Karl Denninger’s summary on Obama’s CNBC press conference:
So as an investor you are reduced to one – and only one – question:
How long will the “bubble view” of both Treasuries and Equites hold up – that is, for how long will people buy both stocks (at ridiculous bubble-spending levels where the government is providing 12% of GDP’s gross amount via deficit borrowing) and bonds (funding said 12% of GDP) before those very same people have sink into their skulls The Admission The President of The United States just made on National Television: WE DO NOT HAVE THE ABILITY TO FUND THE GOVERNMENT TODAY AND STRUCTURALLY NEVER WILL, BECAUSE HE DOES NOT HAVE THE DISCRETION TO DECREASE SPENDING IN THE PROGRAMS THAT CONSUME ALL OF PRESENT TAX REVENUES.
That’s it folks. That’s the only question to ask as a long-term investor.
For long long does the mass-delusion last?
Nothing else matters, because when (not if) that delusion ends the valuations of both stocks and bonds are going to collapse.
Not “dip”, not “recede”, not “sell off.”
Collapse.
