THE SMART MONEY

The smart money is looking for another $5 trillion dollar correction in financial assets (we already have had a $10 trillion dollar global pull back) this year and next. We agree there is more to the downside if invested in the wrong space.

What are investors missing? Inflation, a rising cost of capital, a contraction of credit and a peak in profit margins.

Did you know the U.S. household sector (including home mortgages) is the world's largest net creditor, with net financial assets greater than the rest of the world combined!

So we need to keep things in perspective but realize with the world coming off steroids (derivatives) everything is going to shrink for a while as we come back to a more normalized cost structure (higher) and growth rate (slower).

What is left is for the politicians to step aside and allow capitalism to work...they can't keep flooding the system keeping debt junkies alive...bankruptcy has to happen. Britain made a big mistake nationalizing one of their worst lenders this week....our Fed needs to force the largest abusers of credit into receivership. This is the next shoe to drop. Socialism is not the answer.

Oil is about to jump yet higher following all the other commodities as global supply for everything is not keeping up with demand....we are early in this major cycle....

The winter storms in China since January 10th, has left 107 people dead, killed 69 million head of livestock and destroyed 354,000 homes and nearly 62 million acres of farmland.

The recent cold snap in the Arctic: The sea ice has expanded by 2 million square kilometres, compared to the average winter coverage in the past three years. The ice between Canada and southwestern Greenland has reached its highest level in 15 years.

Danny Boy seen here cooling his heels on top of the snow pile...staying very cool.