You know that Mexico has enormous natural gas reservoirs that have yet to be tapped and the technology for tapping these alternative reservoirs continually needs to get better and better.
There is a tremendous amount of oil in Iraq and it's still very, very cheap due to all the political uncertainty. So if you want to be a serious oil investor, I would say get yourself to Iraq in person and look around to find great opportunities.
Historically, bad money always drives out good. Accordingly, if a central bank anywhere in the world sets up its currency to be backed by any kind of hard currency, it would cause people all around the world to desire that currency for their savings, rather than dollars.
You wouldn't want to underestimate the perfidy of the government. I have no doubt that the government will need to increase revenues substantially to avoid default on either debt or social welfare promises. How they will increase those revenues, I can't predict.
Stock price multiples are negatively correlated with real interest rates. As interest rates rise, the market multiple will fall.
I studied what happened in the bond and the stock markets during previous periods when the Fed stopped manipulating the bond market. In every single case, the moment the Fed announced that there would be a cessation of intervention, stocks declined and interest rates went up.
The Fed's buying is far more important to the market price of U.S. debt than any other economic variable. If the Fed stops buying, it doesn't matter whether unemployment goes up or down. It doesn't matter whether inflation is higher or lower. Its influence on the market is dominant.
There's been a dichotomy in the world financial markets over the last 30 years between the developed markets and the developing markets. Brazil, for example, always had to pay a lot more in interest to borrow money than governments in developed nations.
There is a belief, at least on the part of the American people, that they can borrow money forever without consequence.
Stocks actually can be a very good hedge against inflation, and short of hyperinflation, stocks will have the ability to increase their dividends to match the rise in prices.
When you're dealing with a bankrupt sovereign - like the U.S. government - you're dealing with a very powerful wounded bear. You have to be very careful because you can't know what the beast is going to do.
You can survive your income falling if it's not dramatic. Your income can decrease for a long time before you start living beyond your means.
I think what's happened to America, in a cultural sense, is we stopped getting richer as a country in the early 1970s, but we haven't adjusted our consumption patterns in any way, shape or form to meet the realities of the new lower income.
I think the only thing that really can be done - it would be painful, but less painful than the calamity we're heading toward - is to demand that people be responsible for their private obligations. No more bailouts, no more stimulus, no cash for clunkers.
I can tell you what happens to countries that go bankrupt. I've been to Argentina. I'm familiar with the history of Mexico and Great Britain. We'll see the same things here shortly: inflation, huge tax increases, capital flight and, eventually, capital controls.
And I don't want my assets to be stuck inside a banana republic in the midst of a huge socialist experiment.
By buying off the bottom in the real estate markets, I'm doing the best I can to protect myself from any future calamity. Time will tell whether it will work.
