Asia’s markets are settled this evening, in response to Turkey jacking their interest rates to 12% in the dead of night, if such sources as Reuters are to be believed.

Central banks have had such a firm hand on everything for the past few years, it really would not surprise me if we just shrug this off and keep going. But I’m not going to rest my hat on that this time.

Ultimately, jacking interest rates to 12% is really bad for growth. Turkey is an importer, so maybe this helps the rest of the world to up that production a little bit. But my concern has always been that we’d hit the point where the rest of the world couldn’t stand the US’ cheap money policies. I thought we were there with the EU, but they passed the buck somehow.

Where did that buck end up, I wonder?

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The fed decision to test the waters with a taper while I was away did surprise me, somewhat. Yet it did not phase me much and so I elected to remain on vacation, silent on the issue.

I would state now in hindsight that a $5B per month taper (with as much as another $5-10B in the works) would still put the Federal Reserve on path to add another ~$800B to its balance sheet in 2014. This remains colossal and would have the Fed assets outstanding at just under $5 Trillion by 2015.

They may very well have tapered by $5B/month just because they were running out of things to buy…(laughter)

If I were to state things that concern me as potential impediments to the US economy and growth, they would list (1) consumer slowdown from budget impacts (pension, healthcare costs, rents/mortgage, increased retirement contributions, etc), (2) foreign existential shocks (EU breakup, Asian crisis, similar collapse that disrupts foreign trade) – where exactly did the EU government debt go and why is it now suddenly not an issue? Who is buying it (ECB, Fed, banking scheme, inter-government trade imbalances, etc)? And what stops non-payment concerns from popping up again in the future? and (3) the election of a Republican majority

But banking solvency just isn’t on that list right now. Neither is inflation, really, although long term prospects of an uncontrollable outbreak of inflation remains a viable possibility. With credit expansion in this country limited to growth of government balance sheets, deflationary pressure is set to commence…until it doesn’t. In the meantime, another ~$1 Trillion of free money to those closest to the trough will keep a major disruption of financial assets here at home as a low probability outcome. Of course, this bodes ill for the “wealth equality” lot, but they’re too dumb to call the system out on that, so we maintain the course.

Concerns aside, I am optimistic. Recessions don’t last forever, and my concerns are outweighed by hope in outlook. I am very long (no margin) and prepared to reap the rewards of economic growth. It’s been almost six years; the system has been on a hyperactive outlook for problems which greatly reduces the likelihood that a real “Black Swan” manages to crop up. It could still happen of course, but with hundreds of thousands of financial professionals calling bubbles as quickly as problems crop up, and a full time central banking staff armed with an unlimited supply of money attacking them at first sight, how exactly is a crisis supposed to materialize from all of this?

The only room for crisis in the US is rampant commodity/asset appreciation, which remains benign. That or an elsewise major shock to the consumer. Financial assets and liquidity issues are covered.

Now, that being said, historically we haven’t had a period longer than 10 years without a recession since at least 1789 (and probably not since long before that either – I just lack records to verify a more robust claim). I’d say the expectation of a correction since the Great Depression is 5-10 years with occasional 1-3 year shocks intermittently. We’re past the small shocks phase, which would put the expectation at right about where we’re at.

These times are unprecedented and the support the Fed is willing to lend the markets (unlike any time in recorded history) makes me think we blow through the averages. I want to say this ship will have the wind to sail to years seven, eight or nine, uninterrupted. We may even match the record holder of 10 or above.

However, it would be foolhardy to doubt another recession will most likely crop up before 2020. The ever growing levels of margin debt to buy equities may well be the first sign of the beginning of the final run before that. Of course it could be nothing.

My belief then is that a long commitment remains the way to go. I have been positively surprised by recent developments that have overridden prior comments on wanting to have a larger cash position by about this time (end of 2013) that I made late last year. However, as gains are taken, a portion should begun to be set aside, starting sometime mid 2014 to early 2015. This should create a reserve build-up of steadily marching intervals (10-20%, with a 1-2% increase every month topping out at around 40-50% of ones account value) sometime around late 2015 to early 2016.

At such time, a second hard look should be had. Earlier and exceptional strength should trigger a reassessment of these statements. Casual to quality growth does not necessarily change them. A major weakness (such as a shock of a GOP majority and fear of monetary policy interference) of course may necessitate a sudden course change.

My most hated places to invest are land/real estate (excluding multifamily or renting derived), oil companies (excluding natural gas predominated), and retail (excluding facilitation to the ultra-rich).

My favorite places center around natural gas production expansion, uranium, coal, multifamily REITs, and I remain interested in holding physical precious metals in a full position in the event an inflation shock from significant expansion in credit hits the economy.

I’m indifferent to the insurance market – especially health insurance. It could swing either way; they crawled into bed with the devil so it’s all political at this point. On the one hand, the entire market is shifting in wild and unpredictable ways. On the other, the feds are rigging the game in the insurance companies favor. Just stay away.

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Want to see something distressing? Let me show you the outstanding consumer credit of the US federal government according to the Federal Reserve.

These numbers include student loans originated under the Federal Family Education Loan Program and the Direct Loan Program, Perkins loans, and private student loans without government guarantees. These numbers also include loan balances that are not included in the non-revolving credit balances reported by the Federal Reserve.

The US government has crossed over $700 Billion in outstanding consumer credit (by its definition, non-investment credit for the purpose of consumption of goods and services by the borrower). These numbers were around $100 Billion just five years ago.

To put this into perspective, JPMorgan Chase’s entire loan portfolio was about $729 Billion last quarter.

To further put this into perspective, the market caps of Visa, MasterCard, Discover, Citi, JPM Chase, Capital One, and American Express combined are just under roughly $800 Billion. The US consumer credit program is equal in size to the publicly traded shares of all of these companies put together.

If something should happen to this loan program – if, for instance, these loans should have happen to been made under shaky, high risk terms to people that cannot repay them – the resulting blow would be similar in scope to a company the size of the largest banks going under or, if you prefer this imagery, the shares of all the aforementioned companies trading to $0.00.

Have a nice day.

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Long ago, when I first purchased CCJ, in the midst of a nuclear reactor melting down on a coastline in the Pacific, I told you that there was more to this than the panic being cultivated by professional fire-alarm pullers.

And there were two primary reasons at that time which I gave. The first, and most obvious, of course, was that one does not just restructure the load production of a country’s power grid over night. Watching Japan struggle with prices as they import the coal needed to replace that energy has been an exercise in this concept.

Across the planet, other nations that declared their intentions to wean off nuclear energy are also realizing how difficult this task will actually be.

But the other main reason I gave why Japan, specifically, would not be divesting itself of nuclear assets was not economical. It was military.

Japan’s hardship is that it is an island nation with weak natural resources. And Her ancestral rival is a massive half a continent, sporting more than one billion people and rich natural resources just a short ship ride away.

In a peace time environment, Japan may have taken her sweet time (and much wasted money and hardship) restarting the nuclear energy program. The Japanese are a notoriously conservative culture, and if you have ever worked with a Japanese company, you know just what I mean by that.

But even Japan, with her slow, careful processions, has limits of patience.

Japan’s greatest threat is a blockade of supply routes. A steady flow of resources into the country is necessary to maintain it. These supply routes, not unlike the UK’s in World War 2, would prove a great headache and cause of domestic problems in a military conflict.

It’s bad enough importing food, goods, raw materials, munitions, etcetera. And having your nations power grid at the mercy of getting boats past enemy naval fleets is just one extra pitfall that Japanese military leadership will not want to deal with.

This was one of the main reasons Japan decided on the nuclear path years ago to begin with. A nuclear reactor carries enough fuel both active and in storage to supply full power for around 3 years.

Compare that to a coal plant, which under full load can require a delivery of about 15,000 tons of fuel a day. This approach requires a constant flow of fuel and also very large holding sites, both of which become attractive and hard to defend targets in wartime.

I bring this up because just recently, Japan’s leadership has reaffirmed the country’s commitment to safe nuclear power. A recent report from Cameco management issued guidance of a sizable fraction of Japan’s total nuclear assets beginning to come back online. This same report detailed that Cameco has observed Japan to be net buyers of nuclear fuel at this point in time.

This should be seen as reducing the uncertainty surrounding Japan’s fuel assets. One of the many worries supplying downward pressure on nuclear spot price has been that Japanese utilities may begin selling off unused fuel. This does not seem to be the case.

In the same presentation, Cameco also reassured audience members that Cameco will not be entering into any long term fuel contracts at these prices, which Cameco considers unreasonable. They are waiting for the market to set rates higher, and have instead dedicated themselves to shoring up the balance sheet and controlling costs to bide the time.

For the moment, the uranium market remains cold. But Cameco is committed to outlasting the cold spell. I remain very excited in the prospects of CCJ, and it remains my largest position at this time.

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Alright, it seems like the benevolent Tea Part folk have decided to share their complete inability to grasp simple concepts with the world, by forced contrition on the populace. It is time to eat our peas. Following the line of Obama’s hatred for those damn jet plane flying 1%-ers, the Tea Party have chosen to one up him, by destroying the 1% in its entirety. An unfortunate and slight side effect may be to destroy the other 99% of the country in the process, but hey…sometimes sacrifices must be born for the good of everyone. So making moves for the ill of everyone is the only logical course of action.

In an attempt to honor Argentina’s dim witted socialist president Fernández de Kirchner for her blood clot, the Tea Party have magnanimously extended a show of us revisiting that countries darkest moment, a point from which it has never recovered: elective default.

Remember that one time the global economy nearly collapsed because a single line of business for US banks bet large sums of money that non-creditworthy citizens would default at abnormally low rates in exchange for paper thin margins on those loans?

Well the entire global economy and all of finance has bet gargantuan sums of money that this non-creditworthy country will never default for no fucking margins.

By all means, how do you think this ends?

Frankly, I don’t care anymore, and am all in. Lay your neck under the axe, and taunt these pussies with all your hatred. See if they have the sack to swing.

What’s the alternative? You can turn all short doubling your money with the end of civilization, just in time to burn it to stay warm? You can barter that paper desperately for some precious metals that aren’t for sale? You can get shot by rioters and have it taken off your corpse?

Because if we actually default, it’ll be to late to go out and prepare. Just think of all the mechanisms that are tied to treasuries. There will be bank failures. And a slow, agonizing process as US spending on interest careens towards $1 trillion annually.

In the meantime, staying in our means would require we basically slash in half one of the following:

The entire defense budget OR
The entire non-defense budget

The point of the matter is that if we default, this place is going to get so screwed up anyway, what does it matter? At some point if the decision were not reversed, the man you know as Cain Hammond Thaler would simply cease to exist. His 9th floor office would be deserted; the only clue that he was ever there at all being an empty safe that used to house his silver and firearms and row upon row of cleaned out bookshelves.

I would simply take up my favorite pocket watch and walking stick, and slip away into the night…never to be heard from again.

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Earlier this week on Twitter, I was no less than accosted by a deranged individual for suggesting that I would very much like a surprise Bernanke additional term. This man has dedicated himself to the proposition that we are on the verge of a near total collapse of stocks, insulting the “dip buyers” for their “stupidity”.

Amusingly, his handle was a Sesame Street character dead on the sidewalk, shot in the head.

This is fitting, as this clown has just had his skull split wide open. This is what you get for being a jackass.

How can there possibly be shorts left alive anywhere? Where are you hiding, or what pathetically small positions have you taken on that you can still get off calling yourself “short”?

The status quo has prevailed again. This charade went a little further than I thought, but it was still just a charade.

My only hesitation here is that the implementation of ACA may shock a weak recovery. I will hold a 20% cash position at all times, because of this reality. But make no mistake, I am long. Christmas is almost upon us, and Janet Yellen is a printing psychopath.

Now if you can excuse me, I have an obsene amount of money to make.

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