Monday, May 10, 2010

More Debt Always Fix Too Much Debt

Markets are in overjoyed mode today as are the boobs and boobs in chairs on CNBC ebrace with love the mantra that more debt always fixes the problem of too much debt. What a relief it must be for these simpletons to see the high frequency trading (HFT) machines back up running and functioning in a more approriate fashion (that is, in buy mode).

The trigger for this seems to be news that
the ECB and IMF have crafted an approximately 1 trillion loan bailout to save the world and stop the Euro crisis. From what I can ascertain the IMF is on the hook for just shy of 300 billion of this package. Now the U.S. portion of IMF responsibility is about 17% so yes, the U.S. taxpayer is on the hook, now to bail out German, French and other Euro banks that foolishly lent money to people who neither can nor are willing to repay.

Yes readers more debt with solve our indebtedness problems. Ya think ya need a Harvard MBA to figure that one out? This package out of Europe is their version of shock and awe to stop the spread of contagion. The quotes on the wires remark how they will crush the speculators. It seems to me Dick Fuld of Lehman said something similar to that previously? Yup, the speculators are the bad guys here. The speculators are the root of the problem. It could positively never be the politicians or their policies.

Never in all my life did I ever believe we could witness the level of insanity on display now. I lived, advised and traded through the tech bubble and then could not believe what was going on. I thought that was the pinnacle of insanity. Then comes this. The numbers now appearing will, in the fullness of time, make that tech debacle look like child's play.

It all reminds me of the Isaac Newton quote, who, while brilliant, lost a fortune in the South Sea bubble and said at the time;

"I can calculate the movement of the stars but not the madness of men".

I hope you are closely watching this parade of pumpers on CNBC and Bloomberg talking this market up. Remember who they are, quite probably they are managing a portion of your 401k. You think they will be held to account for their incessant 'buy the market', 'I love the market here', ' put new money to work here' mantra.

Now what I am about to say is extraordinarily important and you must never forget. Whatever you do you must absolutely under any circumstances never ever sell. You got that?!!

Every sell off is a buying opportunity. Every crisis a bailout opportunity.

In all seriousness I believe this is yet another gift from the trading gods for you to get out of this market, which I am most certain few will take advantage of. Rather most will use it to buy or in the least fall right back asleep. You can rest assured you will never hear your broker or Wall St. advise you to get out as that would wreak havoc on their income and hence good humor.

Stop watching the equities,, and instead please focus on the dollar, the euro, and the bonds for your tells and let Jim Cramer and the other thugs and charlatans focus on pumping the stock market. After all they all need someone to sell to.

Do you really believe the economy is recovering with these crises popping up on a regular basis?

Do you really believe the jobs numbers when over 40 million are on food stamps?

Do you really believe things are getting better when Fannie Mae is losing money hand over fist, quarter after quarter?

Do you really believe Goldman Sachs can have a quarter with no losing trading days, yes you read that right, Goldman had no days with a trading loss.

Well, then if you do then by all means go all in this market just like the ECB, heck it's only money! Oooops I almost forgot the ECB and IMF money is really yours, at least for 17% on this side of the pond if you exclude the open Fed swap lines to Europe!

Good speculating to you all and please remember to never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68

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