Wednesday, October 27, 2010

Where are the Sane Adults?

According the CNBC's Rick Santelli, Bill Gross's (of PIMCO) piece was the talk of the trading floors today. Actually, as I mentioned earlier, Chris Whalens piece Triple Down: Fannie Freddie and the Triumph of the Corporate State is the real deal and should be the one that was the talk of the day but what do I know. 

Anyway I like Rick so I decided to heed his advice and read Gross's missive entitled Run Turkey Run

Remember now I am no Ivy League missile engineer who can re-configure, slice and dice used toilet paper and make it magically appear to be 17th century collector's edition parchment so bear with me as it takes me longer to comprehend things. 

In his piece today Bill Gross states that:

"Check writing in the trillions is not a bondholder's friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic"

Okay Bill I follow ya there. Next up Bill says:

"Now, however, with growth in doubt, it seems that the Fed has taken Charles Ponzi one step further. Instead of simply paying for maturing debt with receipts from financial sector creditors – banks, insurance companies, surplus reserve nations and investment managers, to name the most significant – the Fed has joined the party itself. Rather than orchestrating the game from on high, it has jumped into the pond with the other swimmers. One and one-half trillion in checks were written in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves."

Okay Bill, still with ya here. Well, Mr. Gross then goes on to say this:

"I ask you: Has there ever been a Ponzi scheme so brazen? There has not. This one is so unique that it requires a new name. I call it a Sammy scheme, in honor of Uncle Sam and the politicians (as well as its citizens) who have brought us to this critical moment in time. It is not a Bernanke scheme, because this is his only alternative and he shares no responsibility for its origin. It is a Sammy scheme – you and I, and the politicians that we elect every two years – deserve all the blame."

"Because this is his only alternative", 

"he shares no responsibility"

Yeah completely blameless. Innocent bystander that Bernanke right? Or maybe more like aider, abettor and accomplice?

I know some 'other' alternatives Bill...

How about making losers eat losses?
How about stopping the prostitution of sacred accounting standards?
How about enforcing the rules of law?
How about consequences for fraudulent and criminal actions?
and finally 
How about letting the natural forces of economic nature and the markets run their due course and unfold as they were meant to. 

Translation Bill ........ DO NOTHING ! 

Are we so pathetically weak and shallow as to not be able to handle this action.

So now we have the purported bond king, who many consider the smart money in bonds openly advocating that the only alternative available to the Fed chairman is to endorse the ongoing Ponzi scheme.

Well I think I have heard it all know. 

How shamelessly pathetic. I am at a loss for words. Someone please tell me where we can find the sane adults in the room, cause I just don't seem em'.

Actually, please excuse me for a moment while I stick my head up my a%@  so I can understand where all this might all be coming from. 

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 @ $60.30
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 @ $52.60
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $98.74
Long 2 units U.S. Dollar Bull ticker UUP @ $22.56 stops @ $21.94/$21.44
Long 1 unit Powershares Gold Double Short @ $9.07 stop @ $8.67
Short 1 unit Apple ticker AAPL @ $312.25 stop @ $315.37
Short 2 units Caterpillar ticker CAT @ $77.75 stop @ $81.71
Short 1 unit American Express ticker AXP @ $40.37 stop @ $41.81

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