The REAL Impacts From the Disaster in Japan

From Martin Weiss Research. After this, you will no longer be hearing from him--he's gone commercial, and rarely has anything of interest to read without it becoming a veiled gold stock selling attempt.

"As Japan’s nightmare unfolded, most experts expected investors to move their money out of Japan and into the U.S. or other major markets.

But in reality, the exact opposite is happening!

Yesterday, for instance, the Dow fell 242 points, the S&P 500 plunged 25 points, the Nasdaq declined 50, as global investors dropped U.S. stocks like hot potatoes. It was the market’s largest one-day decline in 7 months!

Even more telling, the Japanese yen soared to its highest level of all time!

But why? The answers are disturbing:

First, the U.S. market is vulnerable for a host of reasons — the continuing depression in housing, surging wholesale prices, rising long-term interest rates, and more!

Second, on the other side of the Pacific, Japan’s insurance companies are expecting to take massive hits. The insurance claims from Japan’s earthquake, tsunami and nuclear nightmare are bound to be both extremely large — and extremely difficult to estimate — for a long time.
I know because when I was a young analyst for a Japanese brokerage firm in Japan 30 years ago, and our primary clients were Japan’s largest insurers.

That’s how I learned that Japan’s Ministry of Finance (MOF) had been preparing Japan’s insurers for this disaster for many years.

They knew the next “Big One” was coming someday — an earthquake that could cause unprecedented volumes of claims both to property and casualty insurers as well as life and health companies.

They also they’d need liquid assets OUTSIDE of Japan to help pay the claims. So they mandated that insurers hold a solid chunk of their reserves in U.S., German and other foreign government securities.

How much? Huge amounts! Because they feared the earthquake might hit Tokyo. Instead, thankfully, Tokyo was spared a direct hit. But no one planned for a giant tsunami — let alone a nuclear disaster all at the same time.

Now the Japanese insurers have to start cashing in their foreign holdings, with most of those in U.S. markets. That means they’ve got to sell dollars, buy Japanese yen and then repatriate that money to help pay claims.

That’s a key reason the yen is surging, while the dollar plunges against the yen.

Third, the Bank of Japan will liquidate additional amounts of their U.S. assets to pump into the domestic economy and help finance reconstruction efforts.

Fourth, global investors aren’t dumb: They know that, to support the U.S. bond market, the U.S. Federal Reserve is going to print money hand over fist.

That not only hurts the U.S. dollar over the long haul … it also drives more money into all those assets that rise when the dollar falls, especially silver and gold.
My overall view …we are headed for an apocalypse."

The article dissolves into a gold sales pitch from there. In the original article, he has a video (selling his latest book) about how this Japan crisis, coupled with the state and federal debts, foreign country debt, the ongoing baking crisis, the ongoing housing crisis, and every thing that is till in crisis mode since 2007 is going to hit us full-force, threatening Europeanizing us like I predicted some years ago: everything that has escalated in price since 2008 is only getting started--it's forecasted to quadruple in the next couple of years if Congress can't get serious about the budget, the Fed can't get serious about interest rates and inflation, and the world can't get it's own house in order.

Expect $8.00/lb. ground beef, $12.00/gallon gas, and $10.00/gallon milk. I'm already paying the $8.00/lb. for ground beef, but mine's grass-fed and organic.

This is only the latest reason why I want to leave here: an economic tsunami is coming to Frugal Valley, and all those grasshoppers are going to drown because they waited too long to start scurrying. Unfortunately, some ants will also drown in the process, but at least we got an early start on gathering for the deep winter to come.

Here's what you can do as far as wealth goes (for a conservative standpoint--no gold or other crazy stuff): Instead of buying PRODUCTS like the iPad, iPhone, or a Groupon deal, buy the COMPANY STOCK while they're still a viable company. Grasshoppers are most likely to shop at a WallyWorld or Target store if they have access, so do the Wall St. thing and bet on demand--demand from grasshoppers. This is where Gen Y, Z, and AA get it wrong--they spend money on PRODUCTS when they could be insuring their futures by buying STOCK, but capitalism's baaaad, um-kay? Groupon is fixing to go public in a matter of days--I suggest you try to get some AFTER the inital IPO, when the stock price calms back down. Traders will bid it up in a first-day frenzy, but wait about a week.

Other ideas are: when they finally catch up and realize what's going on, they too will want to garden, so buy stock in garden supply companies such as Burpee, Ortho, etc. When food prices quadruple from their already-unaffordable levels, expect a pile into gardening, and profits to rack up.

Remember Vickie Robbins and the "Your Money or Your Life" method of building wealth? Look into doing the same thing, but with stock dividends rather than bonds. Ladder CDs if you prefer to do that instead, but not bank CDs--look elsewhere, even online or in brokerage houses. More banks are due to collapse, and you don't want to get caught in an FDIC fight.

Look to grasshopper consumption (again) for dividends by investing in utilities and telecom companies that serve smart phones--those who already have them are not going to give them up lightly, no matter how expensive they become to maintain. Gen Y, Z, and AA have fallen into the technology dependence trap, and you can profit from it while the world goes to hell.

UPDATE: Now that nuclear energy is off the table (thanks, Japan!), look to natural gas as our cheap power alternative. If you plan any home renovations, make switching to gas a priority (if possible), or sell and move to a house with a gas line (if possible, look into getting a natural gas-running car--you'll need it). Electricity isn't going to get any cheaper from here, with Obama's planned wipeout of coal, nuclear, and oil.

Another car alternative: a turbo diesel (TDI) engine car from Europe that can run on canola oil--the Europeans are using it now to avoid the $12.00/gallon gas and the imbedded taxes. Rather than filling up at the pump and paying exorbitant taxes there, you can fill up at the grocery store, and only be paying sales tax. In the past, diesel engineshaven't performed well in cold climates--with a TDI engine, there's an in-line fuel heater that prevents the fuel from turning to sludge until the car heats it up. Biodiesel from algae is in testing with the Air Force for use as jet fuel, where higher altitudes also have been known to freeze diesel fuel

Instead of getting caught in this coming tsunami, we're heading to higher ground. Most of this quadrupling is going to be the result of higher taxes, most of which we can avoid when we get to our new home. We're the ones who are going to be expected to pay for all the deficits and debt incurred by the states and federal government--they spent it (foolishly, of course), and now we have to cough up more to cover the resulting bill.