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A Foolish Investor Bets Against the Market

November 6, 2012

 Silly me.  I had hopes for the US.  People spent billions of dollars to get this outcome of this election.  Now they will get their payback.  From an economic perspective, the US just decided to consume its assets and to not pay its bills.  From the perspective of liberty, the size of government and regulation will grow and grow under this administration.  Oh well.  Now I’m wondering where to invest my life.  California is a loosing market.

There are political promises to keep, so government spending will increase even if it is in the form of off budget expenditures.  That will cause rising inflation.  (1) At first, real assets will be bid up as a hedge against rising inflation.  Real assets are things like houses and land.  Later, the value of these real assets will fall once there is no wealth being created to support their value.  House prices in the California central valley are an example.  There, housing prices crashed because there were no longer any jobs in the area.  Not even retirees want to live there due to California taxes.

Texas real estate might be a good hedge in several ways.  Foremost, Texas is producing jobs.  Real estate is real property and looks more secure the worse the US economy turns.  Is that enough to buck the tide of US decline?

I wonder if Texas would secede from the US once the EPA increases penalizes on energy producers?  Will it be targeted taxes against energy producers or simply huge tax increases on fewer and fewer workers?  Could producers avoid the tax if they export their oil to other countries so it isn’t burned in the US?

So many questions.  Tell me again what  a productive state gets from being part of the US.  I’m trying to answer that question myself.

(1)  I bet you could find out who received huge government kick backs by looking at local inflation in this declining economy.  Just a thought.



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