Bigworld, It's hard to disagree with Stockman, even if he's been saying the same thing for umpteen years, and sounds like a broken record of gloom and doom. Rickards is also predicting a big crash, as are Jim Rogers and many others.
I still think the most sensible approach is to not to be short (yet), but instead do what Rickards recommends - be in cash, short/mid term treasuries, 10% gold, with some in gold stocks, land, fine art, etc.
I think Rickards will recommend going short at some point, but probably only when the crash is clearly starting. Europe and Japan are starting to remove stimulus just as the US Fed is, so one would expect problems ahead. But Rickards says the Fed has signaled no more rate hikes until December at the earliest, and if the economic numbers continue to weaken they could go into dovish/happy talk mode. He said as of now they still plan to begin their balance sheet normalization, with $10 bil/month in QT/quantitative tightening, and that will run in the backround regardless of rate hike policy.
On the plus side, there is no sign of a financial crisis starting anywhere yet, and the Fed has some policy options to preemptively prevent a crisis from starting. What they lack though is sufficient 'ammo' to deal with a big crisis once it gets rolling, ala 2007/08. They can't cut interest rates dramatically or do huge mega-trillion bailouts, therefore we can assume they'll be very careful not to trigger a big crisis if it's at all avoidable.
One good aspect of the declining dollar is it takes pressure off of China and the emerging markets. China won't be forced into a mega devaluation of the yuan to maintain the dollar peg, and the dollar denominated debt of the emerging market countries will become less onerous. So the lower dollar reduces the risk of a crisis event happening that might otherwise snowball into a global financial crisis.
