Use access key #2 to skip to page content.

DaretothREdux (39.76)

DaretothREdux says, “A Rose By Any Other Name…

Recs

12

January 21, 2009 – Comments (11) | RELATED TICKERS: CHA , INS

Would still smell as sweet,” and shite by any other name still stinks!

Seriously though, I love semantics as much as the next guy with a degree in both English and Theatre. Whoever that next guy happens to be, I can’t say…

But that’s not the point. The point is that denial is not a good thing. There are 5 stages to grief and no one can live in denial forever (except maybe the government). It’s time to accept it and move on. THIS IS A DEPRESSION. Not a recession. Here is the wiki definition (see if any of this sounds familiar):

A depression is a sustained, long downturn in one or more economies characterized by abnormal increases in unemployment, restriction of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation or hyperinflation are also common elements of a depression.

------------------------------------------------------------------------------------------------------------

Hmmm. Restriction of credit? Check. Shrinking output and investment? Double Check. Reduced trade, volatility, and devaluations? Check. Check. Check. And don’t forget the NUMEROUS BANKRUPTCIES that are still incoming even as I blog.  Want to hear the really scary part?

Daretoth achieved All-Star status today. No. Not DaretothREdux. Daretoth the first. My first CAPS profile that I basically abandoned because I made a lot of silly bets on UltraShorts right before the recent market turn around. I lost ranking faster than a fat girl in Mickey-D’s gives up on her diet. So, I started my second profile and with my new found lesson of not making bets too big and not simply relying on the picks of other all-stars I have maintained my all-star status.

------------------------------------------------------------------------------------------------------------------

Then as the market has decline back to previous levels I have been paying a little more attention to my old profile as well. I continued to make safe picks with DaretothREdux, but I decided that I would make Daretoth the First a SUPER BEAR. I red thumbed anything with BULL in the title and green thumbed everything with Bear or Short in the title. 

And after today, Daretoth was 5th on the list of hottest single day members. Ouch. Basically, this means that we have returned to our lowest lows and I believe will continue in our downward spiral until we are wishing for Dow 7400 once again.

-------------------------------------------------------------------------------------------------------------------

How do I know this? I don’t for sure and anyone who says he does is lying. But I do know that a system built on false hope (house prices continuing to rise no matter what) is collapsing as we speak. Houses in Detroit are selling for $1. One FU%KING DOLLAR. Are you kidding me? You could make more money if you tore the house down and sold the components used to build it!   

Except no one should be building a house right now. You might as well throw your money in the garbage can. House prices will continue to decline. We are already overbuilt and overbought and no attempts by any government can create demand out of thin air (even if they can create money out of thin air). And that brings me to our real problem.

---------------------------------------------------------------------------------------------------------------------------

Debt.  

Banks can create money by lending more than they have. They take your money and loan it out and that creates more money (your money + your money loaned). Debt can only continue to be money though as long as the people who owe money can pay the interest on their loans. If enough people default or enough people take their money out of the bank (via a run on the bank) then everyone would suddenly see that all banks are insolvent!  

The banks can not possibly pay all their debts if they came due at the same time. This is the nature of a fractional reserve banking system. The problem we are experiencing now is that a lot of people have stopped paying on their house loans (and the government is giving them more reason to quit paying when they offer to pay with taxpayer money). The system’s foundation was made of sand and tide is rising fast. 

The more foreclosures and the more loans defaulted means money destroyed. The Fed can print day and night until they reverse the system and send us into hyperinflation but they will not ever be able to estimate the amount of damage done by banks issuing bad loans (via government mandate I should remind you). Inevitably, the banks will fail. Citigroup anyone? Didn’t we “bail them out?” Look how well that went. And this is only the beginning.

---------------------------------------------------------------------------------------------------------------------

Alstry is right about deflation for now. 

A new President or more government can not possibly save us from the damage that the government has already caused and continues to cause by intervening. 

Just wanted to throw that in there.

----------------------------------------------------------------------------------------------------------------------

The market will continue down because “crashes” and depressions don’t happen overnight. It takes years and many steps down to the bottom. The majority of people who lost their money in the Great Depression didn’t lose it in 1929 but in the years that followed.  

I imagine many investors where thinking about how undervalued stocks were and many new investors came along and bought these so-called “undervalued” stocks. But stocks are only “undervalued” if they continue to make as much money as they used to. In the short run the market might swing based on good/bad news or government intervention, but in the long run all that matters is fundamentals. 

The fundamentals of many companies are gone. Some of them will NEVER recover. I suggest you stay away from any company that is asking for government money (unless you short it). That was the lesson I learned with Daretoth. The government can screw up your CAPS score in the short run by inflating a stock’s price, but in the long run the government can severely screw up the economy (which is arguably much worse).

----------------------------------------------------------------------------------------------------------------------

So, it’s time to move on people. It’s time to accept the fact that this is a DEPRESSION not a recession, not a regular boom and bust cycle, but in fact a nasty economic decline caused by too much debt and too much spending. You shouldn’t run your finances like the government runs theirs. 

You should save, and lives within your means. I know this is precisely the opposite of what the economists and banks and government want us to do, but it’s over people. We rode the wave to the shore and it was fun, but now the tide is going out and it’s getting pretty damn hot without enough water to cool us off.  

Do what is good for you in the long run not what is good for the economy in the short run. Eventually prices will stabilize and the business that weren’t stupid will gain market share and everything will return to normal. But I must warn you. I think it’s going to take much longer than the so-called experts anticipate.

-------------------------------------------------------------------------------------------------------------------------

I must also warn you that the stage after denial is ANGER. And when people start to wake up and realize what has been done to them, when people start to understand that the government is the problem and not the solution, when people begin to understand that they are being stolen from and the “redistribution of wealth” is in fact caused by the monetary policy, they will be angry.

And they should be. My hope is that it will be a good anger. The type of anger that makes people once again responsible for themselves and stops asking the government to wipe their a@@ every time they shite on themselves. Maybe they will even call for the abolishment of the Fed and the income tax. I can dream, can’t I? 

Because after Anger comes bargaining. Only death is permanent and government is not. We can bring about a real change if we want. We “the people” have that power. 

---------------------------------------------------------------------------------------------------------------------- 

America is like a sleeping elephant in chains. The elephant has been in chains since it was born. When it was little it tried to break free from the chains but it was too small to do so. It doesn’t know now that it is strong enough to break free, so it simply sleeps most of the day away.  

Wake up America! 

You are stronger than this. Your chains are nothing compared to the awesome power you possess. This country was built by “we the people” not the government. The government is supposed to be the one in chains. Don’t believe me? Read the constitution.  

We have two choices, two paths, this is our fork in the road. We can keep sleeping and accept our chains until more chains are put on us, or we can wake up and break out before it is too late. I know which one I hope for. 

Only through acceptance of our circumstances can we move on. This is a depression, and “we the people” are not to blame, we are the answer.

 

11 Comments – Post Your Own

#1) On January 21, 2009 at 3:50 AM, DaretothREdux (39.76) wrote:

Disclosure Policy: DaretothREdux does not own any shares of CHA, INS. I prefer to go without, and this blog is not satire, but a call to action.

Report this comment
#2) On January 21, 2009 at 5:00 AM, DaretothREdux (39.76) wrote:

Oh, thank god. The government and the new president are here to save us:

U.S. financial losses may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” New York University Professor Nouriel Roubini, told a conference in Dubai on Jan. 20. Obama will have to use as much as $1 trillion of public funds to bolster the capitalization of the industry, he estimates.

Well, in that case just cancel this entire blog! We're all saved! HOOORAAY! heh...

Report this comment
#3) On January 21, 2009 at 7:38 AM, kaskoosek (62.84) wrote:

CHA is a ctually a good idea :D

Report this comment
#4) On January 21, 2009 at 8:26 AM, DaretothREdux (39.76) wrote:

kaskoosek,

I don't disagree. I do not currently own any China stocks but I wouldn't bet against that one on CAPS. They could have a little less debt for my tastes but the P/E is good assuming they continue to make the same amount of money...

But that being said...I obviously meant that I have thrown off my Chains...

Report this comment
#5) On January 21, 2009 at 9:59 AM, DaretothREdux (39.76) wrote:

Is this what we were waiting for to rally?

“Our guess is by the year-end, that the reflation going on with the monetary policy, the fiscal policy, the decline in the price of oil, all that reflation will overcome the deflationary forces, and we’ll have a somewhat higher market” 

Change the word "guess" to hope and it would be more accurate. Either way, that statement makes me laugh. Somewhat higher than what? Zero? I certainly hope its higher than zero.

Report this comment
#6) On January 21, 2009 at 2:41 PM, chk999 (99.97) wrote:

This is nothing like a depression.

In the great depression we hit unemployment of 25%. We won't get close to that. This also won't last for a decade the way the GD did. The two principal differences being that during the GD the Smoot-Hawley treaty killed international trade via punitive tariffs and the fed cranked the rate up during an economic downturn.

The problem we will have to deal with is great inflation (which is a serious problem if you have a bunch of dollar denominated assets like bonds) but we won't have a depression. 

Report this comment
#7) On January 21, 2009 at 7:46 PM, Mary953 (80.38) wrote:

I always thought that when Gulliver woke up in Lilliput, the only reason he could not break free of all those little ropes holding him was civilization.  He feared hurting the tiny people climbing around on him and near him, either by sitting up or by causing ropes to snap and hurt them.  This was also, ultimately, the reason that the British lost a number of their colonies to the "less civilized" inhabitants.  They roped themselves in with ideas of what would and would not be acceptable behavior.

As Americans, we respond quickly and courageously to specific events (Alamo, Maine, Pearl Harbor, 9/11), but we fall asleep during readings of the omnibus Christmas tree bills that enslave us with taxes. 

It is my hope that when our new President leaves office in four years or in eight, that he will go, happy, healthy, with the thanks of a grateful nation.  Until then, he has my prayers and I will do whatever is needed to be part of the answer.  (Reserving the right to someday help grow the economy with a nice long cruise - don't take all my illusions away please.)     For now -

Bolt cutters of the world - Unite!  We have nothing to lose but our chains.

 

Report this comment
#8) On January 21, 2009 at 9:15 PM, DaretothREdux (39.76) wrote:

chk999,

There was nothing in that definition of a depression which said 25% unemployment was required...just because it's not the exact same as the great depression does not mean that it isn't a depression. We will see 10% unemployment and in this day and age (considering the way we count unemployment is very different than the 1930s) that's pretty depressing for our current economy.

And let me ask you this: do you think in the midst of the great depression people were saying, "This isn't a depression it's just a long recession..." Probably. People like to be optimistic until reality sets in and forces them to do otherwise. 

My point is that until we accept the facts and quit fooling ourselves we can not keep depressions from occuring.

Report this comment
#9) On January 22, 2009 at 1:34 AM, DaretothREdux (39.76) wrote:

Mary953,

Your point is both poetic and fitting as always. I personally hope you get to take a hundred cruises if that is your wish. I have been on one and I made so much money playing $1-$2 no limit hold 'em in the ships casino that I more than paid for my cruise, the alcohol I bought, and gifts for my beloved and had money left over.

I also wish Obama well. So, far I cannot complain about his actions (Gitmo needed ended the moment it was suggested), but I have many worries over his "promises" of hope and change. Only time will tell if people are willing to take personal responsibilty for their actions, or if we will give way to socialism/fascism and then to more tyranny. I know what I will fight for and I can only hope their are others like you willing to stand up when it becomes dangerous to protest.

Report this comment
#10) On January 22, 2009 at 10:49 AM, Mary953 (80.38) wrote:

The British are having difficulties at the moment due to the fact that they did not fight to hold onto some of their rights.  In this case, they did not stand up for themselves when the government chose to collect all handguns from the citizens.  Crime is on the rise now and the people with guns are the criminals and the police.  This threat was from within.  They did not realize that they were losing a bit of freedom.  Now the Parliment wants to ban fox hunting.  For the USA, think in terms of the Congress deciding to ban football.  The British have given the government so much power over their lives with socialized programs (medicine for example) that now one of the things that is unique to the British culture is under attack and the Brits can do nothing more than march in protest.  The link to the blog about this, and it is an excellent one, is by whereaminow - (http://caps.fool.com/Blogs/ViewPost.aspx?bpid=131898&t=01000860093551905860

I have a dyslexic friend who has an interesting mnemonic for their/there.  She knew "there" was the place  (t + here = there), but had trouble remembering when to use "their".   She has found a way to remember thanks to the government   Theirs = The  IRS.    Do you have anything of value?  It's theirs! 

Report this comment
#11) On January 22, 2009 at 12:38 PM, outoffocus (22.80) wrote:

Mary953

Good Point.  One thing I would really like people in this country to stop doing is making the government their God.  Most people who believe in a diety depend on that diety and are willing to make sacrifices to that diety.  The more dependant they become the more sacrifices they are willing to make. Therefore it is very dangerous to depend on the government to provide for you because then you are willing to sacrifice your freedoms to that government. The result = slavery.  

The same can be said of our dependence on debt.  We've all become slaves to debt because to we depend on it too much.  Think of how many people would have more time with their families if they weren't tied to their job working 60 to 80 hours a week just to service their mortgage on their overpriced homes, cars, and gadgets.

Slavery is not pleasant.  This is evident by the general distrust of the government.  We know our government is corrupt but we feel powerless to stop it. Why? Because we are scared that our goodies will be taken away. Shame...

Report this comment

Featured Broker Partners


Advertisement