SHORT AMERICA!

11/7/07
This is an excerpted (and slightly enhanced) note I sent to a good friend in response to his inquiries and FASB 157 and my outlook on the market and on things in general:

11/11/07

I know very little about FASB 157, other than that it's going to cause a lot of write-downs and mandate a lot of transparency in areas that he financial guys would rather leave opaque. I just wonder how these guys are going to come up with defensible values, especially for Level 3 assets. I would suppose the FASB would look askance at marking to model.

People have forgotten how bad bear markets, and recessions, can be. I saw an older guy at a party last night who swears by Bob Brinker, and Brinker says things are going to be just fine, that we still have plenty of upside. The guy told me he's sticking with Brinker and staying just about fully invested; he's in his late 60s. I told him that, despite Brinker's phenomenal record, there's a first time for everything. I just don't press things any more. People can ask for my advice, I give them my opinion, and leave it at that. There isn't any percentage in doing any more.

It seems like all the "experts" are telling us the same old story, that everything will be fine in the long run, that you just "have to be in stocks for the long run." I, on the other hand, simply don't believe in this country any more, its corporate leaders, its financial leaders, its political leaders, and, most sadly, its people. Further, even if we had all the best people in the right places, we have a lot of years of profligacy and decadent overspending to work our way out of, and it's going to be a long, hard slog. As a people, I don't think we have the heart for it any more. So after the coming crash, when I am going to look to put some money back in the equity markets, I am going to be heavily invested overseas. As an American who loves his country, or at least loves what his country once was, it's hard to say that. But we've become a nation of mind-addled, consumption driven, irresponsible nihilists. Those in charge are there not because they have transcended the rot that has permeated our society, but because they have abetted it. There's no future in that.

I know the old expression: don't sell America short. It's practically a sacrilege to say this, but I think it's well past time to get very short this once great country. The role we play on the world economic stage, that of consumer of first, last, and always resort, whose chief industries are financial services (i.e., figuring out a way to get other people to pay our bills) and entertainment (i.e., poisoning everyone else’s culture with the jejune excerebrosity we call movies and television) can easily be filled by just about anyone else with a surfeit of pomposity, a shortage of shame, and an ample bankroll, built up by the thrift, virtue, and wisdom of our ancestors, to squander on stultifying self-indulgence. It’s over for this once greatest of all nations, and we have no one but ourselves to blame.