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Random Thoughts: Viva La'Merica!


More steps towards market socialization.


Editor's Note: This content was posted in real-time on our premium Buzz & Banter and is being shared here for the benefit of the Minyanville community. See also The Upside of Anger and It's a Market of Money, Not a Money Market.

Viva La'Mercia! - 9:12 am

  • We're gonna have French Toast for breakfast, French Fries for lunch and French Poodles for dinner in honor of our most recent socialist step. This is a historic juncture in the history of the world, Minyans, as we edge through interesting times.

  • I spoke about this on CNBC in 2003--yes, I had more hair and less chin--and felt like I was screaming about a monster nobody yet saw. Now granted, I was five years early and there were a LOT of opportunities between then and now but "socialism," "stagflation" and the perils of Fannie Mae (FNM) were officially flagged.

  • Why do I highlight this? Simple--the issues existed five years ago and have cumulatively built since, percolating under the system, growing in magnitude, magnifying in consequence. That's why there isn't a single, simple solution.

  • Time and price, Minyans, time and price.

  • Do I think the government should have let AIG (AIG) fail? No, I don't. It would have created a cataclysmic vacuum that would have sucked General Electric (GE), JP Morgan (JPM), Citigroup (C) and anyone else tied to the derivative ball and chain into the abyss.

  • The "margin for error" from a solution standpoint is thinning. I mean, if the government is cherry picking its portfolio, their perceived credibility will come into question.

  • That's the risk--shifting social mood, which shapes risk appetite, coupled with derivatives, overwhelmed with debt issuance into a deleveraging process as home values stagnate, unemployment grows and geopolitical tensions mount.

  • My money is split into two buckets. The first is a trading account, where I'm "hitting it to quit it" both ways, and my long-term, which is 100% cash and backed by t-bills (this is important).

  • I'll be back Minyans--head up, eyes open, thoughts positive.

This desperation, dislocation, separation, condemnation, revelation, in temptaion, isolation, desolation. Let it go... - 9:36 am

Get ready for a bevy of announcements from the Fed, Treasury and SEC, including the implementation of the "naked short selling uptick rule" across the entire equity spectrum.

They're desperate--and we've been talking about them only having so many bullets left in the gun (and the last one pointed inward)--but make no mistake, the risk is two-sided.

Minyans, this is what we've trained for. This is what we expected. While scary, it is a necessary, and dare I say positive, step towards the eventual recovery.

And yes, I'll likely be years early with that view too.

Good luck.


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