originally posted by Deogol in another thread
The conversation definitely has changed from IS shit going to hit the fan.
Perhaps it should be something along the lines of what can we do about it to protect ourselves, etc
Yes this is definitely a priority topic.
Obviously, one of the best ways one can protect themselves from being slapped by the coming dollar disaster is to relocate to a place where their incomes and costs of living don't necessarily have to be paid for in US dollars. Unfortunately, these days the only practical way to do this is to move outside of the USA. With that said, the following is one of the best treatises on likely US financial developments in the near future ...
(snip)"In This Issue
2009 Outlook, Part 2:
Bonds
Living a Lie!
As economic activity and PONZI finance fall off the face of the earth, we enter the stretch run of the CON game known as the Bond and FIAT currency markets. Although both are headed for their ultimate demise, the path will be quite different. In 2009, these challenges will be headed your way. Prepare properly and thrive, or fail to do so and fall to your demise.
Never before in history have so many investors made decisions based on PHONY data and false headlines. Most in the alternative information arena are fully aware and have reported extensively on the POLITICALLY correct but practically incorrect economic data emanating from G7 governments. This is nothing but PR for public consumption as the real numbers would spawn RIOTS in the streets. So the public are NEVER told the true story as it is too horrible to acknowledge. The public is fed FALSE data.
GDP, inflation, employment, credit ratings, corporate profits, balance sheets and much more have been MANIPULATED to FOOL the vast MAJORITIES of the electorate that can read and write. But many of these same people are functionally illiterate of history, economics, common sense, logic and the critical thinking skills necessary to sift through the FALSE and misleading rhetoric of the mainstream media, public serpents, er ... servants and school systems.
This politically correct, but practically incorrect data has also been used when making investment decisions, thus creating assumptions which are often false and misleading. Who can argue that when a ratings agency places politically correct ratings on any type of bond or debt offering investors are effectively DUPED into investment decisions which are contrary to their goals and risk tolerances, and then entering into mal investments with expectations that are not correct.
Crop reports, unemployment reports, inflation reports, everything has now been colored by politicians and crony capitalists to create PR/illusions they wish to foster into the public at large in order to manipulate them. The MAIN STREAM media are willing facilitators of these FALSE reports. Many times the financial media make reports on companies' profits which do not reflect the true profits and losses which we find in a companies' tax return. Every investment and analysis made through the investment and commercial banks is BASED on these false OFFICIAL numbers and most have been massaged, thus any investment decision coming from this data is deeply FLAWED.
These FUNCTIONALLY illiterate people DO NOT know from where wealth comes, how it is generated and accumulated, nor how it was by our parents and grandparents. Many have never understood that to thrive you must "produce more than you consume" and accumulate savings. This is what leads to rising middle classes and living standards. These truths and virtues are NEVER mentioned in school. People are taught that they can have anything now by borrowing and unwittingly becoming debt slaves of the banking community as the true PRICE (after interest and compounding) of the purchase is NEVER clearly explained to them. They believe wealth, as well as solutions, to their problems come from government, rather than from their own efforts.
People are taught that they can rely on government for health care, food and welfare. They do not realize that government is invested in making them dependants rather than independent. As dependants, the power over their lives comes from their government masters and their crony capitalist partners. As independents, the power rests in their own hands. Let's take a look at the words of Ayn Rand, as this is where we have arrived TODAY:
"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else.
When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."
John Gault/Ayn Rand
A wonderful description of this individual can be found in an essay by Christopher Hedges entitled "America the Illiterate" (click on the link to read it and weep). It signals the fall of the America we have known for generations. This person is the SOMETHING FOR NOTHING citizen, and once Obama's Tax cuts for those who don't pay taxes are implemented, 'America the Illiterate' will constitute almost 60% of the US population. That is an enormous percentage of the population that will be completely illiterate in everything necessary to make good decisions. I refer to these people as CAPTIVE victims of the government and banking/financial systems. They have been and continue to be the sheep to be fleeced by the elites, public serpents, er ... servants and crony capitalists.
Now they will be the instrument of the demise of the private sector as they provide the public servants with the ELECTORAL support to attack and rob the last of the productive and prudent parts of the G7 economies and transfer it to the morally, intellectually and fiscally bankrupt. As every government policy failure appears, public servants will stroke the fear in the 'something for nothing illiterate' and use it to nationalize and destroy more and more of the private sector. They will double down on the spending, borrowing, printing and taxing required to pay for the next absurd idea to come out of the G7's capitals. Look no further than Obama's "Economic Recovery and Stabilization" stimulus package which spends 12 cents of every dollar on economic stimulus and 88 cents for sustaining and enlarging government spending and programs. A perfect name to DUPE America the Illiterate.
Morally, fiscally and intellectually BANKRUPT public servants and crony capitalists. Now we know why the banks and financial sectors were the greatest campaign contributors in the last election cycle and Obama's inaugural election. Decisions are being made upon political considerations, not economic ones. As the Speaker of the House so aptly put it, "We won the election so we wrote the stimulus bill." This from a woman who brought the approval ratings of the Democrat controlled congress to 9% shortly before they rode Obama's coattails to victory.
The heads of Xerox, IBM and Honeywell applauded the stimulus bill; I guess they made their campaign donations appropriately... "Buy American" provisions are in the stimulus bill; these are shades of "Smoot Hawley" protectionism, which deepened the depression by many orders of magnitude. Smart gal and guy that Congresswoman and Speaker of the House Nancy Pel*si and Senate Majority Leader Senator Harry R*id; real students of history. It's only downhill from here.
George "Pinocchio" Bush expanded government by OVER 60% and NOW Barack "Pinocchio" Obama is doing a 25% expansion in the first month. FEAR, FEAR, FEAR and economic illiteracy drives citizens to accept absurd proposals as wisdom and solutions to their problems. Terrorism, recession, bank failures all provide public serpents the cover for taking more freedom and income from the private sector under the guise of protecting you!! Central planning of the economy, galloping socialism and Marxism are descending faster than I ever could have imagined; having taken a huge leap in velocity...
Now these realities will have to be priced into many investments/markets, and the adjustments are enormous OPPORTUNITIES for some and the demise of others. The greatest transfer of wealth from those that hold their wealth in paper to those that don't is unfolding in the G7 and the old European Union.
As this process unfolds it will present you with unbelievable VOLATILITY in stocks, bonds, commodities, precious metals and all markets as they are ALL mispriced to what is unfolding. Buy and hold is DEAD and will continue to be for quite some time. In order to thrive, you must become nimble and be able to manage risk as the markets whipsaw around in trend and countertrend manner. To understand the enormous potential of this approach if properly implemented, you may wish to read an overview I wrote called "Turning Volatility into Opportunity". This is what I do for investors.
Fannie Mae and Freddie Mac are back at the government begging bowl for an aggregated total of $50 billion, and you can expect it to reach AT LEAST $600 to $800 billion before the losses are COVERED. Foreigners have QUIT buying agency paper.
The Bomb, er...Bond markets
I will start by saying that this is the MOST toxic area you can be in at this moment. Every assumption underlying the creation of a bond, its value as a "store of value and wealth" and repayment is NOW FALSE. Corporate and consumer income, government income, tax receipts, cash flow, level of business activity, asset values, future business, profitability and every qualifying metric used for borrowing are now significantly LESS. In most cases it WILL NOT recover for many years, if not a decade from now. And government stimulus activity will DELAY any recovery in income for years. Therefore, the expectations for repayment are considerably diminished."(snip)



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