Contrarian

The Triumphant Return of Volatility

Herb is in denial as well as many others market participants. The market is assuming business as usual while we have started to witness an unprecedented de-leveraging of the consumer balance sheet as a consequence of a natural unwinding of the unprecedented credit bubble. Exports are no hope. They are only $1.2 trillion versus $9 trillion of consumption. The price deflation (5-10% in the next year) in a $23 trillion asset called residential real estate will take a huge toll on the consumer, on top of the increase in oil prices, on top of the increase in prices due to the USD decline, on top of the increase in interest rates in ARMs, on top of the food inflation, on top the sluggish economic growth,...

Time to run for the hills...