Decline & Fall
October 12, 2009 by goldguru · Leave a Comment
Bullion Vault
Rome’s long decline, now repeated by the United States…
WARREN BUFFETT famously says that people do not make money by betting against the US economy. But two years ago we decided to take a chance, writes Bill Bonner in his Daily Reckoning.
“We are short the United States of America,” we announced from the comfort and safety of our headquarters in London.
“Sell its stocks. Sell its bonds. Sell its money. Sell its real estate. Sell the equity. Sell the debt. Sell everything.”
What we saw was an over-stretched empire getting ready to snap. But we were also allowing ourselves to be lazy. Rather than deconstruct the capital structure of the world’s largest economy, we decided to sell the whole damned thing.
All hell broke loose in September 2008. Since then, US stocks have gone down about a third. Real estate too. Unemployment has doubled. Consumer prices are going down at the fastest rate since the ’50s. And the economy is in the worse recession since WWII.
Meanwhile, Americans’ per capita wealth has fallen from $172,000 in September from $212,000 two years earlier. And the UN reports that the quality of life in America has gone down too…from No.5 on its list in 2000, it fell to No.13 in 2007. No doubt it is below No.20 now.
Buffett has lost billions betting on the US economy while our Gold positions are handily up; gold was the most profitable major asset over the last ten years.
So you see, we were right; America was a sell two years ago.