Shun the Frumious Bandersnatch

"Beware the Jabberwock my son!
The jaws that bite, the claws that catch!
Beware the jubjub bird, and shun The Frumious Bandersnatch"
Lewis Carroll (Through the Looking Glass and What Alice Found There, 1872)

Barack Obama is The Frumious Bandersnatch. Bush and the Republican and then, in 2007, Democratic congress began a debt induced euphoria which ended badly in 2008. Obama, aka The Frumious Bandersnatch, has more than doubled that debt. It seems he expects doubling an already unsustainable burden to alleviate said burden. Hmmm.

At the time of my February posting gold was selling for around $1075. It's now $1242. Generally what's happened is a growing realization that the monstrous creation of and then spending of money by the forces of government has created few jobs and minimal economic vitality. What it has created is an elephantine and still growing deficit with no prospect of a rational idea coming forth about how to deal with all this.

Stock volume is now largely the product of high frequency trading actions which can trade tens of thousands of shares in nanoseconds. Swings of hundreds of Dow points in a single day are now commonplace. The various stock markets appear to be casinos rather than a way to invest in America's future. There seems to be no willingness by the majority in congress to do anything about this atrocity.

As a general rule, there are some exceptions, if you're not a rotten person, a feckless, self-serving, inferior individual when you enter politics your either become one or you get out. And the higher up you go the worse you're likely to be. For evidence of this simply watch the news.

So, what to do to protect yourself. Obviously you can vote the current crop of snollygosters (google the word) out and hope the new gaggle will do better until they too are corrupted then vote them out as well. Not a satisfactory answer but things are as they are.

In the meantime a positive step is to buy more gold and store it in your safety deposit box. Gold thrives when governments and central banks act irresponsibly and this current government and central bank is the most irresponsible in our history. It exceeds the Carter/Democratic congress/G. William Miller troika of the late 70s which heretofore seemed impossible to "surpass".

A second investment is oil in the form of the ETF "USO". This has its' drawbacks due to the fact it "rolls" the expiring front month future's contract on oil into subsequent month(s) so there are times when it doesn't reflect the day's oil price movement. Still over time it does pretty well in duplicating the price moves in the oil market.

Oil is getting more difficult and expensive to extract and the demand for it is growing. New oil discoveries cost somewhere around $70 to get out of the ground so it's unlikely for the price of oil to drop much below that for more than brief periods.

You get more leverage by buying, don't want to say "investing in" because I feel the stock market is a casino, oil companies but companies are often run by bozos (see BP), and are subject to political meddling, unforeseen events (see BP again) and general stock market fluctuations. When the market tanks most stocks are dumped no matter the underlying fundamentals because of program trading.

Last time I mentioned platinum, palladium and silver. Am less enamored with them now as they have industrial uses and I feel the global economy is in for extended problems. Platinum and palladium are about where they were in February. Silver's about 5% higher I presume because of it's relative cheapness compared to the other precious metals. The Dow is about 5% lower.

Interest rates keep dropping. The 10 year Treasury note is currently yielding 2.98%. Who would accept 2.98% return for 10 years? Someone who is petrified about what's going to be happening in the country/world for the next 10 years. The good news is our deficit is now being funded very cheaply. We'll see how long this lasts.

I could make an argument for treasury rates going even lower, a deflation resulting from the unwinding of waaaaay too much leverage, or screaming upward, so much future treasury issuance that much higher rates are needed to attract buyers.

Bottom line we are being governed by unfathomably incompetent political leaders and an academic Fed chairman who gambled that creating a trillion dollars by pushing a button would avoid a deep recession. For a time it looked as though it might. Now it looks like it won't. Worse still is all this new debt piled upon all that old debt and sluggish, at the very best, economy has combined to create the specter of a looming catastrophe. Our grandfathers learned all about this 80 years ago and now because we were too stupid to comprehend their lesson we are in the process of repeating the mistake. (See Rule of Life #3: Experience may or may not be the best teacher but it's almost always the most expensive.)

Buy a lot of gold, some oil, maybe some silver if that's all you can afford, vote out the snollygosters in November and wait for succeeding kings.

We're All Doomed (WAD)