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Sell the Strength, Greece Doesn't Matter



June 29, 2011 – Comments (0) | RELATED TICKERS: SPXU

Greece is one of the smallest Euro nations in sovereign debt trouble.  Ireland, Italy and France all have issues.  Either the Euro implodes in the next few years or we get huge inflation as they too print a boat load of money.

China too has a debt problem in their provinces that will require a national bailout at some point, which will at least suck up much if not all of their reserves. 

In the United States, since we refuse to flatten the military budget, entitlement programs and raise taxes on the 1% of the population that has made virtually all of the excess money the past decade we are facing a what Peter Schiff has deemed an inflationary depression.  At a minimum, I think we see stagflation for six to fifteen years.

I pointed out two and a half years ago that deflation was the imminent problem.  Now, we have a horrible mix of deflation in income and home prices, with inflation creeping in everywhere else.  The FT this week pointed out that with the exception of America, that slack in the the global economy has dissipated.  Inflation is now a boogeyman.  When the U.S. finally pushes an infrastructure and jobs bill to improve employment, and they will very soon, the result will be the last straw on igniting inflation.  Expect a "V" shape, not a gradual rise in price levels.  Scarcity issues will take hold quickly as well, further driving inflation.

Interestingly, this will not help the stock market as some common wisdom stupidly presumes.  Earnings will contract almost immediately, and revert to the mean from 90s to 60s on the S&P 500 for example.  Multiply that by 15 and you have a 900s S&P 500.  I believe by early 2013.

Buy commodity linked ETFs.  (Do not buy gold coins as some Glenn Beck follower at the pub told me he had done.)  Build a kick ass garden.  Engage in skill based continuing education, low skilled people will see their gap in pay get wider the next decade.  Sell most stocks while you can, and by all means, get the hell out of mutual funds- you do realize by now since you are a Fool that the charters that fund companies have to follow almost preclude them from doing well, especially in choppy markets, or a secular bear market, which we are still in.   

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