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Posted by Michael Siemon on January 2, 2007, 3:33 pm
> >
> > That would seem to assume the political stability of the U. S.
> > government. Not a bad assumption over the last 140 years, but not
> > necessarily good for the next 140 (or even the next 40).
>
>
> What political instability are you anticipating. A coup? Keeping this in
> financial planning, what political instability do think in the realm of
> reality would threaten US Gov't inflation-protected securities?
>
> Elizabeth Richardson
Well, bearing in mind that this is not a "prediction" but offered as
a possibility only -- the current polarization of the US is reaching
a level similar to that preceding the Civil War. There are major social
gulfs and wildly differing schemes/strategies of governance, many of
which involve devaluing some large groups of people. I suspect that
serious civil strife, if not war, become very possible in the coming
generation (hence the "next 40" years of my original remark).
In any case, the assumption that the US is somehow magically immune
to massive political upheaval is historically naive. That becomes
more pressingly true as the US loses its hugely dominant late 20th
century role in the world economy.
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Posted by Will Trice on January 2, 2007, 6:17 pm
Michael Siemon wrote:
> In any case, the assumption that the US is somehow magically immune
> to massive political upheaval is historically naive. That becomes
> more pressingly true as the US loses its hugely dominant late 20th
> century role in the world economy.
While all of this is true, it's not like the waste matter is going to
hit the rotating blades suddenly. I would hazard that we'll get plenty
of warning if things start to go sour. And even if we don't, your other
investments are likely to suffer as well. The real point here is that
U.S. notes are pretty close to risk-free as compared to the
alternatives. Unless you have something else in mind?
-Will
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Posted by Michael Siemon on January 2, 2007, 7:14 pm
> Michael Siemon wrote:
>
> > In any case, the assumption that the US is somehow magically immune
> > to massive political upheaval is historically naive. That becomes
> > more pressingly true as the US loses its hugely dominant late 20th
> > century role in the world economy.
>
> While all of this is true, it's not like the waste matter is going to
> hit the rotating blades suddenly. I would hazard that we'll get plenty
> of warning if things start to go sour. And even if we don't, your other
> investments are likely to suffer as well. The real point here is that
> U.S. notes are pretty close to risk-free as compared to the
> alternatives. Unless you have something else in mind?
>
> -Will
Primarily, global diversification, with US bills no more than 50% of
one's non-equity allocation. And equities more likely 40/60 US/Global
than a more equal or US-dominant split. There really _isn't_ any such
thing as a "riskless" vehicle, though I am not disagreeing that for
now the TIPS come about as close as you're going to get. But indeed,
watch out for fans spinning up and more matter heading their way...
What to do in that eventuality, I couldn't say.
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Posted by on January 3, 2007, 4:26 am
Michael Siemon wrote:
>
> Primarily, global diversification, with US bills no more than 50% of
> one's non-equity allocation. And equities more likely 40/60 US/Global
> than a more equal or US-dominant split. There really _isn't_ any such
> thing as a "riskless" vehicle, though I am not disagreeing that for
> now the TIPS come about as close as you're going to get. But indeed,
> watch out for fans spinning up and more matter heading their way...
> What to do in that eventuality, I couldn't say.
I'm not sure one gets advanced warning of the S-H-T-F. Russia's
default was only obvious to the market, in retrospect.
If one is truly gloomy, then a 5% weighting in gold (the metal, coins,
shares) is prudent. Probably more weighted towards the bullion and
coins, rather than shares (stock exchanges can be suspended, company
assets can be stolen a la Russia).
The world is jumping on the Uranium bandwagon, right now. They are
right about the fundamentals of uranium supply and demand, but I
suspect it is now too late, as an investor, to play.
International diversification is a good thing, generally. I would note
that the largest US companies have very significant international
exposure. The old number I heard was 40% of the earnings of the SP500
were from overseas operations.
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Posted by Will Trice on January 3, 2007, 6:02 pm
darkness39@yahoo.com wrote:
> I'm not sure one gets advanced warning of the S-H-T-F. Russia's
> default was only obvious to the market, in retrospect.
This is a good point, but I think it's difficult to compare the U.S.
monetary situation today with that of Russia in 1998. Arguably, the
main problem for Russia was that their tax revenues didn't cover their
interest payments. The U.S. isn't there (yet).
-Will
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