Too many companies are borrowing money on terms and at maturities that fit an economy that is just starting to recover, rather than one that has nowhere to go but down.
Borrowing funds is advantageous when rates are cheap (they are) and growth is resuming (so that the growth spurt is ahead of you), but not after a decade of improving conditions.
In fact, the U.S. economy is so “efficient” right now that employers are trying to figure out how to entice individuals on the sidelines (which are not part of the existing labor pool) to come back and take a job. There are more openings than available skilled employees to fill those jobs.
No, that doesn’t mean that each and every person is working his DREAM JOB, or even that all people are currently employed, since 156M people are either working full-time or part-time. My point is that this is, right here and right now, AS GOOD AS IT GETS, so if you don’t like the current situation, wait until the downturn hits.
Take a close look:
Like a retired NFL star, this country continues to spend as if those mega-million-dollar checks will keep coming forever, but the golden goose stopped laying eggs a long time ago.
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Today, the government is a giant monster, whereas 200 years ago, most people didn’t even know who the president was. They knew who the governor was, because states actually exercised their rights, guaranteed by the constitution.
No, there is no solution – which entails more deficits and more central banking.
This is a system built on the faith that people have in fiat currencies. When the population loses that confidence, we can very quickly slide into chaos and martial law.
Governance is a fragile and delicate game.
One thing I can guarantee you is that the government will never make your life measurably better; only you can do that.
There is capital in private hands sufficient to solve this country’s issues, but it’s locked away.
The rich do not feel secure taking big steps. Government is floating ideas out there that would make anyone cautious and anxious. Think about your personal lack of trust in Washington. Now, think of having billions at stake and where you should invest them in today’s world. This is the challenge private equity faces every single day.
Corporations have used cheap credit to borrow far too much, but in contrast to governments, there is no guardian angel to rescue them; CEOs don’t have access to a counterfeiting operation that magically issues new currency units, when the leaders over-promise.
Many companies are about to go under, as banks tighten lending terms. CEOs looking to re-finance will hit a death wall.
The next recession will start as credit tightens and these zombie corporations topple over.
Own gold. Have liquid cash on hand. Consider using put options, if you don’t have more than 10 years until retirement and need your portfolio money to live off.
We don’t like seeing disorder and artificially-low rates, but we don’t like being suckers to banking manipulators, either. Keep your composure, as the end-game approaches.
Research Partner, PortfolioWealthGlobal.com
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Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.
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