B4 The Bell Thursday June 17

[brian4]

There she Blows boys and Girls the futures just cracked in half below fair value-Say G'nite Dick!

[Guest Icky Twerp]

Preaching to the choir, here, of course. . .

Prudent Bear News Letter Excerpt

 

THE FED HAS LOST CONTROL

And as the global economy recovered and the U.S. boom was revived, it was too easy to

disregard the importance of the Fed having lost control of the ?reflation? process. It is

worth noting that when U.S. financial assets were basically the only instruments

appealing to global speculators, the Fed retained great power to manage monetary affairs

to the benefit of the U.S. economy and markets. The Fed enjoyed the capacity to

basically incite financial expansion and excess on demand, with the resulting

inflationary consequences generally confined to rising American asset prices. Any

resulting degree of inflated demand could be easily satisfied by an endless supply of

cheap imports. These foreign imports were then effortlessly paid for through the

issuance of U.S. securities that could be sold in massive quantities at rising prices. This

process was an extraordinary anomaly ? financial dreamland ? but it?s ending.

The liquidity and speculation floodgates have been opened up to the world and, barring

global financial crisis, our credit instruments no longer enjoy a monopoly position. We

now have liquefied competitors bidding for energy resources, commodities and perhaps

even goods and services. There is no longer an insatiable appetite for U.S. securities,

despite the past year?s massive buying by Asian central banks. No longer are the dollar

and U.S. bonds a one-way bet. And no longer does the Federal Reserve control the

dynamics and consequences of its inflationary policies. The world of central banking

has turned increasingly complex and unpredictable.

9

PRUDENT BEAR FUNDS, INC.

Here at home, the dysfunctional nature of the U.S. credit system has become

conspicuous. The banking system, and certainly the powerful government-sponsored

enterprises (GSE?s) and Wall Street, are geared to lend aggressively to the booming real

estate and securities markets. Financing sound investment garners minimal interest.

What?s more, we would argue that the vast majority of current investment is in

consumption-related structures. Massive over-investment in this area will become

apparent when the current asset-bubble-fueled consumption boom comes to an end.

And, importantly, we continue to neglect investment in capacity for the production of

tradable goods, a dilemma that will become increasingly prominent as the dollar is

debased over time. The acute dollar crisis commences with the bursting of the U.S.

credit bubble.

And while it garners little in the way of theoretical or practical discussion, we are

convinced that there is a major unrecognized vulnerability with respect to the current

bubble environment. Asset markets, predominantly housing and debt securities, have

evolved to become the key source of liquidity creation fueling both the financial sector

and real economy. This is an especially dangerous dynamic. As long as credit excess

fuels self-reinforcing asset inflation and leveraging, there is the seductive appearance of

endless liquidity (for spending, investing, and speculating). But come the inevitable

bursting of asset bubbles, the credit system and its capacity to create sufficient liquidity

will be placed in immediate jeopardy. Such analysis recalls unrecognized fragilities that

festered during the ?Roaring Twenties,? rupturing spectacularly with the fateful 1929

stock market crash.

[RockLedge]

Marketwatch -just reported that the Goobermint has turned down United airlines request for a $1.6 Billion loan guarantee.  Say goodbye to the proud Bird with the Golden Tail-the Airline liquidation has begun!

Brian, just watch DAL. Classic distribution above the 5$ mark. Interesting ribbon chart, for sure.

[Guest Icky Twerp]

"The PPI really doesn't matter anymore" I heard on crapvision yesterday, "because it's main value is as a predictor of CPI, and we already have that"....So the CPI is easier to manipulate, so just hold the PPI till the CPI is out... or is it just that Consumption is the end-all-be-all now for Greenscum & Inflators...

 

More Preaching to the Choir from The Daily Reckoning

 

Yesterday, the Dow went nowhere. It has gone mostly nowhere this year. And mostly nowhere for the last 6 years.

 

There are a lot of days in a year...and a lot of years in a lifetime. On most of them, nothing is likely to happen.

 

But that doesn't mean you should not prepare for something. Alan Greenspan has created bubble after bubble...there are now major bubbles in consumer debt, housing, stocks (a bubble that began in the late '90s and still has not deflated)...imports...and a capital spending bubble in China (the Chinese are feverishly trying to keep up with American consumer demand).

 

Anatole Kaletsky, writing in today's Times, argues, "Bust does not have to follow boom."

 

"Consumption," he quotes Adam Smith, "is the sole end and purpose" of all economic activity. So what if Brits and Americans are consuming their heads off, he says...it is just "a natural and desirable consequence of...improving economic performance."

 

"The unsustainable orgy of government spending, personal borrowing and consumption which Britain has enjoyed...is a sign that the British economy has gradually transformed itself from the sick man of Europe into one of the strongest and healthiest economies in the world."

 

Consumption may be the end of economic activity; the trouble for Britain and America is that it is not the beginning. It is not consumption that creates wealth; instead, consumption extinguishes it. Of course, the healthier the economy, the more wealth it produces that may be consumed.

 

But a society that consumes more than it produces is headed for trouble. Yesterday, we reported that, in May, America's balance of trade dipped to its lowest level ever - a negative $48 billion. This is a rough measure of how far consumption outpaces production...and another milestone on the road to ruin.

 

How many miles are left? Will tomorrow be the day we 'get there?'

 

Most likely, no. There are a lot of days...and only one day on which the biggest bubbles in history begin to explode.

 

Still, Daily Reckoning sufferers are advised to consider the gravity along with the likelihood. You may put a bullet in a revolver, spin the chamber, and put the barrel to your head. There will be only a 1-in-6 chance the gun will blow your brain out. Nonetheless, it would not be a good idea to pull the trigger.

 

Likewise, the end of Alan's bubbles is not likely to come along today or tomorrow. Still, readers are cautioned to invest as if they happened yesterday.

[Guest]

"All three units of the Palo Verde Nuclear power plant near Phoenix have been off-line since Monday. Even though Palo Verde provides half of El Paso's electricity, local consumers have not been affected."

 

Plug pulled at Palo Verde

[brian4]

both spoo and NazDuck have collapsed below fair value- Lock n Load !

[Captain's Log]

Look at the Nikkei. Down 280 and accelerating....

[Captain's Log]

Look at the Nikkei. Down 280 and accelerating....

I did a Bushism. It's actually only down 238.

[Guest Icky Twerp]

WTF? Asia Blood Red! Did Reality Rear its Ugly Head?

 

Since I only see CL & MJ, please forgive me boys. . .

 

DIE YOU MOFO, DIE!