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The key word here is exposure. I am not referring to
personal survival here, but economic survival.
Let me begin by saying that economic collapse won’t
happen overnight. It will develop over a period of time.
The most important thing is to recognize events for what
they are, as they unfold. You can look back in history to
find examples. The Great depression began with events
that occurred prior to the stock market crash of 1929.
The markets during the period prior to the crash were
similar to every recession that has taken place.
The economy, such as it was at the time, was going full
steam and “irrational exuberance” was the order
of the day in the stock market. Finally the bubble burst,
and the economy went into an extended recession.
(Depression) It lasted more than ten years.
Under those conditions, wealth simply disappeared. It was
far worse for some then others. Recovery was easier for
those who were prepared.
Although I cannot be precise as to what set the market
tumbling, I can say that any anomaly that occurs in the
financial markets can trigger a crash.
As if the sub-prime lending crisis and 3 bank closures
this year aren’t enough, just consider this
additional information.
Personal spending and credit card debt are still
accelerating, with a huge proportion in private lending
to young people with little or no credit history. Private
student loans have increased from $4 billion in 2006, to
$17 billion in 2007.
Expect defaults on student loans, as they are often sold
to third-party investors, similar to the way questionable
sub-prime home mortgages have been sold. Also, expect to
see more bank closings. If you want to see what a run on
a bank looks like, just type Northern Rock Bank Run, into
your browser.
Also, as evidenced by today’s precipitous drop in
the market (from up 112 points to down 63 points) between
2:00 PM and close of the market, you can see that things
can change that rapidly. If you’re old enough, you
will remember watching as the Dow Jones fell 580 points
in about the same amount of time, in October of 1987. The
recession that followed lasted only 3 years. Add too, the
fact that the U.S. Dollar has fallen 36% in value since
2002, and that the stock market has gone up 1200 points
in just the past 2 months.
If you have specific questions about reducing your
exposure, please send them to me. I realize that the
suggestions posted on the site are pretty general or
broad, so I would really appreciate knowing if I missed
anything, or if you might have an idea that I
haven’t thought about.
1. Get out of real estate investments and delay any real
estate purchases until after the crash. Asia's real
estate prices fell as much as 70% after their recent
stock market crash.
2. Get out of the stock and bond markets.
3. Reallocate your retirement funds to safe, liquid,
short-term investments such as money markets or consider
switching most of your investment money into hard assets.
4. Buy gold and silver bullion and coins such as Gold and
silver eagles and junk silver coins (pre-1964).
5. You should have some cash on hand in small
denominations. As runs on banks occur, they will limit or
suspend withdrawals. Checks and credit cards will be all
but useless.
6. Purchase items now, that can be bartered easily.
7. Stock up on food and survival items now.
8.Those with the least amount of debt will survive the
storm more easily. So try to get debt free. Pay off your
credit cards.
By Michael Scoglietti
Copyright DynamicTrends
DynamicTrends.com
8380 Pearl Rd. Suite 303 Strongsville, Ohio 44136
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