The Next Crisis City & State Govts
It started with Harrisburg PA several weeks ago. They were on the verge of default until the they were bailed out at the last minute by the State. However debts and deficits are about to make individual states the next victim of the credit crisis. What does this mean to you as an investor? Firstly I would be very cautious purchasing muni bonds. They are a problem waiting to happen. It stands to reason that sales tax collections are down, real estate taxes are down, impact fees for building are down as well as countless other avenues of revenues have ceased. Making matters worse so many State Govts and city Govts took on projects, spent wildly and took on derivative products they did not understand. States Govts are required to balance their budgets however their massive debt-service payments can easily prevent this from happening in many states such as Michigan, New Jersey and California. When or if this happens the FED must step in to bail them out.
The question is who will bail out the FED. Maybe a rhetorical question but one that needs to be addressed.
Not that I am predicting but it seems the writing is on the wall. What is one of the greatest advantages of trend following commodities you do not need to predict anything. Just try to take low risk bets…follow trends ( actually only in retrospect they become apparent) exit losers very quickly and have patience and discipline to let your plan work. This is what successful commodity trading is.
Futures trading involves risk. People can and do lose money