Tag Archives: bankrupt

Purgatory….

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Ever watched a sci-fi movie where the crew goes into stasis while they travel from one end of the galaxy to the other?  Ever contemplated Purgatory where heaven and hell meet?  

I feel as though this is a period of semi-consciousness awaiting judgement…  Last night I was catching up on some news online when I was watching the futures markets turning deeper and deeper shades of red.  The morning was locked limit down and then we had an immediate spike — DOWN.  However, the day is turning out to be mild in comparison to what may have happened.  

The reason I label this as purgatory is because I think we are either going to swiftly swing in one direction or the other.  Emotion is in control at the moment and perhaps irrational.  Once the herd stampedes watch out.  If people want cash watch out markets.  As I said in a earlier post we haven’t really seen an exodus or pure panic yet.  

The news from around the world is to be expected given the size of the credit contraction.  

I think we may see a rally, perhaps not today, but maybe next week as people see bargains.  News will continue to be increasingly gloomy, spreading a shadow around the world.  The contraction will not abate and people in a moment of fear and panic will sell.  Hedge funds will continue to implode sending equity prices down further.  Mutual funds will have to begin liquidating.  The dollar will roar ahead.  

Only problem is that we have never seen such a huge monetary expansion. Once banks decide to start lending again that money they are now hoarding and using to purchase other banks will flow into the system.  Bam!!@! huge credit expansion at a completely unsustainable rate, and thus hyperinflation.  Equities may rebound, but given the recession they will probably be somewhat stagnant as the new capital investment will take time to be realized.  Meanwhile, gold, oil, and food will goto the moon as the dollar plummets.  Interest rates will also soar as the reality of our debt burden takes hold alongside major inflation.  People will want to be compensated for holding a worthless and bankrupt currency.  

My only real complaint with this prognostication is strength in the dollar.  I’m having a hard time comprehending or even believing that this dollar rally will continue.  It is a flawed currency, and has no basis for strength.  Then again what fiat currency really has any value?

 

my2cents

Stocks for the LONG LONG LONG term

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“The best therapeutic move for long-term investors is to turn off your TV so as not to get caught up in all of the sensational headlines. The stock market has been and will continue to be the best source for wealth creation over the long-term.”

–Patrick J O’Hare, Briefing.com

I love hearing that the stock market for the long term is the way to make money. Close your eyes and prey. Whoa… Did you close your eyes and watch the money flow into your pockets when you labored every day for what you have invested?

What happens if you are in individual stocks and some of them go bankrupt? The indices adjust and find another company to take the failed ones place. Yes, the market has gone up in the long term, but what if you invested at one of the tops before the crash and had to wait 16 years to get your money back? I don’t know about you but I’d rather sit on the sidelines and wait it out. There are ways to see the hurricane of in the distance, but if you are unwilling or unable it will hit you.

When Columbus was making landfall the natives didn’t see his ships because they weren’t part of their reality. If we can’t adjust our thoughts to accept something new or different then how are we going to prepare for a possible change of future direction?

Read the following article… There is a grim reality facing us all. Investment banks have used up their ability to lend to businesses. Considering that the growth of our economy depends on the ability of credit we are facing a MAJOR did I say MAJOR issue in front of us.

Money Central Article

I’m also hearing local news radio having discussions about what to do with your money to keep it safe. Last night I heard someone saying that this is the time to start thinking about buying. Sure there is the old adage that when there is blood in the streets buy. When if the blood is only at a trickle when it will be a river?

Fannie Mae and Freddie Mac… A governmental department

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I was originally going to write a post about how we always hear about the “New World Economy” prior to any boom / bust period.  This time I think the rules have finally changed as the United States is losing if it hasn’t already lost its status as the number one superpower, we are now the largest debtor in the world, and continuing to bail out thee who fails.  

Whether or not this time is different and we will recover is debatable.  What concerns me is the continuation of the Feds backing up private industry.  Had the United States government let Fannie and Freddie fail what would have happened?  Well, the stock market would have surely taken a tank, interest rates would have gone up versus dropping about .5%, and the dollar would have probably fallen dramatically.  

So what do we get?  – The Dow rises 290.04 points or 2.58%, the NASDAQ rises 13.88 or 0.62% and the S&P rises 25.48 to 2.05%.  Wait a minute here… The taxpayers meaning you and I get to foot the bill for this.  At a minimum the treasury is ready to pump in $100 billion into each company… oh wait are they really companies or departments of the government.  I guess that is up for the next presidency to decide.  Nothing like passing along the responsibility of the crisis.  

So, I present a question about all of this.  This being the cancer’s on the balance sheets of financial companies, a negative GDP that is still positive according to the gov’t, a extremely high CPI, and declining production and consumption.  

– Is it possible that we are going to see extreme volatility in the markets until the elections?  Probable, but as we have seen with every governmental intervention since 2007 there is a quick boom, and then continuation of the contraction.  Contraction meaning declining stock market prices.  The USG lagged in making a decion on the Fannie and Freddie debacle due to the upcoming election.  The longer they take the closer the election takes place.  Due to the recency effect people recall things closer to the present then the past.  Let’s just say that the economy looks somewhat okay going into the election.  What are the odds that McCain will have a better chance of winning over Obama?  Considering the past two elections…

I didn’t mean for this to go into a conspiracy theory or that I believe there is manipulation in the markets, but nothing seems to make sense at the moment.  What does make sense is that my dollar is losing its purchasing power, my condo is declining in value, prices are rising, and the US is bankrupt.  Oh but wait we can continue to print dollars like in the Posted in Debt, Economy, Federal Reserve, Finance, Investing, News, United States Dollar | Tagged , , , , , , , , , | Leave a reply

$1,000,000,000,000.00

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A trillion dollars is for most of us an unfathomable amount of money. However, it seems that the IMF sees that large of a write down due to the unfolding credit crisis. For a more detailed account of what happened check out the book:

I haven’t personally read it, but it is on its way.

I remember when this whole crisis started to unfold, the market peaked, write offs ensued, and that leads us to where we are today. The market seems to think there is light at the end of the tunnel, but I have yet to see it. How is there optimism unless it is blind optimism with an estimated $1 trillion dollar in write-downs, which are beginning the showings of moving into Commercial Mortgages, Credit Cards, Credit Default Swaps, and where will it end.

The present “rally” seems to be hope based on bad news. Or perhaps the markets are being manipulated so that the manipulators get out before all hell breaks loose.

I myself am in a someone state of denial. Everything is starting us in the face waiting to explode, but we want to ignore it as long as possible. The situation is similar to the installation of a stop light. Many times a light isn’t installed until numerous accidents occur, and many fatal. If that is where we are today I’m truly frightened.

My present course of action would dictate the following:
1) Have a decent portion of hard cash on hand. — In USD, NZD, ASD, EUR, and CNY
2) Purchase gold, silver, and platinum numismatics (they weren’t confiscated during the last gov’t gold recall due to them being collectors items versus simply a precious metal).
3) Purchase raw materials, but at the moment I wonder if the market is still overbought. I’ve been hoping for a further correction especially with currencies, but I question if that is prudent. What if one day we wake up to learn that the US Government is bankrupt, it recalling gold and making it illegal to own, we now have a dual currency, and feel free to add to this list.