Juggling Dynamite

A worthwhile Bloomberg clip today with Jim Chanos, founder of hedge fund Kynikos Associates Ltd. Chinese banks are” extremely fragile” because the lenders do not have enough capital to offset bad loans. Watch the interview here.

Over-levered people and institutions are continuing in their predictable dash for cash; prompting mass liquidation across most risk assets including gold, silver and other commodities.  What is black and white and red all over? Our highly correlated global risk markets in the midst of a cyclical bear market.

Losses to date are likely just a warm up phase to the bulk of the downside which typically comes after we receive retrospective confirmation of the global recession. I believe we have already started into recession in most countries, but we are not likely to see official confirmation of this until a few months hence looking back on present data. The Canadian dollar–the bastion of much over-confidence the past year–is also rightfully getting its comeuppance:

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

For those frozen in the midst of this, or still sipping the hold and hope koolaid from their long-always advisors, it is still not too late to wake up. Please remember 2001-2002 and 2008.   Denial is painful:

Today I went off-line to get caught up on some less public work.  I feel remiss now when I don’t blog for a day; so many readers tell me visiting JD has become part of their daily routine.  Sorry to miss.  Cory posted some excellent updates on the US dollar, Gold, and more, which you can see here.  (Hopefully you have noticed that links to his latest 3 posts are listed on the right of the blog.)  Risk surveillance seems a particularly relentless master these days.  What is that about no rest for the wicked?  Talk to you tomorrow…