The markets need to buy Quicken

I hope you've been out of the stock market, as I recommended back in 2006. My read on the macro economic situation was pretty damn good, but before I pat myself on the back too much I have to say my prediction about how silver would react was initially profitable but the recent massive selloff ran me over. But if you used proper risk management and sell discipline, you've made out like a bandit over the past two years - especially when compared to the buy-and-hold dogmatists.

So now that the worst-case scenarios are in the process of coming true, what next? Both McCain and Obama are calling for massive interference by the government to protect the free market from, ya know, freedom (markets are only allowed to go up, after all). Further witch hunts, Reg FD-style idiocies, and the collapse of the investment banks will accelerate the financial industry's move to London and other points overseas. I expect New York City to go bankrupt in the next four years.

On a federal level, more government liabilities means higher taxes and a weaker dollar. There's just no way they can avoid raising taxes in some form. It'll likely be through some mechanism that's completely transparent to anyone paying attention but not directly obvious to the oblivious hoi polloi. But it won't be enough; the government has taken on too many unfunded mandates over the last decade to avoid further deficit spending. So they will try to weather their way out of it by printing more money.

Printing more money and a collapsing financial industry means one thing: a weaker dollar. Commodities have sold off recently because markets are pricing in for lower growth and lower consumption. Another factor, though, that isn't getting much media play is that the dollar stopped dropping relative to the other fiat currencies as people realized that the Euro is just as much a POS as the dollar. But as Washington panics, get ready for the next leg down! Even with lower consumption, the relative value of a dollar to a barrel of oil or ounce of gold will likely drop. Maybe this is where my silver play belongs...

We're in for a very rough economic storm and I have zero confidence in the government's ability to keep from making it worse. If history is any guide, real assets will be king, credit will be useless, and cash will deteriorate. In a real bear market, even the bears don't make money, so a defensive posture may be best. It's a certainty that there'll be vicious rallies to crush the shorts, so only the most agile (read: full-time professionals) can even consider trying to play the downside (in fact, I'd be surprised if the markets don't stage some kind of rally in the next week or so - that's how volatility works). Better to keep your powder dry. Again, I like real assets as the way to ride out the storm.

Plant a garden, stock up on ammo, and sacrifice to Fortuna Conservatrix.

Don't read my analysis as investment advice. Unless I've reviewed your personal finances in detail, I can't know what I'd recommend. I'm offering general observations only that may not apply to your situation.