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"very few countries which has invested in a credible security apparatus (e.g. military) and I believe that in the long run lead trumps gold and human nature." Great Point. I think thats why the market is wrong to ignore Iraq, NK, Russia, etc. The real world always matters. When the US loses...

Governments need a standard in order to prevent complete currency debasement. Right now the world is in all out print-a-thon to see who can debase theres the quickest. There was a reason why the gold standard existed.

The next financial crisis will have the distinction of being the first to resonate in financial markets around the world. I wonder how long we'll all get along once it hits. Can't wait to see who is on the other side of some these interest rate swaps and CDS

The only way a market can function is when private investors are putting there own money at risk. Once governments get involved any ability to price risk is gone. Thats where we are in the bond market and its a sad sign.

I guess I should clarify. I said the yen because it is largest of the carry trade currency and would therefore have the largest impact if it were to rally and cut into the returns of funds using it to juice returns.

Do I get credit for my call that a yen rally would stop the market?

You would think that a slow housing market would slow down the demand for credit, but so far it hasn't. LBO's, mergers, sharebuy backs, structured products, commercial property are all lending a hand. Problem is that all of it is nothing more than financial transactions. There has been almost...

Its a bifurcated economy. The lower end and middle class is not doing as well and are worried about the future. It certainly showed up in the election results. Wal Mart is just another confirmation.

Every major spread across the world is so compressed that stocks are the only place left to grab any kind of return. Interest rate spreads non existent, credit spreads new lows, no currency volatility, and option premiums are tiny. However, the yen could stop the rally if it has a major move...

I know exactly what you are talking about. I think a hidden downside to electronic trading especially in the futures is the instant access lto the market leads to chronic overtrading. Sometimes I leave TT off all together in slow markets like we have now and will phone my orders to the desk...

Good luck, considering vol in every asset class in the world is the lowest on record. Interest vol is non existent. Its as if time has stopped.

I wasn't alive when the gold standard was still in place and I realize that it is not perfect either, however it is perfectly clear why it existed. The current experiment has been tried over and over again and it ALWAYS fails. It seems like we are getting closer to that moment.

I meant not in a panic

Im talking about a panic. I'm just saying that gold would continue to outperform the major averages just like this year.

Thats why gold it the way to go for the longterm. They will print until there is something on the order of Weimar Germany. The pabst idea that shit could quadruple is not that unrealistic

Remember housing still has the benefit of good employment and a great interest rate environment.

You can always print money. The fed has said it numerous times. True nobody ever wins, but you can do it and in desperate times they will print like crazy.

Then I assume that in some of the hot markets there is a long way to go?

Maybe there is a problem in housing, but the point is how will the government respond. They will print money like they have never printed before. Bozo Bernake is already on the record as the biggest money printer on earth.

The only caveat to the home vs gold arguement is that there is a much smaller supply of gold and precious metals. In chicago supply for houses is exploding.