Tuesday, March 16, 2010

Wow! Just When You Thought It might End,,,,,,

Thank goodness for the Fed and their super positive announcements and my lack of testicular fortitude! The farther you climb, the harder you'll fall (all I will say about the markets is I have been warning you to let the weeklys complete their run - EWT unfortunately does not have this in their play book).

Sadly, we are not going to take any medicine for this cancer we have. We'll just continue to ignore all the CAT scans and MRI's that show the cancer and damage within. What the fuck these people in Washington and on Wall Street are thinking is beyond me. All is well, move along, nothing to see here. Hell, they just dropped the scam into 4 wheel low and are now blatantly just crushing the bears and spinning donuts on the carcasses. Again, it will take and "external" event to rip the market from "them", and I'm willing to bet they know what that event is and when it will happen. Then the completed pump and dump with leave the citizens of America broke and deeply in debt.

I was really happy to see this post on ZH today - Albert Edwards Predicts Deflation Followed By Double-Digit Inflation As "Governments Opt To Default, And Monetization Is Policy Lever of First Resort". This post exactly fits what I think will happen and have been calling, deflation, default and finally inflation. I believe we'll have to deflate to a point where we can afford to manufacture again. Maybe this is the class they are creating thru mass unemployment? We have to create jobs and we can not compete globally. The reflation trade has done nothing buy prop up the insolvent banks and your statement from your BD (that is if you have not been wiped out trying to short this historically unprecedented bull run). "Ultimately, as my colleague Dylan Grice writes, I think we head back to double-digit inflation rates as governments opt to default. I certainly again expect to see CPI inflation above 25% in the UK and indeed in most developed nations in my lifetime ? I have happy memories of the three-day week and doing my homework by candlelight. In the near term, however, the deflationary quicksand will suck us ever lower until we suffocate. A key driver for underlying inflation remains unit labour costs. While unit labour costs decline at an unprecedented rate, they are sucking us inevitably into a Fisherian, debt-deflation spiral. Only then will we see how far policymakers are willing to go to debauch the currency. Last year saw them cross the Rubicon. Monetisation is now the policy lever of first resort."

I have gotten addicted to Mish's pursuit of the troubles of the municipalities, and I bring them to you so you can see the truth not reported on the MSM. In Bankruptcy Court Gives Prichard Alabama 2 More Months To Figure Out How To Pay Pensioners Mish shines the light on a failed city government. What I want you to realize is that this problem is going to expand exponentially. Now imagine what happens to the pensioners that are forced to take cuts? They become another class of the unemployed or group that could not escape the deflation train trucking across America. Underfunded pensions are going to be a very major issue in the years to come.

What stunned me today was the reaction of the markets to the FOMC statement. OK, not inflation, we get that, but the ending of the MBS purchases is a big deal. I'm positive (as Santelli eloquently noted) they will find more buyers of the most toxic assets on the planet, but at what cost? Housing has stabilized as far as we are told, but has it really? Shadow inventory, foreclosures, over supply and something called credit have the housing market by the throat. The toxic assets on off the books is unfathomable. the assets held by FNM and FRE are so big they did not even include them in the budget this year. When will reality hit? I do not kow, but when it does it will not be pretty.

Since ZH is continuing it's reporting on the potential attack of Iran and since every financial meltdown in history has ended with a war, I'll bring you Declassified CIA Document Provides Further Insight On Iran Theater And Escalation Vulnerabilities. It may be worth paying attention to. We all know what will happen to the price of oil if they do attack. Wouldn't papa bush be proud of this current administration if they could pull it off?

If there are any permabears left out there, I wish you the best.

Don't forget Shanky's NCAA Tournament Bracket Challenge - Join group - shanky's blog and the PW is shanky. We are up to a respectable 24 players! thanks to those that have signed up. What is an Alabamaclamdangler anyway?