golden age) may well be emerging and overlapping the Kali Yuga (black age) of 432,000 years. The Sixth Rootrace is only about 25,000 years away [2] and a parallel may be drawn with the previous Satya Yuga (1,728,000 years) for the Fifth Rootrace when it was in its nascent inception about four million years ago – at the decline of Atlantis when Atlantis was going through its Kali Yuga. Alternatively in this cycle, there may be a smaller Satya Yuga cycle emerging within the Kali Yuga.

Whether it will be 2012 or some other dates is not known with conviction but one thing is certain that a massive global catastrophe is on the way. With Global warming being the first and the only primary reason for such an event. I had gone to the Gharwal Himalayas in the month of April 2009. The Ganges starts from the Goumukh Glacier and flows down the mountains from Gangotri, meandering through the Himalayas and touching the plains at Hardwar. The Gangotri was a dry river when I visited that place with boulders and pebbles bathing in the dust. Locals said that they had hardly any ice cover in the upper reaches of the Gangotri. The temperature at a place called Chamba which is at 8000 feet above sea level was 39degree celcius. Locals said that they had never experienced such hot summers. The rise in the global temperature will surely rise the water levels of the sea and thereby inundating many cities, maybe slowly or maybe at one stroke. Such things have happened in the past and they have been ingrained in the psychology of the human race at large. Coupled with their observation and calculation they are just telling us that such big annihilation is round the corner and that it is the process of the cosmos to build and rebuild.

The Stock Market is a market for the trading of company stocks, and the likes of the same. In Stock Market both of these are securities listed on a stock exchange as well as those that are only traded privately.

Though it may seem common, the term Stock Market is a somewhat abstract concept for the mechanism that enables the trading of company stocks. It is usually also used to describe the totality of all stocks in the market and indeed other securities, with the exception of bonds, commodities, and derivatives.

The term market is used especially to apply within one country as, to put up with within the phrase “the Stock Market was up today”, or within the term ” Stock Market bubble”. Bonds are still traditionally traded in an informal, over-the-counter market known as the bond market.

Commodities are usually traded in commodities markets, and derivatives are traded in a variety of markets but like bonds, mostly ‘over-the-counter’. The size of the worldwide ‘bond market’ is estimated at $45 Trillion and the size of the Stock Market is estimated as about half that.

It must be noted though that the derivatives market, because it is stated in terms of notional outstanding amounts, cannot be directly compared to a stock or fixed income market, which refers to the actual value in a market.

The Stock Market is distinct from a stock exchange, which can be said to be an entity, say a corporation or a mutual organization countenance within the business of bringing people and sellers of stocks and securities together.

Here, the case in point-Stock Market-within the United States includes the trading of all securities listed on the splendid NYSE, the NASDAQ, the Amex, as well as resting on the many regional exchanges, the OTCBB, and Pink Sheets. European examples of stock exchanges include the Paris Bourse (now part of Euro next), the London Stock Exchange and the Deutsche Borse.

Importance Of Market

The importance of Stock Market can be understood when it’s most imperative networks for transport, electricity and telecommunications function properly. Thus, it is essential that, in market payments can be transacted, capital can be saved and channeled to the most profitable investment projects and that both households and firms obtain help in handling financial uncertainty and risk as well as possibilities of spreading consumption over time.

The financial markets constitute an important part of the total infrastructure for every single society that has passed the stage of largely domestic economies.

The Financial System Of The Market Performs Three Main Tasks:

1) It handles transfer of payments in the markets.

2) It channels savings to investments with a good return for future consumption in the Stock Market.

3) It spreads and reduces the economic risks in relation to the players’ targeted returns.

Here also note that systemic risk is not thereby reduced, it merely becomes less concentrated and uneven. Moreover, unforeseen risks, or catastrophic risks are a good example of the complete collapse of the financial system or government institutions in the market, which cannot be capable of being spread, or insured against.

The smooth functioning of all these activities and facilitates in the Stock Market give economic growth and the lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity.

The market is one of the primary most important sources for companies to raise money. Prior experience has shown that the price of shares and other assets is an influential part of the dynamics of economic growth. The continuously rising share prices tend to be associated with increased business investment and vice versa in the Stock Market.

Share prices also affect the wealth of households and their consumption. Thus, central banks tend to keep a bull’s eye on the magnificent control and behavior of the market.

Relation Of The Stock Market To The Modern Financial System

In the market the financial system in most western countries has undergone a remarkable transformation. One main feature of this progress is disinterring mediation. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being routed via banks’ long-established lending and deposit operations.

The general public’s heightened interest in investing trait within the Stock Market, either directly or through mutual funds, has been an important component of this process.

The statistics related to the market show that in many countries in the recent decades shares have made up an increasingly large proportion of households’ financial assets. A feature in the market within the 1970s, in Sweden, deposit accounts and other very liquid assets with little risk made up almost 60 per cent of households’ financial wealth, as against less than 20 per cent within the 2000s.

The major part of this adjustment in financial portfolios has gone directly to shares but a bargain now takes the form of various kinds of institutional investment for groups of people. As examples in the Stock Market the pension funds, mutual funds, hedge funds, insurance investment of premiums, and so on, the list goes on. The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance, permitting a higher proportion of shares to bonds.

Thus, in a Stock Market similar tendencies are to be related in other industrialized countries. In all developed economic systems, like the European Union, the United States, Japan and other first world countries, the trend has been the same-saving has moved away from well established (government insured) bank deposits to more risky securities of one sort or another.

Lastly, any type of a dealing in the Stock Market should be given a serious thought and then only to be proceeded.

With the volatility of the past year and growing uncertainty of the future economy, an increasing number of people are focusing on safe investments.

If thatâ??s you, what are your options?  Several financial vehicles exist as an alternative to securities.  Those are:

Government Treasuries- Widely regarded as the worldâ??s safest parking place for cash, US Treasuries meet two needs.  Investors need a rock-solid place to put money, and the Government needs cash to spend.  Win-win right?  As an investor, the yields are usually as low as youâ??ll find but that is the trade-off for the level of safety offered.

Bonds- Corporations need to finance operations as well and are the safest way to invest in the corporate world.  Bondholders are the first to be paid in the event of company insolvency.  If this happens, the bonds canâ??t be redeemed at full value but it is better than the alternative of owning a stock that falls to $0.

CDs- This is simply a step-up from a savings account at a local bank.  An investor agrees to lock the money up for a certain time period.  In exchange for the loss of liquidity, the interest rate paid is a little higher and the deposits fall under the banner of FDIC coverage.

Annuities- These products are usually favored by investors nearing retirement.  For that reason, annuities can be used for accumulating cash as well as insuring a long-lasting stream of retirement income.  The returns are based on the performance of an insurance companyâ??s investment portfolio.  Insurance companies own very large blocks of corporate bonds so the return will mirror the yield on bonds, less the operating expenses of the company.  The safety of annuity products comes from company reserves that are used to project stable returns and guaranteed minimum interest rates.  In addition, state guaranty funds back each contract to a limit specific to the state you live in.

Each of these products has its place depending on the demographic needs and investment objectives of each individual investor.

For the right person, I feel that annuities are superior to every one of the safe investments listed.  Hereâ??s why:

Treasuries- An annuity is backed by the reserves of the issuing company rather than being issued by an agency that has never done anything besides add debt on top of debt.  The failure of this system would have catastrophic consequences for every form of investment but I choose to not be part of the problem.

Bonds- Annuity rates are based on a bond portfolio but have guaranteed minimums and default protection from the massive reserves that companies must carry.  Annuities are simply a safer way to own bonds.

CDs- Certificates of Deposit have only one advantage over annuities.  A CD is more liquid based on shorter maturity date so the money invested can be redeemed in full in a smaller time period than annuities.  Besides that, an annuity grows tax deferred and the rate of return is usually twice as high as a CD.  For an investor looking for a safe investment lasting five years or more, annuities easily exceed CDs in all categories of benefits.

Each of these points deserves greater explanation but this covers the basics that each investor needs to see which road they would choose to take.  When making a final decision, competent advice is highly recommended.  That presents a unique set of questions and challenges.  Educating yourself will allow you to screen the advice you get and make a much more enlightened decision regarding your financial future.

Finance Quotes Investment Strategy Before!

Walk into segment investment advisor’s office again they will quickly go into into an explanation of very well how you should manage your money.Visit here http://allfinance-tips-help.blogspot.com

 They’ll talk about maintaining a balanced portfolio while using words like diversification and asset quota. learned is nothing angry shelter this; in fact, I have given the same articulation to many clients over the years. But sometimes I enact a little fatigued with the ordinary. That’s why I came up with a rarely different but mildly conservative reaching to abode an investment portfolio.For the newer investor who knack be reading this article, I’ll offer a snappy explanation of the underground spectrum of investments that exist today. due to a general edict of thumb, investments that offer a elder return on your money treat to have more fitting risk. Conversely, investments that have lesser returns tend to be much safer. A couple examples will help.

A 3-month Certificate of grip (CD) that you can recognize at any bank is lone of the safest investments a person can buy. It is FDIC insured and would fated take a worse-than-the-Great-Depression type of economic catastrophe for you to elude your money. The disadvantage? Low interest rates. The price you usually pay for keeping your money safe and easily accessible is a less than far out interest rate. Investments that are selfsame to CDs but may pay a little more interest include intensely rated, generally insured, short further medium term bonds and notes. These types of investments won’t make your rich, but they will keep you out of the poor house because you generally don’t regard to worry about losing your original investment.

On the contrasting side of the test spectrum you’ll treasure the stock hawk and every type of setup that goes with unfeigned. Stocks, mutual funds, index funds again options correct to name a few. These investments behave quite differently than the aforementioned CD at a bank. Rather than simply paying a pressing interest rate, you perfect your money through growth and the sporadic hike. Over time, you will very imminent turn a far greater lucre than those safer investments. While the 3 month vinyl might offer an average annual interest rate of 3% to 5% over time, the stock market investments will provide average annual returns of 5% to 15% over time. The downside to these wonderful by-product is the risk aid. In order to achieve these better long term returns, you bequeath swallow to endure major fluctuations in your portfolio. It is not uncommon through properly positioned portfolios to appearance 15% to 25% drops in value in less than 12 months. These fluctuations contract be a bit nauseating to the additional conservative client who would hoist to be safe further stress-free.So, is there a drawing near to alimony your original investment safe irrecoverable entirely giving up the opportunity that the stock market offers? In accident there is. I swallow been developing the strategy for a few years and have several clients who have implemented perceptible. Remember, the limit is twofold: to create a portfolio that 1) absolutely minimizes the pledge to the virgin investment, further 2) does not terminate the potential for higher returns. The concept is simple. Rather than investing in thorough aspects of the investment spectrum as hugely advisors would suggest, abolish everything but the much conservative investment and the most aggressive investment. Where does that leave us? With only two investments from which to choose: safe bonds also stock options.

Here’s how it works. halt on an amount of money that you would like to keep absolutely harmless from stock market fluctuations. Place the undiminished amount, yes, unabridged of it, into succinct explicate very safe bonds. Bored yet? Don’t worry, the fun has just begun. Once you fall for invested your thoroughgoing portfolio in insured or highly-rated short narrate bonds, footslog away for a while. Go acting golf, go on vacation or start writing a book. Within less than 12 months, your portfolio of bonds commit have deposited a sum of cash bag your account. This cash is the result of the interest that has been paid to you. directive how we are not reinvesting the chief move passion the bonds; instead, we are keeping all of the interest force important. Here comes the bracing part.Take the cash that has built up in your account further start buying stock options. cattle options are among the most enterprising investments available and therefore present the greatest potential owing to big returns. and when I say big returns, I gruesome BIG! We trust experienced arrangement as high as 800% within a few months on options trades. Of course, it goes without saying that these potentially tiptop settlement clock in with huge risks – it is also not peculiar for us to dodge faultless of the money we invest importance an option trade. So how in the system is this beneficial? Think about it. If we take our sway and travel higher development through choice trading, we have the sock to ethos a insignificant quota of money into a immeasurably larger sum money a very economical term of time. When we are successful in that investment, we simply take those earnings and buy supplementary bonds. That way, we coalesce in our gain and earn even more interest the next year. again if we lose the entire exploit that we placed excitement the stock option, we still haven’t lost a dime of the original investment! After a few more months, we bequeath have earned some more alter and we can start whole over again.Visit here http://allfinance-tips-help.blogspot.com

One of the most basic tenets of portfolio risk management is, do not lose money. Understanding the risk, you are assuming and how you intend to mitigate this risk is what separates successful investors from those that never make any money.

There are several types of portfolio investing risk. Knowing the risk is the first step to making better investing decisions.

Macro Risk Categories

In a macro sense, there are two types of risk. Systematic risk, also known as market risk is the risk associated with the overall market. An example is the overall trend of the stock market dictates a substantial part of the total return. In this case, owning stocks from different sectors does not diversify away the systematic risk of the market.

You can mitigate systematic risks by hedging your positions with non-correlated assets (much harder to do than most think) or employ good stop management techniques to preserve your capital. While stops are not part of the Modern Portfolio Theory, they have their use and should be part of your overall strategy.

Changes in interest rates, recessions, and major catastrophes are examples of systematic risk as they affect the entire market.

Unsystematic risk, also known as specific risk or diversifiable risk is the risk inherent in each investment. Investors can offset specific risk with proper diversification.

For example, if you place all your money in a biotechnology company that has just received news that the FDA will not approve a new drug, you have encountered unsystematic or specific risk. This news would cause the share price to fall precipitously.

Had you owned shares of several biotechnology companies or better yet companies in other industries, you would have reduced your risk.

On Jim Cramer’s “Mad Money” program, he has a segment titled “Are you diversified?” People call in and give him five stocks they own in various industries. He opines whether there is sufficient diversification in the portfolio. All he is doing is suggesting how to hedge unsystematic risk. Systematic or market risk will remain in the portfolios.

Index Funds

The popular S&P 500 index funds are subject to market risk while diversifying away much of the specific risk of owning a specific stock or sector. $10,000 invested into an S&P 500 index fund on January 4, 2000 would be worth $9,373.09 as of November 30, 2009. This is the affect systematic or market risk had on this investor’s portfolio. The diversification of holding the broad S&P 500 did not keep you from losing money. Rather you felt the sting of owning the market, while employing appropriate hedge techniques would reduce or all but eliminate the affect of the losses in owning the market.

Core assets

When examining a complete portfolio it is imperative to consider fully the important factors that comprise your core investable core assets. Dr. David Swensen, the Nobel Price winner in economics, has identified three characteristics of core assets that should be part of your evaluation to help reduce systematic or market risk.

Use assets to hedge the market risk of other assets. For example, real estate is a good hedge against the ravages of inflation, while bonds offer protection from a financial crisis. By recognizing these inherent characteristics of your core assets, you can hedge some of the market risk inherent in an investing portfolio. There should be fundamentally based market returns from the asset class. If you are depending only on active management of the asset class, you are increasing the risk of losses by not being investing in the market. Rely on liquid markets where there is a ready market to buy and sell your core asset. Assets that cannot be immediately priced and sold, are subject to sudden and deep losses. Liquid markets give you the opportunity to employ stop loss techniques should the market turn against you as in a recession.

Your stock portfolio is part of your total asset valuation that includes savings for emergencies, real estate, bonds, and possibly precious metals. By taking this broad perspective, you have a better chance to employ overall hedges that are non-correlated to address market risk.

Asset Correlation

In Modern Portfolio Theory, the most efficient method is to create an optimal mix of asset classes that generate the highest return to risk ratio.

By owning assets that do not correlation with each other, you can reduce the risk in your portfolio. In a general sense, stocks and bonds tend to have a negative correlation. When stocks perform well, bonds do not and when bonds perform well, stocks do not.

Market sectors have various levels of correlation. Owning sectors that are not correlated highly help to reduce your risk. For example, stocks are closely correlated to their sector. In this case is better for the investor to own the sector rather than the individual. Owning the sector helps to achieve some diversification, reducing specific risk of stock ownership.

By owning asset classes that are not highly correlated, you can reduce your risk. The primary asset classes to consider are:

Common assets of bonds, equities, real estate and cash Geographies including the United States, European Union, the United Kingdom, Japan, China, India, Brazil and Latin America, rest of Asia, the Middle East. Bond types such as Treasuries, corporate, short-term or long-term Major currencies including the US Dollar, the British Pound, the Euro, the Japanese Yen Industry sectors.

When you blend asset classes that have a low correlation to each other, you are lowering the risk in your portfolio. Many investors fail to incorporate this thinking when they build their portfolios. Using the R-Squared factor, a correlation of 1 indicates the asset classes are perfectly correlated. A correlation coefficient of zero indicates there is no correlation in the performance of the asset classes.

For example, the S&P 500 and the Russell 2000 have a near perfect correlation of 0.97. Where as the average correlation among S&P sectors is 0.32.

Asset allocation is the most essential factor in building a high performing portfolio. Paying attention to the risk of each asset class allows you to create a portfolio that can beat the market in good times as well as bad.

Hoboken, NJ (October 2008)â??If Wall Streetâ??s recent implosion has you looking for a tin can and the perfect burying spot in your backyard for your money, who can blame you? Recent weeks have held enough economic bad news for several decades. A historic investment bank declared bankruptcy. The U.S. government stepped in to bail out the worldâ??s largest insurance company. And now Uncle Sam is scrambling to figure out what exactly a $700 billion bailout of the financial sector should look like. In the aftermath, many people are left wondering Just how safe is my money, anyway?

The answer? Not very, says Alex Green.

â??Our economy is tanking largely because of the poor decisions of Wall Streetâ??s big financial institutions and investors,â? says Green, investment director for The Oxford Club and author of the new book The Gone Fishinâ?? Portfolio: Get Wise, Get Wealthyâ?¦and Get on with Your Life (Wiley, September 2008, ISBN: 978-0-470-11267-0, $27.95). â??Knowing this, you might be wondering who you should trust to make critical financial decisions for you. Well, look in the mirror for your answer.â?

In his new book, Green debunks the idea that financial experts should manage your money because they are somehow better equipped to predict whatâ??s going to happen in the market. This is a myth, he insists. And thatâ??s why his Gone Fishinâ?? Portfolio flips tradition on its head and helps you go DIY with your investing.

â??No one has more skin in the game than you, so why wouldnâ??t you be at the helm?â? asks Green. â??You donâ??t need to predict the future to make money through investing. In fact, itâ??s better if you just work with the uncertainties of the market. The Gone Fishinâ?? Portfolio gives you the tools you need to make the most of your money and leaves you plenty of time for the more important things in life.â?

Here are just a few reasons why The Gone Fishinâ?? Portfolio is right for you:

It requires no economic forecasting or market timing. Financial advisors pretendâ??and sometimes convince themselvesâ??that they can predict what the market and economy will do because itâ??s believed that this is the special talent that separates them from the unlearned masses. People want to feel that someone smarter and more insightful than them is managing their money, and thatâ??s why many of them are willing to pay considerable amounts for investment solutions. The reality is that no one can tell you with any certainty what the economy or the stock market will do next.

â??Anyone can make a good market call,â? says Green. â??But no oneâ??and no systemâ??can accurately and consistently forecast the future. Investment success begins with a strong dose of humilityâ??not just about your own knowledge but, just as importantly, about the knowledge of the so-called experts. Rather than pretend to have answers you donâ??t have, acknowledge your uncertainty. Deal with it. Capitalize on it. The Gone Fishinâ?? Portfolio does just that. It allows you to profit regardless of market conditions.â?

It allows you to manage your own money. Once you know that neither you nor your financial advisor can predict the future youâ??re ready to manage your own investments. No one cares more about your money more than you do, so why not manage it yourself? Sure, there are investment advisors out there who are competent and ethical, says Green. Itâ??s just that most investors donâ??t need to pay for the services of a good one.

â??In this industry there is a lot of jargon and investment complexities that are off-putting to the average investor,â? he explains. â??But you no more need to master all this arcane knowledge to manage your money effectively than you need to understand how a combustion engine works to drive you from here to the post office. Successful investing does not have to be terribly complicated. Simplicity and effectiveness lie at the heart of the Gone Fishinâ?? Portfolio. You wonâ??t need an investment advisor to put it togetherâ??or run it.â?

It eliminates individual security risk. â??The Gone Fishinâ?? strategy skips buying and selling individual stocks,â? says Green. â??That means if a company goes underâ??think Enron and Worldcom, or, for that matter, Lehman Brothersâ??your retirement savings wonâ??t go down with it. The portfolioâ??s focus is meeting long-term investment goals, not pursuing short-term gains through trading. Itâ??s also about spending as little time as possible on your investments, and being in the business of buying and selling individual stocks requires a lot of time, attention, and legwork on your part.â?

It has delivered consistent market-beating returns in good times and bad. Green created the Gone Fishinâ?? Portfolio back in 2003. In the five years since it has compounded at 17.3 percent, considerably better than the S&P 500 over the same period. And it allows you to take on less risk than you would being fully invested in stocks. But what anyone interested in the Gone Fishinâ?? Portfolio will want to knowâ??especially in todayâ??s economyâ??is how it performs in a down market. The answer: it works. If you had owned it in the bear market of 2000 to 2002, for example, you would have seen it make temporary declines. It was down 6.1 percent in 2000, 2.7 percent in 2001, and 5.4 percent in 2002. But compare those numbers to the S&P 500, which fell harder: down 10.1 percent in 2000, down 13 percent in 2001, and down 23.4 percent in 2002, and you see that it is the better investment strategy.

â??The Gone Fishinâ?? Portfolio is conservative in its investment approach yet as you can see it has beaten the market every year since its inception,â? says Green. â??And when we back-tested through the biggest bear market since The Great Depression, it still beat the market. Not just over time, but every year. Itâ??s an investment strategy that you can be fully confident will always perform for you.â?

It is based on a Nobel Prize-winning investment system. Harry Markowitz won the Nobel Prize for showing how a portfolio constructed of uncorrelated assets can allow you to master uncertainty and generate excellent investmentsâ??a strategy adopted by the Gone Fishinâ?? Portfolio. His ground-breaking paper, â??Portfolio Selectionâ? published in The Journal of Finance, laid the groundwork for much of todayâ??s asset allocation strategies, including the Gone Fishinâ?? Portfolio.

â??Itâ??s these principles that make the goals of the Gone Fishinâ?? Portfolioâ??higher returns with less riskâ??possible,â? says Green. â??Conventional wisdom says it isnâ??t possible. The Nobel Prize committee and decades of experience say it is. The work done by Markowitz and other economic pioneers provide the underpinnings of the Gone Fishinâ?? strategy.â?

It keeps more money with you. When you put the Gone Fishinâ?? Portfolio to work, you will be light years ahead of the typical investor who is either wondering what the heck to do, learning the hard way, or turning things over to an expensive investment professional. The Gone Fishinâ?? Portfolio is designed to let you keep your money where it belongsâ??with you. By managing your own portfolio, you can avoid paying an investment professional costly brokerage commissions and other fees. Also, the unique make up of the portfolio will help you keep your money in other ways. It consists entirely of low-cost Vanguard mutual funds that charge no sales loads or 12b-1 feesâ??costs that often come up when investing in other mutual funds. The Vanguard Group is among the nationâ??s largest mutual fund groups with more than $1.1 trillion in assets under management. Its large asset base allows the company to enjoy economies of scale that allow it to maintain its position as the lowest-cost fund family in the industry. So you avoid paying a lot in fees.

â??In the book, I talk about the role saving will play in building the best financial future for you,â? says Green. â??By avoiding having to pay out these extra fees to brokers and/or mutual funds you are able to save and invest that much more of your income each year.â?

It prevents shortfall risk. The whole point of financial planning is to make sure your investment portfolio doesnâ??t kick the bucket before you do. If youâ??re in good health, you may live a lot longer than youâ??re counting on financially. For example, consider that many baby boomers retiring at 65 will spend up to three decades in retirement. The reality is that Social Security and private pension plans just wonâ??t be able to sustain you comfortably, if at all, for that amount of time. Add the increasing cost of living to the puzzle and the retirement situation for many Americans can become even more tenuous.

â??The simple fact is that you are going to need funds other than those provided by Social Security or a private pension plan to ensure your money lasts as long as you do,â? says Green. â??The Gone Fishinâ?? Portfolio covers your shortfall risk. In other words, it is a growth portfolio designed to keep you from outliving your money. It should give satisfactory returns for 25-year-olds just beginning to invest, as well as 65-year-olds whose retirement may realistically last three decades, before they go to that big retirement home in the sky.â?

It spells out a profitable asset allocation for you. Investors are often surprised to learn that their most important investment decision is selecting the mix of assets to be held in the portfolio, not selecting the individual investments themselves. The Oxford Club asset allocation model Green created recommends that you have 30 percent of your portfolio invested in U.S. stocks, 30 percent invested in foreign stocks, 5 percent in REITs, and 5 percent in gold shares. The remaining 30 percent is divided between high-grade bonds, high-yield bonds, and inflation-adjusted Treasuries. The Portfolio achieves this allocation through investments in Vanguard mutual funds.

â??Youâ??ll find that stocks give the greatest return over the long haul,â? says Green. â??The trade-off is high volatility. Blending different types of stocks with other assets can generate excellent returns with less risk than being fully invested in stocks.â?

It only takes 20 minutes a year but use that time wisely. Once youâ??ve set up your Gone Fishinâ?? Portfolio you are free to spend the majority of your time doing something other than worrying about your retirement savings. But remember the 20 minutes you do spend managing your portfolio are crucial. Youâ??ll spend that time rebalancing your asset allocation. Over time your asset allocation percentages will change significantly, depending on the performance of the financial markets. Rebalancing brings your asset allocation back to your original target percentages, so itâ??s those 20 minutes each year that will help you control risk and will likely deliver a significant performance boost over the years.

â??A few pieces of advice: first, let an interval of at least a year and a day pass between each time you rebalance,â? says Green. â??This will help you avoid paying short-term capital gains taxes and the 1 percent redemption fee on investments held less than a year. Second, unless your investments are held entirely in a qualified retirement plan, where a fund redemption is not a taxable event, itâ??s preferable to rebalance by adding money to those funds that have fallen below your original target percentages. That may sound simple, but I can tell you from working with hundreds of investors that most have a strong compulsion to add to those assets that are performing best, not those that are performing worst. But for long-term results you need to forget what the hot asset class is doing. You want to buy whatâ??s cheapest for the long-term advantage it confers.â?

â??The great thing about this investment strategy is that it takes the stress out of building your savings,â? notes Green. â??You no longer have to worry about any looming market catastrophes, and you donâ??t have to try to predict when these catastrophes will happen or rely on someone elseâ??s ability to do so. Once youâ??ve set up the Gone Fishinâ?? Portfolio it will start making money for you and leave you time to do those things that you really want to do in life. Itâ??s simple and effectiveâ??exactly what you would want an investment strategy to be.â?

 

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For more information, please visit www.investmentu.com.

About the Book:

The Gone Fishinâ?? Portfolio: Get Wise, Get Wealthyâ?¦and Get on with Your Life (Wiley, September 2008, ISBN: 978-0-470-11267-0, $27.95) is available at bookstores nationwide, major online booksellers, or direct from the publisher by calling 800-225-5945. In Canada, call 800-567-4797.

As one watches or listens to the media, they find themselves inundated with information regarding problems in the economy. Further, most people are aware we must find real solutions to correct the catastrophic condition of the financial system. Yet, as we all can attest, it is easier to identify problems than solutions. Therefore, our government and its citizens must identify a clear-cut plan of action to solve the economic crisis. Moreover, the plan must have viability, and, be free of defective assumptions’ and ineffective practices.

The foremost realization people must embrace is the actual problem behind our current catastrophe. Many clamor that the problem is the lost value in the capital markets. The devaluation of the market is really not the problem; it is a symptom of a much worse condition. However, the devaluation of the market is also the solution attempting to emerge. Many people may take pause at such a statement. However, the market is just exposing its true value or lack thereof. Therefore, the object of this article is to bring into focus the obvious solution, and what’s more the solution will be self-evidencing. The devaluation is caused by a supply glut and investors’ realization that the prices of the stocks are indeed inflated and it does not pay to purchase new stocks or even hold them.

Much like with any product if one does not feel his or her money’s worth is contained within the given item (in this case stock), he or she will want to find better value. Thus, demand is lowering and supply is remaining high. Really, what’s happening to Wall Street is an economic adjustment in full motion.The value of the market in actuality is likely half of the amount of investment dollars that have been placed into the market. Moreover, as with any company that sells a defective product for more than its true worth, there comes a time when a loss of market occurs. In the case of securities, a desire has developed to sell off current investments in the market and seek safer and better investments elsewhere. Vast amounts of capital are being transferred from the stock market to treasury notes, bonds, and gold as well as energy investments. However, the transfer of money to other areas such as those mentioned above will consume only part of the investment dollars. At the same time, there is still a hint of instability and possibly poor return in treasury notes, bonds, gold and energy investments. Therefore, it is the remaining dollars that we are interested in as if they are not re-invested in the REAL economy, the economy cannot revive.Decidedly, the remaining portion is the money investors need to utilize wisely. The question is, how does one prudently invest and what else exists if most publicly traded stocks are inflated? Well, as I have mentioned in some of my earlier articles, the investment of the future is in new businesses that have not had the chance to enjoy Wall Street inflated stock values. Example would be new start-up businesses designed to endure tough economic times. Additionally, there are many strong industries. For example, clean energy, service businesses, new technologies and so forth.

So is there a chance that investors may move funds from Wall Street to Main Street and what impact can such transition of capital have on the economy?

Well, shifting investors’ focus to Main Street requires a bit of promotion and incentive for investors to gravitate to small business. The idea is to create new high quality business infusions in the form of good debt, equity and guarantees. This will recreate the economy rather than our government buying up old bad debts and further escalating the problem by propping up a bad business. Beautifully, there is an infrastructure in place that was established under the 1958 Small Business Investment Company Act. Small Business Investment Companies (SBICs) specifically focus on attracting investors, pooling investors’ money and investing in small businesses. The funds are partially guaranteed or financed by the federal government. Thus, it only appears natural that if our government wishes to use government funds to correct the problems in the economy as it has attempted to do with the bad debt bailout of the dilapidated mortgage industry, a much more feasible solution is to infuse the capital into small main street business.

This can be accomplished responsibly through generating a dramatic increase in SBIC involvement. Perhaps the Government could infuse five hundred billion into the SBIC system; this will fund five hundred thousand new businesses of which two hundred fifty thousand will be a success. Of those two hundred fifty thousand businesses, the average staff will be twenty employees. This equals five million new jobs created. Further, it is estimated that there will be an equal number of jobs created or sustained through residual products and services purchases made by those newly operating businesses. The creation of ten million new good paying jobs will certainly be a springboard to stabilize America. Finally, with government involvement, there can be caveats such as high standards of employee payroll for businesses obtaining funding through SBICs, the government can also give preference to particular industries to insure the businesses receiving the funds will be depression resistant etcetera. This plan is essential to restore the workforce, thereby providing a foundation to restart and rebuild the economy allowing America to be financially comfortable as this market correction takes place.

BreadStreet Author: SJ Fortenberry

This article brought to you By BreadStreet Investors’ Union at http://BreadStreet.com

“Bringing Investors and Entrepreneurs Together for Profit”

Also see http://www.PrivateBusinessInvestments.com

There I sat, at my busy, messy, yet highly efficient desk, minding my own business when out of the blue the phone rang jarring me out of my stress induced catatonia. The java, all seventeen cups, triggered a sudden barrage of heart palpitations – I was ready for the day. I made my first executive decision of the day and hit the flashing line fully prepared for any potential  meltdown awaiting me on the other end of the line. Steeled for anything, I heard the voice of lovely Suzy Escrow Officer - from the unnaturally high pitch of her voice, I vibed all was not well in the LBC (Long Beach, CA).

“Hello? Yes, I have a borrower at the table who will not sign her loan documents?” ending her declarative statement as if asking a question.

“Mmmm, hmm — whyyy?” I asked dryly, lips pursed, weary of borrowers who refused to sign docs at the table for a variety of reasons.

“Well, it appears there is a tax form in the loan documents that her loan officer did not tell her about. It’s called a ‘Federal Recapture Tax Disclosure Form’ and she refuses to sign it. What should I do?”

I carefully pondered my response. Should I hunt down the loan officer, smack him (or her), lovingly of course, then insist the loan officer deal with the situation directly and possibly lose the customer while betwixt and between escrow and the loan officer all points bulletin OR should I go against my best judgment, speak with the borrower directly and risk being barraged with additional questions totally unrelated to the issue at hand and possibly lose the customer anyway? In a flash, I knew what must be done; the escrow officer must translate through me the material points on federal recapture tax. Brilliant! Suffice it to say, the buyer eventually signed the required form and escrow ultimately closed.

Yes, the oh so threatening sounding FEDERAL RECAPTURE TAX, a provision associated with programs created through the issuance and sale of tax-exempt mortgage revenue bonds, is not the big scary monster lurking in the shadows to swallow you, your family, dog and cat in one fell swoop if one should sell his/her home within nine years from the purchase date. Not even close. In fact, it is more likely a spaceship manned by little grey men will land in your front yard and throw a barbeque kegger before any punishment may be meted out by way of federal recapture tax provisions associated with public benefit subsidy programs (although partying with little grey aliens in your front yard would be way cool).

OK, back on point. In the context of tax-exempt mortgage revenue bond programs and mortgage credit certificates, borrowers receive what is defined by the Internal Revenue Service as a federal subsidy benefit or public benefit. Receiving a lower than market rate interest rate is a public benefit/public subsidy (as is the case with tax-exempt mortgage revenue bond programs). Receiving a tax credit by way of lowering one’s tax liability and then applying that credit to a new mortgage to facilitate qualifying is a public benefit/public subsidy (as is the case with mortgage credit certificates or MCCs). And don’t forget about the bond investors who originally purchased tax-exempt mortgage revenue bond paper from which the capital was raised to create these special first-time home buyer programs. The principal and interest portion of the borrower’s mortgage payment is extracted, so to speak, then passed through to the original bond investor as tax free income.

So, the federal recapture tax provision was established and written into tax law by the IRS and Congress in order to “recapture” a portion of the aforementioned public benefit subsidies and tax breaks. How does this work exactly? The maximum potential recapture tax penalty that may be assessed is equal to the lesser of 6.25% of the original loan amount borrowed or 50% of the home seller’s future net proceeds on the sale of his home.

Recapture tax triggers upon the passing of a very specific set of events: 1) The home is sold within nine years from the original purchase date and 2) the home is sold at a profit and 3) the borrower’s income exceeds federal income thresholds established in the year the home was originally purchased. In the event all three of the aforementioned conditions exist simultaneously upon sale of the home, recapture tax will trigger however it is a very rare circumstance indeed when all three conditions exist simultaneously. In fact, in my six years working as a bond administrator for a national mortgage bank, I witnessed only a handful of cases where recapture tax actually triggered on the sale of a home. That may be due to the fact that homes closed with 100% financing are not turned over at the traditional pace (5 to 7 years) like in years past as home owners are keeping their first homes for longer periods of time before moving out and up to larger homes. Another reason may be attributed to federal income thresholds which must be surpassed before recapture tax may potentially trigger. Those thresholds are set at the maximum moderate income limit established the year the home was originally purchased. It is possible, yet observedly unlikely, one’s income will exceed maximum federal income thresholds or exceed the 5% per year allowed for incomes to increase under this provision.

If at time of sale conditions 1), 2) and 3) do not apply, will recapture tax trigger? No. In the event the home is sold in year nine and one day yet conditions 2) and 3) do apply, will recapture tax trigger? No. In the event the home is refinanced, will recapture tax trigger or go away? After a refinance, recapture tax will not trigger however, the recapture tax provision will not magically disappear after a refinance either. The recapture tax provision will remain attached to the property for the full nine year window period even through multiple refinances.

There are other special circumstances where recapture tax will not trigger: 1) transfer to spouse due to divorce where no sales transaction takes place 2) transfer due to the death of the homeowner 3) home is sold at a loss to the homeowner 4) home is lost due to a catastrophic event like a fire or flood (other conditions apply).

Please note, if the home is transferred to another party through an assumption or simply transferred outright, the home is deemed sold and recapture tax may trigger. As such, the home’s fair market value as of the date of transfer will be considered the sales price. Also, the assuming party should be aware the nine year recapture window will begin anew upon completing the assumption process.

In all cases, in the context of the subject matter of this article, borrowers are strongly urged to consult an income tax professional for advice on tax benefits associated with tax-exempt mortgage revenue bond loans, tax implications specific to an individual case and filing of IRS Form 8828, if applicable.

In conclusion, when one encounters the Federal Recapture Tax Disclosure Form in a set of loan documents, it must be reviewed, completed and signed by the first-time home buyer on any purchase money real estate transaction funded with tax-exempt mortgage revenue bond program funds or closed with a mortgage credit certificate program.  For more on programs specifically created for first time homebuyers of low to moderate income, go to FTHBGuru.com for an electronic copy.                  Copyright 2007

That’s the decision the Bielski brothers must make. Living in Europe during World War II, they are witnesses to the encroaching terror of Hitler’s genocidal horrors targeted mostly towards Jews. Jewish as well, each brother struggles to define for themselves the best way to cope. Sharing a deep bond, the two brothers support each other, even laying their lives on the line if required. Yet, at one point, they move in different directions, as each takes a different path in an act of defiance against the Nazis.

Though Tuvia can be aggressive, he is more of a pacifist. And, his concern is more for the weak and helpless. That’s why he throws his resources and talents into protecting and defending those who cannot help themselves. Herding increasing numbers of men, women, and children into the forest, he uses his survival skills to keep his fellow Jews alive. Though he knows how to fight, he understands the value of flight, not as a means for running away, but as a means of staying alive. As he tells those whose lives he is saving, “Our revenge is to live.” He also says to them, “And, if we should die trying to live, at least we die like human beings.”

At first in agreement with this approach, Zus stands by his brother. But, the path of flight, and the seemingly inactive stance it requires in an attempt to survive, does not satisfy him. Zus needs another outlet, one that can help him better express his inner turmoil and dynamic energy. So, Zus decides the best route is to fight. That’s why he lends his skills to the Russian army so he can help them fight his enemy, the Nazis. And, he invites “anyone else who would rather fight than wait to be killed” to follow him.

Which path is right, fight or flight? Defiance makes no attempt to give a definitive answer. It simply shows the benefits and consequences of both. And, though the film is an excellent study in the two approaches, to know which path is correct in the moment, an initial step must be taken first. One that involves the ability to endure Full Catastrophe Living, the name of a book by Jon Kabat-Zinn, Ph.D..

What is full catastrophe living? According to Kabat-Zinn it means being able to embrace full on without avoidance or denial “the enormity of our life experiences.” And, it means “coming to grips with what is most difficult in life and to find within it room to grow in strength and wisdom.” But, to do this Kabat-Zinn emphasizes it is imperative that we learn how to stay calm and centered in life during times of stress. This requires an act of constant mindfulness, where the mind is awake and alert to what is going on around it.

He writes, “Mindfulness practice provides an opportunity to walk along the path of your own life with your eyes open, awake instead of half unconscious, responding consciously in the world instead of reacting automatically, mindlessly. The end result is subtly different from the other way of living in that we know we are awake and aware. No one dictates to you what that path is. No one is telling you to follow ‘my way.’ The whole point is that there is only one way, but that way manifests in as many different ways as there are people and customs and beliefs. Our real job is to find our own way, sailing with the winds of change, the winds of stress and pain and suffering, the winds of joy and love, until we realize that we have also never left port, that we are never far from our real selves.”

How mindful Tuvia and Zus are throughout the whole of their ordeal may be debated according to how each person views the film. But, overall, it might be said that they are much more aware of what is really happening in the genocide of Jews and how passive resignation is truly not an option. Only survival is. For Zus the question of survival is simple. Kill or be killed. But, in choosing to survive, especially Tuvia faces the constant dilemma of how to survive in such a way he keeps his soul in tact. Otherwise, the scars of war will leave him no better a human being than those who are murdering his people.

Of course, Tuvia is no saint. He is a man trying to find his way. At times he gives into murderous revenge as he struggles to find a way to cope with his grief, anger, and pain. At times he gives into compassion, only to find to his dismay that an act of compassion causes larger suffering to his people. But, most of the time he finds a balance. He learns from each experience and keeps his eye on the ultimate goal — save as many of his people as is possible. In the end, he does, and as the movie reveals to us (this film is based on a true story), the descendants of those he saves less than a decade later number into the tens of thousands!

What then are the catastrophes you are facing in your life? Can you live consciously and fully in the midst of them? As you do so, what approach should you take? Fight, or flight? And, how to you discern in a mindful way, which approach is the right one to take? Studied carefully, Defiance, may help bring you insight into these answers. Though one thing is certain, any act of defiance done with love and lived in a “full catastrophe way” can’t help but bring some good. Even if that good is simply an act of learning how to more fully and consciously live your own life.

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