Doom of Debt Forecast

Now that bailout nation has turned into bailout planet, with President Obama pressuring German Chancellor Merkel to bailout Greece and scolding Spain on high debt levels, everything is fine. A quick check of the DOW and the NASDAQ shows all green. Life is good.

Where is Lee Corso? Not so fast my friend!

I recommend you give close listen to The Black Swan:



Nassim Taleb, author of The Black Swan, is alarmingly correct. All is not well. The markets are up because the US economy is doing better of late and companies are beating drastically lowered levels of earnings forecasts. And hey, throw a trillion dollars at the problems and you had better hope for some positive results.

The ban aid issued Greece will work in the short term, but the problems have not been fixed, and the expansion of debt obligations versus decreasing or stable income will shortly lead us right back where we started. Only, the next time, the list of those impacted in contagion will increase. Other PIIGS will be included, and Germany appears to recognize it. After all, PIIGS don't fly!

Certainly, the United States is not Greece. But, due to the incompetence in our current governance, if we find ourselves with a bankrupt Europe on our back, our financial status will rapidly decline. We are extremely vulnerable, and look no further than Wall Street last Thursday for confirmation.

There was no "fat-finger" or equipment malfunction when the DOW fell 1000 points in trading last week. There is no problem with Proctor & Gamble (PG:NYSE), who incidentally would be a place for investors to hide in such tumultuous markets. A major player(s) got out, and other mid to major players had algorithmic stop loss levels incorrectly positioned, thus triggering a cascading sell off. Once those in the know identified value in the market, buyers rushed in and leveled off the selling pressure at levels prior to the circus of events. But make no mistake, a seller of significant standing, not Aunt Mary and Uncle Bob, shifted investment from the equity markets into a safer position. Did you notice the rise in gold this week?

The socialistic blueprint in Europe is inefficient and is in collapse. It will not survive. For the Untied States, we should immediately take notice, by implementing no new legislation increasing entitlements, inclusive of the Cap and Trade bill. The health care legislation should be repealed and privatized, including student loans which somehow made its way into the bill. Spending must be slashed by 30% minimum, and if we don't take immediate action in this regard, perhaps this article can give you a glimpse of the future.

Unfortunately, the administration seems smitten with Cloward & Piven and appears to be intentionally trying to crash the system by overpowering it with entitlements. As Taleb said, the Obama team is likely not forecasting the future levels of risk properly, which is a problem of alarming magnitude. Clearly, you recognize the US government, and thus the taxpayer, cannot shoulder the immoral increase in debt and thus will collapse under incredibly excessive taxation. Then, no doubt, we will see civil unrest in our streets, and life as you knew it will be over.

Cash is King, at least until a measurement of anticipated outcomes (risk) indicates a very favorable November. It is up to us.