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August 2010



It's time!

August 31, 2010 – Comments (14)

With this post, I am starting a new theme in Caps, and, starting from tomorrow, in my real-life account. Yes, folks, it is time to short this ridiculous oil and gas bubble. The intrinsic value of 90% of companies in this sector is zero.  [more]



Looks like we have another bottom in place

August 31, 2010 – Comments (5)

And it's not because of geometry. (Anyway, geometrical patterns is a poor way to make practical decisions). But stocks are again priced reasonably given the current environment. And the bubble mentality has not gone anywhere. If it had, we could, quite frankly, have the same stocks a little cheaper. But who wants to fight the Fed? We'll go up from these levels. S&P 1200 by November, anyone?



Idiot of the day: Ron Paul

August 30, 2010 – Comments (24)

Kudos to Ron Paul for his campaign against deficits. Extending Bush's tax cuts forever is the sure way to have a balanced budget, just as devouring 15 cupcakes a day is how one should treat diabetes. Besides, what other tax cut could work better than the one signed into law by George W.?    [more]



The lesson from the European debt crisis

August 30, 2010 – Comments (2)

As I see it, the lesson is this: the collapse of a smaller debt bubble does not have any domino effects. Instead, the hot air streaming from the pricked smaller bubble simply flows into the larger debt bubble.

Caveat emptor: this conclusion is true if the greater bubble is the US, but it has not been tested for other countries and may not work for them. 



Deflation expectations

August 28, 2010 – Comments (3)

Krugman and the mainstream media want you to believe that "the market" is afraid of deflation and is begging for another round of QE. Now, look at this chart. Does it look like TIPs buyers see falling prices ahead?     [more]



A system within a system

August 27, 2010 – Comments (14)

I thought I would write a few lines in anticipation of David in Quatar's forthcoming post with critique of Marx, just to offer the proper context in which I think one must view Marx's writings.   [more]



How one fool got lucky

August 22, 2010 – Comments (3)

Fools often get lucky. Case in point: Paul Krugman. An indomitable supporter of the speculative bubble fueled by low rates, he kept chanting "print, baby, print" and dismissing bond vigilantes, which was a bad call but turned out to be accurate. But Krugman did not understand that it was NOT because of the bad economy. GDP figures may be weak, but it doesn't mean that 2% 10-year Treasury bonds are popular with American investors. I am not buying bonds, are you? The actual reason for bonds' recent performance is threefold: 1) The Fed is buying treasuries, something that Krugman implies DID NOT happen, 2) Banks are practicing the Fed notes carry trade, and 3) the European Central bank DID NOT follow Krugman's "print, baby, print" advice, which made European debt ratings look closer to reality, and made the stupid money rush away from the real danger and toward imaginary security. The moral: bond vigilantes are still as vigilant as ever, but they cannot do anything because they've been outshouted, outprinted, and, finally, outsourced.  [more]



Diversification from a frying pan to a fire

August 20, 2010 – Comments (7)

So China is now tired of US Treasuries and is diversifying to Korean and Japanese Treasuries. I think this is a classic case when the remedy is worse than the disease. There is no argument that US treasuries are very bad, but this does not mean Japanese/Korean treasuries are any better. Especially Japanese treasuries, which look like the ultimate definition of a junk bond, but unlike the real junk bonds, they don't even pay a yield. (OK, technically, they pay a yield, but you need an electronic microscope to see it.) All the more so that Japan's economy is a mess for precisely the same reasons China's will be a mess soon: overreliance on a fictitious trade partner oversees. The last remaining creditworthines of the Japanese government is backed by the very same thing China wants to diversify away from: a stash of US Treasuries. The same inedible soup, only diluted with dog poo.  [more]



An almost perfect inflationary setup is forming

August 18, 2010 – Comments (15)

-The Fed expanding its balance sheet as much as it wants, and the public doesn't care  [more]

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