Monday, September 15, 2008

Be Prepared

I'll keep it short right now as the day job is crazy-busy (but thank heavens I am no longer working as a code-jockey in the financial "industry").

Personally, I think the Powers That Be will be able to stem the worst of the sell-off today and by afternoon, we may even be in positive territory. But it is only temporary and every action you see being touted as a big fix to the system has been tried before during the Great Depression. They all failed.

For instance, we are supposed to cheer as Banks, Firms Set Up $70 Billion Fund for Liquidity. Well, back in 1929, it was called a Bank Pool. Setting up these huge pools of liquidity is ultimately futile, though you can get a big pop up in price over the course of a day or week.

I'll say it again - THIS IS NOT A LIQUIDITY CRISIS. This is a solvency crisis. The assets that underpin the banking system are declining in value. The debt taken on by huge number of U.S. consumers has outstripped their ability to service that debt.

The game is over. No one will fix this system. The question is how quickly will the various financial playerz let this current system die. If it is quickly, then we are in for a few years of very hard times as we rebuild a new method of dispensing capital and supporting the division of labor so necessary to a non-agrarian economy. If they try to keep the system alive for many years, then prepare yourself for an ongoing, agonizing wheel of pain that won't end for a decade.

If you don't have your assets in as safe a condition as you can by now, then me suggesting it yet again won't help much.

Be safe. Remember, if this is more than just a passing financial hiccup, and turns out to be the precursor to the Mother of all Crashes sometime in October, then we are all going to have to shift to an old school way of thinking and behaving, and that right soon. Family matters - reconnect with them. Friends and associates can help - choose them wisely. Charity begins at home - be prepared.

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