Making Sense of Crisis

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Courtesy of Russ Winter of Winter Watch at Wall Street Examiner 

"Suspend disbelief… Anything can happen in a crash, there are machines making the trades and they have no respect for the prestige or standing of a particular company.”- Joshua Brown

The whole bogus neoclassical economic melded with neoliberalism model as a way of life is now in the process of collapsing. Ultimately, that’s a good thing. I’ve treated debt issues ad nauseam as a cancer that’s killing the patient. My view is straightforward: The banksters and kleptocrats need to be handed a large measure of the losses or the economy and in turn the markets will continue to steadily erode. If the parasites take a cold-turkey hit and many fail, this will all come to a climax. If the loses are properly distributed, there will definitely be a financial crisis (FC); but an FC should be distinguished from an economic crisis (EC).

There has been an EC for quite some time, and now there’s also a political crisis (PC) developing. There are markers to gauge it as well. For instance, if this Oct. 6 Day of Rage turns out 100,000 people and spreads, take note. If it’s a dud, then we’re in deep trouble. Just don’t underestimate public sentiment right now.

In the context of what I am describing, an FC in conjunction with a PC would set up a great, climatic buying opportunity for the real economy. Will October be the confluence of an FC and PC?  I recognize that I can be idealistic about such things, but I’m also cynical, especially about the price to be paid. The saying “I’m from Missouri, the show-me state” applies, even though I grew up in Kansas. I’m a fellow traveler and a deeply cynical idealist with a vision of what should happen. If it’s business as usual, I’m going to re-short this market at the overhead convergence (mostly likely 20 DMA).

With the approach of the very definition of a bear market (20% drop) and with investors still facing near-zero returns on funds, it’s natural to contemplate some opportunity somewhere to at least offset inflation. In general I would caution against this right now. This is the kind of market that could easily replicate some of the deep value seen in early 2009. That said, I have to take note when I see some of the names I played off that bottom that are now within shouting distance of those levels.…