-- "Just inflate" Oh, is that all? Turned out pretty nicely for Argentina, didn't it?
-- Unlike Iceland, Greece will taco the Euro, and bring down a bunch of Euro banks.
-- China is to the Greater Depression as the U.S. was to the original Great Depression: the exporter that is going to get totaled. I'm optimistic on the other side of the coming valley, but they are going to have a heck of a reckoning when all the bad debts and malinvestment come to a head. I don't expect the current government to survive unless they are extremely brutal and extremely lucky.
>> "Just inflate" Oh, is that all? Turned out pretty nicely for Argentina, didn't it?
Argentina defaulted. It turned out to be a disaster, which, for them, may have been unavoidable. Why would the US want this?
>> Unlike Iceland, Greece will taco the Euro, and bring down a bunch of Euro banks.
Yeah, sure, we're all moving to the workhouse because Euro banks stand to lose 40 billion euros from a Greek default (this is the "haircut" being proposed). In an economy of 13 trillion euros a year. After Greece finishes digging out from its default disaster (remember, plenty of their debt is internal), maybe others will think twice. Or maybe not. I don't have the gift of prophecy, but I am betting pretty strongly against the whole Eurozone of 400 million people turning into a boarded-up wasteland.
If you want to counsel panic, put some numbers on it - what exactly will one Euro buy in five years, and where will the stock markets be (boarded up, maybe)? Then let's see if you're willing to invest your money accordingly.
By the way, if you want to see my predictions in numbers for the next 5 years, here they are:
1. The Euro will appreciate against the dollar, because the US will have to issue a lot of currency to bail out local and state governments in the next 5 years. I am guessing a Euro will buy about 2 dollars then (edit: come to think of it, probably more. The US will print a lot of money).
2. The stock markets will not be boarded up, and will be trading at roughly at the levels of today (+ inflation). I don't see tons of profit there, given panicky investors, but the fundamentals are more than sound enough to prevent a total collapse. It's not like the market is trading at insane P/E ratio.
3. Almost all private and public debts will be paid. There are funds to do this, and the political pressure to make good on debt will be overwhelming. There may be a Greek default, and the Spanish real estate debts will have to be restructured too, but not at a crippling loss to the whole Eurozone - there is not enough money invested to "taco the Euro".
Yes, my money and my mouth are in the same exact place.
1) I think the Euro will not be recognizable in five years, so I hesitate to guess where whatever the Euro is (if it still exists at all) will be. I'm expecting that current Euro holders will see depreciation of their purchasing power unless they are very nimble.
2) I expect the S&P to retest and break the previous lows. Russell Napier has a target of 400, which sounds plausible to me.
3) Not a chance. Productive capacity has been hollowed out in exactly the economies that have taken on the most debt, so the debt can't be repaid in any meaningful way. When you start penciling in future obligations or, heaven forfend, "investments" in "derivatives" made by our friends in the big pension funds... No way. I believe we are at the end of the public/private debt ponzi scheme. It could end in hyperinflation or in deflation. I expect deflation.
My money is kind of where my mouth is: a straddle of startup investments and cash/PMs.
By the way, I've always wanted to ask someone who buys gold/silver as a hedge against economic collapse - are you physically holding it in your house, or what? If your gold is just 1s and 0s in some database which say that you own some gold, why do you think you will be able to get it after the "Big One"? Your bank or brokerage may have to give it to some creditor who is in line before you. And there are precedents for the government just confiscating it, or forcing you to "sell" it at the price they set. So what's the plan?
I'm going to add this thread to Google Bookmarks, and revisit it in 5 years (does HN keep threads for this long? It should). Unless, of course, there will be no Google and no Hacker News and no internet in 5 years.
Don't know about S&P 500, I'm not about to invest anything in the US, what with Bernanke about to "ease" his printing press into third freaking gear.
-- Unlike Iceland, Greece will taco the Euro, and bring down a bunch of Euro banks.
-- China is to the Greater Depression as the U.S. was to the original Great Depression: the exporter that is going to get totaled. I'm optimistic on the other side of the coming valley, but they are going to have a heck of a reckoning when all the bad debts and malinvestment come to a head. I don't expect the current government to survive unless they are extremely brutal and extremely lucky.