MarketWatch: (Finance Guru) Schultz still sees an apocalypse

[El Pinko]

http://www.marketwatch.com/news/story/harry-schultz-running-hills/story.aspx?guid=%7BAD492AD9%2DDA65%2D4944%2DA514%2D03C7FBACCFA2%7D&dist=MostReadHome



PETER BRIMELOW
Schultz still sees an apocalypse
Commentary: 'Pretend an emergency is coming, because it may be'
By Peter Brimelow, MarketWatch
Last update: 12:03 a.m. EST Feb. 18, 2008

NEW YORK (MarketWatch) -- Harry Schultz hasn't changed his mind: Run for the hills.

... success hasn't softened Schultz. Even I was startled by the apocalyptic tone of his December letter. It said flatly: "A financial tsunami is upon us." See Dec. 13 column

Schultz writes: "It's a derivative crisis, stupid !... 9,000 U.S. banks failed in 1929-1932; look for new records ... Hyper-inflation is a distinct possibility; stay awake!"

....

But then HSL continues: "Global stock markets are short-term oversold. Place, or tighten profit stops on short sales to protect against a potential rebound ... Interest rates will rise sharply long-term, but are generally destined to fall before they rise. Move some funds from short-term government paper (90 day T-bills) into a mix of six-month to two-year government paper (Swiss Franc, Euro, Australian dollars, Canadian dollars) to lock-in current interest rates and hedge against short-term rate declines.

"Exposure to gold shares and bullion should be a minimum of 35-45% of your total portfolio, with at least 10% in physical gold bullion and coins (preferably held in boxes outside of U.S.) ... If not already done so, use the current U.S. dollar mini-rebound to exit U.S. dollars and/or hedge dollar-denominated assets via futures and/or bank forward contracts."

[PDJane]

1. I'm not that startled.

The US has been counting on the world to support the USD in sheer self-interest. The dollar has been on shaky ground for some time, and the administration and the banks have been acting as though the USD would be king forever. It simply can't be, because the debt crisis is now a crisis; there aren't enough hard assets to back the debt. There is no manufacturing; the only thing the US has that others don't is a huge military budget and the means of killing large numbers of people. I'm not sure that's the asset you need to survive.