My previous post about the president swimming in the Gulf coast was whimsical, satirical, and cynical.
Now, however, I turn to something in all seriousness: the continuing economic downturn. I refer to the Weiss analysis team frequently, I know. But they are far from the only folks seeing reality. And the reality of our economy - driven by the political policies of expediancy for way too long - is that it is running out of gas. Government has attempted to fuel it on taxpayer dollars - a lot of them - and there is little to nothing to keep it going. The private sector, which should be revitalizing the economy, has had the stuffing knocked out of it... and the hits keep on coming.
******
Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: “Something that can’t go on, will stop.” True enough. Uncle Sam’s Ponzi scheme will stop. But it will stop too late. And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills. Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it’s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece. (Laurence Kotlikoff, "U.S. Is Bankrupt and We Don't Even Know It," Bloomberg.com, 8/10/10)
******
On the basis of the current economic data, we are in for tougher times. But we are not left without tools to respond. Tools like inverse ETFs (Exchange Traded Funds) which are built to go up as their underlying issues go down. Tools like precious metals - gold, silver, etc. - which can offer a hedge against inflation. Tools like options which can give some leverage and portfolio hedge protection. Tools like historic dividend-paying stocks that can give an income boost to a portfolio even during downturns.
Used in resonable proportion, each of these can protect and boost a portfolio during a dowturn. At the very least, going to largely cash positions can protect hard-earned wealth.
It's going to be a scrap. Keep your eyes open and your wits about you.
God bless!
4 comments:
Sorry, no solicitations. Thanks!
This is so much like what the Lord has been showing me. And, I remember such a warning years before his death, when Larry Burkett wrote a book about "The Great Coming Economical Earthquake".
Yet, it all is in G-d's hands. This is where faith reigns, methinks.
Hey Tsofah,
I quite agree about the primacy of faith. We must be centered in our belief in God's providential will and salvation through the grace of Christ. Sadly, so many people fail to anchor in God's eternal love.
At the same time, as long as we are given the latitude to make personal choices with our resources, it makes sense to allocate them as wisely as possible. The description of the "wife of noble character" reminds us of this: "She considers a field and buys it; out of her earnings she plants a vineyard... She sees that her trading is profitable, and her lamp does not go out at night." (Proverbs 31:16 & 18)
Thanks for your observations, Tsofah! I always appreciate them.
Post a Comment