As we face the imminent collapse of the global financial system, credit markets, and currencies – not only the dollar and the euro; the whole concept of fiat currencies is being met with increasing skepticism – one thing is puzzling me: the collapse of the property markets.
Many people have been predicting economic chaos on a scale never before seen on earth, probably dwarfing the Great Depression of the 30s. As we face this possibility or probability, everyone wants to know how it will affect them, and how they can best manage their affairs to cushion the blow when it comes.
For the super rich, the problem is to find some safe assets to hold which will retain value after currencies become worthless. For everyone else, the problems are far more fundamental and primitive: what is the best way to ensure that you will have food to eat and a place to live?
For the rich, the solutions are precious few: gold and silver, perhaps, although these are not good long-term investments. Yes, a canny investment in precious metals (or even common metals, or other basic commodities) made at a carefully calculated moment has the potential to achieve a very satisfying return, but, long-term, the expense and hassle of holding gold or silver bogs down any realistic expectation of long-term growth.
It seems to me that the only obvious choice is land – the land of the earth is the ultimate source of value and wealth, and has been since the earliest times. But for ordinary people, too, ownership of land appears to be the safest investment in uncertain times. Even a very small piece of land could support a few fruit and nut trees. One English Walnut tree will provide major sustenance for a family forever. These tree crops should be supplemented with kitchen gardens of organically grown vegetables and berries. If your land has a natural source of water (and a mountain spring is more reliable than groundwater), you would be in a fair way to becoming sustainably independent. Add a solar power set-up and a good assortment of tools, and you should be able to survive nearly any upheaval.
So in the face of the natural value of land, particularly in times of trouble, the free-fall of the property market makes no sense to me at all. All I can think of is that the property markets are being deliberately manipulated so that “the smart money” can choose their moment and buy up all that land for pennies on the dollar, and then sit back while everything else collapses in value.
Here we have everyone in debt to the banks so they desperately try to sell off their land to pay their debts. The banks are already acquiring property rapidly through foreclosures; if someone were able to pay off their loan in cash, the bankers could then purchase other distressed property through the property markets. In any case, when the crash comes, do not be surprised if it is the banks, the bankers, and other custodians of “the smart money” who end up owning all the land.
Other than land, I really can’t think of much else that would retain any value, with the possible exception of munitions factories, but I don’t go there.
