>>Gee ACF, you sound like a new, improved version of Jay, expecting a super-duper turbo-charged depression.<<
It's all a question of perspective. I see the same structural problems that Jay sees, but do not expect a collapse soon. Jay and I differ significantly (I think) in that I believe that US boomer-driven demand will keep this bubble inflated for 6 more years before the collapse in US consumer spending post-2010 causes an economic disaster. The US stock indexes will rise to incredible new highs by 2010.
I am becoming more pessimistic about our post-2010 prospects because the worst of times will immediately follow the best of times, with consumer balance sheets in their shakiest (i.e. most leveraged) state in modern history at the onset of the carnage, due to the low interest rates that will continue through this decade.
The US Depression will ripple through the world economy. The US will see 30+ million unemployed, soup lines, residential housing selling at 10 cents on the dollar. You know, The Great Depression redux, though probably worse this time, as maybe 50% of the population have significant exposure to US equities vs. 5% in 1929.
Sure, accuse me of being a raving lunatic, but this is all set in stone, courtesy of the unprecedented demographic wave that is the boomers. When boomer consumer spending begins to fall, post-2010, stick a fork in, we're all done. Fifteen years of declining domestic demand. No government intervention, no deus ex machina can do a thing to stop it.
You have six years of sunshine to make hay. Use them well. An intelligently-planned US stocks portfolio should triple in value by 2010 without any pezz-style heroics.
Post script for Jay. For a (very) small minority, positioned in cash, cash equivalents, gold and US Treasury bonds, the 2010-2025 period will present an unprecedented opportunity to become fabulously wealthy. |
