This past week the federal government released unemployment numbers. We continue to see unemployment rates soar – this time up to 8.1% and rising. Over 651,000 jobs were eliminated in February.

These unemployment numbers emphasize just how important it is to have a backup plan – a Plan B

I suggest that you have a backup plan in place to protect you in the event of a significant reduction in your family income.

President Obama assures us that “help is on the way.”

I stated in “Soaring Unemployment Rates – Do You Have a Backup Plan?” that all the spending that the Obama administration is throwing at the economy will not stem the powerful long term economic forces operating today.

I feel that home prices will continue to fall. I don’t feel that the President Obama Mortgage Relief Plan will provide the long term relief that Mr. Obama is expecting. Sure, there will be some short term improvement in the economy and unemployment numbers as parts of all his plans go into effect in certain locations. But it will have little long term impact on the economy.

I expect a further decline in housing prices. This will lead to more weakness in the economy and higher levels of unemployment. Please see “The President Obama Mortgage Relief Plan – Will It Stop the Decline in Housing Prices?”

Let’s take a look at another area of the economy that is troubling

There doesn’t seem to be a great deal of concern about this among most Americans.

It relates to the huge amount of money that is being spent by the Obama administration. Most people probably feel that government resources are abundant and even unlimited. They feel we can spend well beyond our means for as long as we want.

Prior to this year, the government was spending beyond its means. It was spending hundreds of billions of dollars more than it was taking in. It then borrowed the rest it needed to pay its bills. You and I could not run our personal budget in this way without serious consequences.

Today, the massive spending - the economic stimulus package, the President Obama Mortgage Relief Plan, the continued bailouts of the banking industry, AIG, Fannie Mae, Freddie Mac, the automobile industry, and much more – our country’s federal deficit will be in the trillions of dollars. A further decline in the economy into next year, more bailouts, and a bad bank plan could make the deficits much larger than what the Obama administration projects.

Where can we get the money to make up this deficit? First of all, we can continue to borrow it. However, we have never in our history been faced with borrowing at these extremely high levels.

A second way to cover our huge deficits is to print the money out of thin air. This alternative would have dire consequences. I won’t go into the details here. But it will result in hyper-inflation, the demise of the U.S. dollar, and a massive reduction in the amount of money foreign countries will loan us.

If we use the first option and borrow to cover our deficits, we may fall short. A high percentage of our borrowing is from foreign countries – China, Japan, and others. China is already showing signs that it may not be willing to continue loaning money to the United States on such a large scale.

It’s true that China needs the U.S. consumer. But China, as well as other foreign countries, is seeing a significant reduction in the growth rate they have enjoyed over the last several years. As a result, they have less money to invest.

Not only is the source of funding drying up, but interest rates must rise in order to attract foreign investment.

It’s already difficult to persuade creditors to lend the funds that the U.S. needs. It will become even more difficult as the borrowing needs continue to increase and as more of our largest institutions go bankrupt or need a life-line to survive.

Raising the interest rates we pay our lenders will be the only way we can attract lenders and get enough money to pay our bills

Even then, it may not be enough.

The rise in interest rates caused by massive government borrowing will spread to the corporate sector. Companies will find that they must borrow at much higher interest rates. This is an additional cost of doing business. Capital spending (for computer equipment, machinery, etc.) will be reduced significantly.

Companies will be faced with the dilemma of seeing lower profits and the need to lay off more employees. It will result in a continued weak economy and high levels of unemployment.

In addition, the federal government deficit will increase significantly as interest rates rise resulting in higher interest costs that our federal government must pay on its debt.

You can ignore the possibility of a job loss or a reduction in the number of hours you are working

On the other hand, you can take a proactive approach and have a good backup plan. You can continue working your regular job and get internet network marketing training in your free hours.

I know that a backup plan is a time investment. Hopefully nothing will happen to your family’s income.

But having a backup plan enables you to be prepared and trained in case it does.

Scott Hubbard has retired from 25 years as a Chief Financial Officer in Corporate America. He now enjoys teaching corporate professionals and network marketers how to apply attraction marketing online and how to generate free qualified MLM leads on the internet. 

He is happy to give a free consultation for those having a serious interest in being an entrepreneur.  You can reach him toll-free at 877-878-4036 or by email at Scott.Hubbard3@gmail.com.  You can learn more about Scott by going to his blog at http://www.YourGuideToRetirement.com.

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