Secret DC Think-Tank Report: "Alarmimg and Disturbing"

by Pooky, this blog economics journalist

Just as the massive global stimulus and bailouts is making headway, a secret DC think tank, still was able to imagine a scenario the sees another crisis down the line that will make the current crisis about 20% critical mass in size.

The DC think tank report is called “Alarming and Disturbing” by those who have read it. The think tank is a key advisor Obama and reportedly Obama have studied the report. Sources told this blog there is no immediate reaction from Obama.

The source said however, many important and large investors are positioning themselves to benefit from this crisis, if it emerges.

This blog can only guess that it may be related to the financial situation in the US, particularly the staggering federal deficit the US is still carrying on all fronts, with little hope of ever being able to cover it apart from strong growth for many years, and it must start soon. State wise, the situation is also as critical, with many on the verge of defaults.

Then complicating the picture is the trade and fund flow imbalances. Then the medical bill and the US military expenses. Then adding to the mix is the changing global economic structure.

All in all it spells difficult finances, in a difficult time, when availability of funds for last resort is perhaps maxed out. Simply stated, the US is extremely over-extended.

But all of the above is just this blog’s guess of the content of the report.

On the bright side, however, the US still have many rich allies in Europe and still have close relationship with many rich Middle East countries, who could provide help to the US, if the crisis do hit. From what this blog heard, estimates put this future bailout anywhere from US$8 trillion to US$12 trillion.

Our advice is to continue as normal and hope for the best. Like we said, we think the report verges on being too imaginative. If you are in the stock market, just buy a few futures contract covering the long end, just in case and they are really cheap at the moment. I figure 2-5% of your investment will be about right for this insurance.

If it hits, there is little one can do anything about it. And as far as benefiting from it big times, you got to have some serious purchasing power that you can sit on, to position yourself for it, as the people we are talking about are not just the super-rich, but the ultra-rich.