Debt is Not Wealth

Debt is a claim on future production. The debt markets today are in a frenzied topping process just like the stock markets top in 1999-2000. The fixed income markets have simply reached saturation and now will have to reverse and begin the deleveraging process we have been talking about for over a year. As the cost and availability of credit becomes more rational (harder to come by) the valuations change for everything, including equity. The Yen carry trade is over. The hedge funds and private equity boys trying to trade around this are caught flat footed...the pension funds and endowments are saying enough! Derivatives will not save the day, just like they didn't in the fall of 1987.

The evidence is obvious as long gold is sold, the short yen is covered, the most heavily shorted stocks are covered (bought back) and the biggest leveraged equity longs (ETF's) are sold at the market. We are entering a seasonally weak time for the stock market and the correction has begun. This is exactly what Bernanke wants as do all of the world's central bankers.....long term this is healthy and constructive....short term those with leverage will be in the cheap seats.

Water scarcity and oil will be put on the back burner as once again the short term attention span is all on the news of the day. When the markets move up and down 100 points or more each day....the house always wins and the traders always lose. The biggest challenge for the next year will be to not make critical mistakes and get caught up in the churning.

Oil $75.20 plus $1.63, Nat gas is being given away @ $6.00 and what is the cost of water? How can it be no one knows this answer on water??

Remember, "Whisky is for drinking, water is for fighting" ......the droughts continue and so does the ever shrinking supply of oil.....the global effort on climate change and emissions will be very costly and the masses will focus on the wrong efforts ....which should be more efficient uses of these raw materials... not taxes and protectionism.

Barkly seen here years ago would take all this in stride.