– I am officially back on the “scared and paranoid” side of life, and while it is not “good to be home”, it is, at least familiar, and there is a certain comfort in that, as at least I know where all the pistols and cookies are stashed around here. But then again, my homecoming is only because I was temporarily in a distant, disturbed place, where even shadows spook me out, and where my nights were spent entirely without sleep, night after night, because my brain no longer waited for me to fall asleep before I started having nightmares about the economy, and I am here to tell you that that is unnerving, to say the least.
My problem seems to be that nothing makes any sense anymore. A story in The Post says essentially the same thing when the author notes “In the past few weeks, the world’s financial markets have acted in a confused, counter-intuitive, bipolar fashion.” Doug Noland entitled his Credit Bubble Bulletin this week “Conundrums.” Mike Hoy writes “I have never seen as many red flags being raised at one time as what I see right now.” It’s everywhere!
I mean, inflation is up, but bond yields are down, which is the exact opposite of what you would expect. In fact, the yield on the 10-year T-note is barely over 4%! Foreign demand for US debt is down, yet prices for debt go up, the exact opposite of what you would expect. Inflation is up, yet gold is down, again the exact opposite of what you would expect. Demand for oil is up, yet prices are coming down, the exact opposite of what you would expect. The economy is slowing, yet stocks are soaring, the exact opposite of what you would expect. It just goes on, day after day, item after item, which explains why I am cowering in the hall closet, gobbling tranquilizers and whimpering “It doesn’t make sense! It doesn’t make sense!”
The Mighty Mogambo speaks…
“Underlying most arguments against the free market is a lack of belief in freedom itself.”
— Milton Friedman