8/18/2011 5:04 PM ET|
Europe’s banks could break us all
'So long, farewell, auf wiedersehen, good night'
I've had time to think about this, and I'm not sure exactly what all the ramifications are. We know that the response to disruptions will be more easy money: here, in Europe and worldwide. Ultimately (and maybe even soon), that will benefit gold and gold-related ideas. The near-term risks are unanticipated dislocations and people's reactions to other people who are responding to the dislocations. In other words, the billiard balls will be careening around the table, and it is not possible to anticipate all of the interim moves.
Thus, if the powers that be in Europe continue to be a day late and a euro short, as they have been, we could easily see dislocations there spill over to here. I think that means that most people at the margin ought to have a bit more liquidity, even if that involves more green paper (currency) risk, to be able to take advantage of any opportunities that result from any chaos.
Beyond that, I have no specifics about what people should do, as everyone's strategy needs to be tailored to his or her own circumstances. As for me, I have not changed anything that I have done thus far. I am just alert to the fact that I may need to react. Possible outcomes, for me, might be to short the euro, certain companies or the Standard & Poor's 500 Index ($INX). But I would consider doing that only if I anticipate that we are entering a nasty period in which stock markets crash to the downside and cause people to panic.
I am not saying that would be a sound strategy for the average investor. Nor am I saying that it will happen, only that it is a possibility -- and one that I do not want to surprise me.
I believe the U.S. banking system is far more sound than it was in 2008; thus, to the extent financial problems occur here, they will be as consequences of what is happening in Europe. Still, we cannot forget that the real-estate market is weakening again, and we have no idea how those kind of assets are marked inside the U.S. financial system.
In short, the next couple of months are liable to be rather turbulent, and I think folks need to be alert as to possible catalysts that could lead to new financial problems.
On the air
In the latest of my interviews with Eric King, of King World News, a few days ago, we discussed the European mess, the stock market, the bond market and the funding crisis, as well as gold. He helped me flesh out my thoughts pretty well, I think. Listen here.
At the time of publication, Bill Fleckenstein owned gold.
This column is a synopsis of Bill Fleckenstein's daily column on his website, FleckensteinCapital.com, which he's been writing on the Internet since 1996. Click here to find Fleckenstein's most recent articles.
VIDEO ON MSN MONEY
Time to lose money big! I'm ready!! But remember money does NOT buy happiness. It's just money.
This is where I have serious doubts about all the talk about how the worker bees need to invest in a 401K or stock option account. The drones have a lot more to lose than the big wealthy players. Someone who has 100 million dollars will weather severe market dips as we are experiencing versus your worker drone who has a pitiful 200K in their portfolio. The millionaire will recover, the drone will die.
We have been seduced by the adds and the promise of wealth by retirement if we invest-warm fuzzy adds with a picture of grandpa bringing the family fishing on the beach; a couple on their sailing yacht; a couple tending a vineyard in California-you get the picture, invest with us and we will make you rich.
Guess who is getting rich? Let me give you a clue-it's not the worker drone.
This is a perfect example of how bad the idea of a single global currency is.
If we do fall along with the Europen banks, then at least misery will have company. We can share bread and water along with financial nightmare stories.
Our useless leaders however, will be wining and dining the finest foods and drinks in a well secured bunker laughing and playing Empire.
The US has lost a very important part of our economy-manufacturing.
Just pause and reflect about what is manufactured in the US. Cars you say? Well, a lot that goes in a car is manufactured overseas.
What else? Toys? Most are made in China.
What I'm getting at is this-the Stock Market is a shell game-without real manufacturing of THINGS the Stock Market is an illusion full of stocks which mean nothing. We lost our manufacturing base because of environmental concerns for one-have another country pollute themselves like China for example where the environmental laws are non existent. Labor costs as well here in the US has outsourced manufacturing overseas.
So what is traded? It's all BS! A market functions solely on something made and sold-not paper trades.
The illusion is becoming more and more transparent as the so called "wealth" is non existent and our debt increases every second.
I do believe the comments by LODM to be true the EURO currency will be a currency of the past very soon!!! If the USA has a stomach ache then the rest of the world has serious ulcers, all the hype about GOLD dont buy!!! it will collapse one day also just like current real estate prices in the USA. The U.S. dollar will continue to be the currency of all international trading.
Another word of advise for those who care to listen: dont trust large american banks with your hard earned money they don't give a hoot about you except your just another account they can steal from at will. They are only there to satisfy their greedy shareholders & CEO'S.
Ready to lose a boatload this week?
I am; but remember it's only money-it does NOT give happiness.
“Expert Analysts” on stocks have popped their ugly heads again to create more fear in those with savings portfolios. Hang tight and hold on to what you have. Move not and wait, or these fear creatures will manipulate and profit from your moves.
Europe is a prime example of why socialism does not work as well as capitalism. Capitalists believe in accountability, hard work and providing assistance to the poor. Socialists believe in human welfare, social planning and shared wealth. The problem is when you promise people things that they did not earn at unsustainable levels eventually you go broke. Is the solution taxing those who have benefited the most? It may be part of a solution but its not the cause of the problem. Just look at the European countries who have high tax rates if you don't believe me. Hopefully our young people will start to figure it out despite the steady diet of propaganda our public workers have fed them. You might want to think hard about your vote next election and how important private employers are to everyone's well being.
Unless you have millions to sit on and can afford the market swings, YOU WILL LOSE YOUR MONEY! As Irv Farmer said, put your money under your bed, or I advise, in a safe. That's REAL cash, not some number on a computer screen. I buy small amounts of gold and silver coins/bars (always .999) with cash when I can afford it and keep it in my safe next to my arsenal of guns and ammo.
You know what? Since starting that a couple years ago, it has grown in value far more than any stock investment, actually doubling in value and continuing to rise. Will I get rich? No, but that's not the point. The little I do have is tangible, portable, and will always be worth something, unlike Fraudulent Reserve Notes.
The market game is fixed to screw the small investor. All banks are out to take what you have, and give nothing in return. Take your money out of banks, 401Ks, mutual funds, retirement, everything. Liquidate and save privately. Better to have cash on hand and sound touchable metals like gold, silver and LEAD, than trust some thieving banker or broker.
The whole system is designed to benefit the elitists and ruin the middle class. Do your best to return the favor and LIQUIDATE NOW!
Right now is likely a good time to get a little greedy as fear takes hold of the market.
To the gold bugs- the biggest draw back are selling fees-buyers take their fees right off the top of your profits plus as the gold bubble will eventually collapse be prepared to wait in long lines to sell your gold as you watch the price of gold tick downward.
People who buy gold in small quantities are amateurs-the real gold bugs are your extremely wealthy people who move gold by the ton and give directions from their cell phones on their multi million dollar yachts in Southern France-now those are the real players who know how to make a killing fast.
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