I have been alive long enough to realize, as my dear old granny used to say at any opportunity, "there is nothing new under the sun." The current financial crisis is a replay of the late 70's and 80's, albeit on steroids since our white collar criminal class has gotten bolder and quite a bit larger.
Remember the dollar fell to record lows against a basket of foreign currencies, down to about 80 yen per dollar where previous pegs to this currency was in the 144 to 120 yen range. Gold jumped to astronomical levels, somewhere in the $800 per ounce, and silver rode up to $50 an ounce on Bunky Hunt's play. Then the crisis, I can not recall what it was maybe it was the Iranian Hostage crisis that doomed Jimmy Carter and hastened Ronald Reagan's ascension to the Presidency or the Soviet's play for Afghanistan or a combination of events, but something shook the international markets and the dollar rose from the ashes, gold dropped to $400 an ounce almost over night and all was well with the greenback.
I think all that is left to bring the world markets back to their senses is a crisis, which will probably involve Israel v Iran this time over the latters insistence it be a grown up in the world community and develop nuclear weapons of mass destruction. Only then will the monied interest realize America, with all its problems and corruption, is still the safest place to place a wad of money in the world. Europe is a joke, China needs to feed 1.3 billion people everyday, that is a lot of rice cakes, India needs to feed a billion people a day. Look around, who has the printing presses and the army to back it?
The run up in gold will halt with the international crisis. I do not know when it will occur, but they recently announced that Iran had placed its nuclear generating facility on line last week, so the rods are cooking and the waste product is weapons grade nuclear materials. The Israelis will act in their best interests as they should. Every nation follows this basic tenant of human nature.
Look for the dollar to strengthen v the other world currencies. We still need oil to be priced at about $40 a barrel to spur economic growth around the world.
I know you are thinking, Jack you are full of Sh--! We are in a deflationary inflationary time warped speed trap, a black hole of debt. Bubbles bursting in stocks, housing, commercial real estate, metals and commodities soaring to unheard of gains. The fed is printing money to monetize the debt.
Ok, maybe I am wrong. I can live with that. But the trick is to not let most of the rubes who invest see it coming, so to be smart bet a little on my proposition as it may play out. Long on the dollar, short on the euro. Even with all its warts(read current administration) the USA is a good bet to right its ship because of the wisdom of its free people.
The election of fiscally responsible leaders in 2010 was just the opening salvo. The real battle will be won in 2012. There are still some adults left in America. Not everybody smoked dope, like this current bunch of arrested adolescents who by a quirk of fate find themselves in charge. Come on, 2012!
Jackson Delano Maybolt, President Urban Poverty Law Center
"There is nothing new under the sun, if you do not consider Lady Gaga." Mother Maybolt, 1925-2008
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