Tuesday, June 16, 2009

The House is on Fire!

Sometimes you read the news of the day and ask yourself: "What in the hell is going on!?".

Life has almost become surreal at times as I watch this economic collapse slowly spiral completely out of control. The wheels are off the tracks at this point folks. All you need to do is open the newspaper today(that is if you still have one in your city) and just read whats going on in the world.

I mean think about what we have seen in the last few days:

- We have watched two Japanese Nationals get busted smuggling $134 billion of bonds into Switzerland. Can you say bizarre?

- British Airways is asking their employees to work for free. Gee, where do I sign up for that job? I think I could do that job out of my house! (scarcasm off)

- Iran is spiraling out of control as Aljimajoke won an obviously rigged election.

BTW. Why can't our people learn how to protest like the Iranians? They take to the streets with torches when they see fraud on an unprecedented scale. Meanwhile over here in the USA, we just sit on the couch and watch American Idol as our country swirls down the drain following an unprecedented financial fraud.

- This report out of Drudge on ABC takes the cake for me:


ET On the night of June 24, the media and government become one, when ABC turns its programming over to President Obama and White House officials to push government run health care -- a move that has ignited an ethical firestorm!

Highlights on the agenda:

ABCNEWS anchor Charlie Gibson will deliver WORLD NEWS from the Blue Room of the White House.

The network plans a prime time special -- 'Prescription for America' -- originating from the East Room, exclude opposing voices on the debate.

The Director of Communications at the White House Office of Health Reform is Linda Douglass, who worked as a reporter for ABC News from 1998-2006.

Late Monday night, Republican National Committee Chief of Staff Ken McKay fired off a complaint to the head of ABCNEWS :"

Quick Take:

Jeez....Am I taking qualudes and not realizing it, or am I really reading this ABC news story? What planet are we on? Since when does the media start broadcasting out of the White House? Is this a goddamn dictatorship that's now in office?

Will Obama be appointing his own version of "Baghdad Bob" that comes on air on ABC everyday and tells us about how wonderful a job the government is doing? Perhaps he could also give us a daily recap around all of the green shoots that are beginning to sprout up all throughout the economy.(sarcasm off AGAIN!)

What is going on here folks! Has the world gone mad????

The Markets

I think investor's are now dazed and confused. The volume has been extremely light for weeks now. I don't believe anyone was really that confident around the economy when this bounce got started. Now that this rally has stalled in the last week or so, it appears that investor's are quickly losing confidence as we begin to roll back over. This is what happens when so many things remain so unclear.

I post this graph a lot but I think its critical to remember:

My Take:

The pattern that is developing right now appears to look a lot like the pattern we saw above in The Great Depression. There will be ebbs and flows throughout this crisis as we see conflicting signs around an economic recovery. I don't think we are headed straight down from here. I expect a lot of volatility , and you are going to have to be nimble in order to catches these bounces and sell offs.

However make no mistake about it, there is no recovery in sight. As a result, the long term trend will be straight down. Its just a matter of time before we break the March lows as this brutal recession/depression continues to wreak havoc on the economy.

The biggest problem that we have in this country is that there is no catalyst in the near future that will be able to pull us out of this.

Think about it, where is the next economic catalyst going to come from? Tech? We already blew up that bubble. Wall St/Finance? HA! These companies will be drowning in debt for a decade or more. Possibly a generation. Housing? Been there done that. Manufacturing? HA! From who Government Motors? How about healthcare? Yeah right. Obamacare will wipe out any hopes of growth in this area.

Green energy is just about the only thing that I can see that is promising. However, its a decade or more away. We simply don't have the infrastructure set up to get this game going to any large extent. We may create some jobs in this area but it won't be near enough to replace what we are losing.

Bottom Line:

Without an economic catalyst there will be no recovery. Without a recovery, there will be no consumer which is what drives the economy in this country. Practically everything in the US is geared around us emptying our wallets. We make and export hardly anything anymore. We have become a nation of debt slaves that no longer has the ability to spend.

The future sadly looks very grim. An economic reset is now inevitable at this juncture. Consumption has collapsed and our industrial production has collapsed along with it(we got more bad numbers today).

The longer we deny the fact that our cost of living must be dramatically lowered to affordable standards, the more we will sit here and and simply suffer.

Our debts must be cleared, and our consumers need to deleverage themselves off of their Ponzi spending lifestyle. THERE IS NO OTHER ANSWER TO THIS PROBLEM. This will result in a lot of economic pain in the form of massive bankruptcies, but it is essential if we ever care to see an economic recovery.

At this point, a depression is unavoidable. Lets accept it before it morphs into an economic collapse.

Stay Tuned!


John Maynes said...

Will Obama be appointing our own version of "Baghdad Bob" that comes on air on ABC everyday and tells us about how wonderful a job the government is doing?

It's called "embedded journalism". Or more concrete: journalists in bed with Obama. LOL

Anonymous said...

Most American people are content with their TV shows, ipod/cellphone, and still decent quality of life. Thus no one gives a hoot about the country being ruined by the DC/WS crooks.

When their lifestyles deteriorate to the bottom, they will bring out the torches. Unfortunately that will be too late because the damages have reach the point of no return.

CT-Hilltopper said...

I have a couple of predictions of my own regarding this market.

Number one: I predict that CNBS will miss this collapse just like they missed the first one. Not a live brain cell in the bunch. Maybe Rick Santelli, but the sheeple never listen to Rick.

Number two: Even with a Democratic congress, it will be a tough go getting approval for Universal Health Care. I don't think it can be pulled off.

Number three: The press in this country are like the Nazi press were about Hitler. They adore him and accept every word out of his mouth as the gospel. Don't expect to see any criticism of "That One" and his policies outside of Fox News.

Number Four: BRIC (Brazil, Russia, India, and China) will be meeting every so ofter to how us more ways in which the United States has ceased to be relevant. The meeting this week was held purposely outside the "G" meetings, as these four countries see themselves in a position to determine future monetary policy on a broader scale.

So , Jeff. At what point do you see this all ending. I see it starting now. I just got out of my last stock.

We see the same thing, but from different vantage points. You see the possibility of a depression. I think we're there, and that we've been there for some time. This rally was just an anomaly caused by manipulation, pure and simple. (just my POV)

Jeff said...



Isn't that the truth

Jeff said...


Totally agree

NOW is the time that we need to act. Once its too late there will be no stopping this tidal wave.

I am afraid that it may be too late already. We are springing leaks right and left and this boat is taking on some serious water!

Jeff said...


Where does it all end?

Not sure yet. I need to see further policy responses in order to be sure. Its a great question.

The one thing I am very confident in is its going to take a decade or more to get out of. You don't have a 25 year bull market and shake it off in just a few years.

I think we see massive debt deflation short term. Inflation down the road. The severity of this inflation depends on our policy response.

The third stage will just be a long period of slow to non existant growth.

Eventually we will work our way through this but its going to suck.

As for your predictions I agree. I hope you are right on your second point. I saw your blogger profile and we have more in common then just our economic views CT.

Lets see how this all plays out. My portfolio has gotten extremely diversified in preparation for a varety of scenarios.

snood said...

Does anyone actually watch the news anymore?

BTW. Why can't our people learn how to protest like the Iranians?

You obviously have not see Lakers or Pistons fan celebrate a NBA championship. :-)

I think the government has gotten very good at eliminating all signs of protest. Witness the mass arrests at the Republican & Democratic National conventions. Very little coverage on the "evening news" and no coverage in newspapers.

The "tea" parties of 3 months ago received scant coverage as well and what coverage there was noted the people as cranks and crazies.

And besides, anyone that protests is harming our soldiers in Iraq and Afghanistan. 9/11. 9/11. 9/11.

Jeff said...


Is that what it is?

I am shocked at the apathy among Americans. I just for the life of me don't get it.

I always thought we were fighters in this country in terms of doing whats right in society.

Man, we seem to have really lost our way.


Minton Mckarkquey said...

I think you've got a load of great points here. The credit ponzi scheme has to be stopped not only to address the mess we're in but to prevent a replay of the same disaster. I read that debt settlement firms are making a killing right now by negotiating deals with delinquent credit card holders that are around 35 cents on the dollar.

In terms of the green industry, although it's clearly the way we need to go in the future, it's by no means the short term solution to getting out of this situation. Obama's employment plans here are wildly unrealistic - apart from the fact that the government has no track record of creating a new industry, it will require a significant push from private business to create any meaningful development. 5 million jobs in this sector will take - as you say - at least a decade.

I'm wondering when the media is going to get off the Obamatrain. The lack of criticism and analysis of his policies is shocking - even Fox is toothless when it comes to looking at his agenda. The popularist decisions (such as giving gay Federal employees healthcare and - get this - access to language training (?) for their partners) seems to cloud any coverage of the big economic issues. It's getting tiresome.

The Depression see-saw is coming: wait for higher interest rates, a weaker dollar and rising gas prices, all just around the corner...

theART said...

Jeff could you comment on this news maybe in your next post?


If I am reading this right than the banks who got us into this mess will be over sighting themselves? Also there is a bit on Federal Charter, what are your toughs?

Jeff said...


Excellent analysis.

.35 on the dollar wow! Hadn't seen that but it makes sense. The banks are smart enough to see what's going on. I guess they figure this is the best they can do given where the economy is headed.

That's why they have basically stopped lending. Well, that and to pay the TARP back.

I think Obama's grace period is close to being over. Hopefully he will start taking some heat soon. He is basically socializing the whole damn country.

Today's financial overhaul announcement giving more power to the fed will be a nightmare. More on this later tonight.

Jeff said...


That's my main focus tonight. We are both on the same page.

What a frickin fiasco thats gonna be.

Jeff said...

post up around 7:30