Mission impossible for president-elect Obama

‘Your mission, Barack, should you decide to accept it, is to save the US economy from imminent destruction. You will not actually take over until January 20 by which time you and your IM force should all be in position. As usual should you or any of your IM force fail in your mission this website will deny your existence. This message will self-destruct in five seconds!’

It would all be so amusing if it were not so desperately serious. Changing the US executive management team mid-crisis with a couple of months handover time seems absolute lunacy.

The new IM team has to familiarize itself with the problem and devise an instant solution. You have to ask yourself: how are they going to do it? Bring in Tom Cruise as treasury secretary? Actually my choice would be Bruce Willis – he always seems so cool in a crisis.

No escape

But I am afraid the sober conclusion is that neither Bruce Willis nor the IM team are not going to save the world this time. The financial crisis is a doomsday scenario and the meltdown of capital markets through out the world is going to take its course.

People with real assets and no debt will be OK. But then they always were going to be fine. It is the vast majority that is in trouble with debts bigger than their assets and jobs now under threat. The US shed half-a-million jobs in the past two months, and this downsizing could go on for a year or more.

I suppose the real message for Americans is to buck-up and realize that electing a new president does not help them in the short term, and that they have to belatedly take responsibility for their own actions: whether that was buying a house at the top of the market, remortgaging to take a holiday, running up debts on a credit card or rushing to buy stocks.

There are no easy solutions any more. My biggest fear about the IM team is that they will choose spending, subsidies and inflation as a solution to the US economy. That will collapse the US dollar within 12 months with incalculable consequences for the world economy.

Precious metals

Investors who have money and want it to maintain its value should therefore take advantage of the current low prices of gold and silver, and especially beaten down precious metal stocks. Cash might be king for the moment but precious metals will shortly stage a coup d’etat.

This will start with a collapse in the metal futures market – where contract owners have the right to insist on actual physical delivery, and when they do the exchanges will not be able to do so and the price of the underlying asset class will soar. Arabian investors alone could break the Comex futures exchange and make a fortune in the process.

Precious metals are the safe haven of last resort, and that is where the current crisis is taking us. It is a cycle and once we are at the bottom the process of recovery can begin. But the Mission Impossible for the new team is just that.
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