Sunday, June 20, 2010

Everything in a Nutshell for Dummies

1) Easy Money was the chosen solution to keep the good times rolling, even though the good times were questionable.
2) Productivity was already being impacted by poor allocation of resources, wars not going well.
3) Financial oligarchs effectively took over the government, existing laws were not enforced, and as thing came to a head in 2006 and 2007 the big brokers (deal makers, IPO, LBO's) were hiring specialists in bankruptcy reorganization.  They were poised to buy stuff up on the cheap when things blew up.
4) The recent "recovery" is really just the same recession, but given a hit of crack so it can party on a little longer.  Many trillions were spent, but it mostly benefiting big business, big banks/brokers.   Long term benefits to the economy are non-existent.
5) Government workers have increased their pay like 30% to 40% whilst non-gov workers have treaded water, even if they have a job at all.
6) Government is expanding it's powers and owning businesses.   Whilst theoretically, expanded powers could be useful, why we anyone assume so, given that existing laws and oversight were already so poorly performed.
7) Lobbying, campaign contributions, and restrictions on how any Gov official could migrate from an oversight of an industry to an executive or lobbying position must be instituted.
8) Deflation is likely to be the near term hobgoblin.
9) The Gov can literally just print money, seriously.  They can hand out that paper money to pay off debts.   They do not have to roll over every debt.   All the governments with soveriegn currencies can do this.  The Euro cannot.   This is called competitive devaluation.
10) Inflation can take hold someday.  You best not have all your assets in paper money or equivalents.  These changes may happen relatively quickly, like by 2012.
11) The US has plenty of military muscle, expect it to be used more, especially as things go bad.
12) If anyone owes you money, get it now.
13) Very few, maybe 1% of the population learned anything from the greatest financial crisis in a century.  Or they "learned" that the Gov can indeed save us by strong Gov intervention in free markets.  This makes the next crisis more dangerous.
14) Very few of the problems of the crisis were solved by those trillions of dollars thrown at the situation.   It was more just a transfer of wealth from a captive audience to the ogliarchs.   The bad debts, bad assets are still on the books, they have just been covered up.  Those in the know, know it, and they are pulling out all the stops to "get theirs" before round 2.
14) There may be a QE2 (Quantitative Easing, money printing, throwing money at large banks/brokers), or the USA could follow the austerity trend that is all the rage (pun intended).
15) Reviewed Conquer the Crash by Big Daddy Pretcher.  We all love Pretcher, he is a free thinker, like Armstrong, but he has been so wrong for so long, he is not infalliable.   His view on Gold is wrong, it is not just a commodity that reacts like others.
16) Gold is a currency.  Paper gold is a speculation device, owning gold ETFs and even gold miners is not the same as owning physical gold.  Silver is good for making change, buying a tank of gas, bag of rice, etc.
17) We are not at the precipice of Primary 3 wave down, we could be near the end of the 1st 5 waves down (completion of wave 1).   Wave 2 could slog sideways for years, like a zombie propped up by QE2.
18) Most people have lived beyond their means for a long time.   Most "young people" say 35 and younger, have only lived in a bull market.
19) In order for any chance of moving forward with positive results a few things must happen--banks and investment advisers/brokers/deal makers must be separated by a firewall, not a just a company division name, lobbying must be curtailed, contract law including making bondholders take their lumps, must be restored.
20) Never has the world been so intertwined.  Never has the situation for competitive devaluation of every countries currency been so nicely setup.
21) There is still something like $600T of notional value of derivatives floating around out there, and apparently no one even know where they are or how to track them.   This is many multiples of the world GDP.  This can't be good for the common man.


  1. I think there's actually 1.44 quadrillion notional value derivatives in the system, it's just that 600 trillion of them are interest bearing.

    And regarding easy money, from the "Yeah, that looks normal dept", your Monday AM overnight ramp job started right out of the gate (I'm glad you're only long a tad)...

  2. Nice, TOS is broke for futures display.


    You mean the gold theoretical pricing exercise?

  4. Euro tanking now, Ill try to throw up my strong resistance chart


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