Is America Too Big to Fail??? Got gold???
IHT article asks this question. Scary that the question even needs to be asked.
Many that understand long-term economics of this country believe that America's failure is not a matter of IF, but WHEN. Even those that believe in the long-term prospects of the US believe that it has a significant hurdle to clear in the years to come.
Some believe we are in the middle of the eye of the storm - the financial crisis. Only months ago it was labeled the sub-prime crisis and will likely soon to be labeled a crisisof confidence over the USD. After all, isn't this what the Fed was trying to do - to give comfort to the sovereign wealth funds and foreign cental banks that holds hundreds of billions of FRE and FNM bonds that had the implicit guarantee of the US government. As things continue to unfold, more and more cracks in the dam will be revealed - $1.6 trillion in losses, not $400 billion for the brokers; states and cities filing for bankruptcy; failure of the bond insurers;businesses and individuals filing for bk en masse; spiraling inflation; massive underfunding of PBGC, FDIC, and SIPC, massive deficits caused by ballooning Medicare and Social Security programs, etc...
We are looking at more than just a run on the banks as a possibility, but a run on the confidence in the US to repay its obligations in the long run. If the USD loses its luster, what currencies will take its place? Currency values are relative to one another, but they also have perceipton of absolute values associated with them. Will the EUR hit over 2 to 1?
TDRH says "Those that will be at the top will have long term growth stocks that they are picking now, or have already picked." I am betting both in CAPS and in real life that gold shares (especially juniors) will benefit the greatest as gold rises to multiples of where it is now. History has shown this and history will soon repeat itself.
Gold is the ultimate anti-dollar. It was dissed in the 70s and has lost its perceived value as a currency for the past 30 years or so. However, over time gold has always been perceived as the ultimate currency, espeically when fiat currencies have shown they cannot be trusted.
I remember reading a book in a college political science class called "The Rise and Fall of the Great Powers" which chronicles similarities in the fall of great nations thorughout civilization. The US has held history's place as one of the greatest nations / powers ever to be built. Indeed, it still has much going for it and if any civilization were ever to pull out of the death-spiral it appears to be in, America could do it.
However, it is scary to see reputable publications questioning whether the US could fail. It may not be a matter of IF, but WHEN. Food for thought...