Monday, March 9, 2009

Jim Rogers: US economic policy is 'ridiculous and insane'

Money and Markets

Emergency Briefing Transcript
by Martin D. Weiss, Ph.D. 03-09-09

America’s Second Great Depression has arrived; and a great bear market is here.

I prayed this day would never come as often as I predicted it. But now that it’s here, I have a new prayer:

That you will boldly defend your assets before
the next big decline; build your wealth during the decline;
and reinvest it in America after the decline,
when we hit rock bottom.

No one can know in advance at what level that bottom will be. Nor can we know for sure when it will come.

But today, as the crisis unfolds in a rapid staccato of collapses, and as the severity of the damage is revealed, we can gain a firmer grasp on certain unassailable facts:

Fact #1. As in the early 1930s, the essence of this crisis is a debt collapse.

Fact #2. The debts today are far greater; and their collapse, more impactful. Specifically, in 1929, for every dollar of GDP, the U.S. had $1.70 in debt; today, it has $3.50, or nearly twice as much. In 1929, there were virtually no derivatives; today, among U.S. commercial banks alone, there are $176 trillion. In 1929, the U.S. was a creditor nation with no debts to foreign countries; now it’s the world’s largest debtor nation, owing more than $2 trillion abroad.

Fact #3. Between its peak in 1929 and its ultimate bottom in 1932, the Dow Jones Industrial Average fell 89 percent, the equivalent of a decline to Dow 1500 in today’s market.

Thus, even if this depression is not more severe than the 1930s, a devastating, long-term bear market still lies ahead.

That’s why we recently held an emergency briefing on bear market strategies. And that’s why I’m dedicating this triple-length issue to the transcript …

The 11 Laws of Bear Market Success FULL STORY.

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