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Creating More Debt in a Debt-Laden World

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What will happen to bulls while under this drug-induced haze?

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Let's see, we've got unity and accord at the G20, a relaxation of mark-to-market accounting rules, global markets cut in half in the last two years, the government throwing everything and the kitchen sink at the tape and a seemingly endless supply of innovative inventions designed to spur lending. We're good, right?

As a trader, I'm schooled to focus on the journey rather than the destination and we walk that walk every day, sometimes right, sometimes wrong but always honest. What I'm not reconciling, however, is the fundamental disconnect in this equation, the 800-pound elephant in the room and the fatal flaw for the Matador Crowd.

The only true solution for what ails our economy is debt destruction yet all we're seeing is an attempt to create more debt.

How this manifests remains to be seen and to be sure, the circle smirk can last for a while. I will simply ask Minyans to maintain perspective and remember that the grand experiment gone awry created cumulative imbalances that won't be cured with a garden variety V-shaped recovery. Indeed, bear market rallies aside, this particular puppy will take years to resolve itself.

It will take many shapes and forms--from potential currency shocks to social manifestation--and proper preparation, prudence and proactive intelligence will serve us in good stead. Make no mistake Minyans, I'm extremely bullish on the opportunities that will emerge after the medicine of time and price is taken.

My concern, I suppose, is what might happen to Hoofy while he's under the influence of a drug induced haze.

Financial staying power. I remind ye faithful of this concept while the screens are green as most folks are in a better mood. It should never take something bad--or lower prices--to reinforce the notion of risk management as we together find our way.

Good luck today!

R.P.



In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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