If you have not yet read Part 1: You’re Likely A Lot Less Prepared For Crisis Than You Realize available free to all readers, please click here to read it first.

What To Do

Broken models and bad ideas eventually catch up with you. That day is coming. As to when, I clearly don’t know.

If there’s an outbreak of war with North Korea than that could easily precipitate the breakdown, especially if the conflict spreads across superpowers. That could happen at any time, so the lessons from the hurricanes is this; get ready now.

Barring some sort of kinetic follies, the farthest I can see things carrying on as they have is until 2019 or 2020 when the profound lack of investment in oil will show up as an oil supply shortfall that will result in much higher oil prices. Those higher prices will run smack into ~$250 trillion of global debt and ~4x that amount of un(der)funded liabilities. I covered that thesis in this report, which is worth a re-read (or a first read in case you haven’t already).

The global equity markets are floating along on a sea of liquidity which has allowed them to seriously depart from the underlying fundamentals and from any sense of risk. When neither fundamentals nor risk apply, you have a bubble on your hands.

Bubbles are always in search of a pin. None of us can predict what that pin might be, but it’s out there.

When the next downturn finally comes, it will be with the force of a hundred corrections denied. We’ll be falling from a much higher level of insanity and self-delusion. Once again we’ll discover that prosperity cannot be printed out of thin air. History doesn’t repeat, they say, but when it comes to bubbles it certainly does. They are always the same; they arise from too-easy credit.

Here’s what I think everybody should do, regardless of circumstances…