The Iceman Cometh
March 9th, 2009
My prediction right now is: we’re going into a worldwide depression.
The main reason for this dire outlook is the complete failure of the Obama administration as well as most other governments to tackle the crisis on hand.
Obama, it’s becoming clear, is a gifted speaker - with not many ideas of his own. His treasury secretary Geithner is more or less absent from the scene and everybody else is simply procrastinating. The only treatment which has been prescribed so far is the money shower: throwing money at each and every problem which appears on stage. Trillions are the new billions, deficits are exploding, states and countries are going bankrupt.
I hear recommendations to buy treasuries for safety, but I don’t buy it. There is a not insignificant danger that the treasury markets might collapse under an onslaught of new paper. Banks are kept alive in intensive care, staring at us like zombie whoofs, unwilling and unable to lend money as required.
Unemployment will continue to grow everywhere, soon reaching double digits in the USA and higher still elsewhere. In this scenario the stock markets would have further to fall, house prices ditto and most everything else too.
If chaos and fear spread, gold should be one of the few refuges. But it has to be kept in a safe place, because bankrupt governments might be tempted to confiscate it as an act of desperation and “social justice”.
Besides gold, I think some agricultural commodities such as wheat might do okay. Oil will also keep most of its (presently diminished) value. Other than that, I don’t know and, while it might be tempting to pick up some seemingly cheap debris, it’s hostile territory out there.