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Triple Crisis Looming Around the Block

Subscibers,

A unique and unprecedented convergence of three crises in one time and place is looming around the block — a severe U.S. recession, surging inflation, and close encounters with a Wall Street meltdown.

Now, news on each of these crises has burst onto the scene with great force, wiping away the last vestiges of sugar-coating by analysts ... creating the conditions for a bond market disaster ... and driving the U.S. stock market into a tailspin:

 Deepening the U.S. recession, vehicle sales are expected to plunge to 15-year lows. Dealer lots are overflowing with gas-guzzling trucks and SUVs. But they can't get their hands on enough fuel-efficient cars, limiting sales in the most popular models. Another warning sign: S&P has just put GM, Ford and Chrysler on "credit watch negative." End result: Don't be surprised if one of the Big Three — Ford, GM or Chrysler — is soon forced to file for bankruptcy.

 Bankruptcy has already struck over 20 airlines worldwide, with many more on the way. In the U.S alone, the top 10 U.S. airlines are expected to post pre-tax losses of nearly $18 billion this year and next. At the same time ...

 U.S. inflation is surging. In May, producer prices jumped 7.2% compared to a year earlier; import prices catapulted 17.8%, the biggest rise ever recorded; and even the so-called "core" producer prices (excluding food and energy) rose at the fastest pace since 1991! Adding to this explosive mix ...

 A bond insurance disaster has finally struck: In one fell swoop, Moody's has downgraded MBIA's ratings by five notches and Ambac's by three. In turn, this is threatening the finances of hundreds of thousands of states and local governments that are covered by these two giants of the industry.

The entire bond insurance system — whereby issuers of municipal bonds and mortgage bonds could effectively "buy" a higher rating simply by taking out some insurance — has always been questionable. Now it's a house of cards, and it's crumbling. Result: Another wave of bank losses and write-downs that could exceed the losses from the housing and mortgage crisis. {see archived E-mails about what to do to protect yourself against your bank failures}

 All of this is bound to drive most U.S. stock sectors — especially financial stocks — into the gutter. Already, the benchmark banking sector index (BKX) is about to bust below the low set in 2003, during the depths of the last bear market. Expect the same for other sectors as well.

What to do? Yesterday, I gave you very specific recommendations on where and how to build your first defense.

Next, if you haven't done so already... please get on this week’s conference call "Straight with No Chase - Pt 2" as I'll be discussing more ways to get yourself "FOOL-proof" double digit returns in an economy where most people are raking in double digit losses. Visit our website, and click on the calendar link for more details. If you missed Pt 1 of the call, you can listen to the playback by dialing in on the number below.

Playback Number: (641) 715-3487
Access Code: 974124#

Thanks

Gary Gray
Tax & Financial Consultant, RFC
G&G Associates
877-817-6031 toll-free
866-361-3872 toll free fax
www.gngassociates.net

"Those who do not learn the lessons of history indeed are condemned to relive them."

LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. G&G Associates expressly forbids from having a financial interest in any security that is recommended to our subscribers