The Worst is Yet to Come

I agree with most of this.

Uncomfortably viewing the banking sector as a curse (and not a cure) for our problems, he sees the Japanese Zombie bank experience playing out which guarantees sustainable growth is not around the corner and suggests we would be far better off medium-term if bank defaults occurred and the painful medicine is taken.

I have no financial sector debt or equity exposure either.

Current Positions & Plans

Lots of noise out there. The world’s most riveting most complicated reality TV series starring Barry and the idiots in Congress has shifted into sweeps week big time.

Referencing this post by Karl, I give you this comment in the forum:


With the rampant devaluation I fear is nigh, I’m suddenly not feeling very good about my all-cash position. But I can’t think of anything safer.

I have been cash and PM’s for several years and refuse to invest in a propped and overvalued market. We are at a historic crossroads where there is no safe haven. Everybody can’t jump into Swiss Francs. We may be at the point of what loses least.

As to the US dollar, we are the best looking hag in the bar and damn, the drinks are starting to wear off! Everywhere you turn all the “rich countries” are broke and all the emerging countries are holding the paper of the “rich countries” There have been paper money failures before, but never so many countries on the brink of a fiat disaster of this proportion.

Historically, gold has not been that good of an investment unless you happened to be in a country that had currency issues. Even then, you may have had the option to hold another currency. This is why the dollar was welcomed all over the world because it was somewhat a store of value compared to the national currency.

When you look around the world today, every country is on the edge and there is no safe haven currency because we are all interconnected. One of my dad’s favorite sayings was “When America sneezes the rest of the world catches cold”. We now have Europe and America on the edge of cardiac arrest. That is the equivalent of two Americas by economic size.

Resource rich countries like Australia and Canada have been heavily supported by China’s use of raw materials, but even China too is an overheating ponzi. When China blows up and they will, it is party over not only for those two countries, but because the rest of the world has been looking at China to spur economic growth.

When the depression hits, all commodities are going to get smacked because consumption will drop in the toilet. Gold will probably lose the least of the commodities and likely gain because its use against suffering currencies will remain high and the USD/Euro will no longer be considered a safe haven or any country for that matter.

When the dust settles, we will probably end up with a new monetary system and gold will probably play a part in it. If for no other reason than confidence will need to be restored and historically gold has played a role as money.

Otherwise, the best investments are probably for your personal safety and means to weather the storm that lies ahead. If you are in a big city you probably want an escape plan and a place to go to if you have to leave.

The Matson portfolio looks much the same- lots of cash and very minimal securities. I have felt that liquidity is a better evil than anything else over the past few years. While I don’t think it’s time to max out credit for long term goods, I do think that day approaches.

As the “discussions” continue, we will come to find the truth that, if the issue can be kicked down the road any further, it will be kicked.