All this Karl Denninger controvery ... information overload
Yesterday saw considerable activity debating the merits of a blog by Karl Denninger. In this case the very bearish LIKED Denningers position and said he was smart. As usual they called people they don't agree with stupid. Thats a rolling, rousing CAPs tradition - bearish people calling anyone who doesn't agree with them stupid in one way or another.
CAPs blogs see considerable activity declaring the imminent demise of the value of the dollar, the inevitability of hyperinflation, the certainty that all foreign countries hate US dollars and all of that. The very baerish promote these ideas.
GMX posts that rising interest rates inevitable from the rise in treasury yields, said rise inevitable due to the imminent demise of the value of the dollar.
And Denninger apparently posted today that the successful (successful in that the yields went at a lower rate than expected) long-bond auction today, with an unusually high percentage of participating bidders being foreign governments. See here: http://market-ticker.org/ and if its off the front page look for the post from June 11, 2009 about 30 year treasury auctions. Denninger says that foreign governments WANTING US treasuries is really bad and bearish because that means they think we're heading for a delfationary death spiral and that foreign governments can control the outcome and its dangerous to be short $$$, short bonds, or long equities.
Paul Kedrosky says the auction was bullish, and bond rates going up is GOOD because it shows that markets and investors are once again not terrified of any risk. He says forign participation is good. see here http://finance.yahoo.com/tech-ticker/article/262660/Rising-Treasury-Yields-a-Sign-of-%22Healing%2C%22-Not-Inflation-Fears%2C-Kedrosky-Says
Same information, many wildly variant views on what it means from presumably all smart people.
David Dreman in his book on contrarian investing talks at considerable length about how more information has had a neutral to engative impact on analyst accuracy.
We are all suffering from a degree of information overload, perhaps, and I think in times like this minds that simplify situations rather than over analyze them may prevail.
The mind that says "things are in the toilet, eventually, as we always do, we'll return to some kind of normalcy, so i'll buy some stuff and wait" or "this is all messed up, i have no idea whats going on, lets see what happens and then decide" might come out ahead of many hyper-analytic minds.
I submit for discussion the hypothesis that nobody knows and that the ultimate outcome is likely to be alot more boring than the vast majority of the predictions thrown out. That there's probably an element of truth to every viewpoint listed above and more, and that each viewpoint probably also contains an element of error.