Wednesday, September 23, 2009


That's what the Fed gave us today.

This is what happens when your bankroll is dwindling and the economy sits on the brink of collapse. The Fed has just about run out of options.

Their plan of stimulating the economy until the "real" economy can heal itself has failed. How long can they keep this zero interest rate game going without destroying the dollar? My guess is the Fed runs out of money before the economy heals.

The damage has already been done when it comes to the economy. The Fed's "tourniquet" is no longer working. The patient(the economy) is about to bleed out.

I am very tempted to get short right now although I didn't put any positions on today. My spidey sense is telling me that investors are on the brink of realizing that Rome is still burning.

I have seen some horrifying evidence of this anecdotally when I talk to friends involved in banking. Companies are panicking in reaction to this crisis and don't know what to do. They are trying to make 10 workers do the work of 30. Their ability to lend their way through this crisis has dried up.

They have run out of options!

Bill Gross from PIMCO(who I think is a genius) has consistently talked about the new "normal" of our economy which is low to zero growth.

Many businesses are still leveraged up hoping that a gigantic recovery can save them from blowing up.

This ain't happenin folks no matter how bad CNBC wants it too. Welcome to the modern version of The Great Depression.

You think it's bad now? IMO you ain't seen nothing yet.


CT-Hilltopper said...

I agree with every word.

Everything that's happening now is too little too late. Kind of the equivalent of shuffling the deck chairs around on the Titanic. It doesn't matter where you move the damn things, sooner or later, everything is gonna go down.

And the government and the Fed are saying Full Speed Ahead.

Jeff said...



It's weird. I saw a few condo complexes in Baltimore slash prices for the second time in less than 2 months.

I have a feeling that commercial real estate sees whats coming if the home buyer tax rebate disappears.

I would be shocked if this wasn't continued, but the price slashing makes me think it won't be increased to 15k like the NAR wanted.

Anonymous said...

get into the 3x inverce etf calls
nov,I been buying nov close to the money calls smn tza edz ,anywere from .75-1.00 ,I think these are heavily shorted

Jeff said...


Nice plays. Love em. The small caps got way ahead of themselves.

Shorting the russell here(RWM) makes sense as well.

Anonymous said...

There certainly is a disconnect from what the stock market is indicating as to what I am seeing out in the real world. Jobless claims numbers are improving so they say yet the percentage of unemployed is still high. I don't know if I completely agree that we are going to sink like the titanic but I think the seas are a hell of a lot rougher then what wall street is projecting.

flipmeister said...

I've never seen musical chairs like this...the only thing which has changed in the last 6 months is the increase in potentially disastrous crises.

The only unanswered question is which problem surfaces first:

-weak dollar
-strong dollar
-bond market
-mortgage market (that reading today shocked a lot of people)
-manufacturing resuming its decline

Quite a stew. And more interesting, it wouldn't shock me if we saw both SPX 1200 and SPX 500 before January 1 2010.

BTW - Jeff, have you seen real estate intervention? It films locally and the last couple episodes have been about people in Baltimore.

It's comic gold, and incredible insight into the delusions sellers still cling to.

And, if that show is any thing to judge, I fully expect to see inventory go down sharply along with prices as people increasingly realize they can't afford to sell or to buy.

Anonymous said...

"My spidey sense is telling me that investors are on the brink of realizing that Rome is still burning."

Your spidey sense also told you in late March that this little rally was about done and time for the next leg down as we were "nowhere near the bottom". How did that one work out for you?

Brian Hoffman said...

Very well spoken. I think you are absolutely correct.

Jeff said...

Brian, Flip


I have seen that real estate intervention. I think its great and helpful for the sellers although they rarely seem to listen.

They have their price and they are sticking to it! Good luck with that!

getyourselfconnected said...

I figure you have more pressing matters than the markets (that would be about anything in real life) but the money market repo idea by the FED may be the last straw for me. WTF are these guys thinking?