To Buy...Or Not Dubai????
November 26, 2009
– Comments (12)
Alstrynomics has a simple basic premise.....much of the world is insolvent from an accounting perspective. Much of the world's insolvency has been masked by fraud and improper accounting actions. And a material part of recent corporate earnings has been improperly influenced as well.
The question becomes what becomes sound investment advice when much of the world is broke? Some people say eat pancakes....and if you want to know the truth of the matter, it is as good advice as anything even though that Fool may think it is simply a parody. Sometimes you just have to pity the Fools. Why?
Because when enough people, businesses, and governments are broke.....we are all broke. Let's say you were a sound bank that had a big loan to Dubai....its default could cause you to go bankrupt....and in turn force many of your depositors into bankruptcy. By the nature defaults, one default can trigger many counterparty and subsequent defaults.
Some people make fun of Alstry....and that is fine. Alstry is simply documenting in detail the shutting down of America under a Zombulation policy approach. When you give the banks unlimited free money and subsidize and guarantee speculation....in is inevitable that banks will back away from the risks of traditional banking and the economy will implode due to lack of funds to service the debt.
Dubai, over $70 billion in soverign debt, is merely a symptom of a much larger problem. How do you navigate the investing waters when much of the world is insolvent....or likely to become insolvent when enough default?
It is a very interesting question that many are afraid to confront. If nations can't resolve differences on how to work things out, often conflict can arise. If enough nations can't agree, a BIG conflict can develop.
I truly understand the fear of the Alstrybaters.........these are uncharted waters. Lifetimes of savings can easily be wiped out. Civil liberties and property rights can be taken away in an instant. Never have so many been so insolvent.....and we are still at the beginning of trying to figure out how to deal with it.
As you can tell from Alstry's blogging, giving it all to the insolvent bankers is not a very good solution because the rest of the economy will implode and too many will fail.....as a matter of fact, almost all.
The outlook is unclear....will money be worth a lot....or little or nothing? Will gold be the new currency, or will a new currency develop with no relation to gold? All good possibilities.
Whatever happens...the outcome will likely create an investing landscape very different than the current one.
What do you invest in when the world broke?.....you knew it in 9.09 when the FDIC, FHA, Fannie Mae, Pension Guaranty and most banks were technically insolvent at the same time under traditional accounting rules.....no one knows for sure.....but making pancakes is as good as anything.
Why? Because when people are broke...they act very differently. Remember Trading Places? When countries are broke....the behavior is not much different. Since Alstry started blogging, Zombulation has caused more and more to have less and less........if this policy continues much longer.....things could get very volitile.
Already nations are staking claims to the world's natural resources....pretty soon disputes are likely to arise...if not resolved amicably, then violence is highly likely as the stakes are high......the sustainability of nations and the people.
As I have said on a number of occasions....when your nation goes to war, you go to war........and when your nation is broke....it likely needs everything you have.
Between now and the end of the year....most of you will wake up and finally understand and appreciate what Alstry, the screaming blogger, has been blogging about. The stakes will be high....actually the ultimate stakes will be on the line, soverignty and survival.
If you think bailing out the banks and letting the real economy implode is the solution....you may be very disappointed in the people's reaction once they figure out what happend to them on this Thanksgiving Day.
Now sit back and watch things unfold between the present and 1.01.10.......it will definitely be a time to remember.
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