"Friday, June 30, 2006
“If you fake the funk, your nose will grow.” — Bootsy Collins, The Pinocchio Theory
Today, we see the Pinocchio effect in play in it's full glory. The Wizards tried to slip in some more benign language, I suppose to test the waters? Understandable, given that they feel they want to control the situation. They sure don't need Toto pulling back the curtain. Instead they were hit upside the head with a two by four.
Just about every crack up boom trade from gold to gasoline is soaring, and the USD is being pounded. This is not just a Risklove play now, but has all the hallmarks of a true crack up boom, where all kinds of players get involved in a classic flucht in die sachwerte (flight into real goods). In that scenario, participants worldwide just get weary of monetary authorities (Wizards), "faking the funk". The risk now is a true panic, and then a full blown crack up boom is underway. This is the moment of truth for the Wizards, it's time to quit faking the funk. I'm now seriously wondering if an intra meeting hike might occur? It sure seems necessary. Mark my words, if this keeps up much longer, you will hear talk of it.
For investors, this is a difficult moment. If a crack up boom, flucht in die sachwerte panic really gets underway and out of control you can't just sit on Treasury bills and US Dollars, you'll be wiped out. Crack up boom trades themselves are also extremely high risk, so folks have to guess right. One can already see clear evidence that the Wizards are pulling liquidity, and that trades including commodities and foreign currency are very popular. One would expect them to be popular, given the Pinocchio monetary policies that have been employed. Which is exactly why the Wizards need to get their heads out of their asses."(snip)



Reply With Quote

Bookmarks