Thursday, February 4, 2010

Deep Thoughts And Deep Trouble (A Summary And Overload)

This is real. This is very serious. This is a long post, but a summary that is overdue. I highly recomend you tate the time to review this. The news now hits so fast some of the stuff in this post is already obsolete.

Debt/GDP ratio will be over 100% (60% is acceptable). The problems have gotten too big for any government to handle in my opinion. It will hit the fan as soon as the global dominoes start falling. I am a believer that the market will not set any higher highs from this point for several years. I think the tsunami is finally coming ashore.

Obama’s $6.3 Trillion Scam Is America’s Shame: Jonathan Weil - we have a slight budget imbalance that if real will bury us for many years to come. The FNM and FRE issues are being pushed to the back burner like they did in the Enron like accounting fraud with the MTM and derivatives issues. This is not real and it can not happen. Fantasy land is not a real place. I'm not positive but they may be taking string theory a little bit to far. Sure there mat be 11 dimensions of time, but we only live in one and can't cross over to the others quite yet.

Tomorrow you get the governments "revision" on jobless claims. 824,000 Jobs will disappear on Feb 5th. If there are no jobs there is no consumption or taxes to feed the system. Here is Mish on the subject
824,000 Will Disappear On February 5; BLS Admits Flawed Model But Plans No Changes and NO ONE is paying any attention to those falling OFF OF the unemployment list cause they have been on there for too long. We just don't count them anymore. Real unemployment will cross 20% (+17% now).

They have now enacted legislation that will limit what you can get from your MM accounts. Yes, you can not just withdraw your funds on demand anymore. The Treasury Is Soliciting Your Feedback Regarding The Proposed Annuitization Of 401(k) I highly suggest you use the link provided to fight this action. 

Commercial real estate is yet to crash and a second housing slump is coming. Take a peek at The Next Leg Of The Housing Crisis In Five Simple Charts any questions? 

Even now Bloomberg is getting in on questioning the monetization of our debt.
Bloomberg Joins The Direct Bidder Inquiry, Even As DB Identities And Rationales Continue To Evade it is clear that no other country is purchasing our debt at any significant rate anymore (more than likely they are removing funds at this time). 

Shall we mention the possibility of raising of the US Treasury's borrowing limits by $1.9 TRILLION. (UPDATE: they voted yes and our CC limit has been upped. Told you this post moved fast) Yes, we were out of money and just might decide to extend our own credit (ain't that the cherry on top of the cake in this credit crisis!) They are debating that virtually right now. Try
Visualizing The Abyss: An Itemized Representation Of The (Endless) U.S. Budget Deficit Would you like to see the US National Debt Clock?

Portugal, Spain, Greece or any number of smaller countries are about to bite the dust. California is about to go bust again. Austrailia did not raise rates ignoring their massive RE bubble.Our states are facing massive budget shortfalls. Take this recent post on Nevada as an example.

China....heck, who knows what to believe coming out of the red state. Whatever it is - it ain't good. Bottom line is they are overbuilt and in a massive bubble. Must see vid of Jim Chanos this morning describing the China bubble. It is astounding.

The double dip is here. Money can be made actively shorting the market as long as that is still allowed (unless Barney Frank gets his way). Robert Prechter won't say it, but his models have S&P 500 setting new lows in the future. The great P3 (massive bear market down wave) is most likely beginning at this point. The great fake out will happen at the bottom of this first wave. It will be wave 2 up of the 5 wave structure down. For a chart depicting this theory look here. the market action today is 3 they are brutal. Now magnify this a whole bunch and you get the picture.

One investment idea -
Taleb: "Every Single Human Being" Should Be Short U.S. Treasuries a chart for these is HERE. As for where the dollar goes, we'll know soon enough. every country is rushing as fast as possible to debase their currency. Somehow ours is viewed as a safe place. That is yet to be seen. I think the dollar is eventually going to get crushed. A chart for that is here.

Gold - that is the big question. I am of the opinion that when Russia, India and several other smaller states buy huge blocks near the $1,000 level they have set support near there. You have to ask yourself why they made these large investments at this level at this time. Could they be hedging future bets? do they see hard times ahead? The other question about gold is the tungsten issue. Just how much gold is really out there. Some studies have been done that suggest that supply is overstated. that we have not mined enough gold in the history of the world to equal all the supply that is said to exist. If reserves are proven to be falsified (and there is tungsten inside those bars) who knows what will happen to the prices. Some are speculating it will skyrocket. I recommend the real thing over paper. Near term, gold is nearing support at 1066.

I have really only scratched the surface of the bad news in this email. I have hardly touched on the derivatives, CRE/RE, unemployment, monetization and many other larger issues that exist here and globally. Fraud, lies and deceipt - they are out there as well. Trust me, I could have made this much worse. The bad news is coming at an even faster pace now, and I'm not positive they can keep up anymore (or even have any control at this point). To make matters worse and to add to the falling market theory, I believe we are at an earnings peek.

I believe a real depression is coming. I believe you need to have ample cash at home. I am not on the need water, canned food, seeds and ammunition train just yet, but I am not discounting the possibility of this either. I believe some sort of social unrest is coming. The only way to fix the crisis will be a massive overhaul of Washington. Frank, Pelosi, Bernanke and the lot need to be removed. The Constitution and firm regulation need to be put in place to ensure this never happens again. The Fed needs to be abolished. As long as we are slaves to the TBTF banking cabal, nothing will ever change. If we can rest them of the power, we can get our nation back. It will be better again one day, but sadly we have to shed all the excess first and start over.