I know none of you would like to have the Hot Gun Spy looking into your portfolios or checkbooks, but I am warning all readers to watch their money very carefully. I have been hearing more and more financial voices warn of a serious crash in America's financial future, and the chatter is getting louder, more frequent, and more intense. This chatter is from serious folks, too. This is not just a bunch of fringe economists wearing tin foil hats theorizing about a collapse. This is a serious discussion among very serious people.
This from DailyKos:
"Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish."But you should hear what he's saying in private.
"Roach met select groups of fund managers downtown last week, including a group at Fidelity.
"His prediction: America has no better than a 10 percent chance of avoiding economic 'armageddon.'"
"Press were not allowed into the meetings. But the Herald has obtained a copy of Roach's presentation. A stunned source who was at one meeting said, 'it struck me how extreme he was - much more, it seemed to me, than in public.'
"Roach sees a 30 percent chance of a slump soon and a 60 percent chance that 'we'll muddle through for a while and delay the eventual armageddon.'
"The chance we'll get" through OK: one in 10. Maybe."
That is not all. Paul Krugman is now officially referring to the U.S. as a banana republic. Here is an excerpt in a piece from Reuters:
"The most immediate worry for Krugman is that Bush will simultaneously push through more tax cuts and try to privatize social security, ignoring a chorus of economic thinkers who caution against such measures."'If you go back and you look at the sources of the blow-up of Argentine debt during the 1990s, one little-appreciated thing is that social security privatization was a important source of that expansion of debt,' said Krugman.
"In 2001, Argentina finally defaulted on an estimated $100 billion in debt, the largest such event in modern economic history.
"'So if you ask the question do we look like Argentina, the answer is a whole lot more than anyone is quite willing to admit at this point. We've become a banana republic.'"
"Crisis might take many forms, he said, but one key concern is the prospect that Asian central banks may lose their appetite for U.S. government debt, which has so far allowed the United States to finance its twin deficits."
