Veksels and Squawks (Plural)

A Veksel is a promissory note/ or commercial credit in Russia...it is an unregulated form of barter. In their markets with smaller and medium sized companies they say, "everyone owes everyone else money...no one can pay anyone", says an FT's article. "Whole sectors of the economy are under water, the economy is standing still."

Squawks are an expression of mechanical problems with an airplane...like it is squawk free only when new....other wise you are just trying to minimize the squawks to stay airworthy.

Today, it seems everyone everywhere owes money. We read of a debt to equity ratio of 10-1 for America. The political leadership has no business background thus no understanding of economics of supply and demand. Debt is now growing faster than our nations equity. The global capital markets are like a daily voting machine.....you can vote yes or no (buy or sell). You can elect to not participate.....when larger "groups" form the same opinion.....the waves or new cycles/ momentum form. The politicians are about to receive an unwanted MBA in economics very shortly.....we believe the markets will not fund these budget losses much longer....it is like an investor being asked to come up with more money to keep the boat a float....with not a bright future for the "business plan"....that is when it stops......we think we are there now....in the business world that happens daily. Congress can do nothing about this market force.

There are way too many squawks in the system right now as the math has moved beyond the normal person's ability to grasp reality. For example....we have spoken to several middle aged people recently who have no health care and preexisting conditions and or recently went to the hospital "to be treated" and much to their dismay were surprised to find out..no, in fact, they are now required by law to BUY health insurance FIRST. THEY THOUGHT IT WAS NOW ALL FREE.

We believe the capital markets are about vote no to some $3.5 trillion in new and maturing government debt that needs to be sold over the next year. The current holders of all this existing debt will soon "own" these debt (Veksels) at losses......when after a time holders realize these are now held at accruing losses...they will turn sellers....so a double negative to the bond markets. The difference between being able to fund these losses... and not finding willing buyers is a very very small edge (perception is all)....like the difference between wining a tennis match with two pros playing....all you are looking for is a "break".

We think this is a debt top just like the equity topped in 2000....only much much larger. It is important to understand that the stock market is different...we are not in an equity bubble...that has passed.......we are in a debt bubble......more money will be lost in bonds than equity...especially adjusted for inflation, taxes, and devaluation/ debasement of the currency.

Danny Boy seen here......no snow in March? That has not happen in 130 years. Get used to extremes they are coming!! Sell in May and go away?