Jim,
Very, very well done post, "Possible
Outcomes for the Panic of 2007". I would say you nailed it as good
as can be done. However you will not be invited to be a guest on CNBC. - DAV
Jim:
Don't ignore the compounding effects of a) an energy shock from peak
oil, a major gulf hurricane, or geopolitical conflicts, b) natural disasters,
particularly
major 8.0+ earthquakes on the West Coast or the New Madrid fault, or c) wars
and terror attacks driven by causes other than angry debt collectors (e.g.
Al Qaeda, false flag attacks). All of these could shift us from the current
outcome in your framework to a more painful one. Likewise, do not underestimate
the risk of U.S. dollar hyperinflation - it is substantially more than 2%.
Spending more money and printing money (or creating its electronic equivalent)
is too much of a temptation for 99+% of politicians (Republican and Democrat)
who are too cowardly to take desperately needed but painful steps and instead
make everything worse with more spending, more regulation (particularly high
risk of currency controls and offshore investment accounts), and more government
interference in both the economy and our lives.
The most important message is to be prepared. Now is the time
to get any long-lead time preparations ordered or built and to get any items
that may
no longer
be available in the near future (particularly imported items). To the extent
that you can make your family either partially or fully independent of the
grid through a) installing solar electric, wind turbine, and/or small hydro
alternative power systems, preferably with battery backups, b) installing
combined heat and power or solar hot water systems, c) drilling water wells
(even in
suburbia where you have city water, d) building greenhouses and other infrastructure
to grow your own food (plant and animal), and e) installing diesel backup
generators with large fuel tanks, do it now because all of these are good
personal investments
for hard times. Although the financial markets have only dropped about 8%
to 10%, at some point in the near future, one may have to think about non-conventional
investment strategies to liquidate IRAs and other financial portfolios and
move assets into either real goods (e.g. prepay future expenses), precious
metals, or offshore in non-dollar denominated accounts with non-U.S. financial
institutions with little or no exposure to derivatives. - Dr. Richard
