2012

Looking at next year....generally speaking, "the street" is anticipating a flat to higher stock market and marginally higher commodity prices...

We think the markets will continue to be highly volatile and completely dependant on politicians coming to some sort of compromise. But the chances of that are nil. It is rare to have virtually a complete turn over (a year plus from now) of the global political leadership.....thus we have so many lame ducks and no ability to make any basic decisions or offer any leadership.

In a slowing growth environment, debt becomes unmanageable, regardless of the government buying (Ponzi scheme). We are at the end of a 30 year bull market in bonds and in a phase transition back into the worlds top 100 companies....and their stocks....

Well read long term students of the stock market are incredibly bearish.....looking for a material break in the averages and view that correction as a buying opportunity....sometime later in 2012... We agree.

What we try to tell people is that debt levels now accruing/ compounding regardless of coupon size are past the point of no return....and it has to now run its course....government has become too big to manage and too big to finance. The capital markets are essentially closed/// to closing for the sovereign debt issuers. See recent failed auctions in Germany and Italy. Japan is probably next. A classic new bear market and investors are fighting it and in denial.

Since the USA's government debt was downgraded in August, we have lost (issued) an additional $455 billion in debt. That is more than the outstanding debt in Greece.  In the past ten years global debt has grown at an 11% compounded annual growth rate vs. real GDP growth of only 4% annually....debt is growing almost three times faster than the economy.

The NYT's recently quoted an economist saying "What Europe needs right now is money that is willing to absorb losses."

We don't personally know anybody who is willing to take any losses intentionally. And yes...the entire US government bond yield curve is negative now....and everyone owning these bonds are losing money too.

Danny Boy seen here keeping the ball in front of him this winter.