Debt Has Its' Consequences

$600 Billion, that's 75 billion dollars per month, of our own money to be bought back by the U.S. to stimulate our economy? 
Huh? Yeah, I know it sounds like double talk. It is. Created a buzz for a while, kinda like a few glasses of cheap wine. But don't expect the euphoria to continue. The market is already starting to show signs of increased volatility.

Take heed...the bond bubble is about to burst.

As I wrote in the summer issue of The County Woman, here comes the implosion of the US TREASURY bubble. The last time this occurred in 1976, the five years following were among the most extraordinary in economic history. They're about to be repeated again, but this the the trend will be bigger, it will move faster, and the fallout will be far greater. We weren't 1.65 trillion dollars in debt. We did not have underfunded Social Security and Medicare disasters looming, and we did not have 76 million baby boomers retiring at the rate of 10,000 a day for the next 15-20 years! And above all, we were not recovering from the worst credit crisis in our history!

Now, in order to save the day, we need the rest of the world to keep buying our debt, 'cause we're pretty tapped out, wouldn't you say? Russia and China have already begun buying oil in their own currency, not the US dollar. We are looking at worldwide currency devaluation if the US Dollar gets replaced as the world currency.

The day of financial reckoning is near when other countries and even our own citizens lose confidence and nobody shows up to buy our bonds. When that day comes, we'll crank up the printing presses and print more money. In effect, we will be silently defaulting on our own debt, bonds will crash, the Dow and the dollar will nosedive, and inflation will quickly start to spin out of control.

And what of the overall market? The next downleg is coming. Could be as early as April, but I think no later than July. Believe me, I'd rather be wrong about this than right, but I mingle with and follow some really smart people that have no personal vested interest in their predictions. If your nest egg can't withstand another major hit, it doesn't hurt to sit on the sidelines for while. Me, I'd rather be safe than sorry. Again.

Usually the contrarian opinion ends up being the right one in the end. I don't smell roses. Smells like crap (or should I say poop!).

-Kathy