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alstry (35.20)

Has the world gone CRAZY???

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December 19, 2008 – Comments (19)

First, Alstry is OK, just recoving from a bad poker night with good friends and too much beer.   Time to go back to bloodies.  It is simply this, I am just observing the world and am amazed how deep people can stick their heads in the sand and not look up.  If you were playing hockey, you would be knocked flat on your back and not know what hit you.

For those of you that thought the dollar would crash after the rate cuts....OOOPS!!!

Metals Stocks: Gold falls for second day as dollar rises

Finally a sensible headline......

Automakers get reprieve; now who will buy the cars ?

Notice how the language has changed from bailout to reprieve.....since when was giving a few dollars to a business so it can prepare for a prepackaged bankruptcy a "bailout."  A failout maybe, but a bailout???   Definitely not.!!!!!!!

Oh goody, this will certainly help the fact that these guys can't pay the interest...

Auto makers to get more than $17 billion in loans

Isn't borrowing form one party to pay another party with no possibility of making a profit the definition of a Ponzi scheme????  Maybe our government and auto execs went to the Madoff school of investing.

Possibly these guys will be in the market to buy cars.....

Sovereign Bancorp to cut 1,000 jobs

My friends, in the next few weeks....you will see thousands of businesses, cities, counties, and states running out of money.  The layoffs will only increase and the distress will grow.

As I keep saying....never despair....PREPARE.

To end on an optimistic note....before my adult game last night....my 9 year old and I played heads up poker for about a half hour before his mother forced him to bed.  In the end he took all my chips on a bona fide bluff.  Who said there is no future for our children.  But in order for our children to have a chance...we have to set the foundation for them to effectively compete.  As this progresses....I am certain we will get there.  Let's hope by blogging and socratic discourse, we can effectivey mitigage the pain along the way.  Happy Holidays to All.

 

 

19 Comments – Post Your Own

#1) On December 19, 2008 at 1:09 PM, djemonk (< 20) wrote:

I am just observing the world and am amazed how deep people can stick their heads in the sand and not look up.

It's not that they're sticking their heads in the sand, they're tired of hearing people go on and on and on and on and on and on and on and on and on and on about how bad things are while offering nothing in the way of analysis or suggestions.

People know it's bad.  No one is under any misconceptions.  There's just a lot of fatigue listing to report after report and reading blog after blog that just does not let up.

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#2) On December 19, 2008 at 1:26 PM, blake303 (29.52) wrote:

I'm shorting capitalization, question marks, exclamation points, and refering to one's self in the third person. Alstry is flooding the market. Supply will outstrip demand, then lookout below.

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#3) On December 19, 2008 at 1:30 PM, DemonDoug (92.50) wrote:

al, i'm going to repost this here in the hopes you will respond here:

i would like your prediction for california.  it appears as tho the entire state is heading for BK. Not enough money to make it thru february.  If I understand correctly, CA going BK would be the biggest BK in the history of the world... just trying to imagine what that will be like.

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#4) On December 19, 2008 at 1:40 PM, givmeabreak (29.51) wrote:

djemonk, he has made suggestions; drinking and cigars. Oh wait, that would be avoiding the problem/sticking your head in the sand.

To which I'm sure Alstry will respond that is just his way of adding humor to the situation. Meanwhile dje, you are still correct, but that does not mean he is wrong on his points. But it would be nice to see more discussion on how to prepare accordingly.

On another note, I think Alstry=the talented Mr.Ripley.

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#5) On December 19, 2008 at 2:38 PM, alstry (35.20) wrote:

Demon,

Do you think its strange tht the BIGGEST bankruptcy in the history of the world is getting such little press and credible analysis?????

As far as what I think is going to happen, that is the $64 queston that goes to the essence of our running debate between inflation and deflation. Rupudiation results in deflation which has been and is my bias right now.  But in the end, anything is possible.

The malfeasance is getting so large right now that entire governments are being forced to resign.....I am not sure how far the world will have to break down before people finally realize that a fundemental change is going to impact their lives as they know it.

SAN FRANCISCO (MarketWatch) -- Belgium's government has collapsed after a court found it tried to influence a bailout and sale of troubled bank Fortis Reuters reported Friday. Earlier in the day, Belgian Prime Minister Yves Leterme reportedly proposed that his government resign over the affair. A spokesman for Leterme told Reuters that the cabinet agreed to the resignation proposal. Under the country's constitution, Belgium's king, Albert II, must decide whether to accept the resignation.

Maybe if a nation blows up due to a nooklear catastrophe, someone might get a pulse....who knows????  Let's hope for all our sakes it doesn't go that far.

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#6) On December 19, 2008 at 2:45 PM, outoffocus (23.65) wrote:

Honestly, even in this market, I think the solutions are being shot down.  So far I've heard (and even blogged) about a few solutions. Buy gold, silver, precious metals, etc. Short the dollar, short treasuries, trade ultrashorts, raise interest rates, so on and so forth.  Yet somehow these still seem like the unpopular solutions.  What gets the most play are the doom and gloom posts.

Basically we have insanity in all markets. The current financial implosion has made assets prices into a huge mushroom cloud.  We wont know what anything is truly worth until the dust settles. But instead of letting the dust settle, the Fed keeps kicking it up.

Until the dust finally settles, all investments are a gamble.  What people have their heads in the sand about is how the government is only making things worse.  We cannot come up with real solutions if no one wants to face reality.

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#7) On December 19, 2008 at 3:42 PM, DemonDoug (92.50) wrote:

I'm not even talking about inflation/deflation.  I'm talking about more generally - will schools shut down, will there be riots, will cops and firemen not get paid?

Sad thing is I remember Mish's post about all the waste and there was so much room for cutting (as opposed to arnold's 10% across the board cutting).

that's more the take I was looking for though, not inflation or deflation, more like how far into anarchy are we going to descend.

My guess is that the federal gov't bails out the state of CA.  I guess you would call that inflationary, but again I'm not asking or looking at it from that perspective.

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#8) On December 19, 2008 at 3:53 PM, charlesblazer (99.00) wrote:

The reason nobody's talking about CA going bankrupt in February is because the media (and its audience) can't see past 5 minutes from now.  If a problem is more than a week away, it isn't news.  And if a solution won't get results today, it's a failure.  Long term?  What's that?

Welcome to the now-now-now, 5-second-soundbyte, drive-thru society.

Oh, and when I'm driving, and I see a yellow light ahead, I don't slow down.  Sheesh... That yellow light is, like, 12 seconds away.  I have other emergencies to worry about right now.  [12 seconds later...] OMG RED LIGHT EMERGENCY STOP!!!!!

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#9) On December 19, 2008 at 3:55 PM, charlesblazer (99.00) wrote:

Yikes, I've been doing computer stuff too long.  "soundbyte"??  Eeek.  My apologies to the world.

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#10) On December 19, 2008 at 4:14 PM, XMFSinchiruna (27.96) wrote:

outoffocus

gold will prevail as the dollar's decline resumes.

Other than that, don't forget to prepare in real life as well. Think through basic necessities like food and water, keep some cash in something VERY liquid, and do everything in your power to keep your job and or find a new one quickly if it goes. I fear that jobs will contract sharply in 2009.

djemonk

I share your sense of fatigue... but the news must be reported, and people must remain informed. Hang in there.

No one blogs doom and gloom material because it's fun... quite the opposite. It pains me to have to present negative information, but people must remain very well informed to stay a step ahead of the biggest financial catastrophe in modern history.

Alstry and I may differ on the inflation / deflation equation, but we sure agree on this: 

"As I keep saying....never despair....PREPARE."

blake303

that was funny :)

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#11) On December 19, 2008 at 4:47 PM, motleyanimal (93.88) wrote:

California is not going bankrupt. No state government has ever been bankrupt. But you folks keep saying so, because I do enjoy buying municipals and general obligation bonds at a 30% discount.

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#12) On December 19, 2008 at 4:52 PM, alstry (35.20) wrote:

Sinchiruna,

Its time for you and I to have a little fun.

Gold was $800 about 30 years ago and it is about the same today.  Gold was money 30 years ago and for a few thousand years before that and now it is something jewlers pray that women think its pretty.

As much as I love history, I can't figure out your love for something that no longer plays the same role.

I am sure in its day, an abacus has material value, but with the creation of the calculator....it no longer served as the tool for adding and subtracting.

You really think you can take a bag of gold to the supermarket and exchange if for food????

As far as what a ounce of gold will be worth....that is simply a product of peoples emotions as it is no longer legal/tender.......and trying to predict that is beyond me....heck figuring out women is almost easier.

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#13) On December 19, 2008 at 5:39 PM, MarketBottom (29.44) wrote:

Other than absolute necessities, everything else only has perceived value.

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#14) On December 19, 2008 at 8:32 PM, alstry (35.20) wrote:

Demon,

For the most part, other than inferences and a few occasional posts about foreign issues.....I try to refrain from blogging about those issues.

We start getting into some pretty serious discussions with serious implications about the behavior of government.

The difficulty about projecting forward is that we are dealing with issues we have never delt with before.....according to some, if it hasn't happened before, it can't happen now.  To me, such thinking is a logical fallacy.

There are many intangible issues about America structurally in dealing with potential issues.  How they unfold is anyone's guess.....

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#15) On December 19, 2008 at 8:50 PM, nuf2bdangrus (< 20) wrote:

Hello all...my two cents.  Alstry has been pretty spot on, as i have been negative as well.  Seeing it is one thing, trading it is another, expecially when there are such large and powerful forces at play.

 

Demondoug.  California goes BK.  Before that happens, there will be a deadlock between the executive and legislative branches, and one of them will force a government shutdown.  This is where it gets tricky.  Do the Feds step in?  If so, then you can count 13 other emergencies of the same manner right behind them.  So far, the Fed can't resist bailing out....what they fail to understand is one of the most basic human behaviors...that addicts don't change their behavior until they hit rock bottom.

 

The states want to have it both ways.  Lots of taxes.  Lots of services.  Lots of politically correct projects like expensive educational funding for not english students.  Benefits for illegals.   As long as the bubble was bubbling, they can run defecits spend even more aggesively.  THe the deflation bomb hits.  It is inevitable, because as I have been saying for months, we don't have enough INCOME to service our debts, and a Federal, State, or personal level.

 

If the Feds kickstart California with a bailout, they will be able to put off for tomorrow the problems, as they won't have to make hard choices.  Liberal governments philisophically believe in hard choices, they just never find one hard enough that meets the test.  So they avoid, borrow, spend to save their political hides.  It's a PONZI scheme that runs until we run out of succors, read the Chinese and Japanese funders of Treasury debt.

 

Now......if the Ca gov't shuts down, non essential services go, but essential ones like police and fire continue.  Eventually, if you lock up all the crooks in the legislature and don't let them out until a balanced budget is reached, then they will face their problems.  Services will be cut.  And taxes will be raised. 

 

How do you invest it?  Well, being short the market is hard as crap....nerve wracking.   Either step aside, or go long with dividend plays, and use something short as a hedge.

 

I tend to like the inflation play, I don't know when it will happen, but it will.  Food and metals come to top.  No, you can't spend gold at the grocery store, that's not the point.  It's that wehn people perceive their currency to be devalued, they change their behavior in 2 marked ways.  First they hoard, and secondly they store in alternative values, i.e. precious metals.

 

Rest assured, the governments steps to stop this crisis are laying the seeds for the next one, as we refuse to get out of the mindset that the solution is to get americans to spend and borrow more.  That is exactly the problem.  The solution is to allow the recession to work its way through, and let people sufgfer the pain.  Through that pain they will restructure their lives, finances, and education to meet sopcietys needs.  Failure to allow that to happen will just compound the problem.

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#16) On December 20, 2008 at 8:20 AM, Gingerbreadman55 (30.34) wrote:

 charlesblazer

---The reason nobody's talking about CA going bankrupt in February is because the media (and its audience) can't see past 5 minutes from now.  If a problem is more than a week away, it isn't news.  And if a solution won't get results today, it's a failure.  Long term?  What's that?

Welcome to the now-now-now, 5-second-soundbyte, drive-thru society.

Oh, and when I'm driving, and I see a yellow light ahead, I don't slow down.  Sheesh... That yellow light is, like, 12 seconds away.  I have other emergencies to worry about right now.  [12 seconds later...] OMG RED LIGHT EMERGENCY STOP!!!!!---

 

This. One of the biggest problems in our country.

 

And Alstry; 30 years ago when "gold was money" our system collapsed. The only way to gloss over the fact that the system collapsed was to switch to fiat money and drop the gold standard. Unfortunately, we cant do that now, can we?

There wont be anything to gloss over this one.

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#17) On December 20, 2008 at 4:03 PM, XMFSinchiruna (27.96) wrote:

alstry

There's no fun for me there, man. That's the same tired old argument I've been shooting down for 6 years now. My prior blog posts deal with this topic ad nauseum, so I'll let the prior record stand and suggest that anyone hoping to understand the truth about gold's remaining role as the final arbiter of value when fiat currencies fall into crisis can take the time to look back through the material I've posted.

Happy Holidays

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#18) On December 20, 2008 at 4:07 PM, alstry (35.20) wrote:

Then my friend......you are obviously shooting blanks.

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#19) On December 21, 2008 at 2:21 PM, XMFSinchiruna (27.96) wrote:

alstry

I just draw the line at repeating myself. If you want to bring an interesting topic my way, then bring it. I literally don't have time to teach you basic theory about gold... I've been blogging in CAPS about gold for more than a year now, and over that time have covered the basics in full. If you have specific challenges to any of my past coverage of those topics based upon information of your own, then again, bring it. The notion that gold's value is dictated by nothing more than peoples' emotions is quite simply an uninformed position, and is completely contradicted by the mountain of facts I have presented in this forum. 

You're proposing that the role of gold has fundamentally changed in the last 30 years versus the preceding many thousands of years. The burden of proof, my friend, lies with you. If you can present a well-researched argument, without ignoring other widely-available key facts, then I will be happy to engage in debate about the topic.

"Gold still represents the ultimate form of payment in the world". - Alan Greenspan, 1999 

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=118549&t=01008115229194713562

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=100403&t=01001768469531369712

 

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