This is a long post about what I see working in finance. The collapse — the global economic depression — that is coming will be massive. Get into safety assets like silver now. Silver has been recognized as money for thousands of years and the Spanish/Mexican silver real and American silver dollar made the Americas what they were for so long: a land of prosperity and opportunity.
Here is what I see:
The tech “VC” sector/industry is horribly bloated. The whole idea behind tech VC is that you’re chasing those rare unicorn companies, but there’s so much easy Fed money filtering through the economy that this sector has gotten massive. I recently attended a VC conference and there’s an unbelievable number of 20-something B-school graduates who have never really done anything of note in the business world other than burn pallets of cash on nonsense go-nowhere startups but who are hailed as if they’re investment “gurus”. The reality is these people don’t know how to navigate a normal economy, let alone a recession, and there will be a massive reckoning for this sector in a recession. There’s so much “easy money”. These “capitalists” don’t know how to turn an actual profit like so many normal people do. The knockdown effects of this sectors collapse will be huge. These people occupy lots of primo office space in the Bay Area and NYC and spend a lot. Not as many startups got tech grads to go into. Bay Area residential real estate (the biggest RE bubble in America) sector will slump.
Commercial real estate is gone. Don’t know how to put it. People forgot, but we were already having a “retail apocalypse” pre-pandemic. The pandemic was the kill shot. Restaurants. Malls. Main Street small retail mom and pop stores. “You have no idea how bad it really is” as they say. America used to have the most vibrant, diverse small merchant class. Americans from a lot of different walks of life ascended to the middle class through running small stores and restaurants. That got nuked. The landscape of America is now Amazon warehouse fulfillment centers, vape/weed shops and predatory finance (payday lenders; multinational banks crowding out local credit unions). I’m not judging. I buy shit on Amazon and smoke weed. But that transformation says a lot about America. And that transformation has also resulted in billions of empty square feet of commercial real estate across the country which will be devastating to communities for many reasons. This is destroying local economic resilience and the empty space also fosters crime.
Violent crime didn’t go up much in the 08 collapse but is already skyrocketing and will go absolutely insane in a collapse. In 08, America had a much different culture. People respected law enforcement and the law more. I lived through the LA riots as a child. I remember walking to school and having National Guard on the street corners. I lived through the chaos in NYC in Summer 2020. I know how quickly and easily society can devolve into violent madness and we are on the door step of this ratcheting up 10fold if there’s a recession.
The oil and gas sector is not doing well. Remember, oil and gas NEEDS high prices in order to justify extraction, exploration, reinvestment, hiring personnel. This costs money. It’s not a matter of turning on a tap. Prices are currently high enough to cause consumer pain but not really high enough to reinvigorate domestic production (to the extent domestic production can go up in light of regulations …). We’re going down the worst path possible of higher inflationary energy prices but stagnating production and it’s going to leave this country in a very energy insecure place. Get ready to have your energy go out AND pay higher higher prices for the privilege. Please have a battery storage back up or two in your home. Prices for these are already going up fast on Amazon and other easy to find retailers.
Finally, keep an eye on geopolitical unrest. We all know about the war in Ukraine, but there is also domestic chaos in Pakistan and Peru, among other places. There’s a huge energy reform bill being voted in Mexico. The Yemen war has not died down and Saudi Arabia seems to be allying with Russia (look up MBS’s recent statements and actions), adding to the global realignment. This is all already raising prices for food and creating high food inflation, but it also raises the possibility of a truly catastrophic Black Swan event.
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