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Thursday, July 23, 2009


"we are now in the early stages of a depression"

the better to lick my wounds having gone short this morning into the latest fed liquidity dam-burst to pour into the S&P -- earnings and guidance such as provided by UPS this morning simply no longer matter, folks, until eventually they suddenly do again, perhaps following some more significant fed balance sheet retraction -- here is the latest from eric sprott via zero hedge.

further, pragmatic capitalist links to a talk by UCLA's didier sornette on the origins of the financial crisis and of bubbles in general. the slides early in the discussion are really quite terrifying in their bluntness. particularly important is the slide correlating ken rogoff and carmen reinhart's work on long-term measurement of the percentage of nations in default with a measure of international capital mobility. in the context of the work of richard duncan, whose major insight in my view is the relationship of large unbalanced crosscurrency capital flows with financial/economic bubbles and busts, this makes a great deal of sense. but the implication, of course, is that the unwinding of the excesses of the deregulatory/globalizing period bounded approximately by 1980 and 2007 necessarily will involve a severe reduction/reversal of crossborder flows, capital mobility and global trade -- regardless of the stopgap measures being undertaken by governments around the world.

UPDATE: alea links to the BIS first quarter international banking statistics, including this chart of crossborder claims.

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I feel your pain on that short position although I use mutual funds Grxxz and Bearx off set with Hsgfx and psafx these are long term positions and I don't trade individual stocks. I wouldn't be surprised to see a 50% retrace of the entire move down one bit that would be about 1120 on the S&P.
Get everyone sucked into the bull market mania.

I could be wrong but I'm a gambler and a speculator just like everyone else:-)
Enjoy your blog by the way.

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