Still too much confidence

Still too much confidence
By: Hans Lysglimt

Markets fell hard yesterday, they are up today, there is still too much confidence out there. The con men on Wall Street have been given some time to catch their breath and come up with new conning number schemes. The bull market, and the new cons build confidence on each other. Confidence that is unjustified and that will be shaken out eventually. Observing this irrational bear market rally go through 10-20-30%, we not think it might go even further. Remember that most long investors are now up 20-30% from the bottom, they are breathing a sign of relief. They are telling themselves “phew – that was a close bullet, but I dodged it because I am so smart so and so…”. When markets will fall hard back, they will feel the pain back, take to reason, or outright panic, and sell. So when the markets eventually fall back 10% they will fall another 10-30% fast, good and hard. Calling the turning point this time will be hard, we are still waiting.
Your safe bet would be very long put options, but they are expensive – as they should be. Keep looking though.

The dramatic fall yesterday tells us that the confidence is veneer thin, it scratches off easily.

Hans Lysglimt
Oslo, Norway
April 21. 2009

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One Comment

  1. Håvard
    Posted 22 April, 2009 at 5:11 am | Permalink

    I think I have said this before, but I am still wondering if this is a standard re-consolidation of the banking industry or if it is something more. It started out as it has done many times before, with massive build-up of debt. Everyone that can read could see this crisis coming except the banksters which mean that they didn’t want to see. That again leads to the conclusion that they set the stage for a crisis and let it develop into a crisis as they have done time after time over the centuries.

    As this crisis is far from over it is to early to conclude in any way. But if this was a standard re-consolidation I would expect that more banks should have failed by now. Instead we see that the banksters have total control over governments and make all the decisions, USA being the most extreme example. And despite all the warnings they continue to pile up debt while top politicians like Gordon Brown and Nicolas Sarkozy fight among themselves to become the favorite pet of the banksters in Europe. And I would really like to know what they have done to make Obama sell out the American people BIG TIME. Of course he knows his faith will be sealed much the same way as J.F. Kennedy if he doesn’t do and say what the banksters want, but is it better to be the ultimate Judas in the history of mankind?

    Anyway, now that we have finished phase one of the debt-crisis by piling up more debt things have calmed down for a while while we wait for phase two. And of course there will be a phase two, because so far the banksters haven’t really used the crisis for anything. And by that I mean that governments and people already owed them more money than they can ever hope to pay back, so what is the point in making people owe them 2 times more than they can ever hope to pay back.
    Well, the political bankster puppets around the world scream for a new world order, international “regulation” of finance markets and even a new world reserve currency. And in the background the godfather of all banksters, Dominique Strauss-Kahn in IMF, contradict central banks and governments and tell us how bad things are and that things will get even worse. This will of course make IMF (and the World Bank) look like oracles and the natural source to turn too when things really go off the rails the way IMF foresees, or should we rather say, know.

    This will be the result of phase two, the day that the governments and people of the world turns to the IMF and World Bank and beg them to take on the role as the most powerful organization in history of mankind. A World Central Bank will be born. This will be an organization with complete immunity to the law of any country and it will share only the information it wants to share, even when asked specific questions from government representatives around the world. But most important of all, it will crush any company, government or country that does not follow its wishes.

    But this sounds very grim, so how do you make the people of the world ask for such a monstrous organization to enslave them. Well, you make a really bad debt-crisis become the mother of all debt-crisis by pretending that more lending will solve the problem. This excessive lending will have probably have more bad effects that I can imagine in my wildest dreams. But a strong bet is that a huge number of countries around the world will default on their debt, including big economies like USA, UK, Italy, Spain. This is the kind of crisis it will take to push into existence a monster like a World Central Bank. Like a multistage rocket it takes a multistage crisis to get escape the “gravitational pull” of individual nations laws and liberty. Welcome to a world enslaved in debt by a little group of banksters on Wallstreet and London City.