Well, I’m back. I leave for a few days and it’s financial mayhem again. Granted, I had a great time getting high on mountain air, ignoring the market and the asshats on CNBC, but now it’s back to bidness.
I’m way too busy playing catch up, so I’ll make this brief.
This financial shitstorm will not get better anytime soon, so you can forget about a market recovery for Christmas.
“The Three Amigos”: asset price deflation, credit contraction and a weak economy are playing havoc with our financial system all across our formerly great land and the world collective. Until the three get waylaid at the cantina or lynched, we are in for more of the same trouble.
One key to keep an eye on is a stabilization of the real estate values that are backing commercial and residential loans. Until we see this, the end is not near. I expect that we might see well over 150 bank failures before Rosie O’Donnell starts singing. There is also talk of the FDIC running out of money, ever since Hank and Ben took pity on Bear Sterns, Countrywide, Fannie Mae [[FNM]] , Freddie Mac [[FRE]] , and now American International Group, Inc. [[AIG]] .
Add to all this, the fact that we haven’t even begun to deal with the mess in the credit card, auto loan, student loan and commercial loan areas, and you can see that we’ve got lots of doo-doo to clean up still.
This crisis will try the patience of even the most optimistic investors, for a long time. Sure, there will be periods of hope and calmness, which will then be followed by more blow ups and implosions. In the meantime, play strong defense—cash, high quality bonds and inverse ETFs to hedge any equity positions.
I have been long [[FXP]] , [[EEV]] , [[SKF]] , and [[SRS]] in sufficient size since the beginning of this month. Get yours.
Buenos dias!
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