A collapse in banking segments is eminent – the effect on the economy, stocks, bonds, dollar, and gold
Peter Oberois
Feb. 17, 2007

The economy is already in the middle of deepening recession, except a dew spot where hyperinflation is causing severe trouble. The healthcare, higher education, energy, and food are the problem areas. The rest of the economy is in deflation.

The meltdown in the financial system can cause massive dislocation in employment. The international trade will come to a halt. The dollar will temporarily collapse, as international players stop capital inflow in dollars. The bonds will first rise and then fall off the cliff. Gold will rise very fast to levels that we never imagined before.

The worst hit will be world stock markets, except US market. Let us explain, why? US stock market is now a tax heaven for the world. The new dividend tax rule eliminating double taxation of the dividend has converted the stock market into financial instruments that allow tax-free or lower taxed income. Consequently, US stock market will act differently that the rest of the world’s stock market. While the stocks all over the world will crash, US stock market will actually rise mimicking the bond market as Federal Reserve lowers the rates.

The stock market will have problems later when due to deep economic depression and deflation; corporations will not be able to pay dividends

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