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On the US economy ...

so that a first grader can understand it


Here's what's happening to the US economy so that even a first grader can understand it:

Humpty Dumpty sat on a wall.
Humpty Dumpty had a great fall.
All the king's horses and all the king's men
Couldn't put Humpty together again.

As I've mentioned before, we are undergoing the most severe US economic downturn that will occur in my lifetime. This one will make it into the economic books and be studied in detail. We see highly unusual actions (read desperate) moves by the FED and the government to try to contain this. (Didn't Bernanke state last year that it was already contained?) But, I'm afraid that it's not going to be able to put Mr Dumpty back together again.

The US has reached it's economic apogee. We have held the position of the economic powerhouse of the earth for awhile. And someone else will be coming up to bat. We'll probably end up being an England or a Germany, strong but not a global leader.

The permabulls have not all given up yet. They all keep saying we've reached the bottom. But, unless fundamentals change, the argument that 'we've gone down so much already it can't go down much more' is not very convincing.

What am I doing with my portfolio during this time? Being aggressively defensive. Inverse ETFs, gold, oil, international stocks, money market, income bonds. Everything except having long positions in US stocks.

Posted: 2008-03-17 10:52:07

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