Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: SGJ who wrote (30835)	4/15/2012 3:50:50 PM
From: GROUND ZERO™	2 Recommendations Read Replies (1) \| Respond to of 218890

You could very right about that... but, in the meantime, here's an article by a technician I respect, Carl Swenlin... too often we read only those who tend to support our immediate perspectives, but I think it's wise to look at all the possibilities out there... he stops short of saying what it would mean for stocks, bonds, and the U.S. Dollar, so that's still left up in the air... based on his comments, what do you think he would say about those three markets? TIA Carl writes: A major issue with which investors are having to deal is the global debt crisis. While it is currently centered in Europe, we should be clear that Europe is merely the location where the first dominoes are likely to fall. My purpose here is not to conduct a complete dissection of the issue, only to offer a quick "bottom line" for future reference, a handy template with which to measure the credibility of future news on this subject. The sad fact is that major banks are choking on bad sovereign debt, some of which they hold with leverage of 30:1 or greater. This debt is non-performing and at some point must be written off. Unfortunately, such action will bankrupt these banks, so, in order to keep the plates spinning, all manner of effort is being made to "restructure" this debt -- that is to change the terms of the loan so that it can be imagined that the debt will actually be repaid. Now they can pretend that the loan is a performing loan, a healthy asset instead of a rotting hole in their portfolio. Unfortunately, these restructurings are really a temporary measure that are not going to fix the problem long term (the borrowers will eventually default), but they do briefly allow for a "suspension of disbelief" among investors. Like when you go to a movie and for a few hours you can pretend that there really is a Superman. The end result is that one day there will be news that encourages people to believe (pretend) that the problems will be fixed. Then the next day there is news that reveals just how hopeless the situation really is. How do we cope with this insanity? Well, I suggest that we recognize that everything is not going to be okay, and take it from there. So the news may swing from one extreme to another, but we can stay anchored in the reality of knowing that things are eventually going to go south. This doesn't sound like much fun, but it is a base from which to plan a realistic strategy. blogs.decisionpoint.com GZ