Posted on 01/20/2010 9:42:30 AM PST by SonOfDarkSkies
“What will be interesting now is to see how long today’s thinking continues to hold sway. That will depend as always on future news.”
In the medium term, are you in the isolationist or deflationist camp? More precisely, what kind of news would reverse the current, short term trend (absent helicopters and raining dollars)?
“That said, I don’t think this will be a real deep and lasting hit to our market.”
Under ordinary circumstances, I would agree with this. But if it is true that we are still sitting on multiple bubbles ourselves (real estate never fully collapsed, nor did the stock market either, IMO), wouldn’t the ripple effect throughout Europe, combined with our strengthening currency, cause these bubbles to pop. Our real economy is not healthy right now, and with the crises in state and local governmental finances only getting worse, upcoming Alt-As, not to mention the looming outlays at the Federal level, I just don’t see any way that we can prevent this.
I suppose what I am saying is that the damage done already, in the last year, is enough to make us much more vulnerable than we should be. (Having said that, while we are in a bad position, the rest of the world is in much worse shape.)
Why does this stink of dirty tricks?
The market was poised to surge and now as if by magic stock dumping drives prices down.
Never let a crisis go to waste, even if you have to make one.
Discounts today in isle #9
Discounts today in isle #9
Another day another move. The real news is Dow held over 10,500, so to me so far no real sustainable damage. This is a traders market with the near term major trend being bullish. Long term is another story. My final assessment comes at 11,000 DOW. If it can break through and hold, then stay long, if not, go to cash (or short). This market takes all its moves based on DC right now. If it senses that DC is out of the loop for a while, it might just surprise us. Today, may be the beginning of a market that looks beyond idiots like bammy, nancy, harry, bwarney, et.al.. Essentially I am saying that the emperor has no cloths and people are starting to notice. Further, blue dogs need to prove themselves to Republicans if they wish continue their careers in DC. The pendulum has swung, socialists are yesterday’s news. I believe the market will like all of this new gridlock. Having said all this, expect a RINO to offer bammy a way out by selling out his constituency.
In the medium term, are you in the isolationist or deflationist camp? More precisely, what kind of news would reverse the current, short term trend (absent helicopters and raining dollars)?
One thing that would change my short-term expectations would be an oil shock (Iran, most likely), but that would not change the long-term outlook. I would prefer high inflation as that is easier to deal with in my position, but I don’t expect that to happen.
How to short-circuit the 10-13 years? Massive government spending cuts and higher interest rates no matter the pain, as Volker did (for different reason) circa 1980. As for the helicopters and raining dollars, for the first time in our history there aren’t enough helicopters and printing presses to accomodate that action, in my opinion. The can has been kicked down the road much too far, and the demographic situation is very tough.
One other thing that might change the equation is massive immigration, but that better consist of skilled people and willing laborers.
Freegards, and you asked good questions.
I assume that increasing the debt limit by 1.9 trillion isn’t part of short-circuiting that 10-13 years, lol (http://www.breitbart.com/article.php?id=D9DBN7QO0&show_article=1).
The only thing I would add is that Too Big To Fail has got to be abandoned. It’s not a policy, it’s a suicide pact. Inefficiencies just can’t get out of the system, and transparency has become a running joke.
Anyway, thanks for the response.
Well said. The 41 US Republican Senates need to remain unified and not sympathetic to the NeoMonarchics. Trading range wide with upward bias UFN. Beyond 11,000 once tax cuts enter the picture.
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