Roubini speaks

Roubini today spoke about the sovereign debt crisis road map going forward. To a great extent I agree with him. One point I think he fails to embrace is the propensity of troubled governments to engage in as much quantitative easing as it takes to keep this wretched system afloat for as long as possible. Regardless, you can read his piece here

Summary:
Many PIIGS states are in trouble. Super sovereign entities such as the IMF and ECB will attempt to 'socialize the losses' by bailing them out. This can have severe repercussions because the risk is then transferred to these super sovereign entities, and the can is only kicked down the road. Once the day of reckoning comes and its time to pay the piper, theses entities go bust as they become insolvent. Necessary austerity measures will prove extremely difficult to implement if the riots in France are any indication of what the consequences can look like. Spain is too big to fail and too big to bail.

My take: Europe is doomed.

A couple of thoughts for today

1) Moving forward through the perilous waters in the next 6 years, those who survive and prosper will be those who understand how markets truly work. As much as it saddens me to say this, I believe the only way to not get slaughtered by the oncoming tsunami is to know how to trade the markets. This is the pathetic situation the Federal Reserve and US policy makers has put us into. Honest, hard working people will suffer as they see their wealth contract. Those who know how to shuffle stocks will prosper.

2) To become a true sage of the markets, one must become "one with the markets". Understand what the markets are saying. Every move has a message. It is not the markets that are irrational- it is us who are incapable of interpreting the message that the market is sending. Just because one doesn't speak the language of the market does not mean the market is wrong.

Quote of a true idiot

Daniel Sadek was a renowned subprime loan pusher- who made millions on selling worthless mortgages to gullible California home buyers. This is what he had to say in defense of his business and his loans (it really shows the incompetence and stupidity of certain people, especially those who use 'Wall Street' as a measure of credibility)

"If my loans were so bad, why did Wall Street keep buying them to securitize?''

Jim Sinclair quote

"My approach is and the truth is Bert’s (Seligman) and Jesse’s (Livermore) was you don’t have to make it all. If you can knock off the middle 50% or 80% of the move, you’ve hit the jackpot. But the guys who want bragging rights buying bottoms and selling tops go broke."

Happy Birthday to me + Great Bond Bubble!

Thought the bubble days ended with the bursting of the housing bubble? Think again. The gigantic US bond bubble is here. Mark my words. This is the next mega monster to short the heck out of. All faith in the US government and trust in their ability to manage their finances and debt have been thrown into the garbage bin. Higher yields and lower bond prices are fast approaching.

Today's quote

"A bull market's job is to throw you off and your job is to hang on"

Listening to opposing viewpoints

Have the courage to expose yourself to counterarguments no matter how strong the temptation to only bombard yourself with commentary that falls in line with your own personal view. To be able to debate and counter the opposing viewpoint is the true test of one's conviction in an investment, or any belief for that matter.