Friday, December 11, 2009

Dust in the Wind

At some stage all the Zombie banks are going to come home to roost. In the immortal words of Kansas, all they are is dust in the wind. There is a lot of bad debt floating around in Zombie banks, that no one will be interested in purchasing or refinancing, even with the preponderance of cheap credit that is again flushing through the system. This is a different sort of cheap credit boom. It's cheap credit for the risk adverse. There is no doubt that we are in the middle of one of the greatest dead cat bounces in history. 60% run in 12 months, what a joke. If you haven't moved to a market neutral or slightly short position then you are dreaming. What's the assumption? Are forward p/e ratios of 18 too low? Too much cash, no where to put it, Treasury yields are zero to negative, Gold has gone crazy.
China has built up a ridiculous amount of over capacity and as the world turns to China to pull them out of the depths of depression, their economy will surely start to falter. 8% growth is unsustainable.

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