"Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless."

Milton Friedman

I don't make this up about your government lying to you. Check this out...

http://bigpicture.typepad.com/comments/ ... ng-ec.html

AND

http://bigpicture.typepad.com/comments/ ... sions.html

AND

http://www.nytimes.com/2008/04/19/business/19chart.html

Anyway...

ChartZ and Table Zup.

http://www.sfgate.com/cgi-bin/article.c ... 106LQH.DTL

Local inflation...


So I'm short of time lately, but here's what I got....

The market has looked like hammered dog shit this year.

Check out the 401 mutual funds and other stock charts.

For the last three years, I've been riding stocks up in my 401a.

In January I started to step to the side and told some co workers about it. They bailed out into the GIC and they look real smart/lucky. I tried to pick up the last few pennies in front of the steam roller and I'm a little flatter for the experience, but I've done good since 9/04.

There is smoking ruin at the banks and financial companies, and it's much worse than you've been lead to believe. The Fed finally figured it out and has let the markets and companies know that;

1) They will engineer a coverup as needed. Bear Stearns didn't go bankrupt and have to open their books to a judge, The Fed gave(loaned) JP Morgan enough money to buy them over the weekend. The public didn't see the books. There's more, but time and space....ya know. Anyway, the Fed will keep the banking system afloat until they've earned/written off enough over a long enough period of time to put the problems in the rear view mirror.

2) They will shift the burden of paying for it onto the public by engineering inflation. Money will be printed to paper it over.

You HAVE read the links above, right? Got it?

Business is gonna suck. Hugely over leveraged credit blew up this year. Read prior posts below... So these credit cowboy guys are gone. Some hedge funds/banks/SIV's etc were levered up 5 to 30 times. A billion dollars was behind as much as 30 billion of loans and business. Thirty billion of loans is left suspended as the billion dollars is vaporized. Even if the Fed turns a blind eye/floats/postpones/papers over these loans, ya ain't gonna have the credit cowboys anymore to support new loans. Welcome to deleveraging.

Ya got roughly 3 million too many homes (1 million of them empty) to get rid of. Whose gonna throw good money after bad when the bank examiner may come knocking?

Get used to houses going for so little that even a recently singed loan officer has gotta realize that there is little risk to a loan.

Energy and food are getting bought away from us by the rest of the world as the dollar falls. The rest of the world has figured out that the printing presses are gonna go 24/7.

Well, it's bad. But not without hope. This is not a manufacturing/inventory issue like we used to have. No wholesale layoffs in manufacturing; that happened years ago. There's WAY better inventory control; this is the other side of computer based inventory control/just in time manufacturing. What jobs we have are in parts of the economy that MAY stay good.

The dollar's cheap, we're able to export big time to the rip roaring material and manufacturing economies elsewhere. I own Catapiller in an IRA. They reported earnings last week. WAHOO!!!!

'Sides, I'm a pipefitter and the oil companies got bucks, like in '75 and the early 80's. Been there/done that, it worked out pretty well.

So. here's the way I'm gonna play it. Certain stocks will do well. Others will suck bigtime. Markets will be REAL volatile. There will be a year long or multi year bear market as things work themselve out. There will be vicious bear market rallys as the boyz in the pits stampede the rubes when everybody gets comfortable on the downslope. We'll go down for three weeks/months into a big hole and a two/ten day rally will get us halfway out of the hole. And then we'll go down again.....

Sounds like the safest play is cash in the 401a to me. I'll keep what I got saved/made. I'll worry about making more money when the market starts going up on more than short covering panics and dead cat bounces. Or I'll try to make some money in my trading account where I don't have rapid trading restrictions and I can look for things like oil trusts, MacDonalds, and CAT.

Of course I could be wrong. It's hard to predict the future and you can't always be right. Maybe it's straight up from here starting now/three/six months from now. It's not a financial sin to be wrong when you try to put a strategy in place for the future. The sin is committed by staying wrong when the future gets here and isn't what you've expected it to be.

Stay tooned...