Financial Crash in 2004?

Peter Eavis, senior columnist for TheStreet.com, has some interesting things to say in what should be a very sobering article entitled “Fed’s Folly Will Come Due in 2004.”

He’s betting that the fake, credit-propelled recovery will still get Bush elected, but then everything will go to hell, including a housing market crash resulting from forced sales. The reason is simple enough and may account for the current drop in consumer confidence I saw mentioned today: debt. Trillions of dollars worth of debt. Debt, debt, debt. Higher interest rates, even massively higher rates, are just around the corner, according to this analysis. I’m not going to dwell on this too much now, especially as it’s one of my Old Songs, but even the most sanguine observers seem to agree that the Fed is in uncharted waters at this point.

But what if it really did happen this time, a dollar crash, perhaps, with resulting inflation and high interest rates that devastate the debt-burdened U.S. economy (and with it, the rest of the world)? In this environment, what would be the best strategy? Maybe it really will be time to detach from the consumer economy, figure out what’s really meaningful in our lives.

There is, after all, only one kind of “security,” and not even Bush can buy it.