This may very well be an interesting day…. Asia is taking a major hit as we sleep or well we are about to sleep as is my case. Here is the latest Bloomberg headline:
Asian Stocks Plunge on Credit Concern; Indonesia Halts Trading
I’ve been very cautious about the markets continuing on their tumble down and am unfortunately not surprised that this is happening. It seems that the world has reached panic mode and is fleeing paper, which also is another indicator about why gold is so difficult to find.
We just may have reached that point where the markets enter freefall. It is similar to watching a stampede running towards you. You have a few choices:
- Get out of the way!
- Get run over!
- Run like a mad-man and go with the stampede.
I’ll go with #1 or #3 or perhaps a combination of both. When there is panic nothing is rational. Even if things aren’t really necessitating a major sell-off the herd mentality will cause a major sell off. It is self-perpetuating, a feedback loop. Very similar to hyper-inflation. Once the shakeout occurs what is going to happen with all newly created money floating around that nobody wants to lend at the moment, coupled with peak oil, and fiat currencies worth not a whole lot… That’s the trillion dollar question. Not good is all I can say, not good at all.
Imagine losing most of you wealth to the market as did happen similarly in 1929-1932, then due to a massive increase in the money supply prices take off and unemployment rises. Don’t be surprised if the next President resembles Roosevelt and the New Deal. If that ends up being the case I’m even more concerned. He did want to raise taxes to 100% beyond a minimum income. That will halt any growth in an economy because people have no incentive.
On the bright side the amount of panic and fear in the air could be considered a contrarian indicator. Why not…. when there is blood in the streets BUY… oh but wait… HOW MUCH BLOOD??