Lord Z...Prepare to go Broke
It is pretty funny....some people get upset at my posts for simply warning them about what is going to happen. First, Alstry it is not too serious because our government tells us all is fine. Then Alstry even if it is serious we should drink wine.
The problem is that no one will be able to afford wine and we will have mass starvation in America if we keep going down this path. If we have mass starvation....what do you think would be a good investment.
First of all.....America is broke. America, as a nation is broke. If we extracted every dime out of every American's bank account to pay down debt, we are still broke.
Since we exported much of our manufacturing overseas in the past ten years....a larger and larger portion of our revenues came from borrowing money. Government borrowing, business borrowing, and individual borrowing. Now we have accumulated tens of trillions of dollars of debt and only have a few trillion in the bank.
As those people, businesses, and municipalities can't pay....they call that defaulting debt toxic debt. As more and more can't pay we accumulate more and more toxic debt. We are rapidly reaching the point where toxic debt equals accumulated savings.
At this point, we have two options.....restructure our debt or print money to simply delay the eventual restructuring since it does nothing to relieve the burden of a growing debt base. As a matter of fact the more we print, the more debt we accumulate and the more debt we accumulate the more we need to print.
Between the Iraq War and the Credit Bubble....America accumulated well over $10 Trillion dollars of debt as we became more dependent on borrowing money to survive. Now we face a double crisis. Banks can't lend so revenues are going to implode and debt is defaulting at records rates destroying the value of assets in America.
This bailout plan will do little to solve the problem. It will only take toxic debt off banks balance sheets and put it on taxpayers backs. Revenues in America will still spiral downward because few will be qualified to borrow and those that are will not borrow. As revenues continue to evaporate...more and more debt will default destroying the value of assets even further.
So now what is the government proposing? Print money and accumulate more debt. This process now is being proposed at the Hundreds of Billions per request. Foreigners will start dumping our dollars as they see the hyperinflation cycle go into full gear.
Basic necessities will start to cost more than many peoples incomes and few will even be able to afford basic necessities. Only those institutions that got the entire nations wealth transferred to it to remove their burden of toxic debt will survive and the rest will fail.
Few will be able to afford much. Assets will crash in value as people simply can't afford the carrying costs. Businesses will fail. Unemployment will skyrocket. Crime and starvation will be rampant and wealth will be concentrated in a few hands.
OK Lordy, now that you are broke as you cash can't by a decent bottle of wine, your assets are basically worthless, what investment do you suggest? May I suggest a Churchill Dominican Cohiba as I believe it is a lot smoother than its Cuban counterpart.
At this point, if we go the current route....we all starve save a few bankers who will own the entire wealth of the nation.....or we can restructure the country now, get through the process and protect savers.
Either road will be very painful....VERY PAINFUL.......but the latter road will take a much short time and provide a much better future for our children.
Now that you are broke Lordy...please suggest a Cab that I may try.