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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (30007)	2/27/2008 11:25:00 AM
From: carranza2	Read Replies (1) \| Respond to of 218233

How is all that accumulated money going to be put to work? Financials are doomed. Just a matter of time until the derivatives mess makes mincemeat of their balance sheets. The SWFs will be throwing money into a black hole. Even more important is the fact that the extent of the possible liabilities on various derivatives is not even known. Why would anyone managing a SWF want to put money into enterprises which are vast unknowns? Only if they get guaranteed junk bond returns will they be rationally investing - and that is exactly what they are doing - and even such a guarantee could be worthless. The American consumer drives the American economy to a huge extent. He is flat on his back and will be flatter as job losses are felt, credit dries up, and bills come due. The signals are there for all to see: Unlike their government and corporations, Americans are acting rationally by paying off debt, not incurring new debt, starting to save money and living within their means. This of course is not good for growth and stocks but is terrific from a macro standpoint. Who will suffer the most from the slowdown in consumption? Global exporters into the US and financials, who are on life support as it is. The American consumer thanks to a housing-financed spending spree has been the heart of the global economy for many years. The consumption was not healthy, however, as it resulted in massive dislocations which are being corrected as we speak. The correction of these dislocations will be painful. Reflating as the CBs are trying to do will not work because the consumer does not want any more debt. In other words, consumers are a lot smarter than everyone thinks. There may well be other bubbles, I just don't know where. In the US, the effect of all of this on commercial real estate will be serious for it was not just Joe6P who got easy mortgage money. The commercial real estate speculators fed at the liquidity trough, too, and like pigs, will be slaughtered mercilessly. That game has just begun and I am participating in it via SRS. The US will go into a recession. The globe will suffer as well from the withdrawal of the US consumer from the party. In the meantime, the global competition for commodities will go forward unabated. Agriculture will do extremely well, gold, coal, and oil too. The latter is of course subject to Peak Oil so it will do even better than most commodities. Like I said, it is a lovely day in the neighborhood. Tons and tons of opportunities for those who see the macro picture properly, and it is not that hard to do.