I was thrilled to see that Tirex Resources Ltd is "accepting submissions for
its "Golden Slogan" contest. The entrant who submits the best 'Golden Slogan'
for Tirex will be awarded five ounces of gold. The company is looking for
creative minds to submit a short, concise slogan that reflects the company's
success in establishing Mirdita as a potential gold-rich VMS district",
whatever and wherever in the hell that is.
Regardless, the lure of winning about US$4,000 in gold for a few minutes of
writing appeals to my Lazy Mogambo Nature (LMN), and soon I came up with the
perfect slogan to win the contest. "We had a lot of success in establishing
Mirdita as a potential gold-rich VMS district, whatever in the hell that is,
because governments and central banks around the freaking world are
creating so much money and credit so as to finance massive deficit-spending
that it is now accelerated to terrifying degrees undreamt of heretofore, as
unwieldy and pretentious as that is to say, and so inflation in consumer prices
in response to this tsunami of new money will be equally as terrifying, while
the deflations of the other asset bubbles as they go predictably bust from so
much stupid leverage that losses are thus magnified 20 times, 30 times, 40
times or more, and that is why people go to gold, go running to gold, go
stampeding to gold, screaming in fear at the economic destruction raging all
around them, and then all this demand makes gold and gold mines suddenly worth
a lot of money as people realize that government promises and central bank fiat
currency ain't worth diddly-squat!"
After 10 or 15 seconds of "polishing" my timeless prose, I mailed off my
winning entry, and then spent the rest of the afternoon throwing up, retching
out of panic and fear, as my head was spinning, spinning, spinning after
spending the morning writing about the cataclysm descending upon us and
buttressing my argument by looking at my old graphs and charts - the workaday
stuff to discern things economic - and I see, alas, that things no longer make
any sense whatsoever. Everything overwhelmed by all that new money.
Naturally, I heap all the blame on the Federal Reserve and the US Congress,
where it belongs, and to heroically cope with the paralyzing terror of such
monetary and fiscal mayhem, I square my manly shoulders, sneak out the back
door and quit work early, perchance to calm my brittle nerves by visiting
someplace dark and cozy where a gentleman like me can get a drink - perhaps to
entertain some scandalously under-clad hustling "hostess" honey young enough to
be my granddaughter by buying her "champagne cocktails" while she tells me how
handsome I am until my money runs out.
As I get down to my last few dollars, the initial buzz of the alcohol is gone,
replaced by a drunken melancholy at our economic fate, made more bitter by
seeing Amanda's fawning adoration turning cold as she notices my dwindling
fortunes, and I realize that I really am stupid to be spending my time like
this, just like my family always says.
Then, suddenly, I realize that I am not an evil, creepy old man, clumsily
lusting after young ladies and making a fool of himself, but instead just plain
stupid! Wonderful! Hahahaha!
Anyway, this revelation that we are all just stupid is almost attested to by
David Tice of the Prudent Bear Funds, who writes, as concerns hedge funds, "It
now seems silly that investors actually thought the multi-trillion [dollar]
hedge fund industry could somehow post robust profits even in down markets",
which I think is pretty incredible, indeed, as most stock and bond funds hardly
keep up with inflation and taxes in a bull market, and most individual
investors actually lose money over the long-term! Hahaha!
Mr Tice is too smart to be drawn into some weird conversation with me, which
will probably end with me screaming, "We're freaking doomed from all of this
Federal Reserve creation of new money and credit! Buy gold!" and accusing
everyone who disagrees with me of being stupid and out to get me.
Instead, he continues as if I wasn't even there, "Apparently, expectations were
that savvy fund managers would quickly reverse course - liquidating long
exposure and increasing shorts - if and when markets began to turn."
I see where he is going with this, as the essential flaw in this theory is that
it assumes that the guys who are taking the other side of my shift in my
portfolio from long to short are some stupid bunch of yahoos who will say, "You
want me to take the other side of your short by going long, even though the
market is down, and has been going down, and every freaking technical indicator
that anyone has ever thought up says the market will continue going down?
Hahahaha!"
Actually, this theory brings up a lot of old memories for me, back to when I
was a fledgling executive, already in over my head, but using my boyish charm
and rat-like nature to successfully blame others for all my failings.
Anyway, this one time I let some defective machine parts slip through and get
delivered, and since I did not want one MORE damned thing to go wrong because
things had been a Big Freaking Fiasco (BFF) since the day I freaking walked in
here, I didn't say anything, figuring that the customers were a bunch of stupid
yahoos who would never even notice.
It turns out (and you might want to write this down) that there are not that
many stupid yahoos anywhere, either amongst the company's customer base or in
the financial markets, as Mr Tice seems to confirm when he says that "Not
unpredictably, liquidity evaporated almost immediately as fear provoked selling
from fearful investors, leveraged players facing margin calls, derivative
traders dynamically hedging exposure, and others desperately trying to hedge
market exposure."
But, since nobody trusts anybody since there is no reason to do so and every
reason not to do so, then ain't nothing getting hedged, disproving yet another
bit of stupid neo-Keynesian econometric claptrap upon which their whole
preposterous theory depends, which, by this time, is so discredited as a theory
that it is embarrassing that, as a country, we still believe such stupidity.
And that brings us to my usual admonition to buy gold, as it is nobody's
liability and everybody has always trusted it, and always will! Whee! This
investing stuff is easy!
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.)
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