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Doctor Dinero's Discussions

January 24, 2004
Hurricane Alan
As I read investment reports, news articles, various editorials from the web, lurk on a forum (such as gold-eagle's). I just get the sense of dread. It is the same feeling when a hurricane is in the gulf and is forecasted your way. You have 36 hours to prepare. You board your home's windows (invest in gold an silver stocks). You stock up on your emergency supply of water and food and gas up your cars (buy physical bullion). Now you wait, watching the TV (until the power runs out) then you listen to the radio (reading all the monthly reports, editorials, etc). You hear the wind and the rain slowly (oh so slowly) build over the hours. You hope and pray that the hurricane will weaken. The outer feeder band comes ashore and hits your home (like the 2001 recession), you experience lulls between the storm bands (2003 bear market rally) but the overall the weather does not improve (jobless recovery). The storm bands continue to gain in strength (we have not seen the next band in my analogy). You start to think, "If it is going to hit, lets get it over with", since you have prepared (and you have turned up the air conditioning to make it through the power outage), but mother nature makes you wait (and forget about trying to sleep). Stronger and stronger storm bands banter your home (do you loose your job, does the brokerage firm holding your stock certificates go into receivership), the storm surge continues to rise making its way over the sea wall and flooding the coast (taxes, health care, energy, food, etc inflation). You want the storm to get it over with, because you are anxious and curious about the damage that is being caused. You want to spend this wasted time repairing and getting on with your life (rebuilding your financial assets and business). This is what today's economic climate feels like to me.

Meanwhile, your neighbors are throwing a Hurricane Party, imbibing and getting drunk (consumption of their financial savings, think home equity loans). They are in the process of consuming all of their provisions before the storm hits. They have not boarded their windows (why spend within your means when you got plastic). They ridicule you for boarding your windows (persecute the gold bug); they make you question yourself (is this storm going to be that bad). But when the stronger bands come, and blow out the neighbor's windows, and their house explodes, you feel thankful that you trusted your instincts and prepared. However, when the neighbor's home explodes, it will do some collateral damage to your home and others (It is not going to be rosy after the financial storm hits.) After the storm, roads are impassible, power is out, and basic survival becomes the name of the game. Having shelter and food, will enable your family to survive for a while, but the rebuilding process will take years and everyone's cooperation. (The US citizens will have to rediscover what made this country so great, follow the true spirit of the constitution.)

This storm analogy reminds me of Noah and the Ark. I wonder if his fellow villagers thought he was a nut and ridiculed him? I wonder if he had doubts after he, his family, and the animals were safely on board, but it had yet to start rain. It has been a long time since I read anything about Noah. I might just have to for inspiration and to get the story straight.

This storm has been building for years, growing in strength; it definitely would be a named storm. I think we should call it "Hurricane Alan". I am fearful of the overall damage it will cause to the world economy; all conditions are favorable for its continued strengthening (that is why you want the storm to come ashore now, not later, to minimize its strength at landfall). The main sources of its fuel are deceit, debt, deficits, derivatives, and fiat paper, which all continue to feed Hurricane Alan. The smart ones have left the region (Warren Buffet moving out of the dollar.) Only time will tell if staying was an acceptable decision, and it maybe that there is no safe harbor for any of us.

I am writing this as more of a personal catharsis, than an editorial. Something to keep my active and imaginative mind occupied as I wait for the coming storm to pass. Unfortunately, hurricanes can be slow storms, sticking around for days (think years). When this storm officially comes onto land, it will be scary. Many people will become homeless, with their lives destroyed. Protect yourselves and prepare.

I am no weather forecaster, just a simple chemical engineer, trying to survive the upcoming storm by lashing my family to a "golden" tree with "silver" palms. Hence, this could be why my wife sometimes thinks I am crazy. Jury is still out. You must make your own decisions. (As to the storm analogy, not my sanity.)

Doctor Dinero
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