House of Cards Falling
Posted by moolahtime on October 27, 2008
Not much to write about today as not too much as changed. Once again, today was a day where the bulls and bears fought all day long and the bears won (Dow down 203 points). The last hour of trading has been quite volatile for the last few weeks. It’s not surprising as the foreign markets took a beating today.
Hungary is now experiencing some major problems with investor confidence and its banking sector. Today, the IMF (International Monetary Fund) finalized its financing plan (amount unknown…expected to be in the billions of dollars) to bail out Hungary; and, in turn, the country must cut spending by 300 billion forint ($1.4 billion) next year. Here is the article for additional details.
What we are witnessing is a credit crunch and financial sector issues that extend globally. I don’t think this will be resolved in the near future. We will continue to see blue chip stocks and certain ETFs (such as GLD, GDX, and SLV) to get cheaper and cheaper. I think the Dow will test previous lows which is why I did not do any buying today. I think it’s wise to stay on the sidelines, continue to monetize gains when you can, and build up your cash position as we will eventually approach a once in a lifetime buying opportunity. Until then, keep reading and learning about this global mess and take the opportunity to get smarter, more nimble, and less reliant on debt to achieve personal and professional satisfaction. I hope I am helping you to achieve this and, as always, let me know if you have any questions.
Here are some articles for you:
- Check out this article. It is a must read. It describes how the current economic issues reflect a solvency crisis and not a liquidity crisis. Hence, we have a massive debt problem that can’t be solved by offering additional debt at lower costs. With the $700 billion bailout, the federal deficit is expected to exceed $1 trillion next year! That’s crazy. A time of reckoning will come since foreign nations (Germany, Russia, China, and France to name a few) are now losing faith and trust in the greenback. All of this points to the fact that gold should be higher, and it will eventually rise once the liquidating by hedge funds has completed.
- As I mentioned earlier, foreign nations are losing confidence in the US government. Here are two articles: one concerning Taiwan and another concerning China. The US has had the luxury of being in a large debt position because the world viewed the US dollar as the global currency of choice and a stable currency. Now, that is changing and our society will need to learn to live within its means, rather than rely on debt and leverage.
Enjoy your evening, and I will write more soon.
Regards,
Moolah
