Like a family whose expenditures exceed income and then makes up the difference by borrowing on credit cards, the US government`s own deficit spending is largely financed by Asian central banks, notably China and Japan.

Did you know that just twenty years ago America was the largest creditor nation the world had ever known? Now it lays claim to being the largest ever debtor nation. After years of spending like a drunken sailor, America`s net foreign debt now approaches a staggering three trillion dollars.

Under the Bush administration the deterioration has been particularly rapid. Soaring government expenditures, greatly boosted by the Iraq war, tax give-aways, homeland security, all further undermine the financial well-being of the country.

Now you won`t hear much talk of this from government spokesman, nor from much of the sold-out mainstream press and business media. You certainly won`t hear it from the hucksters on Wall Street. To listen to them you would be forgiven for believing all is hunky-dory. They have managed to stage a mock recovery in the stock market and even pulled the dollar back a tad from recent heavy falls.

But, believe me, this is a smokescreen, a scam, much like the tale of the emperor`s clothes. A great nation brought to its knees while its politicians look on, seemingly helpless.

Alas, it gets worse. You see, five separate events are gathering strength and, like a perfect storm, will soon converge, causing massive economic turmoil. All of which leads inexorably to a major economic downturn.

EVENT #1 - The "Twin Deficits" - the US Trade and Federal Budgets - spin mind-numbingly out of control and long-ago surpassed all records. To finance these deficits, the government relentlessly continues borrowing. Throughout history all great empires have collapsed, not at the hands of their enemies, but from within. They all went broke. It appears a tall task for America to avoid a similar fate.

EVENT #2 - A Dollar Collapse. Desperate for money the government turns to the printing press. The dollar bills get churned out, inflation takes hold, interest rates soar. No longer do the financial markets dissect the weekly money-supply figures. But the foreigners do. You can bet your boots alarm bells are ringing. They will stop lending, they will stop investing in US assets. The dollar has been dropping in the currency markets for three years now. It will continue. The dollar is doomed.

EVENT #3 - Housing Bubble Finally Bursts. For some years easy money brought a runaway jump in prices to near ludicrous levels. But times-they-are-a-changing. Mortgage arrears grow, as do foreclosures. Across the nation prices are weakening. Higher interest rates bring increased mortgage repayments, causing further foreclosures. Prices decline more, bringing with it the dreaded "mortgage deficit" - the mortgage exceeds the house values. This brings on more home sales. And so it continues ...

EVENT #4 - Job Losses Pile Up. As our glorious "Captains of Industry" close or down-size plants throughout America, lured by slave labor in China, massive lay-offs ensue. The government loudly boasts new jobs are being found. Yeah, right. A once well-paid factory job replaced with a low-paid job at a Walmart store near you or at Pizza Hut. Economists call this the "employment gap" which simply results in less disposable income. In turn, company profits decline, more lay-offs ... an endless cycle.

EVENT #5 - Stock Market Crash! Despite the best efforts of Wall Street`s finest to persuade you otherwise, the stock market is in trouble, there is no way back. With all the other events in play the market is poised to collapse. We shall be witnessing the mother of all crashes.

So what in the blazes can you do to protect yourself? In the second part of this article, I recommend five steps you should follow. In the meantime I would like to very briefly share one thought with you that will be greatly expanded upon in the next article:

Vitally, get a second income. Work for yourself. If your job disappears at least you have a safety net. If this means working all the spare time given you, tough! What you do is your decision. Just make sure you are equipped to make it successful. The favored way must be to start an online business, probably the cheapest and simplest way to go. Get online and get your second income started right now!

(c) Robbie Pugh - All Rights Reserved