Back in 2007 I was posting my fears of the crash that arrived in October of 2008. The crash that the experts said could not have been fore casted! I posted a lot BEFORE the crash of what I could see unfolding. So much so that some friends could not bear to read my blog.
I also took my own advice and got out of the market in the spring of 2008. I have been in cash ever since.
Nothing that could have restored health to the market was done. As we have seen, the banks got saved but the real economy got killed.
Well - it is clear to me now that 1933 is right around the corner. What is the key now?
Back in 2008, I pointed out that it was going to be the housing bubble that was going to be the agency for a crash. Today is is sovereign debt. The Eurozone, The US and the States are trembling on the brink.
In the Eurozone, there is no lender of last resort other than Germany and Germany cannot pay for all.
The banks are all enmeshed too.
Back on my side of the Atlantic, it is clear that the American system, that is designed to have checks and balances, has been high jacked by ideologues who want armageddon.
Inside the US, the States's finances are also crumbling.
I don't know what the trigger will be. It may be a financial event or a weather event. But there will be a trigger and then the whole thing will unravel. Each part of the system will cascade into the other.
This time there are no moves left. What ever safety net we had has been squandered.
So what to do to protect ourselves?
Back in 2008, I got out of the market and I am now in cash. But now I fear for "Money" itself. What value the Euro? What value a US Dollar? I have been in Ukraine after the fall of the Soviet Union. I have seen what happens when the currency becomes a joke.
In truth, I don't really know what to do now. Because this fall will take us into unknowable territory. I have to look back to the end of Rome for a parallel. In 400 the Empire still stands. The roads and sealanes are intact. Food is transported from Africa to feed the city. The army is intact. Progress is being made in defending the border. But the costs of all of this are over whelming and are put upon the land ownersw. The elite are exempt.
By 450, Rome in the West is done for. By 500 the city that had 700,000 people in 400 has maybe 30,000. The food system that could feed 700,000, down from over a million at the peak, has collapsed and people have to spread out and grow food or starve. People had had to look after shelter, food and energy themselves. All the mechanisms of the state had gone. The tax capacity, the bureaucrats, the army, the transportation system.
Could this be us? I don't know but it is not out of the realm of possibility. Our system is so connected and this is its weakness.
I am thinking about what would be wider effects of a failure in Euro system. What would happen to the Euro itself? How would people conduct transactions? Imagine Greece, Italy, Spain and Ireland pulling out. What happens to the banks and credit. Then pile on the US credit issues and what will happen to the 70 million Americans that depend directly on the US Treasury? What will happen to the States and all those that depend on them?
If you live pay cheque to pay cheque what will happen to you? How will you pay the rent or your mortgage? How will you buy food? Buy gas? etc
I don't see any way of avoiding this either
In this scenario - the quality of your real network and your family may be the key. Your access to food and shelter may be the key.
If you hated my posting back in 2007 and 2008, you must really hate this. I hate it too. So if you have a better view and that you can put weight behind, please tell me.