Wednesday, November 30, 2011

Coming Home (to Roost)

The world's financial system is about to conflagrate and The People need their blow by blow analysis. Therefore, I am (again). Blogging that is.

It is simply not as much fun to blog when the folks running the train set have the trains running on time... From 2005 to 2009 the action was just too good to pass up, and when it appeared that The Powers That Be had patched up the system pretty well, well... that's just not as much fun to cover.

This is different. This is NOT 2008 all over again... this is much better (worse) for blogging... I had remained an unbowed and slightly bloodied deflationist... but it appears that while the FED and the other various central banks were, in fact, able to strike fast and hard (my hat was off to Bernake, Paulson, Bush, Obama and a few other courageous members of the Establishment, hehehehehe), they are pretty much out of gas at the moment.

And not because of the price or supply of Oil! Europe is leading the way in "Keynesian End Game" (I don't know who to credit, but I like that term... may have even used it myself at some point as I love chess metaphors and analogies...)

Oh, sure... Oil prices and supplies are not helping at all, and are in fact contributing to the never ending torture that is the Western economy (because its all relative... ask some Indigenous person living in the Andes if the recession means much to them...)... but that's only because we live in this Television induced fantasy of what our life is - food comes from the grocery store, water from your tap, gasoline out  of a pump at the corner store, money comes from the ATM, financial security is bytes on a freaking screen... holy molly! Are we FOS, or what? (We, as jurors, put people in prison to be raped, murdered, and tortured... for "killing or abusing" animals... and then go home and set out rat and mouse traps and poison - I have to wonder... WWJD?!)

But I digress...

The Central Banks are in full panic mode, now... don't let them fool you... check in with me and I'll be happy to set you right...

Remember the incredible growth in China? Here's a link to the Hang Seng Index 5 year chart.

Do you see any "growth" there? Me neither.

OK. Here's a 10 year chart.  Looks to me like a market growing at a compounded 7% per year... with harrowing moves... During the best decade that China could have possibly had? What will it look like a decade from now?

For now, the risk trade could be on... use this as an opportunity to sell any long positions you have left... hide out in short term Treasuries and US$... a Bear Market is in the offing, maybe The Big One... this will create the greatest opportunity for Capitalist pigs (like me!) since March of 2009... and perhaps a shade better.

OK. That's if you have money.

No money? Not to worry... things can't get any worse for you... no point worrying about it... but if you are young enough and bold enough to have a thirst for life rather than a thirst for commiserating... Think!
The answers are fairly obvious!

In a deflationary environment you must avoid debt nearly as much as death... because debt will lead you there. Too, you must avoid property taxes like the plague. This likely means that if you are fortunate enough to have not set up shop in some high cost Blue State you'd be better off elsewhere. The life long difference between paying $1,800 in property taxes and $18,000 in property taxes (per year) is overwhelming! (Its the after tax equivalent of being able to spend winter in Costa Rica or other warm local... or working 4 days per week rather than 5...) Let the Keynesian Left eat their own cooking... its poisonous to your freedom as well as your life and health.

The West, and the U.S. in particular, is in for a rapid-rate-of-change-event. Not so rapid that its the end of the world... life will go on... but our economic arrangement will under go a tremendous shake up... it will be sooooo much easier on you to swim with the tide rather than against it. Or "Against the Wind".

Nice tune. Don't let it be your anthem.

"There will be two dates on your tombstone everyone will read them, but the only thing that matters is the little dash between them." Kevin Welch