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Friday, July 10, 2009

A Faith-Based System

GM bondholders got the shaft. California is issuing IOU's. And its seems just about every municipal, city and state governement entity is in some kind of debt crisis. Of course the national government is bleeding too.

Primary wave 3 is when it all breaks in a horrible mess. The collapses have already started of course in Primary 1, continued through Primary 2 but of course Primary 3 is when everyone will have that big moment of "deer-in-the-headlights" look and Uncle Sam himself will be called into question.

Trillions and trillions of paper. All based on a system of faith. Faith that the paper is actually worth something.

Isn't it ironic that government itself, who is most interested in avoiding a national calamity, is actually making it worse by a) not honoring its debts (California) b) railroading people who hold debt (US owning GM and shafting debt holders).

When faith collapses, it will be government, through the anti-social actions of its twerpy bureaucrats, who will seize even more power and force the masses into a quasi-fascism all in the name of saving themselves from themselves.

The Great Bear market destroys all. There are no winners when social mood corrects massive excesses of a couple of generations.


  1. Will second that. Will be similar (if not worse) to the 1930 to 1932 time period. Market down to 40 from near 300!

    Now ~900 down to ...we shall see.

  2. A trader friend gave me your web site...interesting. Keep up the good work.

    Randy Pixley, Pixley Capital Management
    #3 CTA in US for 36 months return Financial/metals CTA

  3. Great commentary Dano. I'm going to send this to friends and family.

  4. I agree, the 1929 to 32 crash removed almost 90% of the DOW the first leg took 50% in 70 days the 2007 to 2009 crash (the first leg) took 53% in 73 weeks. Through gov't manipulation and interference the 2007 bear could end up lasting a decade or more. I think the best investment in the coming years is lead, in the form of 9mm bullets for a Glock.$SPX&p=W&yr=3&mn=0&dy=0&id=p31055921046&a=163800550&listNum=12