Coming crash -- buy tangible or get $$ into another currency?

[Eurobabe]

Let me preface by saying I am NOT a financial guru, but we have managed to do well with RE the past few years. We have the choice to buy again, or should we sit tight? All this talk of high interests rates and housing bubbles is making me VERY nervous. We have already decided to scale back on house, not put too much $$ into this one, and sock away the rest. You hate to buy in another country and see everyone take it on the chin if the US tanks --which is what I think will happen. Economies today are global. One goes down, they all go down.

But geez, what does one do in this type of scary looming doomsday talk??

[amber dog democrat]

1. Should we buy Euros instead ?

or gold?

[lindashaw]

3. The problem with Euros is not buying them, it's converting them back.

YOu can lose your fanny.

[gristy]

5. I don't understand

If a Euro costs $1.30 today, and I buy 100 of them for $130, and a Euro costs $1.50 tomorrow, why can't I then buy $150 for my 100 Euros (less some commission or whatever they call it when I trade currency)?

[Eurobabe]

9. you can, but you get killed on exchange surcharges

that stuff adds up.

What you are talking about is I believe called arbitrage and it is not for the faint of heart. (Someone correct me if I am wrong...)

[Mr.Green93]

2. bloat

[teryang]

4. Still waiting for the other shoe to drop

I think a young person should invest in themselves, either an education or their own business future.

For older folks, I'd gradually increase cash positions out of equity in anticipation of some sort of financial crisis in order to take advantage.

[gristy]

6. Cash is good in times of deflation. Bad in time of inflation.

I don't think it is at all clear which direction we will head. This morning I am leaning towards inflation, which is what will happen once the gov't starts printing money willy-nilly after its bond market dries up (or it has to raise the rate it pays so people will still buy them).

Note: I certainly may not know what I am talking about...

[teryang]

7. Oh, there is and will continue to be inflation

...devaluing the currency to alleviate the crushing debt burden. This is the tried and true legacy of dishonest government and banking circles.

This situation resembles that during the Vietnam era. I'm only recommending a cash position as superior to equities in order to reduce risk. That doesn't mean that a cash position isn't going to suffer. There will be stagflation. Interest rates will rise trying to chase inflation choking the economy. Someone published a list of multinationals who profit from devaluation, perhaps some equities will benefit. It's hard to give up equities paying dividends when bank rates amount to little more than legalized theft of depositors money.

Cash will be necessary during the crunch for liquidity. If you don't lose your job there will be great bargain hunting.

[bemildred]

8. Right you are, Deja Vu all over again.

I have always been a bit amazed that never in explaining the
stagflation of the 70s and 80s does the subject of VietNam
and the need to "alleviate" all that debt from the VietNam war
come up. Fixed rate debt should do well, as long as you have
cash to keep up the payments. Adjustable rate debt will result in
many bankrupts and fat pickings for those with hard currency or
the means to get some.