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March 6, 2008

3

The U.S. Financial System Is Broken

by Dan

I’ve been reading Mike “Mish” Shedlock’s economic commentary for a while now. This comment struck me as something that would be very funny if things weren’t so serious:

If you were by any chance wondering why mortgage rates were not following the Fed’s slash and burn policy of lower rates, the…short answer is rising default risk.

But let’s not be too gloomy here.

Other than overleverage, bad debts, sinking home prices, no jobs, shrinking wages, cash strapped US consumers, rising oil prices, a sinking US dollar, $500 trillion in derivatives not marked to market, rampant overcapacity, underfunded pension plans, looming boomer retirements, no funding for Medicaid, no funding for Medicare, and no Social Security trust fund, everything is just fine.

The fact that (I believe) we’re heading into a recession has made me reconsider many of my investment strategies. I know that in the very long-run, the market will do well. But why take the hit of staying in the market during a stock market crash if you know one is coming?

There aren’t many types of investments that do well in a recession. I believe silver will be one of them (up over 33% year-to-date). Others include CDs and Treasuries.

I’m also going to be saving up as much cash as I can, for two reasons:

  1. In case I lose my job, and
  2. To be able to buy investments for cheap when things are really bad.
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3 Comments
  1. mom
    Mar 21 2008

    Ok. Time for more pictures :-)

  2. Dan R
    Mar 27 2008

    Hi there,

    My name is Dan Reese and I was curious if you would be interested in selling/canceling your rights to the domain name “danielreese.com”. I am a college student trying to start my own photography business, and it would be really helpful to have my own domain name. I realized that currently “danielreese.com” is just transfered to this website, so hopefully you might not need it anymore…

    Thanks for any support, Dan

  3. Dan
    Mar 29 2008

    Go ahead and send me an email. My address is dan at this domain.

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