Sunday, December 21, 2008

IT'S THE END OF THE WORLD AS WE KNOW IT...

And I feel FINE! REM used to be one of my favorites. Now I'm more of a Hannah Montana dude cause I have no real choice with my girls. I did get to go to Jingle Ball thanks to my buds ZB and SS, and Miley Cyrus wasn't there, neither were Jonas Brothers. Thank Gawd! Nothing personal, but its hard to rock to kids that are 1/3rd my age!

OK, so forget my rather repungnent eclectic musical tastes, which seem to be going downhill the older I get. Forget music, let's talk about the seemingly endless musings about the end of the world, or some variation. I've read some serious stuff, dudes and dudesses! And, I take bunk for being so bearish and doom and gloom? Jeez, louise, I'm like Mr. Smiley Face compared to a lot of people, trust me.

I say DOW 4500, and then I say DOW 2500. I see people with DOW 400. I hear GOLD $100,000 targets. Man o man alive. I'll tell you this, if Gold hits $100,000 we're probably all living with a shotgun by our sides, or eating cochroaches for dinner.

See, ok, I think that there is a possibility of civil unrest, riots, lunacy and horrible devaluation of currency and global crisis. I think, as do some of these other people, that people are going to be VERY unhappy when they realize that basically the government is stealing from them. I think that the more people struggle, the more they get angry, and rightfully so since a lot of what has been and what is being created is due to complete and utter incompetence on the part of our elected officials, the lobbyists that have owned a lot of public policy and legislature, and the corporations that paid themselves off at the expense of the average citizen. (Can anyone believe that MER, MS and GS are "only" paying out 1/2 bonuses when WE freakin' paid for them to still be in business? Who is overseeing this lunacy? It's sickening! These companies would be all bankrupt, but they should get ANY bonus? Government gave them all at least $10 BIL in free money, how come they didn't demand NO bonuses? Bonuses for what? Being worth negative $500 BIL? Sick!)

I think that Hank Paulson will end up in jail, and will end up being blamed (rightfully so) for a lot of what's happened and what will happen. I think eventually there will be demands (rightfully so) that the executives who got the BILLIONS AND BILLIONS in bonuses return that money to the taxpayers who are now going to be asked to cover it. You have no idea how much I dislike Paulson. I'm not one to demonize people, but I think the guy is as close to the Grim Reaper or Beazelbob as you can get. It sucks he's bald, he gives bald guys a bad name! How and why this guy gets any respect, or has a freakin' job is beyond me. It makes me ill.

Do you realize that we're a country that only 2 or 3 weeks ago admitted we were in a recession? Denial is a very dangerous place to live, its impossible to make rational decisions when you are in denial.

I got an email last week saying that I was "just like an environmentalist" who was saying everything that was wrong and offering no answers. I like that, I love that some of you guys go after me, its totally cool, keeps me on my toes. Of course I'll say that I do have some ideas, and I wish someone would listen. From reading a ton of stuff I think there are others with very good and realistic ideas. It's part of what's frustrating. I can't honestly say I have THE answer. I've found that most things in life usually have more than one "answer". I think it's unfortunate we are on this road to what I feel, and many others seem to concur, some pretty well respected economists and people like Jim Rogers and Peter Shiff who have called (as have I) much of what has happened so far.

I have to say, I really thought Obama would go out there and bring on some NEW people, some fresh blood, and yet we've gotten retreads, a bunch of people who are partly responsible for what's gone down up til now, and who seem to only know Keynesian economics. There doesn't seem to be anyone in a place of power that is capable of thinking outside the box. It's extremely frustrating and sad. We are potentially headed down a road that may destroy much of what we've been built on for over 200 years. And, no one seems to be willing to listen to anyone else who may have a different fresh view. Why aren't they holding some sort of open meeting and invite people who are well respected who have a different viewpoint? I just don't get it, and the more we go down this road of throwing more and more money, now standing at about $8.7 TRILLION and counting that's been committed the more we are "pot committed" to a worthless dollar. Do you realize that that much money would probably feed every poor person in the WORLD for a while! A LONG while. It's INSANE.

I've stated what I would do. I'll repeat it again, or the short version. I would let the stock market DIE. I would nationalize the entire banking system and let ALL the banks that are in debt go under, period. Make the shares worthless and then the government really could act as pilot to a meaningful change. If they did that as a start, even now, they would save the roughly $50+ TRIL (or more) that is estimated to be bad and potentially/probably worthless debt on the banking systems debt. There is simply no way they can assume all that debt without bankrupting the entire country and devaluing the dollar anywhere from 50 to 90% in my opinion.

So, by nationalizing the banking system now, rather than throw all that money at it, it would save "us" a ton of money. It would also allow the government to support the housing market organcally by lowering mortgage rates, PLUS they would then REALLY make money because even if they charged 2% interest it would be more than the Discount rate, which now stands at zero. I stated this last week, my feeling is that they are trying to be all things to all people. By doing so they will, I believe, bust everything out. We've thrown a few TRIL at the issue, what have we gotten for it? Yes, I know, the bullish case is that it takes time, it'll work. Ah huh, sure it will. And if my aunt had balls she'd be my uncle, right-o! It can't and couldn't work, the banks used it to pay down debt or acquire assets to try to ensure THEIR survival. That's why its already gone, it was gone before the check got there. And, thats why the banks can only free up the credit markets so much. Kinda tough to owe a few TRIL and free up credit! The same way politicians are acting out of fear. Just imagine how much legislation will now be justified because of this, and the Madoff ripoff.

When people are scared they overreact. We saw it after 9/11 when we enacted the Patriot Act, which led to wire tapping and eventually led to justifying torture. Whether you agree or not with that assessment, throughout history human beings do extraordinary things, often not good, sometimes very good, when they are faced with crisis. Some people excel and lead, some live in terror and act out of that fear. Integrity is tough to keep when you are afraid.

And, this is part of the problem with blind faith in anything. Now, see, I'm not immune to fear, or challenges, or even bowing out of my integrity at different moments in my life. I'd like to be, but I'm certainly not perfect. All I can do is keep trying to do better whenever pressed. I feel as though I am pretty good in crisis, I usually keep my cool. Not always, but usually. It's ironic that I'm awesome when its not my own crisis. If the world were to be ending I am pretty sure I can keep my cool. I've thrived under duress many times in my life. Part of doing well in crisis is being prepared. I think thats part of what makes me a good, though imperfect trader.

I've stated here my intentions to put together a CRISIS symposium in a few months. I'm still taking resumes for those of you who feel you have something to offer as an expert. We only have about 6 slots so makes sure you have credentials. I realize some of you may have better ideas then some people with credentials, I sure feel I do. No offense, I'm trying to promote this as something that may potentially get press coverage to hopefully get some outside the box ideas out there. I have two little girls, I don't really want to have to go live underground somewhere and worry that some lunatic puts my girls at risk. If you are interested in participating, or just in potentially attending (it'll be in NYC in May or June 2009) please email;

boogedyshoe@aol.com, and cc me; waxie@trendfund.com

Please send your resume if you feel you have something to offer and would like to be considered for inclusion as an expert in the fields of;

Economics
Security
Psychology of crisis
Spirituality
Homeland security
Medical emergency
Crisis management

or something else you feel would be invaluable. If chosen I'll at least pay your way to NYC.

In the meantime, there you have part of my answer. The banking system in this country is BANKRUPT. The government must sacrifice the stock market to save the rest of the country. They must see that they have now thrown 8.7 TRILLION at the problems and have NOTHING to show for it. NOTHING. In fact, things are getting worse according to all imperial data I have seen. The American people have been lied to, spit on and led astray - its time for the trusted servants who WE employ to have an honest and open discussion and let others in on the process. Until that happens I fear that we are headed down a road that will lead to civil unrest, tax boycotts, the devaluation of the dollar at least 70%, rampant deflation, leading to rampant inflation and the wiping out of most wealth in this country. Crime rates will soar, and the amount of strife in this country will be like nothing we've seen in the history of this country. It's time for people to look at their situations honestly, get out of denial and start being proactive with their lives and whatever finances they have.

I am telling you flat out, the stock market is headed MUCH MUCH lower. In 2009, in my opinion, the best case is we only see as low as 4500 on the DOW. Worst case is, well, I guess it's 400. Civil unrest and soaring stock prices don't usually run hand and hand, ya know?

As always, I preface by saying I hope I'm wrong. Do not believe the hype that somehow if you hold your stocks for 10 or 20 or 50 years in the long run you'll be fine. It is total BS. It is a LIE. The market doesn't have to come back and I don't think it will, at least not for a very long time, and none of YOU will be able to hold until that happens, you'll probably be long gone. When systems change they usually morph into somehting else, something entirely different. So, sticking with the normal is a sure way to bust yourself out. Don't do it!

I want to relate one more story to you all. Well, actually maybe two. One is old, and one is new. The new one first. A few weeks ago I ran into an old friend at a party. She's a beautiful woman, super smart, very talented, and a good person. She's very soulful and I've always been fond of who she is, even though over the years we've barely seen each other. Well, she related to me that she has a rare disorder that has her in pain ALL the time. She's a young woman, barely 40. If you saw her you'd think she was completely healthy and in very good shape. She's had to, at times, walk with a cane and been on and off pain killers for a while. OK, so some of you I know for knowing some of your personally, have your own crosses to bear. But, it's striking in that she knows and respects my opinion on the things I write about here. And, she spent most of the night asking me about this sort of thing. Why? Because despite her issues she cares deeply about the world around her, around us. I don't mind taking criticism most of the time. I mean, that's part of what this country was/is built on. I care when I get threatened, or my family gets threatened, which has indeed happened. But, difference of opinions is fine. I don't get paid to write this blog, most of the time when I write it I'm falling asleep. And, I certainly don't make much off most people who read it. Clients read it, sure, but most of you aren't clients. You should be, you'd be making some big money if we stayed as hot as we've been, but regardless,I have a lot of readers who enjoy this blog, respect me, or don't like me and read it so they can snicker or send me a nasty email. It's all good. Bottom line is, I care DEEPLY about humanity. I care deeply about my daughters and family and friend, and I care deeply about my country. I'm good at a lot of things, I've never been much good at frustration, or feeling as though I know more than the powers that be and holding it in. When I worked for others I almost always got fired. Why? I always felt (and usually was) I was smarter than my bosses, and I had better ideas, so inevitably I got fired, or quit in a huff. If and when bad stuff happens, I hope that perhaps some of you will keep your integrity as I hope to keep mine and remember that we're all in this together. I really don't know how people in other parts of the world deal with bombs dropping every day, or rape, or poverty or disease or abuse. We have so much in this country to be grateful for. So much to share, its very very sad that we're in this situation and that it's probably going to get a lot worse before it can possibly get better.

And, lastly, the old story. My step dad taught me a lot. Some of it good and some of it bad. My childhood was not easy, to say the least. I won't go into many details, but we didn't have any money, my dad got fired from every job he had. We were on and off welfare, and you all know I ran away and lived on the streets homeless for a while. I remember a lot, but some stuff really sticks out. I remember my father being resentful that seemingly most everyone else had more than he/we did money wise. I've told this story before to clients at seminars, I think, though it was probably a while ago. One day we were getting gas and we went to the self service segment, if I recall, though that piece is unclear. What is clear is that there was a Benz on the other side of the gas nuzzle. And, my father turned to me and said "that Mercedes Benz A-hole, what a pr*9k." What did the guy do to him.us? Nothing. Guy was sitting in his car getting gassed up, just as we were. His crime? He had more than we did. That's it. Maybe he was an A-hole, or even a pr*9k, but I nor my father would know, we had no contact with him.

I remember thinking to myself that it was wrong that someone would be condemned cause they had more than us. But, when I lived on the streets I got a chip on my shoulder. It happened before that really, I think it was ingrained in me, we're often a product of our environment. And, I didn't like that I was stuck in my misery and didn't see a way out.

I tell people this, and I believe it, everything I've accomplished in my life has happened when I was at peace with myself. That's tough for me, I'm not used to being at peace, I am a fighter, I have had to fight myself not to fight. When you have a chip its hard to let it go. But, I find that when I started to want to learn from people who had more than me, more than I wanted to resent them, it's when I excelled.

As a kid there were a lot of things I promised myself, I used to write them down so I would never forget them. Three of those things were that I would make enough to order shrimp and lobster; that I would be charitable; and that I wouldn't go through life as a hater, someone who resents people for what I don't have, but rather stay open to the possibilities that is life. The first two are fairly straight forward. I order shellfish a lot (love sushi!), and I have been honored at the UN for my charity work with children and am currently working on a program with the DOE to give college scholarships to underpriviledged kids. Keeping one's integrity is especially important when we're struggling. It's very hard to maintain our principals when faced with stress and crisis. There are quite a few hate mongers out there right now, I see commercials that are anti a lot of things. Lately there are anti-"rich" ads here in NYC. It reminds me of my father. This country was built on capitalistic ingenuity. Everyone in this world has something to contribute positively, I firmly believe that. It's up to us inevitably to choose to share it, or to abuse it. Look inside yourself for the anwers, I've found that that's where they usually lay. There are still tremendous opportunities, it's up to us to own them, rather than be victim to outside forces.

This is jumbled I am sure, i'm tired and the holidays are exhausting in a pretty good way for the most part. I still haven't finished all my shopping.

This week we'll see a lot of light volume (Very). That leads to exaggerated moves. We SHOULD go up this week. We'll see. I doubt we tank, but we could trade sideways.

OK, that's it, hopefully that made some sense to someone, I'm headed to bed! God bless, and happy holidays to all!

Waxie

8 comments:

sanjay said...

''I tell people this, and I believe it, everything I've accomplished in my life has happened when I was at peace with myself. ''...Michael parness
Very well written column Mr parness...makes me really think .
thanks sanjay

apelofsky said...
This comment has been removed by a blog administrator.
Steve said...

Michael I have been a Trend Fund member since mid summer and enjoy reading your blog. I have similar thoughts, and fear for our future. I hear ya on the civil arrest, but don't think we have the balls for that. More likely that we get catapulted into a massive world war before we revolt. The stealing of the people's money you speak of couldn't be more true, and is not the first time it's happened.

Most politicians comments these days are tainted because although they say one thing their actions never back up the talk. Actions speak louder than words, yet I feel that we have become deaf to their actions. They are bought before they even take office. How can we believe that there is a difference between Deomocracts and Republicans, they both waste the taxpayers money to benefit a few elites while sacrafising the general public. Just because the benifiting elites are different doesn't mean the parties are. We the people had it right twice in wanting to regect the TARP and the Auto bailout, yet they pass it anyway and say we don't understand the severity. True we don't understand, because we live in the real world were we must pay the consiquences for our actions, whereas they live in a fantacy world were they are reward for bad policies at our expense. When are we the people going to wake up and realize that the government will not save us because they cannot. Their one job is to balance the budget and they haven't done that in over 30 years! If we are going to get out of this economic disaster, we must do it ourselves, the government will only make things worse!
Let's return to the gold standard and live within our means and hold politicians and people accountable for their actions.
I would love to be consider for your team of experts. Although, I might not have the paper qualifications, I have the desire to change the world we live in for the better. I am a history buff with common sense. I truly believe I could add value to your team and hope we can correspond.

Thank you for all you do, you are a true American.

Your west coast ally,

Steve

ROY said...

Dear Waxie,

another article here about hosuing loans which support your view:-

http://www.elliottwave.com/freeupdates/archives/2008/12/18/What-Is-The-1-WRONG-Question-About-the-Real-Estate-Market.aspx

PJP said...

Thank you for your comments - a friend forwarded them to me. This was the first time I read your blog - you have a great life story. I agree with all you have written in this post - it could get very dark in 2009. Your exhortation for your readers to maintain their integrity in the coming crisis is noble.

Rich said...

Hi Waxie,

Great post! It inspired me to share a relevant story of my own and share the lessons that I have gleaned from it.

Recently I was in the locker room of my gym after finishing a workout. There were two business owners having a conversation about how upset they were over the bailouts. Their arguments were that they had run their businesses honestly, paid all of the required fees and taxes and basically followed the laws, but if they hadn't nobody was going to bail them out, so why should it be any different for all of these public companies?

What was interesting to me was that, although they were both angry about the bailouts, they were laughing. They were presenting their arguments in the form of jokes, basically reflecting how ridiculous they thought it is that they would be given the same privileges as the big companies that are being bailed out.

Here are the lessons that I get from this:

These men, like many or most or possibly all "regular people", (those who aren't multi-millionaires, big business owners or with some government insider relationships), are aware that there is such a gap between the "regular people" and the "bigwigs" that they are absolutely powerless to do anything about what they don't like going on in the country. In effect, most people think and feel that they are too small and insignificant to make a difference. I believe that this attitude has grown within our population as our country has grown.

I think that what people need to realize is that we still have a government that is "of the people, by the people, for the people." I think the first step to real change occurs when us little people realize that we played as much a role in creating all of the problems as anyone else as a result of this general attitude of accepting our detachment from government.

There is no doubt that, as you have said before, "the system is broken". Well, who do we expect to fix it? The government? Lobbyists? Big business? Why would they? They LIKE it this way because they get all the benefits. They are the ones that made it the way it is while the "little people" were all too busy staying focused on the details of their own lives.

The USA was created by a mass of people who were pissed off because their government was doing to them exactly what is happening in this country. Contrary to what some may think, it is NOT anti-American to be angry and rebel against what is being done to us. I contest that there is NOTHING more American.

Nothing is going to change in this country until the majority of "little people" once again become aware of their collective power, get angry at what is being done to them and then DO something about it.

Just my opinion. :-)

BTW, made some nice coin off the January Effects list...and your options calls. Thank you!

Rich

In Debt We Trust said...

Waxie, I like your site. Although not a customer, I read your blog occasionally b/c you offer good insight. I believe you have become too influenced by the goldbugs and their dangerous ways of thinking.

I present an alternative scenario:

http://debtsofanation.blogspot.com/2008/12/debts-of-spenders-obamas-3-choices.html

thomas said...

Waxie,

Your economic position sounds like libertarianism on steroids. The problem is the bulk of the wealth of the typical working guy with a pension and retirement account is tied up in the stock market because that's where everybody told him to save his money to insure a secure future at retirement. You'd instantly condemn the entire workforce in the USA to poverty at retirement with your proposal. You want civil unrest?? It's like throwing gasoline onto an unemployment fire.

The government encourages people to spend what they don't have via borrowing to keep us consuming what we couldn't otherwise afford. That's a prescription for disaster, but what keeps us living beyond our means as a nation, so here we find ourselves. Yet, the government owns all the printing presses and can even change the rules of the game at will, and that's why we're not at Dow 5000 today, and might not be tomorrow either, despite your insightful arguments. They can employ a huge number of us by spending vast amounts on public works and other things, and that's where Obama is taking us, like it or not. So, it's unlikely you'll ever see the mass civil unrest in this country you're talking about. There are many more tools available than during the great depression and they can flood the markets with liquidity at will, right or wrong, to keep things percolating. This is the argument for gold.

Since it's Christmas, the birthday of Jesus Christ, a Jew, it's interesting how you blog about love, peace, tranquility, etc., all the things he taught and did by example, yet was miserably crucified by his own people. The jewish "powers that be" at that time saw him as a threat because he drew large crowds wherever he went and the people worshiped him. But the jewish "authorities" didn't like his message. The coming of their Messiah was supposed to be about power and money according to their thinking and he didn't fill the bill, so they eliminated him, or so they thought. Ironic.

Peace, Brother!