Baby Boomers Possible Investment Opportunity of a Lifetime

The world is turning up-side-down. Values are being destroying  and rules of law, business and etiquette thrown aside.

In such a world the best Baby Boomers can do is try to keep themselves and their money safe until everyone realises the world is doing really stupid things.

Kitchen table economics tells you that you don’t try and get out of debt by buying more debt. Even if you have your own money printing press other people will eventually not trust the money you give them.

Suspending the rules governing mortgages got us in this mess. It was Congress that forced banks to lend money at lower interest rates to people who would not normally qualify for them.

The new rules are for banks to re-negotiate the “good” loans and make them as bad as the bad loans for the banks in the hope the people can pay them.

It seems any payment is better than none.

Good loans are defined as with people who have been paying their loan until recently.

I heard that one guy gave up his job so he would qualify. Others have stopped making payments waiting for a bailout.

That’s the problem. People start to believe they should be entitled to a bailout because their neighbour got one. If they don’t get one too, what is going to happen in that neighbourhood? There are going to be winners and losers.

All the things we believed in are no more. He who screams the loudest gets a bailout.

How can any country hope to get out of this mess when that sort of logic prevails.

As such investing in anything now if fraught with danger. The DOW dropped almost 4% the other day. Why, everyone knew the stimulus package was coming and what was in it. It is an irrational response.

Other say the Dow fell because the markets were concerned about bank debt. Are they only just waking up to the bottomless pit of debt the governments keep throwing our money into? Again totally irrational.

In this environment where there are no rules that cannot be broken at the whim of governments for the greater good, Baby Boomers should not invest one dime in risk based assets like stocks and property.

Tomorrow the rules may change and you will lose. This is not a climate to invest into.

You need to know the rules and that the rules will not be changed to fix some problem somewhere in the economy.

Until Mr Geithner and his team tell us the new rules of the investment game from here on in we need to stand aside. Let’s hope he allows for innovation and risk taking.

“I believe that markets are central to innovation and to growth, but that markets alone cannot solve all problems. Well-designed financial regulations with strong enforcement are absolutely critical to protecting the integrity of our economy.”

Cash (I know I do go on about it) is about the best place you can be right now (inflation accepted).

The more our governments meddle with the economy the quicker they will come to realise they can do very little to fix it. When they finally admit it and get out the way private money will come back into the markets and risk taking will begin again.

I have a dream….

It may well be the investment opportunity of a lifetime. Be cashed up and be ready.

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