personally I love pundits I played 'pick yer pundit' back in the 1999-2000 tech bubble it was fun as shit
For the names he mentioned that is just talking his book, if he likes them he is all ready positioned. He has also liked the curve steepner since the last quarter of '07 so he is once again talking his book. Although I have alot of respect for the guy I would not go by anything he says on CNBC or in a Barrons article.
IMO, he's right on all counts. I'm still trying to get my head around it. Japan is the model and Nationalizations and inflation didn't work. Why? Thats the question. Why. The System wasn't allowed to fail. When a Bubble Bursts, the party is over. Doesn't matter if more credit is thrown on the beast. The market crashes because Fundamentals reached critical mass and bankruptcies/losses become inevitable from that point on. Why can't the market be saved with more cheap credit? Because it was massive over-valuations that created the Crash to begin with. Bailing out a Bank here or there won't prop the underlying prices of what actually created the crash. In this case, American Real Estate - Nation Wide. In order to make this whole thing work, and not fail, the Government would have to pay the mortgages of everyone that went into default, for the next 30 years. Thats the only way it wouldn't fail. Fundamentally, we know thats impossible. Banks lent more than they could bear. And consumers borrowed more than they could carry. The result is bankruptcies. When leverage is thrown in the mix, the result is cascading failures and compounded losses. There's no way around it. Save the banks and everyone fails, including the market. Save homeowners, rates stay low forever because owners can't afford interest payments. The USD goes to absolute shit, everyone decouples, imports go through the roof, massive price inflation, etc. The long belabored culprit - America bought in at the top. We couldn't afford the margin call but didn't dump our shares. We're many times in the red, panicking, praying for a rally, but there's none coming. The Country has to take the loss and move on. We borrowed way more than we could service. So we have to return our purchases and pay what we can. The Banks get a pass, of course. The Consumers - not so lucky. They have to pay what they can. They can barely afford it! ITS TOO EXPENSIVE! Yes, thats right. We bought at the top and now we're committed. So, in order to pay the tripled monthlies on our McMansion, people have to work more jobs, spend less, and save more. Just to pay for the bubble. Consume less, and Save more. To pay that mortgage.... What happens to a Countries GDP when its 75% consumption dependant an everyones saving because they've got a huge debt to pay down?? Well, we go into recession. We consumed more than we could afford, via credit and 0% home loans. Now, its time to pay. And if we can't pay for it, we've got to pay as much as we can. Or declare bankruptcy and have everything taken from us.............. So what do people do? They save their ass off to pay down the horrendous debt-load they stupidly signed too. What about the other side of the coin? The Banks? Well, they have a get out of jail free card. For every homeowner that goes bust, the Government cuts them a check. They'll be fine. We won't be. We have to pay our debts. They don't. The Trillions in Money they took from us to pay their debts will eventually find its way into the broader economy. This currency debasement does cause inflation. And that inflation will further erode incomes of americans crushed under their McMansion home-loans they can barely afford.... So what happens nexT? More bankruptcies? More Foreclosures? More bailouts and inflation? Yes yes yes yes. Every bailout is money taken from our pockets and put into the bankers.... We have to save even more and consumption goes down even more.
For the banking elite.........its the soft and fuzzy feeling of socialism; However, for the rest of the American mindless masses.......its the harsh and unforgiving hand of Capitalism. Afforable health care for the working middle class?.......sorry can't afford it. Multi billion dollar banking bail-out paid for by the working middle class?.........sure no problem. Money for students to attend quality schools?.........No-Way - go get a high interest loan from one of the banks we just bailed - out. Money to build thousands of prisons?............Why not - this is America, theres always room for another prison. Funding for national infrastructure projects?.......NO-way sorry! Billions and Billions for Iraq and blackwater.........come 0n down! We can always afford that. Lifetime High quality health care for government, State and City workers?....... Please say Yes we can and we always will. Health care for the working slobs that pay for all of that?........NO NO NO NO NO NO NO What does this ultimately equal = fascism
I tend to agree with Achilles on most of his points. We in the US are consumer dependent. Good luck! What is going to drive us forward quicker than a snail after all the Gov intervention stuff stops, which it must eventually? We can't use artificial interest rates and debt next time. We will need either: a) a large war (won't happen) b) major tech breakthrough in energy, nano tech, etc. Short of something extreme like the above, I see really slow growth for a long time. We have to work off the ridiculous debt first.
It's actually an interesting thing that for commodities, when they go under the price of production, most of them continue to go a lot lower and stay in very strong bear markets for a long time. Of course it makes no sense and a lot of people jump up and down, huffing and puffing and buying and saying "Don't they know its UNDER THE COST OF PRODUCTION!!!", but never the less the prices keep on going lower.
that's why I've been mostly a pure technical commodity trader since '87. Don't think about it, just use the charts.