Crisis Redux- Road to Perdition (unemployed, insurance, economy, financial)

[SilverOne]

Jim Willie | Crisis Redux | 2010-07-07 | FINANCIAL SENSE

July, 7 2010 article by Jim Willie


One of the most pernicious dirty secrets is that the supposedly excess bank reserves parked at the USFed are actually Loan Loss Reserves attracted by the USFed itself, by virtue of interest yield offered. Banks are running naked and insolvent and constipated, hardly a pretty image. The extraordinary measures have worn off, even as the political will to continue them has faded away. Reality has a way of returning to the scene, front & center. A rot has permeated the USEconomy. Personal bankruptcies are up 14% in the first half of 2010, hardly a sign of a recovery. Home sales are down. Foreclosures are unrelenting. Retail sales are down. Factory orders are down. California might look worse than Greece. About one million Americans have dropped out of the jobs market in the last two months. Eight million jobs have been lost in the recession that never actually ended. The rolls of people unemployed but not receiving a jobless insurance check amount to 9.2 million. The USFed has begun to eye the Printing Pre$$ once again. Internal battles within the USFed center upon asset deflation and resumed bond monetization. The august body of hacks who occupy offices at the venerable US Federal Reserve Board is arguing in heated fashion about QE2, a Round #2 of powerful monetary printing, bond purchase, and financial market defecation, with predictably destructive capital formation effects toward which they remain blind.

More at link.........

[HappyTexan]

I read the Financial Sense website every night. There are so many good editorials and from a wide spectrum of authors.

Many of the contributors there have turned bearish lately and are urging folks to protect what they have..."preservation OF capital" because too many indicators are pointing to another dip.

[GregW]

So where am I supposed to put my Mutual Fund savings to protect them from this catastrophe?

[HappyTexan]

Originally Posted by GregW

So where am I supposed to put my Mutual Fund savings to protect them from this catastrophe?

If you are in a 401K there is a special fund called "Stable" which is the equivalent of a Money Market fund. It's a fund of Treasuries but with an underlying insurance policy to keep that $1 value minimum.

If you are not in a 401K then you can just move to a Treasury or MM type mutual fund and sit on the sidelines for a while.

There is nothing wrong with sitting on the sidelines (out of stocks) during bear markets. It's all in the timing of getting out and then getting back in.
During this time though you can be speculative with some of your money; money you can afford to lose. That's what I'm doing right now..the bulk of my savings is fairly liquid and not in stocks but I have some "play" money in Fidelity that I am gambling with..short term.