Tuesday, December 16, 2014

Every denial is an admission now.

Everyone understands that as soon as the Christmas sugar is over - things are going to go a bit sideways. If we are lucky. The market is getting frothy. Oil is collapsing every single day. Interest rates are generally in the 3.6/7%ish range. It's almost getting hard to find a rate OVER 4%. If they do go down much more even I might get twitchy on my house. I thought 4.25 was the best I'd ever get. If they will even lend at that point. There is a sort of death cross there somewhere.

That was the biggest lesson of the recession. Banks may just stop lending in a deflationary period. Make sure you don't need credit.

I heard someone last night say rates could drop another half to three quarter basis points. Enjoy your holiday to the fullest people - because this is where the pain gets good. Almost all of the countries in Europe are growing at stall speed. Engines sputtering and the whole nine.

After the last election I couldn't believe anyone felt better about anything. The Dems are going to scorch the earth now. I bet they are taking the Holiday to rest up.

Anyway, to get back on track with the subject line...

The past few weeks whenever I've read a headline with a denial in it - I get filled with dread. For example :

Energy lenders not facing new '80s-style 'bloodbath': CEO.

When I read this I immediately said fuuuuuUUUUck. Now we are going to face an 80's style energy bloodbath? I'm not sure fully what that means, but I bet it's going to suck.

Then today another one. Cashin: Why it's not like 1998 all over again. I really don't know if that is going to turn out to be true, but Putin has gone cocopuffs crazy. A third grader could have figured out that inflation would skyrocket. When this whole thing first started I even blogged about it in The world is being run by lunatics.  This was back in August!

Russia to block U.S. agricultural imports.
"When I first read this story I kinda snickered to myself. Good luck with all of that, I said to myself. I'm fairly confident Russia can't grow much. And it takes a couple of years to increase your livestock. This is going to hurt them way more than it is going to hurt us. Their people are going to starve!

As I thought about it more though - this is the scenario that causes those crazy hyperinflation periods in history to occur. If it does indeed happen - too much money will be chasing to few goods and services. Enter - hyperinflation. And Putin knows it because he's already "undertaking measures to guard against quick price hikes".

Look I know Mother Russia is tough. But when I see Russia these days - I see it thought the lens of a dash cam. And it looks to me like everyone in Russia has pretty new cars. Made in the last decade. This is a new generation. They might not be exactly as tough as the last. Maybe they like new cars. Or food. Maybe....they are less willing to suffer. You never know.


  1. Russia's swift competitor could go operational any day. Could be a big drain on dollar power. Tough to say what's really going on.

  2. Huh. I hadn't been paying attention to that. Not sure how I feel about it.

  3. In fairness, all these players have central banks that answer to the same people so it's hard to say if it is real or all part of the script... they've beyond tapped out most US citizens and gutted US industry the last half century. May be time to dump the mature US play and go with something that is a growth play like china. Know what i mean?

  4. Yeah. I do. I completely understand the sentiment. In China it's still harder to tell what's a Potemkin village built on a sinkhole. Slight advantage
    to us. After listening to Baghdad Obama this morning, the next couple of years are going to become a little blurry though. It might be a better option to just hide under a rock for the rest of this admin. Embrace the suck. Hunker down.

    I still have hope for this country. People don't always know what they like. But they sure as hell figure out quickly what they don't like.

    I guess after thinking about it, I'm not that worried about the Swift thing. Russia doesn't produce anything except for oil and old school hackers. Quite
    apparently, all of a sudden. It's shocking how fast they tipped. There are at least a half a dozen countries I would have thought would tip first. Venezuela at the very top.

    Russia just doesn't have any industry to kill, so hyperinflation can come quite
    violently in that scenario I guess.

    They do set the record for most fascinating bank run ever. Who would have thought they'd flock out to buy flat screen TV's instead of just trying to take
    their money out of the bank! Now that is fascinating.

  5. I have hope, but need to start preparing the local area for the downturn, Mormon style ;). My statement was coming from those elite global citizen perspectives that make their fortunes on the grand scale.

    The swift thing is for the BRICS, so it is a substantial play. Lot of people in that...

    I think the bank run makes sense. What good is your money if hyperinflation is happening. Toilet paper?

  6. "I have hope, but need to start preparing the local area for the downturn, Mormon style ;)."

    Um, Not sure what that means. I've never heard it before.

    "I think the bank run makes sense. What good is your money if hyperinflation is happening. Toilet paper? "

    Oh. To be sure. I was watching a billionaire getting interviewed once. It was during the middle of the recession. He said - if you ever see a bank run, the best thing to do is join them. I thought - I hope that never happens, but if it does - I'm going to take that mans advice.

    Still, by the time a currency crisis hits to that degree - the shelves are usually already bare. So it's just really wild to see them rushing for consumables rather than cash.