Sunday, May 10, 2009

Building The Case For P3 (The Next Crash)

As most of my regular readers know I am constantly trying to put the pieces of the puzzle together for P3. It is not that hard to forecast the impending doom of our economy given the multitude of really bad decisions we've made over the past many years (and especially recent decisions by our faithfully elected officials). In my blog below on the many employment issues that still and will continue to exist (5.7 MILLION out of work and growing) I tried to paint a fair picture as possible using many reliable sources. To build on the employment issue and the impending doom of the consumer, Mish has put together a fantastic writeup on the Vanishing Credit Lines for Consumers and Small Businesses.

OK so the banks that are in such good shape and have all that TARP money (remember they are "well capitalized" and the stress tests said all is well) to lend to help rebuild our economy are now cutting credit lines to the lifeblood of the American economy, the small business? What? Say that again? Oh, they are cutting credit to the general public as well? What? Say that again? So here is another major piece to the puzzle that impending doom is being delivered to our doorsteps. Just read the article and then add the unemployment issue to this debacle and you may start seeing the picture.

I'll add a quick side note here, if the savings rate nationally has gone from negative to over 4% that is another LARGE chunk of money taken out of consumption. Just thought that small tidbit of information fits in context with the credit and employment issues recently being addressed here. Those predicting that since inventories are at historic lows and a hiring boom will come to rebuild and resupply everything are wrong. Sorry. The tax payer is tapped out. The consumer is tapped out. The treasury is tapped out. PIMCO is tapped out. The Fed, well, just how much money will they print and then if they do....we're totally toast. Bottom line is it may be a decade(s) before we become the extreme nation of consumption we were just two years ago. They have put the patient on life support and nothing short of a miracle is going to stop this patient from passing on. Oh, OK, the patient will survive, but it may come out needing years of therapy and might need facial reconstruction to recognize its own self in the mirror in a few years.

I'll not go into the multitude of other issues here just yet. I'm keeping a notebook of links to build the ultimate case for P3. It's coming. I believe new market lows will be set eventually or at least they'll be tested. Just make sure you are ready. Enjoy this pop while it lasts, because by the end of this year or early next year the ugliness returns (IMO of course).

GL this week.

Your permabear buddy,



  1. awesome post shanky,
    just saw on kenny's and thought of coming here.
    I think of two letters that provide impetus to P3.
    You are going to see 100K employment (supplier plus small businesses around it, and of course GM) the minute the BK is announced.
    That monkey will ride the jobless claims and CPI and virtually every metric for at least 6 months.
    thanks shanky.
    by the way seeking alpha is looking for contributors and they give loads of access once they accept your article.
    p3 definitely qualifies for it as long as put it say by end of this week and go through couple of more drafts. i also enjoyed your stockcharts this weekend.

  2. Thanks Linus. Way behind on updating most of them. Looking to add a bunch and delete a few. Trying to figure out how to make it more interesting, new and can benefit me and everyone else. Still a lot of stuff missing. It was fro client holdings at first and is going to morph into better work. See you at K's tomorrow. Thanks.

  3. Shanky,

    Once again, we see the disgusting double-standards and hypocrisy of the super-rich and powerful in our beloved democracy:

    The banksters f*ck up, and demand to be saved from self-annihilation by taxpayers involuntarily bailing out the banksters -- whose selfish, greedy recklessness has cost the loss of 5.7 million jobs for "the little people."

    As if that weren't unfair enough, the banksters "repay the favor" by withdrawing credit from the very same "little people" who just saved the banksters from self-annihilation and extinction.

    I say we BREAK UP the "too big to fail" (and too powerful to control) banks, fire all the top managements of the worst banks, send a dozen to jail, and to send a message...HANG a few (for all the suffering and destruction they have caused -- and will cause -- to "the little people" of our country and the world)!

    A guy robs a 7-11 OF $100 and goes to jail for 10 or 20 years -- but a bankster robs a million people of their jobs...and he keeps his job and gets a million dollar "bonus" paid for by taxes from the very same "little people" whose jobs he just robbed.

    Where's the justice? Where's the accountability? Where's the democracy?

  4. Shanky,

    I want to add this related fact:

    Another disgusting double-standard and hypocrisy by the super-rich and powerful is that welfare and safety nets for "the little people" are bad, immoral, and unfair to the rich.

    But when the super-rich and powerful destroy themselves by their own greed and reckless over-reaching, welfare and safety nets for the super-rich and powerful are suddenly good, necessary, and fair to all.

  5. SRS - buddy, you nailed it, but they are the puppet masters. Funny thing we pay for it all and elect the officials but are powerless. Well, they let you think you have power, but that is just another part of the great play on the stage of life. It is finally out of control and the to bigs to fail have won. The next time this happens socialism will be here and everything will be nationalized. That will happen after "o" has his eight years and then Queen Hillary comes to rule. Right now I am sorry I have two children. They will suffer and not realize the freedom we have experienced. Times will be different from now on for the most part IMO. Maybe it gets better, but I'm not very optimistic right now. Thanks for the visit and the comment.



  7. I think P3 could begin in mid-June, but this market will continue to be propped up short term.
    I posted the reasons on Ken's blog over the weekend. But in short, there are too many big fund managers who truly believe they are going to miss the next leg up to 1100 and will keep buying every dip for the next 4-5 weeks. Leading economic indicators in June will be the catalyst IMHO.
    This market is going to try everyone's patience and test the ablilities of the best technicians.


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