In this weeks edition of Speaking of Settlements, I discuss the impact that the mortgage melt down is going to have on the fundamental question of what should a personal injury victim do with their money at settlement.
For the last 25 years I've been helping injured plaintiffs, their families and trial lawyers answer that question and over that time frame I've seen waves of investment mistakes made. Tax shelters in the early 80's, junk bonds and SPDA's in the mid to late 80s, the tech stock boom of the late 1990's and of course the real estate bubble of this decade. In each instance I watched as poorly informed or gullible plaintiffs ignored the exceptional benefits of a structured settlement and instead chased the fad of the moment, only to get clobbered when the market burst and they were left in financial ruin in many instances.
In this video I discuss the following:
1. Structured settlements are still one of the safest, most secure and highest net yield options for settlement dollars.
2. The implosion of the mortgage market has so badly injured the US financial system that we will see a steady wave of bank failures as regional banks bets on bad commercial and residential real estate deals come home to roost. Just this morning we saw the bankruptcy filing of Woodside Homes, a major home builder in the southwest with lenders such as Met Life, John Hancock and NY Life listed as major creditors.In other words keep your bank deposits in amounts under the FDIC protective limits of $100,000.
3. The broad stock market can not possibly have solid gains in a recessionary and inflationary economy.
4. We are about to see massive monetary inflation as a result of the unprecedented bail out of banks, quasi banks such as Fannie Mae and Freddie Mac, with the result being a bond market in long bonds unlike anything we have seen since the late 1970s and early 1980s.
What this means is choices for plaintiffs and attorneys as to what to do with settlement dollars has never been so risky, but neither has the decision to use a structured settlement annuity for your personal injury settlement been clearer.
Watch this week's edition of Speaking of Settlements.