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Financial Consulting:
We may well be facing hard financial times for several years. Not only
are the rhythms and cycles of the markets indicating this, but the
inflationary/deflationary tug-of-war, the massive federal and trade
deficits, the crash of the dollar and the bubbles in the stock, bond and
real estate markets leading us into a full-scaled financial crisis. Do not
listen to politicians, economists, the Fed, stockbrokers or CNBC. They may
be trying to rig/control the economy but the day of reckoning is coming. YOU
CAN NOT ONLY MAKE MONEY DURING A FINANCIAL CRISIS BUT PROSPER. There are
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Evolving Personal Finance and Financial Times Newsletter
10 predictions for 2005
#1. World Will Regard US as "Enemy"
It is no secret that the Arab and Communist worlds have viewed the "values" of the US as antithetical to their agendas; nonetheless, 2005 will usher in blatant attempts by America's so-called Allies to undermine America's position of Leadership. The singlemost force behind such collusion will not be the fall of the dollar, trade imbalances/deficits or massive exporting of inflation, but the supercilious way in which America disregarded world opinion on Iraq for unilateral sovereignty. In addition, "little things" such as the rebuff of the Kyoto Treaty, the takeover of military "thinking" in the White House and defense of Israel have caused the wolves to circle the fire. Only those countries which are lackey to US dole-outs will pretend to support her efforts; however, as the US approaches bankruptcy. even that stale card will be trumped (and I don't mean Donald!)...#2. Interest Rates Will Become Double-Digit
We shall return to the "Bad-Ole-Days" of the 70's whereby the Prime zoomed into the stratosphere...Whether we reach the high teens will be determined by the Inflationary-Deflationary battle; nevertheless, despite the Fed's "orderly" (more like "Order Ye") posit to graduate the Prime to a "digestible" range, the US Treasury printing presses will prevail over the vast Deflationary chasm about to engulf the world in the next great economic cycle. To implement US printing mania, other nations--in reaction/defense to US exportation of deficits--will join in the "printing-press-mania" and circle the globe with their own brand of monetary-bacchanalia.#3. George Orwell and the Patriot Act
Rather than admit to the primary cause of the disease, politicians, as defense attorneys, will blame the victims: those opposed to Iraq (including the Iraqi people), those opposed to "Environmental Development," and anyone who dare oppose current Administration-Patriot Act-Whim--which, like the weather, can change from moment-to-moment, season-to-season... As the US economy begins to crumble, blame will be meted on those opposed to political policy. In the name of Patrotism, CIA/FBI/McCarthyism will be ushered into our databases, dossiers, wiretaps--the irony being that Right-Wing-Politics which feigned to be anti-Central-Government will be approaching the satellites of Stalinism in its hayday.#4. A New Banana Republic
Because the dollar will crumb, all commodities must accelerate inversely. People who think $50 oil is reprehensible need to think again. Regardless of supply-and-demand fundamentals, assuming that all is neutral on that front, prices must reflect the "devaluation" of the dollar. If, hypothetically, 25% more money were printed and the dollar were to usurp 25% of its value, conversely, prices should move up in the range of 25%. Of course, as has been attested by former Banana Republics that printed money to pay off debt, this ratio does not always correlate. Such forces as panic, jaw-boning and rigging markets come into play. The sole factor keeping the US from immediately joining the illustrious fraternities of other Banana Republics is the rest of the world is in a quandary of how to dispel their holdings of the worthless dollar debt. Were the dollar to tank, the World would be caught with worthless US Treasuries. To keep feeding the dollar-shark only stirs the waters of feeding-frenzy.#5. Prosperity Is Not Prosperity!
By pouring billions of dollars of federal debt and tax breaks into the hands of consumers, a pseudo-spending-spree has been created, offering an illusion that consumers are spending more money, consumer confidence is high and profits are on the rise. How long can this endure? As long as a poker can bluff with a weak hand...As long as nobody takes their chips off the table...As long as foreigners holding US dollars can either help rig the markets, accept huge foreign exchange losses or throw in the trowel as they do eventually with all Banana Republics. One thing to remember: whenever a trend commences, it takes an incremental amount of time for that trend to sink in before a "reputation" and conventional wisdom regarding that trend ensues, for just as a marriage in which one of the spouses changes over time takes a while to sink in, so does economic truth.#6. Politicians Will Lie More Than Ever
Unlike more forms of true endeavor: athletics, medicine, science, et al., in economics, the more things get worse, the more liars there are to protect the lies...Politicians will always blame everybody but themselves: previous administrations, other countries, terrorists, unpatriotic ingrates, crooked business, but one thing you can count on: they will never confront the Middle Class, for this is where their votes are and....the Middle Class, herded into their Second-Equity abodes and instructed to spend more than ever of their future non-existent jobs, pensions and social securities will naturally...eat, drink and be merry! How amusing it was in the 70's to witness politicians blaming gold and silver speculators for the uproar in currency markets, the bankruptcies of New York City and Chrysler and the panic of stock markets. My guess is the "usual suspects" will be rounded up again.#7: Beware the Ides of March and/or Trick-or-Treat
Methinks this house of cards will collide with reality upon the awareness of a "credit-crunch" along about the Ides, spewing her venom in an April crash. If, however, natural forces are not allowed to proceed according to economic law and the Fed and Treasury continue to rig, jawbone or thrust a preponderance of funny-money derivatives to control markets for a spell, the day of reckoning migh be forestalled until the next scary month, October. After all, the important people in society will do anything and everything to protect their lifetime affluence. Jimmying of indexes, accounting tricks, false inventories--any method that will suffice to keep prestige and power--must be utilized in times of desperation. It worked for the Third Reich for a spell and with today's "sophistications" and sabre-rattlings (after all, military power equates with anything-goes mentality to our Planners), the illusion that entitlement should last forever will try to prevail.#8: China's Intentions Will Become Clearer
Capitalism in China is but a means to an end, the end not-being the uplifting of the masses. China will flex its economic prowess through its military might and plan to takeover the world. While the world is preoccupied with piecemeal terrorism, China will quietly hide behind that smokescreen to plan her New World Takeover. Although considered a Communist nation, Communism will only serve as yet another smokescreen obscuring her true thrust for another typical fascist quest for power.#9. Government Confiscation Will Loom On The Horizon
As it becomes increasingly clear that the lowering of taxes has backfired on our beloved leaders and the handwriting for massive defaults is on the wall, fearing their loss of power, government "leaders" in the name of patriotism will start a trend towards confiscation--if only to line their pockets. Although gold, silver, platinum, coins are a protection against government fiat fraud, the government will blame "unpatriotic speculation" as the source of the problem. Beware another dose of Franklin Rooseveltism where gold was outlawed. Although we may not face immediate confiscation in 2005, the seeds will start being planted. Take necessary steps to preserve your valuables from government scrutiny, taxation and ultimate confiscation--as all falling governments are wont to do.#10. An Uprooting of Values
Instead of a 60's-type revolution which questioned values, people will languish into escape, vulgarity and orgy, on one hand...escape, puritanism and patriotism on the other. True Art will become a threat to "Patriotism." Individual thinking will be shunned in favor of planned solution. Classes will be pitted against one another to divert the real blame from the rich idiots who have put the world economy in this precarious position. Universities and students will be expected to tow the line or face loss of funding. As in the Age of McCarthy, entertainment/art that does conform to government gudielines will be construed as subversive and the seeds for new "witch hunts" will be planted. Move to another part of the world? Yes-- or live a very low profile......At the end of 2005, let's see how many come true...
Le Scott, December, 2004
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