Bones

Positioning for When Water Runs Out: Part II

I also would like to see ERII in here.

This is Not a Bull Market: Stocks Are Not Up, and They’re Headed Even Lower

I'm not an ecnomoist so perhaps you can shed some light here. I hear a lot of people concerned with inflation and as a hedge suggest buying gold. The concern is apparently the government pumping of trillions of dollars into the economy as you mention in your piece. This appears to make much sense until you ask one simple question. why? It would appear to me that the government printing press is simply trying to fill the void and attempt to replace a huge amount of wealth destruction that has occurred over a very short period in housing, stocks, bonds, commodities and just about anything else you can think of. There has been a huge sinkhole created they are attempting to fill-in, to re-flate the over leveraged US consumer. At least that is how I think about it. So the question to me really is, how much is enough. Will they overfill (inflation) or underfill (deflation) or get it just right (which is nearly impossible). So far, again, in the real world, it appears they are underfilling. This still will take some time to play out before we know for sure but what I can tell you is I see the price and perceived value of "stuff" continuing to go down whether it be houses, cars, or even gas relatively speaking. So my dollar is worth considerably more than it was in many ways. That's deflation. I think the inflation gang is going off history and in the past during these cycles the government has pumped money into the system which eventually worked it's way thru and caused a period of inflation as they tend to overdo it. The argument here being that if THIS time they are pumping not mere billions but trillions, we for sure will see HUGE inflation. But this time, it appears no amount may be enough to fill the hole, and therefore the inflation fear may be unfounded. Very few companies are raising prices in this environment, quite the opposite. Even if we are able to re-flate the consumer is that sustainable? Ultimately, will that be good for our economy? We've hit a demand wall where, as a country, we've maxed out our credit and can't make the payments. At that point, who will continue to lend us the money for consumption at a low risk rate when we are clearly a high risk customer and more likely to default. As money gets more expensive and harder to access, and as a result demand continues to decline, pricing power may end up in the Land of Make Believe. We may in fact be heading for a long period of deflation.

What Were the People of California Thinking?

Another point...Harry, what blameless state do you live in that gives you the right to judge how other individuals vote? If you just lost your job and half your net worth and were upsidedown on your mortgage would you vote to have your taxes RAISED?!?! It's a ludicrous request and therefore your argument is ludicrous.

What Were the People of California Thinking?

You talk about "Californians" as if all of them are to blame. The majority are NOT to blame. The majority are hard working taxed to the max citizens of this country that has been run to the ground by CEO's and paid-off politicians. California is not the problem, it's a symptom of the disease which is the corrupt government and corrupt elite who break the rules that they expect the rest of us to follow. The people of California have spoken, and they are saying "we've had enough, no more taxes!" They'd rather fire teachers and free prisoners. If you want to blame someone blame the political and financial elite. They have lied and they are the ones who have failed, not the majority of hard working citizens in California or any other state who are already over taxed and will be paying for this debacle for many years to come. I like to see people are getting mad, but make sure you're getting mad at the right individuals first.

10 Reasons Why We Still Haven't Hit Bottom

I'm the biggest bear there is and all 10 of your arguments are WEAK.

Dollar-Gold Relationship Inspires 'New Economic Theories'

The dollar is up because relative to other countries we are the best of the worst options. Also, look around, the price of everything is cheaper, so the dollar is clearly stronger. That said gold has moved up even in dollars but it's moved more in foreign currencies than in dollars which says it's moving for various factors. Part of it is fear, part of it is expected inflation from government spend. What I doubt we have is real increased demand. So right now it's a fear/inflation expectation play. Incrementally fear has subsided and gold has sold off. Inflation remains the longer term driver but it's unclear that will happen although it makes sense. Keep in mind that although the government is printing money like never before, all of that is an attempt to reinflate. They are trying to fill a hole from the wealth evaporation in housing and that appears to be a futile attempt. So we may not see the inflation that everyone is expecting. For most people, their house is their largest asset, if that house now costs $300k instead of $500k where did that money go? It evaporated. Value is based on perception. Perception has changed dramatically and people are not going to pay what they used to because $'s have become SCARCE! Do you know anyone buying yachts these days??? Therefore, when something is scarce and in high demand the value of that something goes up. That something is $'s.

India Risk Rises as Pakistan Unravels

Thank you Rakesh. Another great piece.

The Case Against Gold

I agree with most of your points. In foreign currencies gold was hitting new highs well before it neared the $1000 mark in US$. Strength in the dollar is undeniable, just look around you and there are hundreds of examples of how your dollar is buying more than it has in years, from gas to clothes to food to real estate. I see two drivers for gold, fear and inflation. Fear is the most fleeting and we've seen this move already. The inflation move is the real driver and we have the exact opposite occurring although we will eventually see it. There is truly nowhere to hide (at the moment) but stocks are NOT cheap. The S&P is trading 14-16x depending on who you believe and this bakes in a 2nd half recovery that will not come. The market could still be cut in half in a worst case scenario.

Slow Down Mr. Roubini

Roubini's a GOD and so is Jimmy Quinn. Roubini was spot on and although he was early almost all his predictions to date have been accurate. He sees 20% downside and nationalization. I call that a perma-BULL. We've only seen the tip of the iceberg.

Is This a New Depression? The Lessons of the 1930s

unemployment was calculated much differently back then. If done on an apple to apple basis the picture is FAR grimmer on unemployment comparison.