I’ve long been worried about the turning of the markets. I was pretty sure the local housing market would turn by the end of this year and I was a little late on that prediction. My prediction about the overall economy is that our country’s present spending plan is insane and will see a serious reality-slap within a year or so. It was with great laughter that I read James Cramer’s (of The Street) recent article on how to survive the coming crisis (via Andrew Sullivan).
“Our only hope that financial disaster won’t strike sooner lies with the Chinese, who actually fund our deficit by buying our Treasuries—$242 billion worth, or 12 percent of all foreign holdings. If the Chinese decide to be good communists and stop buying our bonds, the Feds will have to raise rates to attract new investors and the reaper will be at our doorstep with interest rates more akin to those of South than North America. Right now, it’s not a problem. But in a year or two or maybe less, I perceive that the government will throw a bond auction and nobody will show, including the Chinese, until rates shoot up dramatically.”
He’s a bit more optomistic than I am. I think the interest rate scene will be starkly different in the spring … more representative of the early 90′s than anything else.
