Somnolence

Somnolence is a state of near-sleep. As trading volumes dry up (mid-summer), famous money managers are scared into abnormally high cash positions and hedge funds sit on probably a record high 25% cash levels.......WHY??

Simple.....November elections might or they might not stop the bleeding.....they could even make things worse. But nothing much will "change" for another 2.5 years.

The challenge will be as the world slows......from lack of any leadership, risk taking or profit generation...is that in a deflationary fear cycle ALL DEBT becomes unmanageable....much less at the state and federal level where there is no understanding of anything. Tax receipts are about to plummet. The public sector has in front if it what the private sector has been through for the past three years.....times maybe two or three.....

Unions, guaranteed benefit plans, and jobs in the public work force will be severely cut back. A negative for the bond market.... a long term positive for the equity markets as future liabilities get resolved.

Cover stories show how couples nearing retirement age have sold all their stocks and now feel safe in their bond portfolio. Buyer beware!

We read:

1) 2010 is so far the warmest year, worldwide, since records were kept starting 131 years ago.
2) The largest bond manager in the world said, bonds are "priced not for recession but near depression (levels) which seems extreme".
3) "It's just unreal how much prices have gone up, just dramatically, the highest I've seen in 36 years in the business," said a manager of a food wholesale company in town.
4) "It is not the end of the world. It is just the end of the world as we know it. People with serious money throughout the world are afraid of what's happening."

We keep observing comments made during the depression how the media would smooth over, alter or not even report the real news......we see this daily today.....80 years later.....this will be especially problematic as we approach the November elections as the true story needs to be heard.

Danny Boy seen here checking out downtown.....likes the trees and grass better...but he keeps and open mind.