Juggling Dynamite

We have been writing about the anatomy of secular bear markets for the past 10 years. They are a much different beast than a secular bull as shown in the chart below. The Italian stock market is retesting the same level as its 2002 and 2009 bottoms, with Spain following close behind. Will this bottom hold for a third time? or does this secular bear push to a fresh cycle low? The next few months will tell. This also bodes poorly for other global stock markets (like North America) which are highly correlated (with some time lags) to other global stocks, and are still some 40-50% above their prior cycle lows.  Decoupling anyone?

Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

A reader sent me this clip and I think it is refreshingly honest about the state of the world’s current problems. For all the academic dissertations, and political posturing, the problem is remarkably simple: too much debt, can’t be paid back.  Whether it is on households, corporations, governments or central banks, more debt is just more debt and it will not fix a debt crisis. Debt holders have to face the fact that they are not getting back a loaf.  And spenders have to face the fact that they are much poorer than they think and cannot afford all that they have come to expect.

William White, Chairman of the Economic Development and Review Committee, Organization for Economic Co-operation and Development (OECD) speaks on panel, entitled “Which Way Forward: Reflections on Global Turmoil and the Role of Markets, Governments, and Civil Society” at the Institute for New Economic Thinking’s (INET) Paradigm Lost Conference in Berlin. April 12, 2012.  Here is a direct link.

Billionaire investor George Soros speaks about Europe’s sovereign-debt crisis. Soros called on Europe to start a fund to buy Italian and Spanish bonds, warning that a failure by leaders meeting this week to produce drastic measures could spell the demise of the currency. He spoke yesterday in London. Here is a direct link.