Remember me
You know how we often say that debt destruction (revaluation) is "medicine that cures the disease vs. the drugs that mask the symptoms"? Morgan Stanley (MS) echoed that sentiment yesterday when they offered that government defaults are all but inevitable.A lot of the things we said in the 'Ville seemed a bit far-fetched the first few times around; that Fannie and Freddie were toxic (as far back as 2003), the forthcoming “prolonged period of socioeconomic malaise” (2006), when we posited that financial institutions were technically insolvent (2007), as we pulled back the curtain on the invisible hand, when we exposed the death knell of derivatives, and so on and so on and so on. We like to say Minyanville offers the financial news you need to know before you know you need it, which is why DEPRESSION! stories on CNBC and the sudden shift in newspaper headlines stands out relative to when we tossed it on ye radar. To quote the incomparable Kevin Depew from the summer of 2008:
"Welcome to the Depression. No, don't drop whatever it is you're doing. Don't get up. It's not going anywhere. It will wait. It's just going to sit over here in the corner and read a magazine while you do whatever it is you need to do. A Depression doesn't run hot and fierce like some crazed meth burner. A Depression is methodical, purposeful, patient. It will build a shelter out of tree branches and newspaper, light a small, well-contained campfire and wait you out, brother. While you feed on the empty calories of denial and popcorn, it will quietly gather shards of broken dreams and fashion them into a terrible weapon of blunt force reality. It's a hell of a thing to call this day and age the next Depression. It's dangerous tinfoil-hat territory inhabited mostly by screeching lunatics and volatile nut jobs. But by the time they get squeezed out by reputable folks the whole gig will be up, the circus will have left town."
Now to be clear, I believe we're traversing through a process of price discovery entirely more profound than The Great Depression; after all, FDR didn't know what a derivative was. There are many moving parts -- not the least of which is the government, but also the dollar as the world reserve currency and the global perception thereof -- and my sense is we've got five years of preservation and perseverance followed by profound generational opportunities for those who are properly prepared. With that said, the path we take to get there is more important than the destination we arrive at and therein lies our task at hand -- not only to walk that walk, but to enjoy that journey. Yes, it can be done and it will be done as long as we look "up and out" rather than "down and back," remembering -- but not dwelling on -- our lessons learned. I don't know if any of this is making any sense but don't worry, it will someday. Random Thoughts:
R.P.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
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