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John Hussman: This Is What Worries Me Most
TBI ^ | 7-30-2012 | John Hussman

Posted on 07/30/2012 5:37:53 AM PDT by blam

John Hussman: This Is What Worries Me Most

Joe Weisenthal
Jul. 30, 2012, 5:27 AM

There's a lot to chew on in the latest weekly letter from fund manager John Hussman.

The title of the letter No Such Thing As Risk? is a reference to the latest bout of optimism and belief that in the end the ECB and the other world central banks will do what it takes to save the day.

Not surprisingly, Hussman doesn't buy it.

Where things get really interesting though is down at the bottom in a section called What Worries Me Most where he addresses his underperformance (his main fund has missed a lot of the post-2009 rally) and his new reputation as some kind of permabear, which he steadfastly denies.


So what do I worry about? I worry that investors forget how devastating a deep investment loss can be on a portfolio. I worry that the constant hope for central bank action has given investors a false sense of security that recessions and deep market downturns can be made obsolete. I worry that the depth of the recessions and downturns – when they occur – will be much deeper precisely because of the speculation, moral hazard, and misallocation of resources that monetary authorities have encouraged. I worry that both a global recession and severe market downturn are closer at hand than investors assume, partly despite, and partly because, they have so fully embraced the illusory salvation of monetary intervention.

(Excerpt) Read more at ...

TOPICS: News/Current Events
KEYWORDS: collapse; economy; investing; recession

1 posted on 07/30/2012 5:38:06 AM PDT by blam
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To: OneVike
(Vanity) Why Is The Stock Market Doing So Good, When It Should Be Tanking
2 posted on 07/30/2012 5:49:41 AM PDT by blam
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To: blam

Here’s what Conservatives have to think “What worries me most” about what it is that worries Mr Hussman most,

and that is, if his worries are not just right but prophetic, our philosophical opponents around the world - with their huge tentacles into the world media and academia - will still NOT blame the “regulators” and central banks, they’ll blame “the markets” and the businesses of the investment world.

Just like 1929, ignoring that what the stock markets did merely reflected what had happened and was happening in and to the economy, the popular theme most people still repeat - in their minds - is that the crash of 1929 was PRODUCED by, CAUSED BY “Wall Street”:and the stock markets.

So, ignoring that the fabulous recent creation of the Federal Reserve at the time had not fulfilled it’s mission of preventing very wide swings in the business cycle (had in fact contributed to bad conditions in 1929), the crash was followed with more “blame the investors” and additional controls on them.

More government had not solved the problem so the solution was - more government.

It’s not hard to guess what will happen, who will be blamed, and what the politicians will do, should Mr Hussman prove to be prophetic in what worries him now.

3 posted on 07/30/2012 6:32:28 AM PDT by Wuli
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To: Wuli
politicians like obama are skillfully preparing the stage for a great failure to be blamed on “the rich” and “Wall Street” and corporate greed, and for the solution to be more government to “protect” the middle class

Mobs will be set loose to pillage loot and “eat the rich” as the government marshals even more powers to “restore civil order”

Those of us older, and our parents and grandparents, have seen this before in our lifetimes, in Europe and in China

and this is how democracies die- to thunderous applause

4 posted on 07/30/2012 7:56:56 AM PDT by silverleaf (Every human spent about half an hour as a single cell)
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To: blam

There’s certainly much risk in our US dollar. It’s levitating on mountains of lies told by terrified international fund managers and pegged with a funny, rigged interest rate.

5 posted on 07/30/2012 7:00:33 PM PDT by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
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To: familyop

Buy. American.


6 posted on 07/30/2012 7:03:00 PM PDT by Cringing Negativism Network (America doesn't need any new laws. America needs freedom!)
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To: Cringing Negativism Network

Or better, yet, get ready for the bond collapse and remainder of the default process. It’s going to happen. Besides, give the globalist/socialist beast and her government-linked, globalist business supporters a helping push in their efforts. Avoid buying anything that you don’t really need while becoming more self-sufficient and encouraging the beast to spend, spend, spend.

Foreign product prices will go sky high.

Then, with much smaller government and regulations against small manufacturing shops unenforced after the repudiation of debt, bank closings, office closings, etc., get to real work.

Buy only tools and products that help with personal independence from big energy bills and revenue generation, growing food and becoming more independent. Get ready for the great economic reboot. Then start making widgets ourselves. Then the effete folks can buy from us. ;-)

7 posted on 07/30/2012 7:14:47 PM PDT by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
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To: familyop

No I don’t say wait.

Buy American. NOW.

But only for things you need. Stop buying anything foreign.


8 posted on 07/30/2012 7:19:22 PM PDT by Cringing Negativism Network (America doesn't need any new laws. America needs freedom!)
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To: familyop
"Get ready for the great economic reboot. "

How much time do we have?

9 posted on 07/30/2012 8:44:22 PM PDT by blam
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To: blam
"How much time do we have?"

I don't know. One of the hints (months ago) that has come through the hysteria, is that of the Fed saying that it probably wouldn't raise the rate before sometime in 2014 (spring, I presume). We'll see.

The main radical variables come from the massive efforts of world banks, merchants and governments manipulating currencies. Generally, countries with less manufacturing production, with agriculture a distant second, should have lower currencies. Some historical insight into where we're going there, sooner or later.

...probably a little later (IMO, barring international war of heightened intensity) and with stupendous effect (consequence of propping western currencies to pile up more debt).

If it's a couple of years or so, even that's not very long at all. We'll see how many remaining tricks the banks and governments have up their sleeves, if any of effectiveness. It appears that the spring general deflationary move (dollar inflationary with more debt seduced into bonds) has lost its push after a couple of years. Fuel is still a high priced burden, as East Asia continues to pump out the toys.

10 posted on 07/31/2012 1:00:28 PM PDT by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
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To: blam

Something that’s interesting with regards to economies around historical events, BTW. One would expect our political and business leaders to be trying to calm our US population. It appears that they’re doing the opposite with many-pronged disseminations: fomenting hysteria. They’re rehashing quite a few unlikely worldwide disaster scenarios, threatening crazy polices and so on.

I’ve even watched the firearms and ammunition politics and market debacle from the outside. It’s like watching a bad, morbid movie with fascination. All noisy sides, including leadership, are issuing crazy talk—almost as if they were trying to fulfill their own doomsday fantasies.

There’s the Second Amendment, which I support. There’s also self-defense, which is not realistically discussed. Then there’s crazy talk from many who fantasize that they could be soldiers (done that in years of past training, no thanks, regular sleep and freedom are nice...little police work and security background here, too). Some civilians even call their peers civilians.

Maybe it’s the television that I’ve been intentionally missing for years. Maybe some of our more well placed and vocal peers—all parties and factions—are morally bankrupt.

IMO, people should save food, yes, and money. And have plans for heating homes and the like. Save money. There may be inflation, but personal money will be needed—at least a couple of months’ worth of it. Focus on the essentials.

Oh, and for personal/family security, look more at nice looking barriers (legal, psychological—fences, etc., that grannies past would have loved). Lighting, soft lighting that allows residents vision without being bright enough to bother neighboring NIMBYs. Maybe a brighter light or two that’s switched off except in case of emergency (e.g., home invasion, looting attempt). Put a solar charger on a marine battery or something like that, hooked up to an automotive headlight or two. But don’t violate the local ordinance on bright lights shining beyond properties except in case of emergency (manual switch only). A dog...not a liability dog but one that will raise the alarm. Electronic alarms. Sleep well, and think of good things.

Physical fitness is of most importance. Do what you all can do safely with regards to age, kinds of exercise and the like. Eat well. I’ve discovered, for example, that rice, a little bok choi (Chinese cabbage, only a little in order to avoid digestive discomfort), some eggs and a heapin’ helpin’ of spices all fried up in a skillet is a breakfast that powers me up real good for a while (very physically active for fifties here, much hard work to do). Yeah, I’m weird on food, but that’s a powerful breakfast—even more so with a little meat from last night tossed in. Otherwise, oatmeal. Avoid sugar, especially, and much vegetable oil. I’m not rich and use a mite bit of Canola often—worse than olive but better than some others.

Some of my formerly leery neighbors, who became easily hostile in the past, have been more mellow and offered kindness recently. Avoid burning bridges, to use a figure of speech here. Public affairs is as important for us as it is for military forces. If you’re in a suburb with close neighbors and already have firearms and ammunition for “zombie” attacks or whatever, lean toward wise shotgun loads and/or frangibles (rounds that stop in intended targets). Do more safety and range training. Become much more accurate. Consider adding non-lethal defensive weapons (can keep you out of court, depending on legalities, jurisdiction, etc.).

I don’t need much in the way of firearms or ammo here. Zombies would freeze or dry out very quickly (weather’s awesomely awful), and there are no local zombie services (no nearby junk food, booze, fuel, water, etc.). Fuel’s going to be even more expensive, IMO, because we’re being lied to about countries that produce more every year (feel-good propaganda). Besides, IMO, the world’s not about to end in ways too often described. It’s only going to get more poor and miserable for those of us in the West. Public officials, clerks, teachers, their pensioner friends (not all pensioners but those who tend to gossip about and henpeck their neighbors) and government-supported others will continue to become relatively rich, considering themselves to be the great and worthwhile taxpayers, and more of the rest of us each year, to be deleterious trash (even those of us—like me—who get along fine without welfare).

IMO, health and frugality considerations are most important for most of us. Many more people are highly likely to end up suddenly and very poor. Will they attack the rest of us? I really doubt that. Nearly all of them will simply be unexpectedly and terribly poor. It will probably rain middle class folks again several times, and the jobs won’t come back for a long time.

[Little more preachy perspective there. I understand that many of you are in high crime areas and have that worry. Some of you are already in areas with other recurring disasters—e.g., hurricanes. Crime’s going up around here, too—most of it being a rash of burglaries and other thefts, probably mostly committed by unemployed relatives of political/regulator class folks. Maybe the “SHTF” time has already come, where that sort of thing is considered. But at some point in the process of a depression, the descent into poverty teaches civilizations to be more morally good.]

11 posted on 07/31/2012 1:55:38 PM PDT by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
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To: blam
"We'll see how many remaining tricks the banks and governments have up their sleeves, if any of effectiveness. It appears that the spring general deflationary move (dollar inflationary with more debt seduced into bonds)"

Oops. That should be dollar deflationary, as it's propped up against foreign currencies. Sorry about that.

Prices of gizmos made elsewhere pressured down for the time being (emphasis on time being). Prices of fuel and some other commodities continuing up. Remember that when the dollar wizardry breaks, prices of foreign doodads should go way up. Maybe fuel, too.

Food might go down, depending on the weather, politics and all. More small, new, domestic shops might spring up, if current business, its pocket government and neighbors allow families to be families and to produce in small shops (re. zoning, etc.).

12 posted on 07/31/2012 2:04:59 PM PDT by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
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To: blam

Little mood music to soothe our friends.

Skeeter Davis — The End Of The World

13 posted on 07/31/2012 2:20:54 PM PDT by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
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To: familyop

I thoughts are similar...mine may be a bit more harsh at times.

I worry that the poor aspect with low morals will force a cleansing period.

14 posted on 07/31/2012 3:21:31 PM PDT by blam
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To: blam

Yes to your differing perspective and situation. I haven’t respected that enough while conversing with others here in the past because of the serene, remote and rough climate environment here. Here, the cold, dryness and distances from services are the greatest dangers (remote place at over 9,000 feet, just east of some peaks on the Divide of the Rockies). I’ve lived in much more populated places before (even a dangerous neighborhood once...close to work) and should’ve remembered more clearly.

You’ve probably been to some poor and corrupt countries outside of ours, and maybe outside the safer reservations of tourism in those. Maybe we can remember some insight from seeing how things were there. From one consideration, I guess that how safe we are in such a place depends on who we are and how we relate to the locals. Avoid showing fear, but be humble. And remember that most people in rough neighborhoods are more old fashioned and decent than presented in television and politics. The few violent criminals do stand out, though, and do tend to gather into groups for looting.

15 posted on 07/31/2012 4:16:45 PM PDT by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
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