Saturday, February 28, 2009


I am lucky to have a broker handling my retirement account that is young, energetic and loves his job. He is almost never wrong; but, has been a little off on his timing. For example when the stock market was at around 12,000 he called and told me to send him an email to authorize him to sell what he thought best if the market hit 11,033, the next day he was selling. At that time he told me that there was a good chance the market would go to the 7,000’s. It took a little while; but, the market just closed around 7,000. He called me Friday, the 27th to advise that he did some more rearranging because the market will hit 5,000 and there was very little support between 3,000 and 5,000. He advised that the 3,000 mark is not definite but a concern, the 5,000 is a given. He also said that the computer models that his brokerage firm uses covers every single scenario including the depression and as they plug in their numbers it keeps coming up depression. I was told that at some point 3,000 or 5,000 there will be a slight lateral movement and modest increase in stocks, 500-800 point improvement, then in about 2-3 years we will get slammed with inflation.

I am not a person who scares easily; but what we discussed was scary. The 800 billion bailout will actually cost about 3 trillion with interest on top of the 11 trillion (largest debt package in the history of the country) for a total of 14 trillion in debt. We have gone off the gold standard and now depend on just paper and promises. One of our biggest debt holders is China (who recently said, “we hate Americans”). Their complaint is that with our dollars facing steep devaluation the billions and billions they are holding will become equally worthless. The Chinese and Arabs that are holding much of our paper very well could dump our dollars for something better. When that happens and when they stop loaning us money the prediction is about 20-30% inflation because the money will be worthless.

No one in their right mind wants to see Obama fail. Like him, dislike him, support him, or do not support him; the future of our country is in his hands. If he fails we all fail and our country fails. One of the problems is, so far, he has been all show and no substance, it might sound good but it will not feel good. From what I’ve been told “wall street” sees that there is no substance to what he is pushing. In other words our economic system is capitalism, Obama is pushing socialism. The stock market is not geared for socialism and that is one of the reasons our savings and retirement accounts/investments are heading down.
I am saying these not to slam the president or promote scare tactics like the liberal democrat socialists do; but, to simply pass along a scenario that is unfolding right before our eyes

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