Debt Deal Was a Dud and a Fraud

Not much to say about this fiasco - this just "kicks the can" of debt and spending down the road and prolongs the financial day of reckoning. There were no actual spending "cuts" made, just reductions in the amount of proposed spending increases. In Washington-speak, we won't spend as much as we planned to spend, so that's a cut and will help reduce the deficit.

In reality, it does nothing except maintain the Beltway status quo.

It's like giving a drunk two more shots of vodka and Red Bull to keep him partying later into the evening. In the short-term, he can keep partying... but in the longer-term, when he wakes up the next morning or afternoon, that hangover will be a doozy.

That's the best analogy I can think of to describe the cause of the American economic boom, and the following bust. Commodities and stock markets don't like the Debt Deal at all - gold has gone up $50/ounce since Monday, the Dow tanked 275 points on Tuesday. Europe still has major financial challenges with the amount of debt carried by Greece, Italy and Spain - frankly, I don't see the European Union or Euro as a viable entity or currency in the longer-run.

This financial "hangover" that America is facing will be really nasty. We got a taste of it from the stock market and real estate Crash of 2008. How bad will it be? Think of your worst hangover in college, where you're dry-heaving over the toilet late into the next afternoon.

When you swear "you'll never get that hammered again," only to go out next weekend and party it up. Unfortunately, the consequences to Americans' wealth and standards of living will be much more severe than acute alcohol poisoning. This hangover will take years - and probably a decade or more - to work through.

I doubt that America will re-gain it's standing as an economic superpower, because most of the success was fueled by debt, having the world's reserve currency, speculation... and ultimately confidence in our country, economy and financial system. The real collateral and support for financial paper assets and nations is in the public's confidence in those assets, countries and governments.

Once the confidence goes, it takes a very long time to recover - and sometimes it never does. Think Enron... MCI Worldcom... Global Crossing stocks; or failed nation-states and empires throughout history. We're in for major paradigm changes in politics, culture and economics as the Greater Depression unfolds. There will be many fortunes lost, but some will be made in the chaos, confusion and mis-information.

Wealth will NOT be made by investing in stocks like Sitting Bull - or buying and holding forever and ever. Information moves too quickly, industries and companies change at a faster pace, Wall Street and governments manipulate markets. For an average individual stock investor, you're playing in a financial casino that's rigged against you.

Wealth WILL be made by people with vision, foresight, and a willingness to serve and provide VALUE. Forget about flipping houses or day-trading stocks, it's more about old-fashioned values and good business fundamentals - just like many of our parents and grandparents did it. That's the silver lining in this massive economic storm, that our country will (hopefully) get back to basics and common sense business and moral values - Lord knows, our country definitely needs them now more than ever.