Worst case scenario, unfortunately realistic, since lots of
the mortgage debt has been unloaded to foreigners -
US economy weakens, foreigners start selling bonds,
the dollar goes sharply down, essentials go sharply up in price,
LT interest rates move much higher, causing even more pressure
on J6P, a lot more defaults on "weird" mortgages w/o downpayment,
and severe economic troubles. So, high
inflation in essentials (food and gas), and deflation of
asset prices related to debt (stocks and bonds) will be the
result. We have not seen ANY bubble fallout yet.
They have been postponing the inevitable through
lies and market management, but when the real BK comes, things
will not be pretty at all. Gold is probably the only answer,
as other countries will not be able to prosper due to their
exports to the US. The trade deficit will reverse itself as
US bubble economy weakens. A long way to go to restore
the manufacturing capacity here, thanks to the Fed policies
of the last 20 years, which really made us a gambling economy.
If one thinks about investment, that's where I would invest
after the dollar crisis. Once the foreign gadgets are cut
off due to low dollar and high prices of these gadgets,
they will need to manufacture a lot more gadgets here.
Manufacturing in the US has really been in the dolldrums for
a very long time, thanks to the Fed. Who needs to actually
produce something, if the Fed hilos are flying around
dropping cash? Just be the first one to catch the drops -g- |
