OT to Blade:
I don't agree with Roubini and I think Mobius is being conservative. With the Fed's actions of increasing the money supply at the greatest rate in history, lowering interest rates to zero and printing money to buy Treasuries....well, I think inflation comes back faster and stronger than he predicts. And while I agree that real estate has further to fall, the reason going forward is going to be higher interest rates. Precipitously higher interest rates. The Fed cannot increase its balance sheet high enough to buy all the Tresury paper that needs to be turned over by the end of the year. I look at stock prices in the Agricultural sector. I look at gold and silver. I look at oil. I see the anticipation of inflation. The deflation theorists can continue to assume a deflationary scenario. I'm placing my bets the other way. TBT, GDX, SLW, SLV, CEF, PBR, FCG, KOL, HL, MOO, EWZ, FXI, JJA. I own all of them. And my portfolio has held up really well this year. I anticipate doubling my money by fall. Anything less would be a disappointment.
The left wing nuts can continue to assume that borrowing and spending can reignite a Goldilocks economy. I'll put my money on the side of Peter Schiff, Jim Rogers, Mark Faber and others. I think we're in a strong bear market rally that will bring the S&P to the 1100-1200 range by September. I also think interest rates will begin to creep higher. And I think it will be the higher interest rates that will kill the perceived rebound in the real estate market and the rest of the economy. I think we'll see double digit unemployment and double digit interest rates. The Federal, State and Local governments will combine to suck so much life out of the private economy with high taxes and by soaking up a large proportion of the available lending capital that it will stifle economic growth going forward by a significant degree. There is only so much capital. The Fed can print more Dollars, but then each one represents only a smaller portion of the capital available. If the US Government has to borrow $13 Trillion, and the States have to borrow to continue their operations, it leaves much less for the private economy to access. That will stifle economic growth. It is fundamental. I am very confident in my position because it is based on basic fundamental economics. That is something that our idiotic, self-serving politicians have never understood. And it is the ultimate reason why we are in the predicament we're in. Washington wanted to provide $1.10 worth of benefits for every $1.00 it taxed. It just kept forwarding the bills into the future. Now we have the baby boomer tsunami coming. And I have a feeling that they're going to want their Social Security checks. And they're going to want their prescription drugs and their Medicare. But fear not. I'm sure the future taxpayers of America won't mind forking over 50 or 60% of GDP to various entities of government and that they'll continue to work their asses off.
Look at the stock charts for the last couple of years. Look at the stock charts for 1928-1945. Look at the similarities to 1906-1910. What's the famous saying...history doesn't repeat itself, but it rhymes. The stock market will perform in a similar fashion. A steep crash, followed by a strong intermediate rebound, followed by an even longer and more sustained crash. We'll certainly see DOW 5000. And if the government keeps growing we'll see DOW 4,000.
So I'll stock up on food and ammo. If I don't need them in an emergency in years to come I can use them over time. But those that don't prepare for some of the possible eventualities will be like Katrina victims....starving while they wait for "government" to rescue them. Good luck with that. I'll try the route of as much self reliance as I can plan for. I don't trust government to do anything right or to give a shit about any of the citizens of the county, as long as their perks and their retirements are guaranteed off the sweat of our brows. I only hope that a real 3rd Party movement arises out of the shambles in 2011. The two-headed monster we have now has utterly failed us and continues to do so.
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