China is "worried" about US Treasury bond investments. Should you be too?

Well, we knew this was coming but today's pronouncement by the premier of China, Wen Jiabao that he is "worried" about the amount of US debt that China holds and it's value in the face of the current economic melt down is the first big warning shot to the Obama administration. Wen Jiabao, Premier of China

Many commentators, investment firms and others have long been warning that China would not tolerate for long the financial misadventures of the US Congress and our exploding deficits if it threatened the viability and stability in pricing of US Treasury's held by China.

Premier Jiabao said " We have lent a huge amount of money to the US. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried."

Lets just say that China has now officially let it be known that the massive bailout, spending and stimulus program embarked on in the first 50 days of the Obama administration has got it more then a little concerned, as they realize that even more Treasury paper will be flooding the credit markets and that the US has become a debtor nation.

The implications of this policy are laid out in two excellent articles today.

One in the NY Times.

One in the Wall Street Journal.

What this means to the financial markets, tax payers and others is that much as the loan sharks send Vinnie the collector over to your place of business to remind you that Friday is pay day and that they expect you to be on time, China has now sent a clear message to the US that the orgy of spending and printing of money is going to come at a huge cost.

That cost is China and many of the middle east oil producing companies are going to be directing, through the pressure they exert as a major lender, the direction and priorty of US fiscal policy and that our nation is now vulnerable to economic blackmail from countries that are not our friends.

The implications for us are that we as a nation have got to pare back debt, pare back foolish spending, start investing in real businesses, technology and processess that create real wealth and value or we are looking at an extended period of economic decline or malaise as a country. Both parties have their hands all over this deal and it will fall not on political leadership but individual citizens and business people to set the course straight again.

Keep your powder dry, your assets in safe and secure places, invest in your business and educations and spend wisely. It's going to be a new world order and the US and it's citizens just got a glimpse of it this morning.

As settlement planners our focus will continue to be on safety, quality of assets, fixed and floating yield annuity products and assisting clients with protecting their settlement awards and assets.

Major one day seminar on 468b trusts and qualified settlement funds

As many of our news letter readers already know, there is going to be a major seminar held here in Phoenix, AZ on April 17th, hosted by the Tax Institute and featuring national tax expert Attorney Robert W. Wood on the topic of 468b trusts and Qualified Settlement Funds.

This event will be held at the beautiful Phoenix Marriott, literally 3 minutes from the Sky Harbor terminals and strategically planned to allow for either a quick and economical same day fly in to attend, or a quality weekend stay over if you want to enjoy some sunshine and fun a couple of days after April 15th.

The text book, which is included in the CE/CLE cost is 468b trusts and qualified settlement funds, authored by Attorney Robert W. Wood of Wood & Porter of San Francisco, CA. It is published by the highly regarded Tax Institute and is an exceptional resource. I've got a copy and it's about the size of the Gutenberg Bible and almost as authoritative! It covers every tax, regulator and procedural aspect of 468b trusts, qualified settlements funds and their use in both qualified and non-qualified cases. There is no finer expert then Robert Wood, he already wrote the text book used in most law and tax curriculums on taxable damage issues and now has written what I predict will become the standard of practice on 468b trusts.

What makes this seminar so unique is it is open to trial lawyers, tax lawyers and professionals, elder law and probate attorneys as well as structured settlement and life insurance company personnel. Perhaps no area of the settlement and legal profession holds more promise then the broad application of these trust, while at the same time facing unneccessary resistance as a result of a standard of how taxes and process is handled to make them understood to the every day planner, attorney or tax professional.

Listen to what the Tax Institute has to say about 468b trusts and Qualified Settlement funds:

"Qualified Settlement Funds (QSFs) are tax qualified trusts for litigation settlement proceeds. They are easy to set up, and offer unparalleled tax and structural benefits. Defendants get an immediate tax deduction and full release, but plaintiffs can defer their income, structure their recovery, etc. They are revolutionizing case settlements, from complex class actions to mom & pop litigation.

Plaintiffs love QSFs, for they can determine when and how to be paid, structure, cash or both.

Defendants love QSFs, for they get their tax deductions immediately!

Plaintiff Lawyers love QSFs, for they can structure their fees, or get paid immediately, even while their clients are still negotiating.

Settlement Administrators love QSFs, which are orderly, tax qualified, and advance settlement goals."

What this is NOT is a seminar on single claimant cases but a truly thoughtful look at the tremendous opportunity to revolutionize and improve the management of a huge area of litigation and settlements!

Featured speakers will of course be Attorney Robert W. Wood on the tax and procedural issues, famed environmental and Civil Action attorney Jan Schlichtmann on how the use of 468b trusts has revolutionized his environmental law practice, Mark Wahlstrom of Wahlstrom and Associates on the key planning and structured settlement opportunities for settlement professionals as well as other experts and providers who will be there for the breakfast, lunch and social hour functions that will give people an exceptional opportunity to network and meet other professionals who are working in this exciting area of settlement planning.

This is event is currently submitting for both CLE and CE credits and is being produced and filmed by The Legal Broadcast Network and it's production arm, LB Network Studios. This is going to be a high value, time and cost efficient event that can dramatically improve your practice and is open to everyone, from defense firms to plaintiff practices and all other disciplines.

You can learn more by going to the event page on The Tax Law Channel or at the LB Network blog where we will profile the speakers, give links to the hotel, contact information for Attorney Rob Wood and answer most of your questions on this event. We hope to see you there!

Structured settlements, the right choice

In an earlier blog post I tossed out the concept of The Golden Age of structured settlements, and how I believe we are about to enter a period of incredible growth in the settlement profession. I got such an exceptional response to that blog post that I took the time to create a two part video presentation on the topic of the future of the structured settlement profession, settlement planning and the need for structured settlement annuity contracts for injured plaintiffs.

This two part edition of "Speaking of Settlements" goes into that post and the theory of a coming boom in structured settlements in greater detail. Obviously I'd like you to view the videos, but if you want the short hand argument as to why I think we are about to see a surge, the five points are as follows:

1. Tax rates are about to rise given the government deficit and Democratic control of the House, Senate and White house. High tax rates make tax free annuity payments such as offered under structured settlements more attractive and as such we will see a relative advantage to using tax free annuity payments over alternative investments that don't enjoy the same tax status.

2. Interest rates are going to rise substantially over the next 3 years as the massive government debt leads to inevitable declines in the value of the dollar and relative increases in interest rates on debt obligations. Again, when compared to alternative investments such as bonds and bank CD's, the high rate of return on structured settlement annuities will compare favorably with other choices that lawyers and plaintiffs have before them, making the structured annuity a favored choice for many.

3. Life insurance companies are going to come out of this financial crisis as one of the few entities that didn't fail and in fact stood strong during the turmoil. The performance of structured settlements in this crisis is going to contrast very favorably with money market funds, banks, stock brokerage and mutual funds, not to mention real estate. People will begin to realize the superior safety of life insurance companies which is going to make our selling job easier when we discuss safety, stability, etc. All one needs to do is look at the 100% gain in the price of Hartford Life's stock last week in a single day once it became clear the insurance industry is still making money, is not going to vanish and that the major life markets such as Met Life, John Hancock, Genworth, Prudential, Hartford and others are not going away, but in fact are going to get stronger. Even AIG looks to be a candidate for a successful work out at this point.

4. Tort reform is dead as a political issue on both the national and state level, which will ultimately lead to a stronger settlement market. The distraction of tort reform, the heavy handed claims and litigation tactics and other clubs used to push people into smaller settlements, poison jurys and reduce the number of cases filed will slowly begin to receed. Nothing huge at first but the pendulum that swung so far to the right over the last 10 years will begin to swing back to the middle as the political climate shifts to a more pro-plaintiff market.

5. The Structured Settlement industry cartel is in it's last days as the information age sweeps over our business and creates greater awareness of pricing, negotiation and access to markets by consumers looking to decide how to settle their claims. The last 25 years has seen complete dominance by defense interests and a few powerful brokers that limited information, access and entry to the structured settlement business. I can't think of any other major financial market that is so totally insulated and sheltered from outside competition, however, with the information age, the intrusion of other financial professionals and increased sophistication of consumers is going to continue to force greater transparency and cooperation on our business.

Take a look at both segments of Structured settlements, the coming Golden Age and watch for some other big news this week related to new marketing opportunities about to be made available to structured settlement professionals nationwide.