Tiredness Sets In and US Dancing with Debt

Phew... it has been a busy week. I have been doing some of my own research on REITs in Singapore but was too frightened to enter into the market during the recent weeks due the US "debt crisis". On hindsight, I guess we should have all figured that the Republicans and Democrats would have struck a deal in the end. But hindsight is always 20/20 and I guess at that point in time, no one could really tell.

Regardless of the "good" news that the debt default is no longer a worry, the next concern will be the potential downgrade of US credit rating by the various rating agencies from AAA to something probably lower.

Somehow deep inside me, I know that the US debt crisis is actually a time bomb waiting to occur. There must be seriously a lot of wastage in terms of public spending when a government starts to rely on debt to finance its spending.

I wonder what will the impact and how the markets will look like in the near future with the less than optimistic forecasts ahead. Dark clouds perhaps?

US Likely to Avoid Debt Default

It seems that the US will avoid a potential debt default. After weeks of following this issue on and off, I was quite amazed at the amount of politics at play here. It seems that congressional leaders will most likely approve a deal to raise America's debt ceiling. And somehow I don't think the deal was what President Barack Obama wanted as he was initially calling for one, broad debt agreement that included cuts, entitlements and also taxes.

The final deal that will go before Congress this week seems to be a compromise which includes cuts of about $1 trillion and also relying on a bipartisan congressional committee (I will take that to mean comprising both Democrats and Republicans) to propose by November another $1.5 trillion in other deficit reductions that could range from cuts, entitlements or tax increase. This new dealwill pave the way for US to avoid the Aug 2 default.

With this good news, gold prices decline from their record prices while oil prices continue to climb. Will the Singapore stock market also respond positively to the news once the final agreement is reached? It is scary to think that one day away from the deadline, the most powerful nation in the world is leaving it really till the last minute to finalise something as important as this.

The Collapse of US

Real Trouble coming soon. Don't say that I did not warn you guys =)

I believe the US dollar will start to devalue pretty soon and I really cannot imagine what will happen to the entire world's economy. I believe that it will really be a sight to watch as all this unravels in the near future.

The Dollar Crisis

It seems that many books and articles have been written about the coming demise of the US dollar and the effects it would have on the global economy.

In my journey to financial freedom, I understand that there must be a certain amount set aside hedge against inflation. But what if there is a total collapse of the entire financial system worldwide? What if the US dollar becomes absolutely worthless? How would that affect me and my savings?

If the day was to come when the US dollar becomes totally worthless, I think all countries willl be affected. Everyone will face inflation or hyperinflation and those currencies which are not backed by gold will suffer the most. Of course, this situation is just hypothetical but it could happen in our lifetime.

The best thing one can do is to make sure that a certain amount of money is set aside in Gold - which for the longest time in the history of mankind, has been used as money. Only in recent times have we as nations abandon the gold standard which was replaced by Man's money (easily reprintable and reproducable money).

I am looking for opportunities to invest in Gold.

So far, the only bank in Singapore that sells gold is UOB. I will explore this further in the next posting.