Trends for 2010

Excerpts from Chuck Bentley, CEO, Crown Financial Ministries in the January issue of Money Matters:

"1. The federal government will continue to expand and increase:  Although operating dangerously close to insolvency, the financial crisis of 2008 has given way to the "spend our way out of this" strategy currently in use by those who are entrusted with the use of our tax dollars.  As George Bernard Shaw observed, " A government that robs Peter to pay Paul can always depend on the support of Paul".

2. Banks will continue to have less loan activity: A correction is underway as the amount of money borrowed by businesses and individuals is reduced so that existing debt can be paid back. This would be a healthy trend if it did not have such an [negative] impact on our economic recovery.

 3.  A commercial real estate crisis: As delinquencies rise on commercial mortgages surge and vacancy rates rise, highly leveraged properties will continue to be in jeopardy of foreclosure.  At present, more than 3,000 banks and savings institutions have more than 300 percent of their risk-based capital in commercial real estate loans.

 4. State budget crisis: At least 48 states have addressed or still face shortfalls in their budgets for fiscal year 2010.  State budgets are built upon tax revenues. With declining residential property values and downward pressure on commercial real estate valuations, more states could find themselves  in a financial bind and in need of severe corrections to their expenditures, increasing taxes or seeking federal bailout money.

 5. Pivotal mid-term elections:  The U.S. government is wildly increasing its indebtedness while the general population is struggling to decrease its indebtedness as rapidly as possible.  The government has threes sources of income: taxes, borrowing, or printing currency.  When taxes and borrowing become insufficient to handle their appetite for spending, they will resort to the final option of further devaluation, printing worthless money.

Our appropriate response, regardless of our political affiliation, is to vote for those seeking office who see themselves as stewards of the resources supplied by the citizens and will commit to see our nation live within our means.  All others are not worthy of holding office.  If the midterm elections of 2010 do not achieve this result, a painful correction is looming large for all of us."