Monday, March 21, 2011

Prepare for the worst...disinformation is everywhere

Today's rally was likely pretty close to a one day wonder...maybe there is a little upside left to complete the retracement but the bullish blindfold is not likely to survive very well or long. Everyone and their brother agrees: "Buy Japan" question: do any of these people actually do any research at all? Well, its characteristic for us to get a good dose of dis-information before reality dispels it.

The reality is that when ever Japan has had a significant natural disasters that influence its economy and confidence, the reactions are a multi-down wave affairs...usually bouncing after they decline well over 20% from the levels prior to the event and requiring over 6 months to tire the sellers. Now, this is not just a normal event and Japan's economic condition is not normal economic condition so this will be bigger and take longer. They are hiding massive amounts of insolvency off-balance sheet and are insolvent on-balance sheet already without another trillion dollars required for the response to this disaster. The "mis" and "dis" information provided by Japan will likely ensure that their reward will be rather severe. One way or the other, Japan has quite a long way to go before it has a meaningful bounce...please see my chart on the long-term Nikkei yesterday. Again, its characteristic for us to get a good dose of dis-information before reality dispels it.

Then there is our "change you can believe in" president who's only change that I can see is his name and blame. He is obviously both a republican and a democrat and has no intention of living upto any election claim that he has made. Why would one expect a guy who campaigns on such a superficial and duplicitous hook line to be anything other than a salesperson of the highest order. However, now he is trying to sell a cronyist oil war as protection for civilians in Libya. Clearly helping the Libyans is not a realistic foundation for this totally un-thought-out and badly planned air assault in yet another oil rich country. The reality is that we would have waited another few years to attempt to do anything there (as we did in Yugoslavia) if it were not for oil. Mind you that this transgression will not remain in Lybia but will spread like a virus till it reaches Iran and Saudi Arabia. And we thought that anti-American sentiment was bad in the past - just wait and see what it becomes in the future.

The reality is that, there are many, many cases in which the west's influence brought much more pain, death and discomfort rather than safety and prosperity that it purported to bring. Iraq is just one of the recent examples...millions of civilian lives trashed, thousands of troops killed and trillions of dollars thrown down the drain which will most likely be blowing up in our faces in the not too distant future. We have enough to worry about at home but this "Nobel peace prize winning" president of ours can't find anything to do with war or conflict that he does not like...from Guantanamo to Afghanistan to Libya and I am sure quite a few other over commitments that he is preparing to make...not one thing scales us down, improves our economy or moves us toward freedom or prosperity as a nation. The special interests, unions and banks are quite happy with that agenda and will make sure he gets their votes after he runs roughshod over our country. Again and again, its characteristic for us to get a good dose of dis-information before reality dispels it.

My systems initiated new shorts on today's rally and odds are much higher for real selling than most of those "Buy Japan and everything else in sight on 500% leverage" people are expecting. In the next few days we could be on our way to taking out recent lows...hold on to your blindfolds.
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