Grant a Bull
An economics writer I trust is bullish. That, according to New York magazine. I like NYM, but I don't trust it. Awhile back, I remember they wrote about the sense of public service that prompts Goldman Sachs to require its executives to take government job assignments in Washington, DC, for a couple of years. They made it sound like altruism, thereby falling for a fraudulent cover big banks have been using for a hundred years or more ("We need the Federal Reserve bank to protect the little guy; it's not for us, really").
If you get all the way through the NY piece, though, you see what's really going on: Grant is bullish on 2010 . . . and that's about it. Eleven months. Here's how the piece ends:
Grant, too, harbors deep concerns about what lies beyond the bounce-back. He sees long-term problems in the government's massive efforts to save the economy, especially the low interest rates that Bernanke shows little inclination to raise. “Inflation is upon us,” he says. “Not too much money chasing too few goods, but too much money. The object of the money's desire varies from one cycle to another. It could chase skirts, toothpaste, and automobiles, as it did in the seventies. Or it could chase stocks, houses, or income-producing buildings, as it did a few years back.”
Grant, in other words, hasn't forsaken pessimism so much as postponed it. Hyper inflation could produce the kind of volatility that enables traders to make a killing while the rest of us suffer sticker shock in the breakfast-cereal aisle.
The piece is worth reading, though, because it points out reasons the U.S. might bounce back. Part of me doesn't think it's smart to bet against America. We're a land built on business. If there's a way to bounce back, we'll do it . . . with a vengeance. But then I see way too many problems, including a creeping socialism that will strangle the profit motive, and I invest my money overseas.
Gold bug Bill Bonner is no longer hugely bullish on gold. He still likes it as a core holding, but he doesn't think it has the upward potential it had in 2000. So what does he think will be the rocket investment of the new decade?
And I don't think he's kidding. Bonner is a big contrarian (buy whatever other people don't want), and that's Japan:
While there are many things that seem likely to go down, there aren't many that seem destined to go up. Let's see, what has been beaten down, dissed, battered, and abused for the last 20 years or more? What is it that people don't want? What is it that they expect to go down”¦possibly forever?
Of course”¦Japanese stocks!
So there is our Trade of the Decade:
Sell US Treasury debt/Buy Japanese stocks.
Most international mutual funds will have some exposure to Japan, but probably not as much as you think. If you want to bolster your Japanese holdings, you might consider a couple of Japanese ETFs. I found ten different JETFs without even trying.
Some of you might recall that I gave Alex Jones a try last Fall. I listened to about five hours of his podcasts, but finally gave up when I realized he was never going to paint the big picture that would tie together all the conspiracy theories. The guy is entertaining, though, and I skim across his website about once a week. During my random surfing last night, I wasn't disappointed in the fare. The first paragraph from one of his headline pieces: The establishment is ensuring that pedophiles and perverts are kept entertained at airport security checkpoints by mandating the mass rollout of naked body scanners that provide detailed images of your child's genitalia, to be enjoyed by officials sitting alone in back rooms. I'm no fan of airport security (I'll know they're serious about making airports safe and efficient when they single out Muslims for extra inspections), but this piece seems to lack some objectivity.
From Mangan, quoting Zero Hedge: "The next time there is a market crash, and you try to withdraw what you thought was "absolutely" safe money, a back office person will get back to you saying, "Sorry - your money is now frozen. Bank runs have become illegal." This is precisely the regulation now proposed by the administration."
Found this interesting for some reason: Oscar the Grouch used to be orange.