Why I am now considering selling some of my stocks and buying TBT:
I put a portion of this email on the business & headlines forum, but it belongs here, as I need to add the investment consequences.
Whenever I discussed the current bailout situation with people, I find they can not truly understand what it represents; I am a student of history so think of it this way:
The $4.6165 trillion dollars committed is about a trillion dollars more than the entire cost of World War II for the United States:
Word War II. original cost was $288 billion in 1945, that is $3.6 trillion, adjusted for inflation, in today's money. The bailout has passed it already by a trillion some time ago since..
If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. so let’s give this some context.
The current Credit Crisis bailout is now the largest outlay In American history.
Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:
• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion
TOTAL of ALL the above programs: $3.92 trillion
Now the bad news..
this email is from November 2008, so it is before the Obama stimulus package, and does not include it. Well you say what is another trillion to add to it..
A trillion is...
If one spends $6 Million per hour, 24 hours per day, that gives you $144 Million per day; and that is over $700 Million per week..
It takes over 19 years to spend just 1 Trillion with round the clock spending of $144 Million per 24 hours ... 19 YEARS!
or if you prefer think of it this way:
One thousand times one million = one billion.
One thousand times one billion = one trillion
In other words. One million times one million = one trillion.
The trillion dollar stack would be one million times higher than the million dollar stack -or- picture it this way. It would take one million stacks of one million dollar bills to equal one trillion dollars.
If the million dollar stack is indeed .067 miles high, Then the trillion dollar stack would be 67,000 miles high. (fairly near to one third the distance from the Earth to the moon).
Oh.. and remember YOU are paying for all this.. so now that we know what a trillion means, I am scared. As these trillions are going to be trillions of TBonds.
Now you add the situation with China, who was the main buyer of TBonds, and who now has its own problems and may not want to keep buying them anymore, and you have a problem to finance all these trillions.
I have not pulled the trigger yet and I truly hate to admit it, it is getting scary for me, so I am considering selling some of my stocks and buying some TBT and I am also concerned of the effect of the above trillions on our currency, since the other countries are also running similar bailouts I do not think that selling the dollar for the Yen or Euro will help, so I am thinking of buying some gold or GLD, ABX and GFI.
I realize this sounds like a panic but Marc Faber, is the one person on the Barron's 2008 Round-table who got it right. (Strangely this year he had many longs but sounded bearish too.) and i thought he had paniqued.
So I am thinking of keeping some key positions like BRK, WFC, PFE, LUK, GOOG, MSFT etc.. but cutting back on many of the rest and adding some TBT.
Any thoughts?
PS: Sorry to those who read part of this on the other post
I put a portion of this email on the business & headlines forum, but it belongs here, as I need to add the investment consequences.
Whenever I discussed the current bailout situation with people, I find they can not truly understand what it represents; I am a student of history so think of it this way:
The $4.6165 trillion dollars committed is about a trillion dollars more than the entire cost of World War II for the United States:
Word War II. original cost was $288 billion in 1945, that is $3.6 trillion, adjusted for inflation, in today's money. The bailout has passed it already by a trillion some time ago since..
If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. so let’s give this some context.
The current Credit Crisis bailout is now the largest outlay In American history.
Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:
• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion
TOTAL of ALL the above programs: $3.92 trillion
Now the bad news..
this email is from November 2008, so it is before the Obama stimulus package, and does not include it. Well you say what is another trillion to add to it..
A trillion is...
If one spends $6 Million per hour, 24 hours per day, that gives you $144 Million per day; and that is over $700 Million per week..
It takes over 19 years to spend just 1 Trillion with round the clock spending of $144 Million per 24 hours ... 19 YEARS!
or if you prefer think of it this way:
One thousand times one million = one billion.
One thousand times one billion = one trillion
In other words. One million times one million = one trillion.
The trillion dollar stack would be one million times higher than the million dollar stack -or- picture it this way. It would take one million stacks of one million dollar bills to equal one trillion dollars.
If the million dollar stack is indeed .067 miles high, Then the trillion dollar stack would be 67,000 miles high. (fairly near to one third the distance from the Earth to the moon).
Oh.. and remember YOU are paying for all this.. so now that we know what a trillion means, I am scared. As these trillions are going to be trillions of TBonds.
Now you add the situation with China, who was the main buyer of TBonds, and who now has its own problems and may not want to keep buying them anymore, and you have a problem to finance all these trillions.
I have not pulled the trigger yet and I truly hate to admit it, it is getting scary for me, so I am considering selling some of my stocks and buying some TBT and I am also concerned of the effect of the above trillions on our currency, since the other countries are also running similar bailouts I do not think that selling the dollar for the Yen or Euro will help, so I am thinking of buying some gold or GLD, ABX and GFI.
I realize this sounds like a panic but Marc Faber, is the one person on the Barron's 2008 Round-table who got it right. (Strangely this year he had many longs but sounded bearish too.) and i thought he had paniqued.
So I am thinking of keeping some key positions like BRK, WFC, PFE, LUK, GOOG, MSFT etc.. but cutting back on many of the rest and adding some TBT.
Any thoughts?
PS: Sorry to those who read part of this on the other post
