U.S. Economic Doom Forecast
According to commentary by at least one economist, the melt down of the U.S. economy is very likely, in line with the previous arguments I've presented here before. I'm not trying to be chicken-little, and as the article mentions, Greenspan will probably let the USD go into free-fall and allow inflation to destroy the population's savings (what little there is of them) on the principle of causing pain to both institutional lenders and small savings alike. Of course, institutional lenders will then hand on the costs to the existing indebted U.S. population with sky-rocketing interest rates.
My prediction is that this will wind down spending among the majority of the population and begin to eat away at the middle class resulting in more spectacular crashes of large corporations - with again small investors (pension funds) bearing the brunt of the pain. This can only increase the dissatisfaction and hopefully the militancy of the working and middle class as they realise Bush's agenda is bankrupting the U.S. economy, in exact repeat of Roman, British and European imperialist/colonialist policies of the past.
If any of this is correct, the question then becomes, what do we do? I would argue for diversification of investments into European and Asian industries, or Euro/Asian real-estate, perhaps even metals. I would argue for divestment specifically away from U.S. companies (particularly technology stocks since they are critically dependent on cash which dries up very quickly whenever there is a bust - see the 2000 Internet bubble and 1983 Western Australian Tech disasters). Euro/Asian tech may be a bad investment if the major drivers of consumption (Americans) no longer can afford foreign tech and U.S. xenophobia and racism will drive consumers towards U.S. manufactured (no outsourcing) technology.
I would be investigating ethical investments - specifically renewable energy companies, organic produce and third world village & women's banks since these should perform contrary to a collapse in traditional petroleum demand, further discoveries of factory farming diseases and a collapse in first world spending. The big caveat is that I'm not an economist nor investment advisor, nor do I have much money :-) so do your own research and make your own decision.
I would be very wary of investments in Australian industries or even real-estate since with the signing of the Aus-U.S. free trade agreement, we can expect Australian wages to plummet and for the Australian economy to be hitched to the U.S. dollar, dragging Australia down with the U.S. in sad repetition of the decline of the Aus dollar with the Asian currency crisis. It seems we still have, as Fela Kuti sang of Nigerians, the "Colonial Mentality" - as much as Australians like to think of themselves as part of the first world, a better term for them is as white Nigerians - always looking to what the big bwana's of Europe or America are doing and then unthinkingly following them.