When, not if

Danger, Will Robinson, danger.

The global economy is a mess. Basic household money management is enough to demonstrate that this can’t continue much longer. Spending can not exceed spending for ever. Someone will stop paying, stop lending and want to collect or all of the above. Sooner or later, it will come apart. What is surprising is that it hasn’t yet. But creative accounting, crony politics, and a general willingness to believe in the tooth-fairy simply carry-on regardless. Maybe if we pretend it isn’t there, nothing bad will happen.

  • S&P 1465 – depends who is talking but this is either appropriate because the US is still the global leader in everything and there is still money to be made in the stock market, or way out of line for the dismal state of the US and will end very badly
  • 10yr 1.87 – pretty discouraging for savers, anyone with conservative investments that were hoping to live through retirement on money socked away during a working career
  • Oil $99 – it is still appropriate to be transporting commodities and raw materials, agricultural products and manufactured goods all over the earth, but for how much longer?

How much longer will Germany be willing to contribute to bailing out most of the rest of the Eurozone? What is astonishing is how long this has continued.

How much longer will tax-paying Americans be willing to allow their hard earned money to be spent on government and government-programs that they don’t support, don’t believe in and/or don’t approve of? A US that is broke? 700 military bases? More than $1 trillion spent and still giving away borrowed money for foreign aid? As the Tea Party illustrates, even though there is considerable support behind the general idea, too many “supporters” piled on their own special interests and pet causes that fragmented the initiative. Contrived divide-and conquer strategy or coincidence?

Does the November election matter? Is there another “bubble” waiting to emerge and prolong this fragile balancing act? Is there a black swan lurking in the Middle East? What is going to upset this apple cart? Is anyone worried?

  • CAT Caterpillar 93.17 – manufacturing, agriculture
  • GCC Commodities 31.53
  • TLT 20yr Treasuries 118.30
  • QID S&P Short 26.57 – bet against

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