Monday, January 14, 2008

2008 Forecast

"That sound you hear out there is reality knocking on the door. It has been standing out in the cold for a long time and it is not happy with us."

-James Howard Kunstler

Wish I had better news, but it's not looking good for the US of A in 2008. By this time next year, the President-elect will already be talking about the "Newer Deal" she plans on implementing in her "first hundred days" to help with the economic collapse that is upon us. Just as her husband "discovered" in 1993 that there was no money to pay for his promised middle class tax cut, expect Robert Rubin to have to give Hillary the bad news that this nation is already more than 9 trillion dollars in debt and the foreign lenders have cut us off.

Regular readers already know what is coming later this year, or at the absolute latest in 2009. Some recent updates can be found here, here, and here. Many of you are no doubt thinking that a financial collapse could not happen in the United States of America. The truth is that it has happened many times throughout our history, most recently in the lifetimes of many of our senior citizens. Here is an excerpt from the Ainsworth's Financial Service newsletter of March, 1932:

Every wage earner, every producer of capital, is a speculator whether he would be or not. We must speculate on how we are to make our income, and after we have made it, we must speculate on how we are to keep it where it will be safe until it is needed. Speculation is just another name for intelligent assumption of risks.
Now most of my friends who are out and out speculators frankly admit the fact, as opposed to that so-called investment class who would like to think that they take no speculative risks. By all the time-honored yardsticks of financial measurement these out and out speculators should have failed in the last two years of declining stocks and grain futures, and those who invest for a six percent return should have their capital intact. But such has not been the case. As a matter of fact, very few of my old speculator friends have lost all they had, yet every speculator I know of has less in 1933 than he had in 1929. On the other hand, millions of people who never meant to risk a dime have lost their lifetime savings in the four years following 1929.
Many of my very close friends who look with horror on so-called speculation have lost all they had through the failure of banks, building and loan associations, and defaulted bonds, where they had their savings invested; or else they have failed through the decline in farm lands or city real estate. This doesn't seem quite fair since those who never asked more than a six per cent return certainly had a moral claim to safety of principal.

The coming economic collapse is going to be a great shock to almost all Americans. Please take advantage of the literally once-in-a-lifetime investment opportunities that are unfolding before you so that you do not end up like so many good, decent, unsuspecting people did during the Great Depression through no fault of their own other than failing to educate themselves and then act on that education. If I was only allowed to give one piece of advice for 2008, I would advise you to read Jim Sinclair's web site at least every other day or so from now until the crisis is over.

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