Thursday, May 13, 2010, 4:39 PM
I've been struggling lately with balancing my role as a responsible information scout and commentator on the current economic situation with this sinking feeling that I've been carrying for awhile. There have been a couple of times in the past where I've had a similar sense of apprehension.
One was in the Fall of 2008, when I sent out an Alert advising people to take cash out of the bank due to my fears of an imminent banking holiday. A bank holiday never happened, but a year after my Alert, we learned from Hank Paulson and Mervyn King that we were literally hours away from a full blown banking melt-down at the exact time I sent out the Alert.
The mechanism by which my 'spidey-senses' get triggered is largely based on data and evidence, but there's also a component to it that I cannot fully describe. Mainly I am watching the news with incredible attention, trying to note both what is being said and what is being left out. Looking for the 'negative space' takes a lot of attention, experience, and good old-fashioned thinking. And I am glued to the markets, looking for changes in old patterns, trying to see the first signs of stress before they become common knowledge.
Based on widening credit spreads, a still-unexplained market glitch, a blow-out eco-disaster in the Gulf of Mexico, an already-failed trillion-dollar euro bailout that really wasn't (vaporware, as Machinehead puts it), and the inexorable rise in gold, I come to the simple conclusion that these data points reveal a loss of faith in both our markets and our economic prospects.
Well, if you are running a Ponzi system, there is nothing more important than faith. Which is why I spend so much time trying to gauge the winds of confidence as they swirl and eddy about.
I'm about as worried as I've ever been.
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