>So if you think the US is headed into the credit risk category, what
>is the best protection - stocks, but in foreign currency?
I don't think the US will go into credit risk. But if the US goes into
sudden credit risk and no one predicted it, I don't think there will be a
safe place in the world. If it's really bad the best place would to be in
gold. If it is really really really bad, the best place would probably be
Cambell's soup. And I don't mean the company stock. I literally mean the
food stuff. =P .I don't think that will ever happen. If the US was hit
with a sudden credit squeeze and was unable to pay back it's bond
obligations, I would try to ID the bottom and bet the ranch on a
recovery. I just can't see the IMF letting the US economy fall. I can't
see Japan and China, two economic super powers that peg their currency to
the USD, letting US economy fall. The US is too big to fail. This is one
of the lessons I learned from Trump's first bankruptcy. When you owe the
bank $200,000 you are a prime candidate to be an example of. They will not
listen to your sob story; instead the banks will foreclose and repo
everything you own. When you owe the bank $200 million, the bank will work
with you because they want their money back.
The truth of the matter is the US doesn't actually have to solve the SS and
Medicare issue to avoid defaulting on loans. They can just pay back loans
with new loans as long as the system is in place.
If the decline is gradual then you have two options: follow the flow of
money to whatever new country is the dominant economic power or continue
business as normal. At the current rate, the foreign country looks like
China. But China presents it's own unique problems as they lack the
transparency of the US and too a lesser degree the other economic leaders
like UK and Germany. A gradual decline of power isn't enough reason to
pull out of the US capital markets though. Look at UK. At one point they
were the world economic leader. But they gradually gave way to the US and
it's not like investing in UK capital markets is a gamble.
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