Everyone and their uncle is predicting an imminent BIG financial collapse. It’s the latest “fashion.”
I found one precise date — October 7, 2015 — from someone called Larry Edelson.
Everyone else is not so sure. Except they’re sure a BIG financial collapse WILL happen.
Most predictions urge you to buy a book or a newsletter. That makes them instantly suspect.
The scenarios are identical: the bankruptcy of the banks, the end of the U.S. dollar, the end of our savings, riots in the streets, the end of our personal freedoms.
Their recommendations are vague (and often wrong) — they include buying triple short ETFs. (Yuch.)
If believe some of this has some validity, there are two solutions:
1. Cash. Not gold. Not silver. Not platinum. Just cash. Preferably at home or in your company’s safe. (But not in your local bank’s safety deposit box). Keep cash for your life and for your business. Think Greece. They closed the banks and limited what you could get out of an ATM. This works:
2. Long, long put options on the S&P. Taleb made a fortune with them last time around.
I’m not dismissing the Gloom and Doom predictions out of hand. Black Swan events happen. And they happen with a bad, loud bang. Worse, they’re not predictable.
Here’s my list of brewing disasters:
+ Student Aid debt. Much of it will never be repaid.
+ Government Debt. It’s trillions. Most governments have too much of it. Much of it will never be repaid. As a side note, Argentina has reneged on its foreign debt obligations at least seven times, starting in 1827. The latest was in July 2014. Why anyone lends them money is beyond my pay grade.
+ Banks are much larger than they were in 2008. They can’t be managed or controlled. They no longer do banking. They gamble with derivatives.
+ Derivatives have exploded since 2008. AIG got caught last time with derivatives it had not covered. (In fact, it hadn’t covered any.) And bingo, they brought the whole company down, despite the derivatives being a small part of the company’s overall business. Buffett called derivatives financial weapons of mass destruction.
+ Carl Icahn thinks things will go awry starting with the failure of junk bonds.
+ Steve Schwarzman of Blackstone thinks Dodd-Frank is killing local banks, who provide liquidity to local businesses.
+ Europe and Greece. Need I say more?
+ China is slowing down, viz. the fall in commodity prices.
+ Too much debt and the “SuperCycle.” I love these scary words from Larry Edelson:
On Wednesday, October 7, 2015 . for the first time since 1929 . five massively powerful financial cycles will unite, forming a “Supercycle” with enormous destructive power.
The last time these cycles converged — nearly nine decades ago — the world was plunged into a Great Depression that lasted more than a decade.
This time around, they will trigger the end of one major epoch in human history . and the beginning of a terrifying (and enormously profitable) new one .
The age we have all known all our lives – an era in which governments amassed $275 trillion in debts and obligations – is about to end.
And a new era – the age in which all of us pay the price for our leaders’ reckless spending schemes and the obscene debts – is about to begin.
As we witness the collapse of the societies, currencies and investment markets that have been built on those debts.
I don’t think you need a list of Financial Disaster reading for the weekend. You can always Google “The next financial disaster.“
You’ll be impressed with the number of hits.
The next financial disaster industry is booming. Good that I can always find us a booming industry.
Favorite Internet quote:
Your shopping cart is empty, but it doesn’t have to be.
Tour de France hits the mountains. Sit in front of your big screen TV. Watch them race around hairpin bends.
It’s exhilarating. It’s gorgeous. It’s stomach-churning. It’s on DirecTV channel 220.
Harry Newton, who eyes another down day in the market. I think I may ease up on my Berkshire Hathaway holdings (BRKA). Does his railroad company carry a lot of coal? If it does, I bet it’s doing awfully. The problem with owning a lot of one stock means small blips make big dollar BLEEPS. And that turns my stomach more than the Tour de France. Have a great weekend.
Cash for the crash. It has a nice ring.
Cash? The US dollar? Isn’t that fighting the last war?