The Fiscal Calm Before The Economic Storm

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New York, Illinois, California, and a dozen other liberal states will raise taxes dramatically in the next 3 months.  New York, for instance, is instituting 88 new taxes

OPEC will cut oil output until oil reaches their target of $75 to $90 a barrel, which equates to $2.30 to $2.80 gasoline.

Obama will impose regulations and taxes that stifle growth.

The Bush capitulation to the Unamerican Auto Workers thugs will allow Detroit to limp for several months before collapsing.

Things will look okay for a few months.  The DJIA will rise to about 9,800 by late January, though much volatility will remain.  Then the bottom will fall out in March or April.

Look back to 1929-1930, 1979-1981.  Both times, the economy began to recover before the big collapse.  But this collapse will be bigger because the government is just about out of options. 

The US government’s credit-worthiness has to be suspect.  No one want’s .25% T-Bills.  No one wants to invest in an organization that’s increasing its debt by $8 trillion every 90 days, as the US government has been since September.  The government is almost out of the borrowing business.  It will have to massively inflate currency to run.

Buy necessitates.  If you must invest, Hormel, makers of Spam, is your best bet.

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