Financial Sense Perspectives

The Perfect Financial Storm

Perspectives on The Perfect Financial Storm

Financial Storms Heading Towards The U.S. Economy

© Copyright 2000-2002 James J. Puplava

Storm Tracks on FSN April 3, 2004 Audio Interview with Jim Puplava. Storm Watch - Resource page tracking "The Storm" with Storm Watch Update

  1. Introduction
  2. Tsunami
  3. Bear-o-Metric Pressure
  4. The Gathering Storm
  5. Rogue Wave
    1. Rogue Wave - Rogue Trader
    2. Rogue Wave Continued
  6. Storm Tactics - Preparing for the Storm
  7. Storm Tactics for Deflation
  8. Storm Tactics for Inflation & Stagflation
  9. Storm Tactics for The Perfect Financial Storm
  10. Riders on the Storm

Part 1 - Introduction

July 18, 2000

IntroductionIn the fall of 1991 an event took place which had never been seen in recorded history. A powerful storm was developing off the northern Atlantic coast. It was a force of nature so intense it would be unlike anything the present world had ever known. Nature was about to unleash a force and furry never before witnessed in the collision of three potent storms at one moment in time. The dynamic power of that collision would be propelled by winds of 120 miles an hour, creating waves ten stories high. Read more

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Part 2 - Tsunami

August 10, 2000
"A tsunami can flood breakwaters, tear into harbors and shorelines, and leave widespread destruction in their wake. Because earthquakes are the primary source of tsunamis, they can often go undetected until they erupt."

TsunamiOn the home front, times are good. It just doesn't get any better than this. People have jobs. Incomes are rising and the unemployment rate is the lowest in three decades. Signs of prosperity are everywhere. The shopping malls are busy with the bustle of consumers shopping and spending money. Confidence about the future is running high in the New Economy. The housing market is booming, prices are heading up and home ownership has risen to record levels. Read more

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Part 3 - Bear-o-Metric Pressure

September 9, 2000

Bear-o-metric PressureFor those who plow the seas either for pleasure or for profit, the element of weather is a constant companion. When plying the ocean, weather can turn any sail into a pleasant memory or a hazardous journey. Mariners approach weather with a spirit of resignation. It just happens. It is beyond human control and there is little we can do about it. Yet as sailors we are subject to its every caprice. Becoming aware of the forces at work within the atmosphere is a large part of seamanship...

As I glance at my stock market barometer, I can't help but notice the drop in barometric pressure. Read more

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Part 4 - The Gathering Storm

October 3, 2000

The Gathering StormIndian summer. Clear skies. Light winds. It's a good time to get outside and enjoy the weather. Like the weather forecast these days, the economic forecast calls for nothing but good times. The economic expansion that began in March of 1991 continues to barrel along. Today's economists believe Fed policies will slow the economy down to a more sustainable growth rate. The soft landing that Wall Street is counting on will allow the economy and the stock market to continue its process of wealth creation. Read more

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Part 5a - Rogue Wave/Rogue Trader

October 26, 2000
Rogue Wave, Rogue TraderThere will come a day unlike any other day, an event unlike any other event and a crisis unlike any other crisis. It will emerge out of nowhere at a time no one expects. It will be an event that no one anticipates -- a crisis that experts didn't foresee. It will be an exogenous event -- a rogue wave." Read More

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Part 5b - Rogue Wave Continued

November 4, 2000
Rogue Wave Continued"Warfare is the art of deceit. Therefore, when able, seem to be unable; when ready, seem unready; when nearby, seem far away; and when far away, seem near. If the enemy seeks some advantage, entice him with it. If he is in disorder, attack him and taken him. If he is formidable, prepare against him. If he is strong, evade him. If he is incensed, provoke him. If he is humble, encourage his arrogance. If he is rested, wear him down. If he is internally harmonious, sow divisiveness in his ranks. Attack where he is not prepared; go by way of places where it would never occur to him you would go." Sun-tzu

The rogue wave could be an unforeseen geo-political event...Read More

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Part 6 - Storm Tactics - Preparing For The Storm

January 1, 2001

Preparing For the StormIt is apparent to me that financial storms and perhaps "The Perfect Financial Storm" may be heading towards the U.S. economy. For unseasoned investors, any sort of financial storm – whether a bear market or recession – triggers fear. Lacking knowledge and a strategic plan, they make decisions in a vacuum, reacting rather than profiting from them. Those who are forewarned are forearmed. Read More

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Part 7 - Storm Tactics for Deflation

February 15, 2001

Storm TacticsThe worst is over. The Federal cavalry has arrived. The Fed has lowered interest rates. The President and Congress are going to cut taxes with Greenspan's blessing. The Nasdaq had rebounded. Relief is on the way. The storm clouds will begin to dissipate. The much hoped for "Soft Landing" has been achieved. Relax. There will be no pain! Read More

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Part 8 - Storm Tactics for Inflation & Stagflation

March 15, 2001

Inflation StagflationJust as mariners must consider different weather and sea conditions, investors must be alert to different economic scenarios. In my last installment I discussed the deflation scenario. This installment acknowledges three other possibilities – inflation, stagflation and what I call "The Perfect Financial Storm". Deflation is a possible outcome of today's credit-induced economic boom as witnessed in the U.S. during the 1930s and present-day Japan. Read More

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Part 9 - Storm Tactics for The Perfect Financial Storm

May 26, 2001

Storm TacticsWhen I wrote The Perfect Financial Storm last July, I saw several storm fronts developing in the economy, the stock market, and the currency market that could, like the movie, lead to The Perfect Storm. In Tsunami I wrote about the credit bubble and the problems it presented for our economy. In Bear-o-metric Pressure, I warned of the dangers of an overvalued stock market. For the record, I wrote my Financial Sense Newsletter about the coming demise of the technology market on January 2, 2000. In each subsequent Storm installment, I have pointed out that these various storm fronts were gathering momentum. For the first time in decades, there now exists the possibility of The Perfect Financial Storm to hit the United States' economy. Read More

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Part 10 - Riders on the Storm

August 16, 2001

Riders of the StormThe severity of a recession or bust is oftentimes determined by the boom that preceded it. In this case we've not only had a boom, but that boom that grew into a bubble has rippled throughout the financial system inflating financial assets and real estate prices. In this final installment, I hope to help you chart your course so that you will be able to ride that storm. Read More

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About the Author, James J. Puplava

James J. Puplava

Jim PuplavaAs host of Financial Sense Newshour and Financial Sense Online, Jim Puplava has spent the last fifteen years on Financial Sense communicating his practical knowledge of twenty years in the field of financial planning and investment management. His website, Financial Sense Online, has been active for five years and as of the close of 2001 greeted visitors from 116 countries. He is known for his insight and writing about future trends. His writing is clear, concise, and understandable to the sophisticated as well as first-time investor. His Perfect Financial Storm series was recognized internationally. More about the Author

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