In a TOTAL banking meltdown..............

[enjoy the ride]

But kOxxx, these sort of predictions are like earthquake predictions. Yes, the big one will come sometime- the really important question is when.
Something seriously bad happens somewhere sometime but a life can not be lived hiding in a box waiting.
So if someone gives a time line, with a sequence of events, that might be useful. One could check first one thing, then the next and maybe start taking action.
For every one of the sky is falling type, there is one of the everything is for the good in this best of all possible worlds.

Give me specifics.

 

[Wifezilla]

Who is hiding in a box waiting? I have to go to the store anyway, so how hard is it to buy a few extra bags of beans and a few cans of something? I have to go to the hardware store anyway, so how hard is it to grab an extra tarp? I have to buy clothes anyway, so how hard is it to focus on quality materials and only buy stuff that will last a long time? I like to garden anyway, so how hard is it to put in an extra bed and grow more of my own food? I like having pets anyway, so how is it strange if I decide to get pets that can make me breakfast?

I am living my life but taking little steps that can be a BIG THING in the event of a meltdown.

Noticing something is very very wrong doesn't make you the weirdo.

 

[enjoy the ride]

Wow- how did you get from "give me specifics" to "weirdo?"

 

[k0xxx]

But kOxxx, these sort of predictions are like earthquake predictions. Yes, the big one will come sometime- the really important question is when.
Something seriously bad happens somewhere sometime but a life can not be lived hiding in a box waiting.
So if someone gives a time line, with a sequence of events, that might be useful. One could check first one thing, then the next and maybe start taking action.
For every one of the sky is falling type, there is one of the everything is for the good in this best of all possible worlds.

Give me specifics.

You asked for it, but be ready for your eyes to glaze over with economic boredom.

Sovereign debt default is when a country is so deep in debt that it basically goes bankrupt. Generally a debt load of 90% of GDP is considered a tipping point. Right now you are seeing a lot of Western countries on the verge of default. Greece and Italy are at the top of the list. However, Belgium, Iceland, Ireland, Portugal, France and Spain are right there with them. Coming up fast are economic powerhouses Germany, The UK, Japan, and America. At the moment, our debt to GDP ratio is around 84%, with deficits (borrowing) as far as the eye can see.

I am in no way an expert, but if you want a few things to look for, from the reading that I have been doing, these would be fairly good signs that the economy is about to get much worse.

1. Gold and the dollar "decoupling". Traditionally, when the dollar decreases in value, gold moves up, and when the dollar increases in value, gold falls. Gold becoming independent of the dollar would mean that gold is becoming a alternative to the dollar as currency.

2. Dollar Loses World Reserve Currency Status. With the dollar as the worlds' reserve currency, any nation wanting to buy commodities such as oil, gold, etc., must use dollars. When the dollar loses its' reserve currency status, there will be a flood of dollars as nations no longer need to hold them. What happens to the value of something when market is flooded with it? It drops.

3. Nations holding US Treasury Bonds start to dump them. As the dollar becomes worth less, the Treasury bonds held by other nations become worth less. Why hold onto something that you know will be worth less tomorrow and every day after. The more bonds that are dumped, the faster the value drops. If our bond holders start dumping those bonds, get every dollar that you can get your hands on and but something tangible with them, while you still can.

4. Simultaneous Dow / Dollar Drop. Normally, when the Dow loses value and investors pull their savings out of stocks, they tend to put those savings into dollar backed securities or treasuries as a safe haven. This causes the value of the dollar to increase whenever the Dow falls, but the balancing act is beginning to change. One clear indication of a collapse would be the simultaneous fall of the Dow and the Dollar over a moderate period. This would denote a loss of safe haven status in the dollar as well as uncertainty among investors in stocks.

There are other things to look for that could start the crash, like when interest rates start to rise, and you see the Dow and the dollar dropping at the same time over a moderate period of time. Another surge in oil prices. Wholesale prices starting climb rapidly.

In 2009 it was calculated (by Jeanne Sahadi, CNN Money senior writer) that at the then current rate of borrowing, the yearly payments on the our debt would be 500 Billion by 2015. By 2019, the payment will have ballooned to 800 billion. That was assuming that interest rates stayed at the current near zero level. When interest rates rise even a small amount, the interest payments go up a lot because of the size of the debt.

When you add our national debt to the exploding costs of Social Security, Medicare, and other entitlement programs, you don't get a pretty picture.

 

[johnElarue]

Very good post koxxx,

I would add the problem with US debt is that it is mostly foreign held.

http://en.wikipedia.org/wiki/File:Foreign_Holders_of_United_States_Treasury_Securities.svg

none of the top 10 holders of US debt would dare dump their Tbills large scale, but it must be happening slowly, behind the scenes, hence the dollar drop.

 

[chipmunk]

IMHO, things are going to deteriorate BADLY by next winter. I am weighing whether to keep what's left of my IRA invested, but move it into something other than stocks. or whether to just cash it out and invest in some land. I figure the total amount I get, after all the penalties and taxes, may be equal to or better than what it's worth if the dollar collapses. What do y'all think?

 

[Ldychef2k]

I wouldn't let anyone else have an ounce of control over my money. I want to save it. They want to spend it. Or freeze it. Or devalue it. It is controversial, but I invest what little money I have in silver coins of various denominations.

 

[Wifezilla]

Wow- how did you get from "give me specifics" to "weirdo?"

When you use terms like "sky is falling type"? Or say we are "hiding in a box"?

 

[enjoy the ride]

What I said was that there are always people at both extremes of the emotional scale- some constantly report doom, others ignore everything uncomfortable.
In order to understand anything, details and timeframes are required. Otherwise living in a box is what will happen because no one will ever "know" what will happen.

I think this is a reasonable position. Inflation, deflation, credit crisis, etc- all have different responses.

BTW- I never identified anyone in particular.

 

[TanksHill]

You know I just came across a web site today that was talking about trading in some of your 401k for precious metals.

Most of this is over my head. K0xxx have you ever heard of this? And really in an emergency situation who has your money?

http://www.usgoldbureau.com/gold-monitor-newsletter?gclid=CPiX87Xe4Z8CFRcdawod9WACHA

Let me know what you think.

Thanks gina