It's not over yet

The Fed has once again appeased Wall Street. The rate cut and the Treasury swaps had led to a market rally and an easing of the liquidity problems. However, things are still dangerous. I still think that the full extent of the problems are unknown.

So far, subprime has been the word on everyone's lips, but I wouldn't be surprised if prime mortgages begin to show significant deterioration. Then there's the issue of the commodities boom. All the talking heads have declared this over, citing recent reversals in the oil and gold futures. I don't think it's over. I think that it is a correction as investors unwind positions and take profits after a huge run, but I still think that long term, the supply-demand ratio is out of whack. Markets don't go straight up after all and this is no reason to bail on this thesis yet. If you're not interested in averaging down, then I suggest that you just sit on cash until you figure out your next move.

By the way, I still like agriculture even though the momentum money has left the sector. Their P/Es are in the 40s, so I wouldn't jump in just yet. Wait for the media to really sour on them and then snap them up from the bargain bin.

As usual, we Americans are solipsists. It's very easy to get caught up in our financial difficulties and forget that Europe and the U.K. are suffering right along with us. They too have experienced a runaway real estate bubble that has been fueled by cheap debt. Their big banks were no more savvy than ours about asset-backed securities and derivatives. Oh, and not everyone in Europe loves the strong euro. It's great if you want to come to the States and shop, but hell if you want to sell your products here. Just ask any of your friends who enjoy French, Spanish,Italian, or Portuguese wines.

Let's not forget Japan. No country is more export focused, so they're not happy with their strong yen versus the dollar. Growth is practically nonexistent. Toyota is saying that it probably won't make its 2008 sales goal of 9.85 million vehicles. Did I mention that they currently have no central banker?

So where do you put your money in a world like this? I'm seriously thinking about pulling a Jim Rogers and getting out of dollar-denominated assets. Through Everbank you can set up a money market account or CD in 17 different currencies. I'm partial to the Australian and Canadian collars as those economies will benefit from a continued commodities bull market. If you're really pessimistic, they also offer precious metals accounts that hold real gold and silver.