America’s Fate as the RMS Titanic

Written by Jason Simpkins
Posted April 14, 2017

If you’ve ever read about the Titanic, you’re probably familiar with the lore that its passengers were almost blissfully unaware of their impending doom.

Convinced that no ship so large and luxurious could ever sink, they carried on dancing, drinking, singing and gossiping even after they hit the iceberg.

Well, I hate to tell you, but America is the Titanic. We hit the iceberg years ago and after a brief moment of shock and panic, the passengers of this vessel went right back to living their lives as if nothing ever happened.

So fully convinced are we, the American public, that the foundation of our nation is strong. And yet, it is sinking.

To wit:

  • Lobbyists, corporations, mega-donors, super PACs, and gerrymandering have displaced American voters as the true drivers of policy. We have become bystanders in our own Democracy. Our “representatives” serve themselves and their moneyed interest.

  • Our policymakers are so inept, they couldn’t follow through on a near-decade-long promise to repeal Obamacare, or even address its failings. We’re now left with a health care system that’s on life support.

  • The prospects of other major legislation — be it infrastructure, immigration, or tax reform — passing through this administration is less than unlikely. It’s dauntingly bleak.

  • Two simultaneous wars in Iraq and Afghanistan proved utterly disastrous. Thousands of American soldiers and millions of civilians have been killed. More than $4 trillion of borrowed money was spent. And all that’s left to show for it is ISIS. So, last week, Donald Trump launched missiles into Syria, joining Russia and Iran in yet another regional quagmire.

  • After invading Ukraine and threatening the eastern flank of NATO, Russia has infiltrated, influenced, and undermined our presidential election. The FBI is actively investigating the involvement of a sitting president.

  • China, in addition to challenging the United States on every economic front imaginable, is now expanding its borders at the expense of its neighbors. It’s seized the South China Sea, violated international law, and built new military bases throughout the Pacific to counter U.S. military dominance there.

  • Back at home, tensions between citizens and law enforcement have never been higher. Police shootings have become as routine as the protests and riots they incite.

  • Jobs are scarce, wages are low, and hours are long for working Americans. Retirement has become more of a luxury than an expectation. Debt from student loans, health care costs, houses, cars, and credit cards serves as a poor substitute for real growth. Worse, it's driving people into poverty.

  • Economic growth is meager at best. Corporations are actually becoming less profitable over time, even as robots and automation make production more efficient. Many are struggling with their own debt burdens after feeding too long at the trough of government lending.

  • Our national debt is roughly $20 trillion and counting. Our total GDP is less than $17 trillion.

  • The stock market is hitting one record high after another. It’s been in a bull market for SEVEN YEARS.

Well, now wait a minute... That last one doesn’t really seem to fit, now does it?

That’s weird.

Do you see what I mean by our Titanic-esque merriment? So long as we have jobs and go about our happy lives, no one really thinks twice. Stocks are high, and our retirement money is (theoretically) safe. Things must be pretty good, right?

Nope.

Sorry, but that’s not how these things go.

Yes, I realize that the stock market is supposed to be a mirror, or even a forward-looking indicator of economic development. But, in fact, it’s usually the last thing to go.

Consider that the Great Recession actually started when the subprime mortgage bubble burst in the spring of 2007. However, the stock market crash didn’t actually come until October 2008 — a year and a half later.

A year and a half. That’s how long it took for the market to respond to a generational financial crisis. At its worst moment, there was a real fear that we’d out-depression the Great Depression. And the market didn’t realize what was happening until Lehman Bros. and Bear Stearns fully imploded.

I was working in this industry back then, albeit at a different company. And an analyst I worked with (who shall remain nameless) was telling people to buy Lehman Bros. stock the entire way down. He simply didn’t believe what was happening.

He couldn’t come to grips with the true fragility of our situation.

And he wasn’t alone.

“No! No! No!” Jim Cramer famously screamed into a television camera. “Bear Stearns is fine! Don’t take your money out!”

“Don’t take your money out!” is what people yell when:

A) They want to take their money out before you. Or...

B) They don’t know what they’re talking about.

When it comes to investment firms like Goldman Sachs and JPMorgan it’s usually option ‘A’, and when it comes to television hosts with sound-effect buttons, I’m inclined to say it’s ‘B’.

In any case, you don’t need to panic. I’m not telling you to panic.

But you should take precautions. Heck, you can even do better than that. Whenever the market crashes there’s a small group of people that actually rake in scores of money. They’re the ones that have seen ships sink before. And they’re the first ones to bee-line for the lifeboats.

That's what you should be doing right now. It's a real good time to start hanging out by the lifeboats.

That’s what a lot of the smartest and wealthiest investors in the world are doing, anyway.

According to a new SEC filing, Buffett is sitting on $72 billion in cash. That’s an incredible amount of money to hold on the sidelines. Doing so actually costs the billionaire investing legend $29 million every single day. But he’s doing it all the same, because the market isn't a safe bet anymore.

Carl Icahn, who’s been acting as a shadow advisor to President Trump, recently increased his short positions by 600%. He’s betting as much as $4,321,000,000 that the stock market will plummet sharply and suddenly.

George Soros just made a $2.2 billion bet that the market will collapse.

Jim Rogers is on record saying: “A $68 trillion ‘Biblical’ collapse is poised to wipe out millions of Americans.”

And the man, the myth, the legend — the Original Goldbug — Mr. James Dines is predicting a devastating market collapse that will cost retirees $4 out of every $5, or 80% of their wealth.

You can find out more about that prediction here.

Like I said, we hit the iceberg years ago. You can dance around, dust off the champagne, and drink it like it’s your last. Or you can calmly and coolly start making your way towards a life boat.

The choice is yours.

Get paid,

Jason Simpkins Signature

Jason Simpkins

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Jason Simpkins is a seven-year veteran of the financial publishing industry, where he's served as a reporter, analyst, investment strategist and prognosticator. He's written more than 1,000 articles pertaining to personal finance and macroeconomics. Simpkins also served as the chief investment analyst for a trading service that focused exclusively on high-flying energy stocks. For more on Jason, check out his editor's page. 

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