Treasury Secretary Steven Mnuchin sent panic through the financial world, by issuing an unusual statement that he had called the CEOs of the nation’s six largest banks to make sure they have ample liquidity and credit to extend to American businesses and households.
Mnuchin made the unusual statement via Twitter, saying he had “convened individual calls with the CEOs of the nation’s six largest banks” — Brian Moynihan, Bank of America; Michael Corbat, Citi; David Solomon, Goldman Sachs; Jamie Dimon, JP Morgan Chase, James Gorman, Morgan Stanley; Tim Sloan, Wells Fargo.
Today I convened individual calls with the CEOs of the nation’s six largest banks. See attached statement. pic.twitter.com/YzuSamMyeT— Steven Mnuchin (@stevenmnuchin1) December 23, 2018
“Panic feeds panic, and this looks like panic in the administration,” said Diane Swonk, chief economist at Grant Thornton. “Suggesting you might know something that no one else is worried about creates more unease.”
Could Mnuchin Trigger an Economic Disaster?
Nothing screws with the economy more than uncertainty, and Mnuchin’s tweet is already generating deeper anxiety about the state of the U.S. economy.
Mnuchin, plans to hold a call on Monday with the President’s Plunge Protection Team which includes Federal Reserve Chairman Jerome Powell; Jay Clayton, the head of the Securities and Exchange Commission; and Christopher Giancarlo, chairman of the Commodities and Futures Trading Commission, to discuss how regulators can assure normal market operations.
A decade after the financial crisis wiped out the home values and retirement savings of millions of Americans, it looks like the U.S remains unprepared for another financial collapse.
“It’s going to raise the question of whether Treasury and Mnuchin know something the markets don’t,” said Brian Gardner, Washington research director at Keefe, Bruyette & Woods, an investment banking firm. “Without clarifying further, it’s going to weigh on the markets.”
Let’s look at the current reality of our financial situation:
- Hedge funds are having their worst year since the 2008 financial crisis.
- Household debt recently hit a record high $13.5 trillion — up to $837 billion from the previous peak, which preceded the Great Recession.
- The Student Debt Bubble – Student debt is now over $1.5 trillion, must of that held by a generation that will never be able to pay it off.
- The National Debt is now at $21.8 Trillion.
Things you can do to Prepare for Economic Troubles:
Get out of Debt Immediately: While this is a hell of a lot easier said than done, you need to do everything you can to get out of debt. Whether that means taking on a second job, canceling all non-essentials (gym memberships, cable, cell phones, etc…) or just selling your old crap at a garage sale, you need to work towards zeroing out your debt. The last thing you want is to be facing a foreclosure or repossession if the economy starts collapsing.
Learn to Prep on a Budget: Don’t be fooled by fancy marketing gimmicks that try to convince you that you need to spend thousands of dollars to be prepared. While you probably have to spend some money to get on top of things, prepping should save you money in the long run. Put together a budget that accounts for all of your essential needs and then add a realistic preparedness line item to the budget.
- Watch for sales and only buy things that you know you will need and use in the future.
- Stock up on long-term goods and consumables that will hold their value even during a collapse.
- Make a rule that you will only buy things when they are on sale or when you have coupons and can then buy them in bulk. It takes some work and some planning, but buying in bulk not only helps you build your emergency stockpiles, but in the long run it’s going to save you a lot of money.
Establish an Emergency Fund: Part of that written budget should include a line item for putting away some sort of emergency fund. You may not be able to fully find it right now, but every dollar that you can throw at that fund will put you that much closer to your goal of being financially prepared to meet future crisis situations.
Learn to be Self-Sufficient: One of the biggest problems we face as a country is the lack of self-sufficiency that has spread like a disease throughout this country. We live in a throwaway society, where instead of learning how to fix something when it breaks, people instead run to the nearest store to buy another piece of garbage that they probably didn’t need to begin with. One of the best things you can do to ensure your future and your financial freedom is to learn how to be completely self-sufficient.
- Start learning how to hunt and fish: Depending on where you live, these skills can help you start supplementing your food supply and cut down those expensive grocery bills.
- Learn to Cook: Believe it or not, simply preparing fresh homemade meals instead of buying prepackaged junk can save you hundreds of dollars every month.
- Plant a Survival Garden: Another self-reliant way to cut down on your monthly grocery bills is to start a small garden.