Saturday, May 15, 2010

Book Rooms For The IMF In Sacramento this June

What do you do when you have time on your hands and don't get your way? Ask the Greeks. Ask our illegal alien population. Soon you will be able to ask those with their hands out in Portugal and Spain. Why riot of course. Tell the news media the world will end and children will be harmed. Threaten not to vote for anyone that cuts your entitlements. Why would you vote for the SOBs that cut your six weeks of vacation? Riots, riots, riots and we're going to see more. Right here in the good old USA.

California is supposed to have their budget approved in mid June for the 2010-2011 fiscal year. The Governor and the legislature are miles apart. Arnold says all the low hanging fruit has been picked as well as the medium hangers and the high hanging fruit as well. All the easy cuts are history. Republicans refuse to enact tax increases or new levies/fees. Cutting programs that have loud constituencies is all that remains. What do loud constituencies do? Complain to the media and riot.

June ought to be a difficult month for the markets. California's problems aren't new or surprising, neither were those of the PIIGS. But no one worried until they were upon us, then panic set in. First with traders, then politicians. Expect the same to occur this coming month as California deals with its budget and angry recipients and taxpayers. Arnold & Co will hit close to home. It's not some foreign land, it's part of us and it will remind us of all of our own unsolved problems.

If markets don't like uncertainty, then we ought to see some significant downward pressure on stocks as the drama unfolds. Here's the sequence of events: talk of program cuts, recognition of huge deficits and debt, riots, pleading to Washington for help, panic and stock plunge, buckets of money from DC, promises to cut and tax enough to get California's house in order, equities rebound significantly. Bet I'm right.

So, even though they will go down in value also, I'll stick with my income stocks and MLPs, gold and silver positions, long-term hold speculations, and short positions. On the first big bounce back day from last weeks decline, I am going to pitch my index funds and buy a few more puts. I should do more, but I'm often wrong, especially with timing so I always have to hedge my bets. But the future sure looks clear and the picture isn't pretty short, nor long term. Too much debt everywhere and an investor class that has started to recognize that fact and is becoming more fearful daily.

Invest in Sacramento hotel rooms as they will have high occupancy as the media and Obama's henchmen come to town.

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