In a speech earlier this month, President Obama called the current situation “an urgent and growing crisis”. This crisis did not begin in the last six months. Anyone with access to the consumer statistics in adjustable rate mortgage payment resets, overall debt as a percentage of income, and personal savings rates, knew that we were headed for a train wreck. Hmmm! The Federal Reserve had all of that information and more. I wonder why they didn’t send us the early warning signal? Recession is a contraction in spending but a Depression is a de-leveraging of debt. The globe is in a depression, not a recession. Those that were caught with an exorbitant amount of debt are in for a rough ride and those with no debt but are relying on bank interest are also in for a rough ride… I guess everybody will have some challenging times. However, there will be winners in this down cycle and those who can break away from the paradigm of the last 30 years will fare better than those who are holding on to the current mindset.Baby boomers are starting to downsize and smaller & simpler is better. As we all know, the debtor is servant to the lender and we will now see how that reality plays out during this severe contraction. When lenders move into survival mode, they rely on that “fine print” found in every contract. That fine print is put there as a protection factor to guard against unintended consequences that are beyond their control. Only Our Heavenly Father knows the future thus how can we create a contract for 30 years into the future without some safeguards? Those whot saw the trends of the mortgage bubble knew there would be a day of reckoning and that day has arrived. Baby boomers are shedding their McMansions for smaller, more affordable homes. Why pay exorbitant taxes, insurance, heating, cooling, and maintenance for a house that you can get lost in? What is the right size house for you? Get on your knees and ask THE LORD GOD ALMIGHTY to direct you to the right house. That is exactly what we did. When you do that, your home becomes part of your ministry to others.Poland is on the brink of collapse as are other Eastern European countries. The interconnections of global financial system are complex and far reaching thus requiring us to pay attention to the exposure of other countries besides our own. The growing complexity of the current system ultimately will break, for that is the nature of complexity, it’s a monster! When everything is in synch, life is a bowl of cherries, but when one aspect of the system fails, the domino effect results in a crash. A $5 internal battery can cause a computer system to fail. With the high degree of leveraging that has taken place, the house of cards is teetering at the brink of collapse.I expect a rise in commodity prices and it will possibly occur from two separate and distinct events. First, the depreciation of the U.S. Dollar will cause prices to increase in terms of the Dollar. Secondly, there will be a restriction of commodities due to the developing countries increasing their relative use of commodities. China must grow or suffer civil unrest. It has a large investment in U.S. Dollar holdings which provides a means to continue building infrastructure at the expense of the value of the USD. The U.S. has lost the trust of other countries as the commercial monetary base of exchange. I expect other countries to slowly disconnect from their reliance on the U.S. Dollar which will also send the value down. Demand destruction of oil is being offset quickly by supply destruction. However, people just don’t understand that this supply destruction will come back to haunt us if demand picks up. We saw the same supply destruction occur 20 years ago and the domestic oil industry is half the size it was. Unused rigs will rust and the mass training of new workers has stopped. This is not good for the energy industry or the rest of the country. Alternative sources of energy cannot make up the difference in the short run. This sets the stage for a dramatic increase in oil prices in the near future.Pakistan continues to be the most dangerous place on earth. They recently signed an agreement with Islamic hard-liners, a move in favor of the Taliban. Obama’s war will be the Afghan/Pakistan theater… Just down the road apiece from Iraq.California is in the midst of a $41 Billion deficit and they can’t print money like the Fed can. I expect their contraction to be more severe than the heartland since their real estate was so overpriced. They will increase “use” taxes to the point, people will migrate to lower tax jurisdictions to flee from the sanctioned extraction of wealth.On the bright side: As I have mentioned in the past, gold is the barometer of monetary risk. As of this writing, gold is up over 6% from a year ago. Silver is still down 17% from last year, but compared to the value of housing it looks pretty good. Most of us have the opportunity to buy silver and I personally believe it is a good buy at these prices. Those of you who can step up to gold, it looks to be heading over $1,000 soon. Gold stocks are lagging in performance compared to the metal but that may change as more people realize that financial and retail stocks have no immediate future.Remember, Fear not: Psalm 118:6 The LORD [is] on my side; I will not fear: what can man do unto me?