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How Being Bearish Will Make You a Terrorist

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It's okay to be bearish, a little bit. But remember: if you get too bearish you'll become a full-fledged terrorist. That's the takeaway from a report on the 2008 economic crisis prepared by a pentagon contractor.

The report, originally written in 2009 by financial analyst Kevin D. Freeman, is getting some play from the Washington Times, which last night published a piece outlining some of the conclusions.
“There is sufficient justification to question whether outside forces triggered, capitalized upon or magnified the economic difficulties of 2008,” the report says, explaining that those domestic economic factors would have caused a “normal downturn” but not the “near collapse” of the global economic system that took place.
Hey man, there's sufficient justification to question everything, which is why I am right now questioning how in the hell such a ridiculous and wrong-headed, totally misguided, frequently factually incorrect and even misleading report could ever have been produced in the first place, apart from attempting to cater to the most irrational and baseless fears, I mean, which, hey, isn't that kind of what terrorists try to do?

Anyway, that's my take on it. You can read the entire report here and see what you think.

The hypothesis is essentially this: a three-phased attack is underway with two of those phases completed to date.
  • The first phase was a speculative run-up in oil prices that generated as much as $2 trillion of excess wealth for oil-producing nations, filling the coffers of Sovereign Wealth Funds, especially those that follow Shariah Compliant Finance.
Uh-oh. "Shariah Compliant." You know what that means: turrists. Of course, there's no follow-up on the assumption that all those Shariah Compliant SWFs didn't lose the majority of their "excess capital" in the subsequent credit global credit bust... which they did.
  •  The second phase appears to have begun in 2008 with a series of bear raids targeting U.S. financial services firms that appeared to be systemically significant.
Right. See, the bear raids targeted financial institutions that looked okay on paper, but which in reality were completely insolvent, thus exposing the fact that they were in reality insolvent. A classic paradox! Turrists!
  • The risk of a Phase Three has quickly emerged, suggesting a potential direct economic attack on the U.S. Treasury and U.S. dollar. Such an event has already been discussed by finance ministers in major emerging market nations such as China and Russia as well as Iran and the Arab states. A focused effort to collapse the dollar by dumping Treasury bonds has grave implications including the possibility of a downgrading of U.S. debt forcing rapidly rising interest rates and a collapse of the American economy. In short, a bear raid against the U.S. financial system remains possible and may even be likely.
This is serious. By borrowing trillions of dollars from the world, trillions of dollars we will not be able to pay back at any point in our lifetime, a focused effort by the world to make us pay it back in our lifetime could... get this... RAISE THE COST OF BORROWING MONEY FOR US! It's like the world is treating our inability to pay back what we owe the same way banks, mortgage companies and credit card issuers treat the average American citizen! Clearly, the turrists have won again.

If I do not read anything dumber today I will consider this a successful Tuesday.
POSITION:  No positions in stocks mentioned.