Saturday, March 21, 2009

We ain't out of the woods yet.

I've been doing a fair amount of reading, and I'm still trying to put all this information together to see just what the hell is going on.

The dollar is being propped up because int he current global credit crisis there just isn't anywhere else to stash your cash. These investors are switching to the short term bonds, because they are drinking the "everything will be all fixed soon" kool-aid. This has caused a bubble in the bonds market. No one in their right ind is going to invest in a 30 year T-bill when the interest rate is only 3.65%! That is equal to the official interest rate, which means a net loss of ~3% for the real interest rate!

When the bonds bubble pops, and it is giving every indication it will as China is bailing out of long-term American debt, then investors foreign and domestic will have nowhere left to put their money except physical resources. Gold, silver, oil, etc. That's what China is doing with some secret reserve fund. They are keeping two sets of books. One for the world, and the real books for themselves.

But Wait! You say, "Wouldn't every alarm bell go off if China dumped their dollar based assets?" And you would be right if they just opened the floodgates. The Chinese government is dumping their assets by purchasing resources with the dollar assets from the secret fund, so the world is none the wiser.

China needs oil bad, so you can expect them to buy a lot, driving the price up. I read somewhere else OPEC cut production some, and the world let their oil reserves dwindle when it was at $150/barrel. Now these stocks are low so you can expect record gas prices as China loads up on oil and other governments buy more to fill up their reserves. In other words buy your gas preps NOW. I'll be adding another 10-25 gallons, myself.

I'm not smart enough to figure out exactly what will happen when the bonds market collapses. It makes sense to me that when the bonds bubble pops every investor will be scrambling to dump their bonds, along with every country that owns US debt. The results of this scenario is the collapse of the US economy.

The blogs have been very, very quiet of late. I envision Mayberry, Michael, etc. frantically getting the last of their preps done before the balloon goes up. Not time for blogging, got to load magazines! Even my posts have dropped in frequency. It's getting tough to write posts because between the economy and politics we have a target-rich environment! It's just too damn easy to bitch and moan about all the stuff going on.

Now is the time for action. I got my tomato plants spouted, I am pleased as punch about that. The peppers haven't spouted yet, but that's no biggie. The onions will be in the ground soon, along with the cabbage plant which looks to make a full recovery. I loaded 50 LRN .45 ACP rounds the other day, I need to load up another 150. I also need to load up a box of JHP I bought.

I need to get cracking on the story, been way, way to busy at work. At home my time has been buried with preps and cleaning up the house. Time is so fleeting when you spend 3 hours a day in a car going back and forth to work. Hope everyone has a great weekend. Keep prepping!


hilljack33 said...

I am tired of all this Doom and Gloom stuff myself. But the evidence that things are about to get rough can't be denied.

Helicopter is printing money like crazy (hello hyperinflation), the Chinese are up to no good and when they dump their US T bills, Katie bar the door.

The blog chatter is down, people are too busy getting ready. Anyone who don't get it by now, ain't going to get it, well they'll get it alright.

Besides like you said, now is not the time for talk'n, now is the time for action....

Staying Alive said...

Money is normally made in the stock market. The bond market is much too conservative for go go investers. A good stock picker will make 3 to 5 times what the bond market will bring.

But then the stock market shoots craps and folks start looking for another place to stash their money. Oops! The bond market, normally a safe haven, suddenly craps out.

Now things are getting a little testy. We are starting to run out of places to stash the family fortune. But there is still Treasury Bonds! But a quick scan of T-bonds showa that market to be gettting close to being a loser also. You can actually pay more for the T-bill than it will be worth. Not good.

You mioght look around at somne real estate and find a bargain but that is not a hot market right now. This leaves you with TANGIBLES. Most folks figure tangibles to be gold and silver. Lead can also work into that category.

As the economic collapse deepens and takes in more people, the search for a safe haven will become more acute.

You can run but you can't hide.