Does anybody else feel deflation in their gut?

[looter]

I'm talking about a good old fashion credit contraction, liquidity trap, bank run. I still expect a "5" handle on NYMEX oil by Valentine's Day. I don't expect grains to get hammered as bad as say platinum, but I think $8 corn will feel like $16 corn... that is if corn is $8.

Lots of horrible banking stories hitting Europe. "Won't be long now." Said the monkey with his tail caught in the fan.

[jrtheoriginal]

I mostly feel sick in my gut. This market is getting to be to predictable. Some bone head is gonna pull out an atomic weapon in this currency war and it is gonna be bad for everybody.

HEre is the question Looter. when do the exchanges become irrelavant?

Lets say that corn goes to 6 but and oil goes to 65. But the masses are in such upheaval that you would risk your life trying to deliver that fuel out to the farm so the farmer could deliver that corn.
At that point the CBOT becomes irrelevant as the risk to deliver that corn or that oil or whatever commodity becomes so great you just sit on it till you can get a convoy together to deliver.

But if the local livestock guy will trade you a couple hogs or a beef or a few gallons of milk you may see that as a better alternative.

We have gotten to the point that so many of our 99% are thinking that there is a civil and orderly descent to the bottom of the hill.

Well in my younger days we had a sledding hill that was a ball. It was at the local state park. Huge hill and we would get tractor tire tubes and put a bunch of us on their and race to the bottom.

Well if you got up to much speed you would jump the hill at the bottom that was made up of snow. And into the forest you would go.

Kids would come out of there with broken collar bones and broken legs. The race to the bottom was always a lot of fun but the thud at the bottom was a killer!

Same thing in this attempt to devalue one countries currency against the rest of them. the race down could be a lot of fun for a while ( think 7 dollar corn) but suddenly you realize that this is about to end and there is no getting off because that guys behind you will run your little ass over and so your only hope is to hold on and hope that you don't hit one of the trees at the bottom of the hill.

Looks like the Swiss decided to push hard to get ahead in the race. Italy, Greece, protugal, and Ireland are about to get thier asses run over by Germany.
ANd the US doesn't even know it's on the hill!

This is gonna end very badly.

I stayed up chopping to late last night hope this makes sense. I need to stop posting when I am tired.

[Grainbelt]

Looter,

What is the market missing that you see happening? We know Euroland has troubles. A shoe yet to drop no one is expecting?

[Hobbyfarmer]

The gut feeling I have is that the Citidiots are soooo screwed.

We (the citizens of the world) seem to have leaders and people in charge that want us indentured for eternity. What is going to happen when the masses call out "off with their heads"?

With a economic collapse all bets are off.

That being said I don't see the worse case senario playing out. We are still mostly civilized.

Shit as I was typing my e-mail chirped....rule 48 was used today in the stock market...

you’re interested. Here’s the text of “Rule 48,” which the NYSE invoked to smooth the open today. Here’s the Cliffs Notes version:

(a) In the event that extremely high market volatility is likely to have a Floor-wide impact on the ability of [Designated Market Makers] to arrange for the fair and orderly opening, reopening following a market-wide halt of trading at the Exchange, or closing of trading at the Exchange and that absent relief, the operation of the Exchange is likely to be impaired, a qualified Exchange officer may declare an extreme market volatility condition with respect to trading on or through the facilities of the Exchange.

(b) In the event that an extreme market volatility condition is declared with respect to trading on or through the facilities of the Exchange, a qualified Exchange officer shall be empowered to temporarily suspend at the opening of trading or reopening of trading following a market-wide trading halt: (i) the need for prior Floor Official or prior NYSE Floor operations approval to open or reopen a security at the Exchange (Rules 123D(1) and 79A.30); and/or (ii) applicable requirements to make pre-opening indications in a security (Rules 15 and 123D(1)).

Dow Jones’ Kristina Peterson explained it pretty well in a story earlier this month. She writes that basically it means the designated market makers “will not have to disseminate price indications before the bell, making it easier and faster to open stocks. The rule was approved by the Securities and Exchange Commission on Dec. 6, 2007 and has been used rarely since then.”


Well shit again ...Looter ...you're the man.

Ok tell me why I wouldn't want to own more PBT, SBR, MWE among others in another day or two of this? Maybe a little of NLY if you believe in T bills and the vallidity of the full faith and credit of the USA.

[looter]

Sept 6, 2011 7:42:09 GMT -5 Grainbelt said:

Looter,

What is the market missing that you see happening? We know Euroland has troubles. A shoe yet to drop no one is expecting?

I don't spend much time rationalizing the how/why my dear friend.

I think its a Sept thing. The humanimal is a creature that learned after 125,000 generations to get ready for winter. Buying stocks isn't a priority in Sept. There is something about the fall that makes a guy worry about credit card debt. A weird sense of urgency comes over us all. Like the need for geese to fly south, we just react.

If people pay down debt instead 9th spend, the inverted money pyramid can blow up overnight given today's leverage.

Don't a lot of stock market collapses happen in the fall? I think this one could be the mother of them all. I base this on none of the market "knowns".

[Grainbelt]

I suppose irrationality provides us all with wonderful opportunities to own assets at cheaper prices, that will produce real returns on capital no matter the denominating currency. Non-quantifiable behavioural events (like selling based on the calendar) are what allows for the possiblity of market outperfomance in nonarbitraging markets like Real Estate and Equities.

[looter]

Sept 6, 2011 14:17:13 GMT -5 Grainbelt said:

I suppose irrationality provides us all with wonderful opportunities to own assets at cheaper prices, that will produce real returns on capital no matter the denominating currency. Non-quantifiable behavioural events (like selling based on the calendar) are what allows for the possiblity of market outperfomance in nonarbitraging markets like Real Estate and Equities.

Are the people who think the DOW will rise over time somehow less biased than those who think it will sink over the same period?

[Grainbelt]

Not in the slightest. People who buy/sell solely because of a date on the calendar may be.

[looter]

Sept 6, 2011 18:42:46 GMT -5 Grainbelt said:

Not in the slightest. People who buy/sell solely because of a date on the calendar may be.

I was on the road a bit today, and in between swerving at hitch-hikers and honking at babes I thought about Chicago School economics. You know, the whole, "market efficiency" thing.

Have you guys ever heard about the typhoid fever attack that hit Memphis like 180 years ago? It was working its way up the Mississippi to them. News moved 100 times faster than the disease. It was front page story on every paper as the deadly disease snakes its way up the river from the Gulf. It was going to consume Memphis as sure as death itself. What did the heavily informed people of Memphis do about it? Nothing. They Hung around until it was too late.

Sometimes reality is that unacceptable. Cognitive dissonance takes over. It's times like that I think Chicago School econ fails.

I can't think of a single reason to own stocks. The data is right before us. There is no avoiding financial armageddon. The masses are fools this time I believe.

Is this thinking the way to avoid prosperity in the markets GB?

[Grainbelt]

We have been on opposite sides of this debate for years as you know. I think the above way of thinking is definitely the way to avoid prosperity. The equity/asset world consists of more than just the S&P 500 and the Dow 30. Overleveraging of countries, companies, and individuals has been a never ending reality since the financial world began, things go bust and new ideas and entities take their place. Financiers and debters, forget and relearn this lesson time after time. Staying on the outside, shouting this time it is different hasn't worked yet....could it this time? Well of course it could. IMHO the odds are on my side though. Not saying buying assets should ever be done for short term reasons, those type folks are consistant losers, just saying that over decades ownership is the surest way to wealth.

You definitely have your convictions and I applaud you for sticking to them. You make the rest of us think more than anyone I have ever come accross. Keep up the good work Outback!

[looter]

Sept 6, 2011 20:25:55 GMT -5 Grainbelt said:

We have been on opposite sides of this debate for years as you know. I think the above way of thinking is definitely the way to avoid prosperity. The equity/asset world consists of more than just the S&P 500 and the Dow 30. Overleveraging of countries, companies, and individuals has been a never ending reality since the financial world began, things go bust and new ideas and entities take their place. Financiers and debters, forget and relearn this lesson time after time. Staying on the outside, shouting this time it is different hasn't worked yet....could it this time? Well of course it could. IMHO the odds are on my side though. Not saying buying assets should ever be done for short term reasons, those type folks are consistant losers, just saying that over decades ownership is the surest way to wealth.

You definitely have your convictions and I applaud you for sticking to them. You make the rest of us think more than anyone I have ever come accross. Keep up the good work Outback!

Over the years I incorporated your teachings into my investment/marketing strategy much to my benefit. Eclecticism never hurt nobody.

My goal a few years ago was to own ten things that each made $1,000/mo without much effort to operate. It's not as easy as it sounded at the time, but its chugging in the right direction. Inflation/deflation doesn't hurt my cashflow investments, but BAU would.

Here's something I thought about yesterday, the whole Sept thing. I'm convinced that the humans release differant endorphins specific to Sept to get us ready for winter. It's in our DNA. It's a gift our ancestors gave us, and we don't know what to do with it anymore.

I'm not saying Sept has to be bad for the DOW. I just think a collective realization is setting in that a financial winter (deleveraging) is coming. Those endorphins allow us to see a problem we shrugged off in June. Had the people of Memphis heard about the Typhoid threat heading their way in Sept, they would of scrambled at first notice.

I like to invent a new theory each day. Thats the beauty of theories, they don't have to become laws. Tonight I am compelled to write a column for the first time in a long time. It's about a cowboy friend who is getting ready to ride off into the sunset of a very long and wonderful life. If I don't get too drunk before the inspiration passes, I will share it.

[Grainbelt]

Amen OBG...... I'm sure you'll do fine with your investments. Ownership is the best way to build long term wealth whether it be equities, farmland, or a business interest.

Looking forward to the column.

[looter]

When I pulled into his yard tonight, Johnnie and the Missus were canning corn. We sat at the dinner table and talked about their grandkids, and their great-grandkids, and of course horses. I shared my thoughts on the growing sport of mounted shooting, and my hopes for its future.

Eventually I followed him out to a barn where he kept the weanling colt I bought from him. This stud colt means a lot to me, as it will be the last crop to come from his storied ranch. The wrinkles and the creaking joints gave way to a lifetime of wisdom as he shared secrets to get a colt to find its magic.

We visited about days long gone when the white man first settled Buffalo County. How the Grassland looked then, and how people worked then compared to the way they do now.

"Did people ever get together to race horses out in pastures back-in-the-day?" I asked. Johnnie laughed and shook his head. That's exactly what people did he informed me.

"Where do you think the term, 'at the drop of a hat' came from?" He asked. It turns out folks in the county rode out to meet on Sundays to race their horses in the middle of anywhere. Somebody would drop a hat, and hooves would pound like thunder. He told me about his days breeding race horses, and the days of producing ranch horses ever since.

As a chronic day-dreamer, my mind drifted to my awkward teenage years when I was judging horses in FFA. I found myself in hot water for missing the judging school before the State Convention. Embarrassed and unsure of myself, I went to see Johnnie. My advisor was steaming mad at me, and I was too ashamed of what happened to cause me to miss practice to tell that cranky FFA advisor. Johnnie pulled out some dusty old drawings of horses from a chest and thudded them down in front of me. He explained proper confirmation and to never get suckered in by a pretty face. My first memory of real pride was winning that judging contest a few days later.

This new stud colt is a buttermilk-colored dun with zebra stripes on his legs. He has the rump of a quarterhorse and the breeding to win any pasture race in the country. If he turns out to be a racer his name will be "Smoke", and if he turns out to have more cow talent then I will name him "Dusty".

People think its silly to invest in a horse that won't pay a dividend for such a long time, especially in this market. Well, this deal isn't an investment, and its not about a market. It's about the brotherhood of a dying breed. I am the last of the wild bunch who ever attended that country school in Gann Valley. This colt is of the last crop of horses foaled on that ranch. We ate the same dust, we drank the same water, we watched the same sunsets and we felt the same wind in our face.. We are kindred spirits destined to partner up on the journey we call life.

Johnnie's stories and memories deserve a better writer than myself, and the unique era in which he lived will soon become a forgotten chapter in time. Today's kids have video games, Facebook, and cell phones that are smart. Farmwork means setting the A/B line on a GPS and calibrating a yield monitor. How people back then even found out where that week's horse race was without text messaging escapes us all... or it soon will.

[mfs]

Looter, it has happened several times to Memphis and the most recent was in the 1880's, I believe 1883. Memphis at the time was one of the largest cities in the South and larger than both Atlanta and NO among others. It was the 3rd outbreak and most "Whites" left the area for St. Louis, NO, et al. The city had gone bankrupt but several stepped up and realized for bad water and mosquitoes. The admin and some concerned citizens took on the problem. I think the city was reduced to 30,000 and mostly the blacks stayed and care for others. I remember by father some 30+ years ago talking of a AFSCME strike and the area was dark. He told me as dark as the days of smallpox. There was a lot of care of others shown in the early 1880's. The whites left and the blacks stayed for lack of mobility. We all need to take care of each other as you do your horses. We all cannot leave and seek "safer haven".

[looter]

Sept 9, 2011 19:44:15 GMT -5 mfs said:

Looter, it has happened several times to Memphis and the most recent was in the 1880's, I believe 1883. Memphis at the time was one of the largest cities in the South and larger than both Atlanta and NO among others. It was the 3rd outbreak and most "Whites" left the area for St. Louis, NO, et al. The city had gone bankrupt but several stepped up and realized for bad water and mosquitoes. The admin and some concerned citizens took on the problem. I think the city was reduced to 30,000 and mostly the blacks stayed and care for others. I remember by father some 30+ years ago talking of a AFSCME strike and the area was dark. He told me as dark as the days of smallpox. There was a lot of care of others shown in the early 1880's. The whites left and the blacks stayed for lack of mobility. We all need to take care of each other as you do your horses. We all cannot leave and seek "safer haven".

When did the whites run? Long before it hit? Just before it hit? Once it hit? Or after it hit? Therein lies a good lesson.

Thanks.