Posted by
rycK on Sunday, October 26, 2008 4:15:33 PM
The Great Depression
in the USA 2008 I: Advice and Caution for Survival
There is
more than a chance that we will have a major economic depression in the next
few months. A casual reading and some research on the following shrieks from
some of our government leaders begins to make one wonder at the timing of this
disaster:
Here is
an April fool’s day assessment from the Brits:
“…in the fiscal year starting in October, 28 million people
in the US will be using government food stamps to buy essential groceries, the
highest level since the food assistance programme[sic] was introduced in the
1960s.”
Okay, we are past recession time and heading toward some worse place so we can ask:
Where
the smart money is going today?
Most of the smart money went sailing off
with the sales and shorts of Fanny Mae,
Bear Stearns, Morgan Stanley, WaMu and other disasters.
“With many investors terrified of the stock
market and afraid to touch
anything but U.S. Treasuries, investment advisers are
trying to steer clients into bonds that are paying higher interest, while still
light on risk – the safest municipal bonds and high-quality corporate bonds.”-- Gail Marks Jarvis Chicago Tribune Posted: Sunday,
Oct. 26, 2008
[Emphasis is mine in all quotes.]This link references all
following quotes in this essay unless otherwise stated.
We all
know that taxes
will soar for everyone if Obama is elected so avoiding taxes is a
must. Investments must be structured so as to avoid government interference in
certain markets. Free market forces are destroyed anywhere the government blunders in. The
government abetted this phony Zero-down mortgage mess because
government-threatened lenders could dump their trash willy nilly and silly upon the decaying corpse of Fanny Mae and
stick the taxpayers. This is no longer an option. 5 million illegal aliens hold nonperforming
mortgages at this time and most will vote for Obama.
There is no control on spending now as Barney Frank informs
us.
His spending feast is now wildly encouraged by the New York Times—aka the Walter Duranty
Papers who weekly criticized Bush for budget deficits
but now want to swamp us in massive debt. He is after your money. They used to
call the Republicans
the Tax and Spend Party and now they will show
us records in unsurpassed spending and stupefying debt while the taxpayers,
from $42,000
and up will pay the bills.
Here is an option:
“Shorter-term bonds can be even
more attractive. For example, a California, unlimited tax general
obligation bond that matures in 2012 is yielding 4.2 percent. A comparable
Treasury is at 1.95 percent.”
This is a trash-grade issue (not viewed as
such because of the cowardice and political groveling by outfits like Moodys
who cannot seem to identify losers anymore) like the very ones discussed
earlier since California is going bankrupt. But the thinking here is that the
Fed will waste your tax money on saving California by the huge unauthorized debt mongering
circus now foaming over in Washington and will make good on this junk for
political reasons if the drug-crazed left liberals in Sacramento fail to cut
spending and default. It would be better for the planet if we studied the ethical
and financial collapse of the Golden Rotten State as they
disintegrate because they are socially and morally bankrupt. We might learn some new things about
government from the negative aspect. The spending and EcoNazism, drugs, havens for illegal aliens, celebration of non-violent crime
and worse are all openly supported by the state with no regrets and this alone
will bring down the state.
The reasoning on this option:
“For investors in high tax brackets, the
benefit of the muni is significant. Investors don't have to pay
federal income tax on municipal bonds, so if you mix the tax savings in with the yield of the
California bond, an investor in the 28 percent tax bracket would have to find a
Treasury yielding 5.83 percent to do as well as in the municipal bond. Someone
in the 33 percent tax bracket would have to find a Treasury yielding 6.27
percent.”
And, that is about 13% for somebody soon to be
in the 66% tax bracket, which is the case for business owners and executives.
This option,
one of the very few, is worth considering while keeping in mind that if too
much money is tax shielded then the leftists will open their giant maw and glom
onto whatever they can get from that avenue to ‘redistribute the wealth’ or “spread something around” as Obama preaches
like we”spread around” AIDS and lunacy in San Francisco.
As Rush notes this is trickle up poverty.
This idea is
worth trying for a while, but T-bills are better if you don’t need
much taxable income. Gold prices are falling, as expected in a
deflationary period, and we must wait to buy more gold until inflation starts up as
the idiot government runs the money printing presses at lightning speed. Then,
a shift to gold is indicated because we could first
have 3 years of -5% to -10 % deflation and then have 15% to 300 %
inflation
as newly printed currency floods Main Street. This high inflation [hyperinflation] number is justified by
the fact that there is no way to deal with the potential massive debt of 20
trillion dollars [7X current tax revenues but only 2X our current debt] unless
inflation of a million fold truncates the debt down to insignificant
levels. Our government is pouring
trillions of dollars into bad debt, banks who don’t need [or even want] the
cash and unknown places around the world. They are trying to buy ownership in the
banking sector—a group, largely, who is wisely defying them at this time. They
are working ‘credit swaps’ or ‘credits’ that are, some believe, some phony kind of
insurance ‘deal’ with foreign nations
whose currencies are already in the
collapse mode. We don’t have a clue what they are doing but it looks like Treasury
is trying to save Europe and Asia with our money. Back in 2007
there were comments like this by US bankers:
“One banker said:
"The attitude is 'don't show me anything east of a [New York] 212 area code.' If
you lend to [those banks], it could be a career-ending experience." -- From the Financial Times, London Sunday, August 12,
2007
Germany showed us the way to economic oblivion in the last century and we
might review their history as we watch Obama and his
drooling leftists destroy our society from the corporations down to the last soggy
cardboard box in some alley.
Europe is less than broke. Here is a frank discussion on by a German academic
cited from 1998.
It is interesting to review his theories and endorsement for the Euro and think
a while about his concept of asymmetric real shocks [see Section 3.3 Adjustment mechanism for asymmetric real shocks]. I wonder if we
are having an asymmetric
real shock with Europe and Asia. We could join them any old time and now
the HUNT IS ON for Wealth and that means your 401(k)s
and other assets. The Euro-Peons will bawl and glubber for our money as
they did several times in the last century and bankrupt us in the process.
Buying munis
might be an interim worthwhile investment. Watch out…….
rycK
Comments:
ryckki@gmail.com
California is Selling Risky Bonds. The Situation Is Hopeless so Don’t Buy
This Junk.