Well... as the smoke begins to clear in New York City and the Wall Street folks are sitting sort of pat... everyone is still waiting to see what the latest collapse brings forth. Lehman Brothers, an investment bank of 150 + years of doing biddness is D.O.A. and along with it a HUGE chunk of money and a lot of peoples retirements as well. Now, Me, I'm not very savvy when it comes to these here eco-nomical kind of things. I do know however that even a redneck like myself sees that a Bank that survived the 1929 Collapse and subsequent Great Depression get flushed out this early on shows that things ain't quite right. I mean realistically, back in July when Bear-Sterns got wiped out I figured that it might be a good idea to keep a bit of cash on hand, and make sure that I don't have any money in ANY markets. I mean it's bad Karma when you see these defaults and essentially the begining of the Economic End so to speak. In what I'm calling "The Greater Collapse" this all is going to become waaaaaaaaaay worse before it gets better.
My prediction? I'd say that by the first week of October we'll be seeing the final fraying of the economy. My reasoning? Well, the end of the Economic/Fiscal Year. Yup. Figure that the past three quarters have been essentially ending in a flood of red ink, and that the final report card for the economy is due the last week of September to the first week of October. THIS is going to be the REAL "October Surprise" that kicks the country in the metaphysical nut sack. The amount of layoffs, bank collapses, 'ghost money' (more on that in a minute) and the unrealistic expectations that the economy could continue to run off of ever increasing consumer debt are going to boil up in a major meltdown thats going to make 1929 look like a love tap.
The 'ghost money' is the term that I use to describe just about ALL the money thats on the 'books' so to speak. I mean to give an example, My house I own in Florida we bought (foolishly) at the height of the Housing Bubble and we got it for around $240K. Now, my loan is for $240K PLUS interest. The interest itself is like 4 times the value of the loan. This, to me is 'ghost money.' It doesn't really exist UNTIL such time as I pay the bank. Until that cash is in their greedy grasping claws, they SHOULDN'T be counting it towards the values on their books. BUT... this is EXACTLY what these guys have been doing... counting my loan as if it was worth One point Two Mil and some change... they then bundled all of these loans up and sold them as 'securities'... secure my ass. Anyways, we all know what the problem is.. it's the solutions that you have to bear in mind.
I mean right now, the current two jokers running for president don't seem to understand that this is going to implode in a way that couldn't be imagined. Obama's Idea is to Tax and Regulate... more Government. Like this wasn't what we had going on to begin with? Hey... genius... it's not the 1960's anymore and Taxing the Top 25% is what Hoover tried in 1929 and 1930... and look where that got us. McCain wants to try and clean up and get rid a lot of the 'overregulation' but even then, this isn't going to stop the eventual collapse. McCain is hoping that a band aid on a sucking chest wound will take care of it. Hey Old Dude... no freakin' way man.
The fact is that the feds have been pumping insane amounts of liquidity into the markets to keep it afloat. Essentially they've been printing up more actual paper money to replace the 'ghost money' but in the process, they've devalued the dollar to the point that I'm trying to get paid in Kuwait Dinar.
My advice? Look to having a couple of months of food on hand, some good seed and a couple of good long guns on hand. I mean who knows where this carousel is going to stop? I foresee an eventual contraction of society. Nothin overly dramatic, just a period of insane unrest, figure about a year or so, and then a slow rebuild much like what went on in the mid 30's. Lots of relocation, lots of uprooting of people, and a revaluation of money and assets. My only hope is that it doesn't got full-out-Mad Max mode. THAT in a word, would suck. Me, well, lets just say that the Boy Scout Motto is in full effect in my house. Its a major part of the reason I follow this so closely, because if it DOES go into full on meltdown mode, I've got to try to get the hell out of Dodge ASAP. Which is what the majority of investors on Wall Street seem to be doing as well. Anyways... More Later.