I expect the metals contracts won't run much more than a year or so.
Even though these event are producing some pain for me and almost everyone on SI, $ 4.00 copper or even $3.50 is enormously bad for the living standard of everyone in the world except for hedge fund managers and people who make corporate jets.
While interest rates are s blunt tool, I think they are the right one in this case. A more selective tool, say a tax on metal transactions, would just move bubble to something new - grains, lumber, financial stocks, BRIC real estate.
While I think many central bank actions are morally questionable, and some definitely evil, I don't think this qualifies. There is a clear and massive inflationary danger, and it is accelerating. There does not appear to be a milder solution.
We could argue that Uncle AL KBE could have increased a quarter or half a point after his "irrational exuerbernce" speech, and this would have constrained the speculative impulses just a little more over the past 10 years.
If they don't back off once the first important thing breaks, then we may be looking at some clumsy central bankers or some degree of evil.
I will move right AFTER the CBs back off - that last step down can be big, like another -5% in under 24 hours. I also think the public announcement will be a bit after the bottom.
I don't expect a V shaped bottom , I expect people will be reluctant to jump back in (I will) unless there are multiple all clear signals. |
