Saturday Snippet: A twofer

 

Normally I put up an excerpt from a book on these Saturday Snippet posts, but occasionally I've excerpted a magazine article, or Internet essay, or something else I thought was important.  Today is such a day.

John Mauldin is an expert of long standing on the economy and investment.  I don't always agree with him, and he's been wrong in the past in several areas, but generally I'd say he's batting a pretty good average on his analyses of the investment scene and who's doing what, with which, to whom.  I get his free weekly newsletter, "Thoughts from the Frontline", and make a point of reading it (and I suggest you should too).

The last two editions of "Thoughts from the Frontline" have contained Mr. Mauldin's forecasts for the year (and decade) ahead.  They dovetail with mine in many areas, including the need to prepare for them (although he'd concentrate on investment and financial preparations, whereas I focus on more practical - not to mention edible - areas).  I highly recommend both to your attention this morning.  Click on the title of either to be taken to it.  I've added a couple of short excerpts to illustrate why I found them valuable.

No Way Out

Having now spent almost six months describing the historical cycles and massive debt that surround us, I find myself looking for an “easy” exit. Maybe one exists, but I haven’t found it yet. I think we’re stuck. The building will have to collapse around us before we can leave.

This is obviously not a great situation. For one thing, if we don't plan properly, the building could easily collapse on us instead of around us. Our entrapment may also cause us to neglect other big problems and maybe miss important opportunities.

The sad fact is we have no easy way out of the debt situation. Worse, we are actually choosing this fate. It’s not about individual choices; none of us want the crisis that’s coming. But all the solutions require joint actions we are apparently unable to take. Which means we are, by default, choosing a path which for many will be catastrophe.

We face this not just because of government policy choices but the political process itself. It is a function of the two-party system. Our system has lost the ability to act decisively against big problems we all see coming. We are a nation of deer in the headlights.

. . .

As we will see below, when I suggested part of a future compromise, I got serious pushback from readers on both sides. And the irony is I understand the frustration. Viscerally. I agree that everything that I have suggested in the past few weeks and months are bad choices. But in the future, the worst choice will be doing nothing and letting the economy collapse around our ears. Some might come through it, but the vast, vast majority of us won’t ... That’s not the future I want to predict, but I see no other possibilities. I think we have a few years left but there are already mutterings of stress in the US bond markets.

Clashing Crises

“Two is better than one” is a nice saying, but it really depends on what you’re describing. Two hurricanes or earthquakes aren’t better than one. Just one disaster at a time will suffice, thank you very much.

The same holds true for man-made crises like the debt fiasco we’ve been discussing. Last week in No Way Out I said we’ve missed our chance to avoid it. We are simply not going to do what it would take to get the federal debt under control—like it was as recently as 2001—until we have no other choice. I have said it before, and I truly believe it, it will take a crisis to force us to act on the deficit and debt.

When you know a problem is coming, the normal ideal is to address it immediately. Procrastination just lets the problem grow and raises the odds you will face multiple problems at the same time.

And that, unfortunately, is what I fear will happen. The government debt crisis will be bad enough, but it’s also likely to crescendo just as we face social, geopolitical, and demographic crises, too ... A bunch of bad things are going to happen in a fairly short time.

Now is the time to begin preparing for what will come.

There's more at both links.  Highly recommended reading - and important, IMHO.  This sort of information helps you plan for an increasingly uncertain and threatening future, to the best of your ability.  Far too many of us are not yet doing that.  It's long gone time we did.

Peter