Corresponding bear market

For stock and/gold oriented trader/investors, there is an article contrasting past performance of the two vehicles entitledPaperbugs Won’t Get It Until It’s Too Late. The author’s immediate view is as follows:

A brutal cyclical common equity bear market within this secular bear market for common stocks has already begun. Meanwhile, the parabolic phase in the uncommon Gold secular bull market has just begun with the latest thrust higher. Please don’t mistake the forest for the trees: Gold should be correcting now and common stocks are due for a dead cat bounce higher. But these shorter-term considerations are not where the big money is made for retail investors …

Improve the economy

Hapless Ben Bernanke, in an effort to save the unsaveable, continues to pour liquidity into the system.

Liquidity is the only thing that keeps the economy and the government from imploding.  It accomplishes nothing other than to “pretend and extend.” The economic debacle ahead cannot be avoided, only deferred. It provides those willing to understand more time to prepare. It also means most will be poorer in terms of purchasing power as a result.

The banking system is insolvent, headed for collapse. Bernanke cannot change this ending, only its timing. In the meantime, he destroys the savings and the standard of living of the middle class. His inflationary policies drive food costs up around the world. Many believe this pressure on food prices precipitated the riots in the poorer nations.

Banking system is headed for collapse

Warren Buffet committed $5 billion to Bank of America today. The stock opened up more than 20%.

Buffet’s commitment may be considered good news, especially for shareholders of Bank of America. Ultimately, it is probably bad news for all of us, including B of A.

In my opinion, it is merely another confirmation that our banking system is headed for collapse. It indicates that more Federal funds (your taxes) are headed for the banking system. Buffet would not have made this commitment without assurances from government that they would backstop him.

Working within the system

In their opinion, we have lost in the sense that there is no way out of our current situation:

To put it simply, America is nearing a checkmate scenario.  Like the final torrid maneuvers of a rigged chess match, we have been pressed, manipulated, and attacked into the last remaining corner of the “grand global chessboard” left to us; centralized control of all social and economic power into the hands of an unworthy elite.  If we continue playing the game by their rules, we will lose.  There is no doubt.  There have been many solutions presented to us in the past to combat this development, but nearly all of them function within the constraints of Federal politics.  Working within the system has earned us no quarter, and frankly, no results.  Our only recourse (and, frankly, the best recourse all along) is to STOP relying on the rules of their game, and to walk away from the chess board completely…

Market is ready for a long bear market

Bill Bonner at The Daily Reckoning wrote this before today’s $100+ drop in the price of gold. Interestingly, he also thought gold might go down, perhaps for some period. Is he discouraged? Hardly, he believes it would be crazy to divest of gold and expects one ounce of gold to eventually be equal to the Dow Jones at some point.

His guess is as good as mine or yours. Here are some other guesses:

We’re also guessing that…

…the weight of so much debt is depressing growth…and will soon depress stock prices too…

…that the economy is becoming zombified from too much government money…especially the military…

…that Mr. Market is ready for a long bear market anyhow; he’s tanned, rested, and ready to go to work

…that the US is following in Japan’s footsteps…towards a long period of on-again, off-again recession

…that the recession of ’08-’09 in the US never actually ended…

…and that stocks will go down over the next 5-10 years until they finally hit a real bottom.

But wait. Here comes the San Francisco Fed. Can you believe it? It agrees with us.

My opinion is worth what you pay for it. I believe gold is in a correction (FINALLY!!) and intend to buy more. Perhaps not right away. Regarding the points above, I believe in them even more strongly than I do the continued rise in Gold. You make your own decisions.

Describe the current economic strategy

The bloated, self-serving  political class can usefully be understood as parasites feeding off the private sector of the economy.

As the economy spirals toward collapse and the government toward bankruptcy, the necessity of spending cuts and downsizing of government should be obvious. However, the recent debt ceiling debacle indicates that the political class is not interested in saving the economy.

The term Kevorkian economics is used to describe the current economic strategy pursued by the political class. Like Kevorkian, the strategy involves managing death – the death of the US economy (and likely other economies).

Incessant hammering of free markets

George Bush did it; the Republican obstructionists in the Congress who were wary of approving another $2 trillion in debt did it; the Tea Party did it; Standard and Poor’s did it; the Japanese earthquake did it; the Japanese tsunami and nuclear accidents did it; the Middle East unrest did it; the European debt crisis did it; new technology like ATM machines did it. Obama has cited these culprits and many more — though never either himself or his advisors who took a weak recovery and turned it into a near recession.

You see, The One is not responsible for a thing. His efforts would have had us back on “easy street” had it not been for the above.

But it is worse than that. His incessant hammering of free markets, businessmen and “success” is creating a bit of John Galt in all producers: