In The Land of the Blind

One of my favorite sayings is that in the land of the blind, the one-eyed man is king. This is my answer to the question I said I would answer last week, "Is the US Toast?" The US is like that proverbial one-eyed man. Things are bad, but they are not catastrophic.

Japan is a bug looking for a windshield, as John Mauldin is fond of saying. If Japan had started a less aggressive program 10 years ago it might have worked, at least that was the conclusion of the John Mauldin show I just saw. Since you have to register, I can not embed the video. Japan is not toast, it is bread so burnt you can not recognize it. (Note that you may have to register if you want to watch this video. Click here.) 

Mauldin did not mention China as it is difficult to invest there. But I stand by my prediction that China is burning toast. It may still be edible toast, but there are huge problems.

Europe is burnt toast. It is still edible, but no one really wants it. I have this gut feeling that selected companies in Europe will do well, but I am not smart enough to pick them. Actually, the main point of the Mauldin video is that no one is that smart so an investor needs to buy indexes and diversify.

Maybe the perception that the US is in better shape than the rest if the world is false. But as long as the rest of the world thinks this is so, it will be so. Thus when the crisis hits in 3 to 7 years, I predict the dollar will increase in value.

In a relative sense things will not be that bad, but if you are the one that gets laid off, you might have a different perspective. The crisis will spread, and it will not be pretty.

Is the US toast? No, things will not be as bad as elsewhere. But things are going to be bad when the fecal matter hits the air circulation device. Are you ready?