Trading to Win

The Ultimate Game Changer: Why 2009 Will Be Worse Than 2008 (Part 1)

Spot-on. It is a historical turning point both financially and culturally. There are so many deluded pundits on CNBC and in the papers urging people to buy, they have no care and conscience.

Thank you

Great Depression, Ominous Political Headwinds and the S&P 500

I think Putin and Russia are the wild card for starting Wars. The man is a despot and will use any means to hold the masses. Ukraine could be his target, split the country in two. I think China will be the wild card for an economic collapse/depression. Those two going down together makes for a stronger Dollar.

Line U-6: A Sell Signal for Bulls and Bears

As a bear I enjoy your columns - Happy New Year.

Thought you might be interested in this:

Sprott have called this meltdown with aplomb.

Here is their 2009 outlook:

SURVIVING THE DEPRSSION

If Q4 2007 was the start of the recession, then Q4 of 2008 is the start of the Depression. It’s only getting worse. We’re not aware of a single bright spot in the economic data that would even remotely hint at things getting better anytime soon. We are in the midst of an unprecedented global economic contraction, with no prospect for one region to ‘save’ the others. This depression is global, pervasive, and deep. Some may point to plunging interest rates, already at zero in the US, as a ‘data point’ indicative that things are about to turn around soon. We believe the opposite to be the case. Zero percent interest rates are an ominous symptom, not the cure. In a recession, zero interest rates are highly stimulative. In a depression, they are not. Monetary policy has been little more than a sugar-coated placebo. Credit is neither cheap nor plentiful. Just ask the Bank of Montreal, one of the big banks in the highly admired Canadian banking system, that recently did a bond issue (not stock, not preferred, but straight-up plain-vanilla bond) at a 10% interest rate. Central bank interest rate policies have become irrelevant. Once again, this is highly indicative that we are in a depression. Corporate spreads have gone through the roof. Not just for junk bonds, but all bonds , even AA rated.


Any belief that this will be a short and shallow recession, or even a relatively long and deep recession (but still a recession), is, in our opinion, woefully misguided wishful thinking. This is a depression – one that has only just begun. One that the vast majority of us (the sole exception being those over 80 years of age) have never experienced in our lifetimes.

Link to full article:

www.sprott.com/pdf/mar...

Wrong Great Depression Lessons Will Haunt Equities in 2009

Rakesh,

Have you read the book The Final Crash?

Here are a few choice quotes:

'It appears that we may be facing a meltdown rather than just a temporary slowdown, perhaps the greatest since the dawn of the Industrial Revolution.'

'Debt is utterly endemic throughout western economies: not just at government level but for individuals, corporations and financial markets alike.'

'It could prove to be the final crash for western stock markets as they wither in proportion to the deflating economies they represent.'

'The bursting of the 1980s property bubble hamstrung the Japanese financial system as banks became completely risk averse and ceased to lend money: activity ground to a halt. This is they key weakness of a debt-driven economy where constant new loans are required to continue the charade whereby growth is not organic but artificial.'

'A catch-22 situation exists whereby consumer spending is supported by consumer confidence which is supported in turn by higher house prices and home equity extraction.'

'The knock-on effect of a generational low in interest rates has inflated every asset to the hilt: there is now nothing left to pump. When the final crash comes, every active participant in the primary and secondary bubble areas will be blown away. A deflationary pin-prick now looms large.'

Happy New Year to you!!!

We Can't 'Spend and Save' Our Way Out of This Recession

Richard Koo of Nomura has called it a Balance Sheet Recession. It is well worth looking into his thinking.

Good fortune.