Bailout & Announcement

Bailout

The little boy who cried wolf - at least in the eyes of the public - stood in front of a telepromter the other night and told us of dire circumstances and implications of not passing the bill being pimped by Paulson and Bernanke in Congress. The scary thing is that I believe him. I have to believe him because of my personal experience. You remember me writing about "this mess" many times over the years on the blog and in published commentary, even in a seemingly fine bull market? The market was fueled by the inflation policy of the last contraction. Therefore it was illegitimate to those who are not Keynesians. It was a mess in the making. Well, enter stage right... one big, scary and utterly predictable mess.

I don't agree with Ron Paul in that if we just unwind right here and now... if Congress actually listens to the majority of Americans who are against the bailout, it will be very hard for a year and then we will get back on track. I think it will be utter devastation for a year (or more) and then there will be a painful, grinding climb back out of hell as the US national psyche is recalibrated from hubris clouded self-congratulatory entitlement to just another failed superpower. Ron Paul is all about purity and honesty and he envisions a return to the purest forms of American Constitutional Democracy.

But most Americans are not Ron Paul. Most Americans are as far from Ron Paul as you can be and that conflict will not be resolved easily. It is why I once mentioned that I, a peaceful and peace loving guy, own a hand gun. What will be the limits on social, errr... unrest? I don't anticipate ever having to use it... but again, I took the Boy Scout motto literally; "be prepared". I live in a small town, am friendly with the police Sargent and have done a lot of thinking over the last several years about community and getting back to local thinking and self sufficiency. I look forward to the cold snap of Autumn because my wood pile awaits and swinging that maul is highly therapeutic. Wood stoves, generator, water purification systems, organic gardening (at which I am thus far a failure on balance, but will continue to try)... it's all intact with the idea that the fiat debt paper system could seize up at any moment. That time very well could be now and the implications will be severe.

Now, in the likely event Congress is just posturing and eventually caves in as they always do, the news doesn't get much better. Yes, we will likely get a market pump and a surge of optimism in all the same corners responsible for this mess being pushed so far out on a leveraged limb in the first place. I would sell that optimism and continue to make preparations because as Dr. Paul says [paraphrased] you can't fight the problem with more of what created the problem in the first place and expect good results. That would actually be a good definition of insanity. But it might buy some time. I think that if the bailout does not pass soon the current system is dead maybe - when figuring all the leveraged debits - ten times over. If they ram home the bailout we will eventually be dead twenty times over after the euphoria wears off and the debits keep on coming. But dead is dead.

The system is ending. It included many good points and led to some good times for the USA. We watched the USSR unravel and thought 'oh, but we are America and that kind of nastiness doesn't happen here'. Well, our forefathers endured all manner of nastiness to establish something great on the world stage. I would argue that for the better part of the 20th century up to today, enabled by the fiat debt paper system and the gradual onset of sloth and hubris, we have collectively been bred to just feed on the prosperity without a clue as to creating actual productivity and prosperity. We have just fed on the seed corn and it is sad. The public is waking up and my concern remains in their disorientation as they awake from their economic fantasies, spoon fed by conventional media.

Am I angry? Yeh, I am pissed off. But I am also happy because over the last four years I did all I could do to try to help prepare anyone I came in contact with who appeared willing to see the truth. Granted, that was an extreme minority but combined with the website and the blog I would like to think I did my part to try to get the word out.

Speaking of bailouts, a couple weeks ago we had in the Northeast a 'remnant' of one of the gulf hurricanes and it produced some epic downpours. Our basement was flooding due to faulty foundation window wells so picture me out there on a Saturday night, wearing only my shorts (well, maybe you don't want to picture that), shin deep in muck bailing out the window wells. I though 'oh dear god, don't tell me I am going to be out here until daylight doing this'. Well, by 2:00 AM it was all over and I got a reasonable night's sleep. Just yesterday I mixed some cement, graded the runoff, caulked the wells, installed covers and solved the problem. Why yesterday? Because we are due to get heavy rain over the next couple of days. I was motivated! That is what is happening with the bailout in Washington; there is motivation and they may get it done. The only problem is, they are using more sand instead of cement.

The issue for individuals is to correctly interpret this situation and make the best of it. It makes no sense to click your heels and wish it away. You must deal with it. We all must. It's all the website's name 'it is what it is' was ever meant to imply.

Announcing

I am planning to finally start that newsletter after four long years of navigating this mess and providing what I think is something different from the average financial commentary and analysis. Gotta do it because right here and right now is go time. Big guy time... whatever you want to call it this is not a drill. I figure I haven't screwed up on the macro thus far and in fact I am disappointed to be proven quite correct on the big picture.

With the understanding that there simply are no all-knowing gurus out there, least of all me, what I offer is a hard working mentality and a straight view of markets, socio-economics and the financial system. Once I reflect a bit on format and logistics, I will offer this service to you dear reader and would be thrilled if you have the confidence in me to sign up. The blog and website will remain here as free services but I want to work harder, go deeper and spend more time on what is a passion for me. Thus, the premium service. I would appreciate any input on what you think I should include or avoid with regard to format (mail me at gt AT biiwii.com).

I envision some narrative/opinion on the macro picture, interpretation of fundamental cycles and of course technical and fundamental analysis of domestic and global markets and macro indicators I find interesting and/or relevant. I will also look at individual stocks, mostly from a technical analysis standpoint although there would be some fundamental commentary as well. Oh and let's not forget about trading opportunities. Every once in a while a nice setup presents itself for short term gain.

Something is ending and something is beginning. As long as the lights are still on I would like to navigate the new normalcy with you, with a respect for the gravity of the current macro situation while not being consumed by it. It is what is beginning - from an investor's standpoint - that I am interested in.

Edit (10:39) I neglected to mention that I think it would be helpful to show my real life portfolio composition broken down by asset class updated weekly, which would be the frequency of the letter (emailed on Sundays).

Have a good Friday and a great weekend. Life will go on. Let's get this right.