Da Bears!

It’s good to know the bearish argument as the breakouts continue less we get too giddy.

What I know is that we had a once in a LIFETIME panic. That is the truth. It is quite possible that tomorrow begins a slow and relentless unwinding of markets and Dow 4,000, but there will not be a VIX of 90 and fear readings like October-March. Investors will just get slowly apathetic and leave.

Reformed Broker has a funny post up with all the different types of BEARS now in the stock market . It’s right on.

That said, here is what the bearish writers like Mauldin say:

As the great bear rally of 2009 runs into the greater Chinese Wall of excess global capacity, it will become clear that we are in the grip of a 21st Century Depression – more akin to Japan’s Lost Decade than the 1840s or 1930s, but nothing like the normal cycles of the post-War era. The surplus regions (China, Japan, Germania, Gulf ) have not increased demand enough to compensate for belt-tightening in the deficit bloc (Anglo-sphere, Club Med, East Europe), and fiscal adrenalin is already fading in Europe. The vast East-West imbalances that caused the credit crisis are no better a year later, and perhaps worse. Household debt as a share of GDP sits near record levels in two-fifths of the world economy. Our long purge has barely begun. That is the elephant in the global tent.

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This is good stuff to know if a big cocktail party is in your future with old people.

You will have plenty of time to get out if common shareholders start caring about this again.

Right now, they don’t.

I will say that buying insurance seems pretty cheap compared to last October if you can’t believe how long you are.

6 comments

  1. Dave Pinsen says:

    Howard,You might be interested in this post I wrote a couple of weeks ago, which touches on a couple of the issues you bring up above: namely, the Chinese capacity question and buying insurance against crap hitting the fan. I included supporting links in the post, but this was my summary of the Chinese capacity question,

    In a nutshell, the positive scenario: China’s big stimulus this year has helped transition its economy to one fueled more by internal demand, in which case there should be continued growing demand for industrial commodities to build infrastructure in underdeveloped parts of China, manufacture first refrigerators for rural Chinese, etc. And the negative scenario: China’s stimulus has been mainly hair of the dog, propping up an unsustainable status quo relying on massive trade surpluses that over-extended Western consumers can no longer support.

    Re buying insurance, I mentioned a site I have under development that will facilitate that. I’ll run it by you, if you like, once it’s live.

  2. DaveinHackensack says:

    Howard,

    You might be interested in this post I wrote a couple of weeks ago, which touches on a couple of the issues you bring up above: namely, the Chinese capacity question and buying insurance against crap hitting the fan. I included supporting links in the post, but this was my summary of the Chinese capacity question,

    In a nutshell, the positive scenario: China's big stimulus this year has helped transition its economy to one fueled more by internal demand, in which case there should be continued growing demand for industrial commodities to build infrastructure in underdeveloped parts of China, manufacture first refrigerators for rural Chinese, etc. And the negative scenario: China's stimulus has been mainly hair of the dog, propping up an unsustainable status quo relying on massive trade surpluses that over-extended Western consumers can no longer support.

    Re buying insurance, I mentioned a site I have under development that will facilitate that. I'll run it by you, if you like, once it's live.

  4. kidmercury says:

    once in a lifetime….lol…..i gotta admire your optimism howard…..

    situation is still the same, too much debt, not enough counterfeit money to pay the fraudulent debt. so the debt bubble bounces along, searching for the needle to pop it….dubai world? nope…..greece downgrade? getting closer…..

    the casino will shuffle money around, but real growth is impossible until structural problems regarding money supply, fiscal policy, and market regulation are resolved. basically gotta fix the rules to get the game working again.

  5. kidmercury says:

    once in a lifetime….lol…..i gotta admire your optimism howard…..

    situation is still the same, too much debt, not enough counterfeit money to pay the fraudulent debt. so the debt bubble bounces along, searching for the needle to pop it….dubai world? nope…..greece downgrade? getting closer…..

    the casino will shuffle money around, but real growth is impossible until structural problems regarding money supply, fiscal policy, and market regulation are resolved. basically gotta fix the rules to get the game working again.

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