23/07/2010 – Quadrillion Dollar Debt: ‘Day of Reckoning’ Looms

Want
to Know How to Prosper in a Deflationary Depression?
If
you haven’t yet given Robert Prechter’s deflation argument your
full attention, you should know now that yesterday was
the best time to do so. Download
Prechter’s 60-Page Guide to Understanding Deflation here.

A thousand trillion in debt can’t
be wished away or swept under the rug. No one can “forgive” the
debt. The consequences of unwinding this debt could be as massive
as the dollar figure itself.

We’ve heard plenty about the debt problems of Greece, Spain,
Portugal and Italy.

But how about the world’s second largest economy? Consider this
fact reported in the Japan Times (July 8):

“Japan’s government debts are the highest the world
has ever seen, at 219 percent of gross domestic product, according
to the International Monetary Fund.”

Then there’s the world’s sixth largest national economy. In
January 2009,  Robert Prechter wrote this in the Elliott
Wave Theorist:

“British banks have amassed $4.4 trillion worth of
foreign liabilities, twice Britain’s annual GDP. … England,
moreover, ‘has not defaulted since the Middle Ages.’ The possibility
that it may do so again is yet another indication that the
bear market is of … (larger) degree, exactly as Elliott wave
analysts have predicted all along.”

Remember, Japan and Great Britain are major world economies.
Imagine what the debt totals would look like in a line-item analysis
of other nations, regions, states, provinces and municipalities
around the world, including the U.S.

De-leveraging will likely lead to a deflationary crash — a “day
of reckoning.”

How can you prepare for a deflationary crash?

To start with, keep your money safe. As Bob Prechter mentions
in the June
2010 Elliott Wave Theorist:

“Investors should be primarily in greenback cash and
Treasury bills.”

He also describes holdings which should be strictly avoided.

Want
to Know How to Prosper in a Deflationary Depression?
If
you haven’t yet given Robert Prechter’s deflation argument your
full attention, you should know now that yesterday was
the best time to do so. Download
Prechter’s 60-Page Guide to Understanding Deflation here.