The young woman who asked that question over supper the other night wants to know whether to quit her job and travel the world. But her friends are telling her that we are in a recession, and some are even saying it's going to be worse than the Great Depression of the 1930s.
Sadly, I had to reply, "It's going to be really bad, and - yes - possibly worse than the Depression." Asked why I was so pessimistic, I went on:
"My brother and I manage our sister's part of the estate (mine having gone into our mortgage, a used "new" car, our daughter's college education, and then her wedding). To be responsible, we have had to scour the literature for investments that are relatively safe. That has led us to several newsletters that, over the past decade, have proven to be remarkably accurate. So, while others have lost huge amounts of money, her portfolio has gone from $60,000 to $104,000 in the past few years.
"The newsletters we follow all predicted the sub-prime mortgage meltdown, the credit crunch, the looming bankruptcy of bond insurers, surge in the prices of oil and gold, rising inflation, and much more. They say that the worst is not over, and that we could be facing a collapse of the financial system or, at the very least, "stagflation" - the toxic mix of slow (or no) economic growth and rampant inflation. They believe that the truly mammoth pyramid of derivatives will collapse, and the entire financial bubble created by easy credit under Greenspan and now Bernanke will pop, with disastrous results."
This did not comfort my friend, who asked, "So what should we do with our money?"
"They recommend various strategies, including (1) get out of the U.S. stock market; (2) invest in some socks based in other countries with better prospects for long-term growth; (3) put money into cash (such as short-term Treasuries); (4) get out of the U.S. dollar and into other currencies (such as the Swiss franc); (5) buy gold and silver - either the physical metals or safe substitutes, like an ETF or certificates that have your name and a serial number, stored in a really safe place; (6) buy stocks in commodities, such as oil, wheat, precious metals. They also have other suggestions, depending on their point of view."
I promised to send her information via this blog, so here I am, passing on to you what my brother and I have found useful for our sister. I recommend that you look first at the Safe Money Report of Martin Weiss(www.martinweiss.com). Supplement that with the newsletter on currencies from Everbank (www.everbank.com); and fill it out with the newsletter on silver from Jim Cook of Investment Rarities International (Call 1-800-328-1860 and ask for Greg Westgaard; tell him I sent you. He knows me as "George" [my first name, which I use for business]). Ignore the hype in Weiss' publications. He's been right on, despite all the exclamation marks.
McAlvany's Intelligence Advisor (www.mcalvany.com) is not for the faint-hearted, but it's interesting to know that he was against the invasion of Iraq from the beginning, seeing it as a costly no-win boondoggle. He's quite critical of the government (as are some of the others I've mentioned) and very pessimistic, which turns a lot of people off. But he does give news and analysis on the current economic and geo-political situation, with worst-case-scenarios worthy of the best "doom-and-gloom" prognosticators, except that he always ends with a strong affirmation of Christian faith and a reminder that we have no security in this world apart from God's promise to take care of his people.
The March 16 New York Times carried two articles of interest: On the front page, a story on how Fed chief Bernanke has apparently thrown the "rule" books out the window in a frantic attempt to prevent a total financial collapse - which should tell us something about the seriousness of the situation -and, on the front page of the business section, a scathing criticism of the Fed's bailout of Bear Sterns this weekend. Apparently, the writer thinks this sends the wrong message to irresponsible risk-takers, and presages the further decline of the dollar, inflation, and a loss of trust in the U.S. government and the U.S. market.
March 18's Wall Street Journal used terms like worsening chaos, panic, collapse, etc.
Friends, this is the big one people have been warning us about for years now, made incredibly huge by the explosion of derivatives investments whose "value" now exceeds that of the U.S. economy.
Maybe during these coming months we shall have to re-think our priorities in life, tighten our belts a bit, and renew our commitment to seeking God's kingdom first.
One thing we know: Psalm 23 has not been taken out of the Bible, and Matthew 6:33 is still true. We don't have to worry. We just have to trust God and do what seems best for his glory and the good of our neighbors.