A Global Power Shift Is Emerging

Short term cautions not withstanding, we are on the precipice of something great.

The entire structure of the global economy is shifting, slightly and slowly. But like all great change, the most striking of the movement comes all at once, at the end.

The United States is driving this assault of the balances of power, globally, as the energy revolution progresses on our shores. This country is set to become the biggest oil producer in the world – and we are now slowly removing the export restrictions that are the last remaining barrier to this mighty end.

This isn’t just about US trade balances and deficits. Those numbers games matter, but they always matter less than you think.

This game is about power. Oil has been the source of power to our enemies for too long. Russia and the Middle East have fed well on global consumption of this product, erecting their cartels around the flow oil to global industry. It has made them powerful and a threat.

The move by the US to become the world’s largest producer of oil and gas can be viewed through a different lens than financial gain alone: this is also going to completely upend our adversaries. What wars and weapons and diplomacy and cooperation could not possibly have accomplished, given the entrenched interests we faced, this one might push on our part will quickly bring about.

This is a once in a lifetime opportunity. You must get invested in it, and stay invested in it. All US leadership sees the goal, and no one objects to it. The days of getting beat about by monarchies in Saudi Arabia, needing to cut backroom deals that undermine our own morals with foreign militant groups, having to sit through endless meetings while Russian oligarchs threaten our allies with gas supply shortages…these days are coming to an end.

As the US increasingly becomes energy independent, the argument to even have relations with half these villains becomes non sequitur. We can marginalize them while circling around our true allies and real friends.

I can’t see everything that is going to come from this. Naturally US power will follow. And the North and South American continents should improve, swinging towards democracy and capitalism. Outside of that, while I think US energy independence is a good thing, I wouldn’t be surprised if war also follows. Revolutions surely, but also open war between foreign, former energy exporters who find themselves being boxed into a corner. The Saudi’s days are surely numbered, in particular.

My bet is that Russia will not change much, but they will also have to cut less lucrative deals with China to make it. So at least they will be a less powerful, less interfering Russia. Good riddance there.

Suffice to say, this is unpredictability at its best. While I think I see the theme, I do not yet hear the notes. But I’ll take my chances with it anyway. The old order of things was repulsive. I won’t be crying any tears for OPEC, or for Russia.

Monetary Policy Remains Overwhelmingly Accommodative (And Outlook)

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.

Following Up Last Night, I’d Like A Word With The Tea Party Please

In the aftermath of this one sided game of chicken, I’m opting to take a minute to veer directly into the heart of politics. You see, I am a political zealot at my core. And while most of the time (sans elections) I do my best to keep it to a dull roar, this compels a direct response.

You see, when I go to the voting booth, I cast a straight Republican ticket. The first time I have ever voted for a Democrat occurred in the last election cycle, interesting enough, when I marked the ballot for one President Barrack Obama.

Mind you, I didn’t vote for him because I thought he would do a good job. To the contrary, I voted for him precisely because I knew he would do a bad one.

And in that respect, he has not disappointed. His management style is soft and lacks executive interest. His underlings run amok. The men and women he entrusts with delicate tasks are incompetent and generally corrupt. And because of that, less than a year after the last elections, we’re up to our necks in scandals that would have otherwise broken quietly out of the view of the public.

And then, just a few weeks ago, the federal ACA exchanges were rolled out; and it has been nothing shy of a complete disaster.

To put it bluntly, I voted for Obama to stack a Royal Flush for the GOP next cycle.

But there was one element of this plan I could not foresee. The Tea Party.

There was going to be a point in time when the GOP was supposed to go all in. That goes without saying. I just would have liked them not to go all in on the first bet. But as tasteless as that choice was, the Tea Party’s other major blunder is just inexcusable.

The Tea Party were dealt a Royal Flush, you jackasses. You had one job to do – one God damned job – show up, and keep your heads down. So what did you do?

You were dealt an unbeatable hand, so you burned the ace!?

Sure, I mean, why not introduce some help for everyone else at the table? That makes perfect sense. It’s not like Obama was so roiled by scandals his presidency had basically come to a screeching halt. It’s not like the exchange launch was the culmination of failure that, if left undisturbed, would have been a launching point as evidence of all the criticism government run healthcare has been receiving up until now.

No, it made complete sense to interrupt the entire process and distract everyone from these legitimate criticisms just so you could remind the entire planet what a stupid bunch of schmucks you are.

And who knows, maybe you’ll even be dealt a same suited ace? That would give you a Royal Flush. That’s an unbeatable hand!

Sure Let’s Default. I’m All In

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.

Michigan Putting Detroit Back On The Map

I for one have had more than enough of the Great Tragedy that is Detroit. Back in the days of Billy Durant, JP Morgan, and Rockefeller, Detroit was a beacon of the Industrial Revolution. The New Paris, it was a destination of distinguished and refined people the world over. Wealth flowed up and down the lakes of Michigan, and Her pride could not be measured.

Today, Detroit is a shit heap.

That last sentence is both succinct and proper – dilapidation deserves few words. Detroit is a terrible place because her residents are stupid people. Every bad judgement that can be exercised has been exercised in Detroit. If you can come up with a horrible idea, Detroit has tried that idea, sometimes multiple times in a row.

Today, the first steps towards the revitalization of this historical city have been made.

Kevin Orr, hand picked general of Rick Snyder (may his pimp hand always be strong), destroyed the gates of the city and entered her walls. The terror of the unwashed masses was great, as any man foolish enough to have lent Detroit money was lead into the public square for prompt execution.

Hail Caesar!

Less the populace think they would get off unscathed for their part in Detroit’s dishonorable rot, Orr then turned his war machine on the cushy public sector jobs and retiree benefits, battering them to ashes. A clear message was sent shivering through the public body: if you are going to choke out a city…nay, a culture…in an attempt to grant yourself her treasury, your claims will not be honored, and you will be left by the wayside.

The entire structure of public unions, city workers, and culture of corruption has been put on notice in a single, fell swipe.

To summarize the exact actions taken today:

If you are owed money by Detroit, you are done
If you are owed benefits by Detroit, you are done
If you receive an excessive salary from Detroit, you are done
If you held any amount of power or sway in Detroit, you are done
If you are keeping Detroit from revitalizing her public services and spaces, you are done
If you are the source of the sprawling blight in Detroit, you are done
If you are a voice keeping taxes high in Detroit, you are done
If you are one of the people generally creating racial tensions to the detriment of the city, you are done
If you are an obstacle to Detroit, you are done

The deal Orr put forward was so byzantine…I positively love it. It’s time to clean out the dead wood, by purging fire. A lesson must be taught: when you let yourself fall sucker to lies and deceit and false promises, no one will be coming to save you. Anyone who let themselves be tricked into thinking those empty promises of pensions, benefits and payments from a defunct body were subject to protections or guarantees by the rest of the state has felt the first shot across the bow today.

Rick Snyder (may his pimp hand always be strong) has heard the demands from those who elected him clear and distinctly. Anyone tangled in Detroit’s corruption is to be cut down at the knees.

Michigan has had quite enough of the Renaissance City’s oxymoron for one lifetime.

I Think We’re About Done Here

I know many of you hate my politics; of which I couldn’t care less. It’s sad, I know, but the degree to which today’s market is dominated by elected (and occasionally unelected) officials is such that you’d be crazy not to follow the politics.

Now, back in December, in the aftermath of a blood hound-bastard seeking his kicks on the backs of butchering kids, all of a sudden the administration swung around in the most opportunistic way imaginable, as if someone had dished them up a free five course meal with which to sake their hunger.

At that time, not quite as shocked as I might have thought possible, that they would try to capitalize on the tragedy, I offhandedly remarked that Obama had just put in motion the events that would make him an early lame duck.

As if the failure in the Senate of gun control wasn’t the first shot across the bow, now I’m pretty well sure this administration is firmly in the “dead at sea” category.

There’s no coming back from this. The administration’s top brass are seriously trying to stall on these three scandals. And one of them was directed at one of the press’s sacrosanct principles. You don’t run the clock out in a game like this…

If you want to gauge just how bad things are for legislative impasse, just take a good look at the mental gymnastics the administrations staunchest, most diehard of supporters are having to pull to write this all off.

So, what does this mean for things that can make you money? Well, for starters, the obvious is that gun stocks are no longer in the cross hairs, and won’t be again anytime soon. State legislation is probably still being pushed, but it’s all localized, and gun manufacturers are really good at leaving states that punish them. Plenty of other, more receptive places to call home – those stocks should be trading back where they were before December.

I can’t see any of these scandals hurting gun sales either…

The second outcome is going to be less direct and more “what would have happened?” kind of stuff. If the economy should start to slow and require more federal stimulus, you can forget it. It’s dead; done. Not happening.

As it is, negotiations on standard fiscal house affairs are going to be very contentious, and this time around Team Executive is going to have to keep its head down. It doesn’t do well to complain that those nasty Republicans are trying to destroy the country when your own IRS department just got caught targeting them.

Fiscal affairs usually poll conservative anyway – in principle people hate the debt and want government spending reigned in. Obama’s charisma and the trust placed with him were the only things that were leveling that playing field.

Every time Holder and Carney open their mouths, you can watch those things get shredded in real time.

A Global Power Shift Is Emerging

Short term cautions not withstanding, we are on the precipice of something great.

The entire structure of the global economy is shifting, slightly and slowly. But like all great change, the most striking of the movement comes all at once, at the end.

The United States is driving this assault of the balances of power, globally, as the energy revolution progresses on our shores. This country is set to become the biggest oil producer in the world – and we are now slowly removing the export restrictions that are the last remaining barrier to this mighty end.

This isn’t just about US trade balances and deficits. Those numbers games matter, but they always matter less than you think.

This game is about power. Oil has been the source of power to our enemies for too long. Russia and the Middle East have fed well on global consumption of this product, erecting their cartels around the flow oil to global industry. It has made them powerful and a threat.

The move by the US to become the world’s largest producer of oil and gas can be viewed through a different lens than financial gain alone: this is also going to completely upend our adversaries. What wars and weapons and diplomacy and cooperation could not possibly have accomplished, given the entrenched interests we faced, this one might push on our part will quickly bring about.

This is a once in a lifetime opportunity. You must get invested in it, and stay invested in it. All US leadership sees the goal, and no one objects to it. The days of getting beat about by monarchies in Saudi Arabia, needing to cut backroom deals that undermine our own morals with foreign militant groups, having to sit through endless meetings while Russian oligarchs threaten our allies with gas supply shortages…these days are coming to an end.

As the US increasingly becomes energy independent, the argument to even have relations with half these villains becomes non sequitur. We can marginalize them while circling around our true allies and real friends.

I can’t see everything that is going to come from this. Naturally US power will follow. And the North and South American continents should improve, swinging towards democracy and capitalism. Outside of that, while I think US energy independence is a good thing, I wouldn’t be surprised if war also follows. Revolutions surely, but also open war between foreign, former energy exporters who find themselves being boxed into a corner. The Saudi’s days are surely numbered, in particular.

My bet is that Russia will not change much, but they will also have to cut less lucrative deals with China to make it. So at least they will be a less powerful, less interfering Russia. Good riddance there.

Suffice to say, this is unpredictability at its best. While I think I see the theme, I do not yet hear the notes. But I’ll take my chances with it anyway. The old order of things was repulsive. I won’t be crying any tears for OPEC, or for Russia.

Monetary Policy Remains Overwhelmingly Accommodative (And Outlook)

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.

Following Up Last Night, I’d Like A Word With The Tea Party Please

In the aftermath of this one sided game of chicken, I’m opting to take a minute to veer directly into the heart of politics. You see, I am a political zealot at my core. And while most of the time (sans elections) I do my best to keep it to a dull roar, this compels a direct response.

You see, when I go to the voting booth, I cast a straight Republican ticket. The first time I have ever voted for a Democrat occurred in the last election cycle, interesting enough, when I marked the ballot for one President Barrack Obama.

Mind you, I didn’t vote for him because I thought he would do a good job. To the contrary, I voted for him precisely because I knew he would do a bad one.

And in that respect, he has not disappointed. His management style is soft and lacks executive interest. His underlings run amok. The men and women he entrusts with delicate tasks are incompetent and generally corrupt. And because of that, less than a year after the last elections, we’re up to our necks in scandals that would have otherwise broken quietly out of the view of the public.

And then, just a few weeks ago, the federal ACA exchanges were rolled out; and it has been nothing shy of a complete disaster.

To put it bluntly, I voted for Obama to stack a Royal Flush for the GOP next cycle.

But there was one element of this plan I could not foresee. The Tea Party.

There was going to be a point in time when the GOP was supposed to go all in. That goes without saying. I just would have liked them not to go all in on the first bet. But as tasteless as that choice was, the Tea Party’s other major blunder is just inexcusable.

The Tea Party were dealt a Royal Flush, you jackasses. You had one job to do – one God damned job – show up, and keep your heads down. So what did you do?

You were dealt an unbeatable hand, so you burned the ace!?

Sure, I mean, why not introduce some help for everyone else at the table? That makes perfect sense. It’s not like Obama was so roiled by scandals his presidency had basically come to a screeching halt. It’s not like the exchange launch was the culmination of failure that, if left undisturbed, would have been a launching point as evidence of all the criticism government run healthcare has been receiving up until now.

No, it made complete sense to interrupt the entire process and distract everyone from these legitimate criticisms just so you could remind the entire planet what a stupid bunch of schmucks you are.

And who knows, maybe you’ll even be dealt a same suited ace? That would give you a Royal Flush. That’s an unbeatable hand!

Sure Let’s Default. I’m All In

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.

Michigan Putting Detroit Back On The Map

I for one have had more than enough of the Great Tragedy that is Detroit. Back in the days of Billy Durant, JP Morgan, and Rockefeller, Detroit was a beacon of the Industrial Revolution. The New Paris, it was a destination of distinguished and refined people the world over. Wealth flowed up and down the lakes of Michigan, and Her pride could not be measured.

Today, Detroit is a shit heap.

That last sentence is both succinct and proper – dilapidation deserves few words. Detroit is a terrible place because her residents are stupid people. Every bad judgement that can be exercised has been exercised in Detroit. If you can come up with a horrible idea, Detroit has tried that idea, sometimes multiple times in a row.

Today, the first steps towards the revitalization of this historical city have been made.

Kevin Orr, hand picked general of Rick Snyder (may his pimp hand always be strong), destroyed the gates of the city and entered her walls. The terror of the unwashed masses was great, as any man foolish enough to have lent Detroit money was lead into the public square for prompt execution.

Hail Caesar!

Less the populace think they would get off unscathed for their part in Detroit’s dishonorable rot, Orr then turned his war machine on the cushy public sector jobs and retiree benefits, battering them to ashes. A clear message was sent shivering through the public body: if you are going to choke out a city…nay, a culture…in an attempt to grant yourself her treasury, your claims will not be honored, and you will be left by the wayside.

The entire structure of public unions, city workers, and culture of corruption has been put on notice in a single, fell swipe.

To summarize the exact actions taken today:

If you are owed money by Detroit, you are done
If you are owed benefits by Detroit, you are done
If you receive an excessive salary from Detroit, you are done
If you held any amount of power or sway in Detroit, you are done
If you are keeping Detroit from revitalizing her public services and spaces, you are done
If you are the source of the sprawling blight in Detroit, you are done
If you are a voice keeping taxes high in Detroit, you are done
If you are one of the people generally creating racial tensions to the detriment of the city, you are done
If you are an obstacle to Detroit, you are done

The deal Orr put forward was so byzantine…I positively love it. It’s time to clean out the dead wood, by purging fire. A lesson must be taught: when you let yourself fall sucker to lies and deceit and false promises, no one will be coming to save you. Anyone who let themselves be tricked into thinking those empty promises of pensions, benefits and payments from a defunct body were subject to protections or guarantees by the rest of the state has felt the first shot across the bow today.

Rick Snyder (may his pimp hand always be strong) has heard the demands from those who elected him clear and distinctly. Anyone tangled in Detroit’s corruption is to be cut down at the knees.

Michigan has had quite enough of the Renaissance City’s oxymoron for one lifetime.

I Think We’re About Done Here

I know many of you hate my politics; of which I couldn’t care less. It’s sad, I know, but the degree to which today’s market is dominated by elected (and occasionally unelected) officials is such that you’d be crazy not to follow the politics.

Now, back in December, in the aftermath of a blood hound-bastard seeking his kicks on the backs of butchering kids, all of a sudden the administration swung around in the most opportunistic way imaginable, as if someone had dished them up a free five course meal with which to sake their hunger.

At that time, not quite as shocked as I might have thought possible, that they would try to capitalize on the tragedy, I offhandedly remarked that Obama had just put in motion the events that would make him an early lame duck.

As if the failure in the Senate of gun control wasn’t the first shot across the bow, now I’m pretty well sure this administration is firmly in the “dead at sea” category.

There’s no coming back from this. The administration’s top brass are seriously trying to stall on these three scandals. And one of them was directed at one of the press’s sacrosanct principles. You don’t run the clock out in a game like this…

If you want to gauge just how bad things are for legislative impasse, just take a good look at the mental gymnastics the administrations staunchest, most diehard of supporters are having to pull to write this all off.

So, what does this mean for things that can make you money? Well, for starters, the obvious is that gun stocks are no longer in the cross hairs, and won’t be again anytime soon. State legislation is probably still being pushed, but it’s all localized, and gun manufacturers are really good at leaving states that punish them. Plenty of other, more receptive places to call home – those stocks should be trading back where they were before December.

I can’t see any of these scandals hurting gun sales either…

The second outcome is going to be less direct and more “what would have happened?” kind of stuff. If the economy should start to slow and require more federal stimulus, you can forget it. It’s dead; done. Not happening.

As it is, negotiations on standard fiscal house affairs are going to be very contentious, and this time around Team Executive is going to have to keep its head down. It doesn’t do well to complain that those nasty Republicans are trying to destroy the country when your own IRS department just got caught targeting them.

Fiscal affairs usually poll conservative anyway – in principle people hate the debt and want government spending reigned in. Obama’s charisma and the trust placed with him were the only things that were leveling that playing field.

Every time Holder and Carney open their mouths, you can watch those things get shredded in real time.

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