Tuesday, October 27, 2009

One of these things first

There's clearly another cheap credit bubble building across most asset classes. Debt is cheap and thanks to the intervention of governments readily available. There is/are massive carry trades pushing up the commodity currencies (AUD, NOK) and pushing down the much maligned USD. This carry trade will unwind and when it does, down goes Oil, Gold, Equity Markets and of course the AUD and NOK.

All asset classes have been picking up in the last 6-9 Months and it has been cause by cheap credit. Nearly every OECD economy is shrinking, so how can asset values be rising? It doesn't make any sense.

This house of cards will fall down again. Everyone has forgotten about the last time it happened and the next time will feel like the first. Unfortunately some of the master criminals of the last dance are still alive and kicking (S&P, Moodys and Fitch) and telling us precisely that nothing is wrong and it's time to leverage up and bet the farm.

Buy land with cash and sit on it.

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