Why is Jon Corzine not in Jail?

MF Global stole hundreds of millions of dollars from customers. Will Jon Corzine go to jail? No, he is well connected. He is doing fundraisers for President Obama. Will anyone go to jail for Solyndra? No, they are well connected. Will anyone resign in the US govt. for supplying deadly weapons to the Mexican drug cartels? No, they are well connected.

Occupy Wall Street communists are angry with the rich. For them, it does not matter how the 1% became rich. Did they steal customer's money like Jon Corzine or did they become rich through honest work like Steve Jobs? It does not matter to the Occupy Wall Street. They only understand rich versus poor. They do not understand honest versus dishonest. How long will a society survive with such morals?

Where is the rage against Jon Corzine?

ISDA insults our intelligence

Why is a 50% haircut for Greek debt not a credit event? ISDA can think that we are all idiots but markets know better. Sovereign CDS markets will be shut down by the markets and interest rates on bonds by weak European countries will rise. The euro-crisis is about to become much worse. The whole thing would have been so funny if it wasn't so tragic.

Time now to trade momentum

The crack-up boom has begun. Interest rates are still kept at zero by the fed.
We are two years into the business cycle.

Time to trade momentum is upon us. In the middle business cycle, there is no point in being a contrarian. I am taking profits slowly from earlier investments. From tomorrow, I will also be trading momentum with tight stop losses.

A crack-up boom or bust

About 3 trillion in short term debt will roll over this year for the US government. Add another 1.5 trillion of revenue deficit to it. About 4.5 trillion will need to financed this year. Good luck trying to get that financed in the market at interest rates near zero. This game is getting interesting. If fed monetizes a large part of it, US will be in a crackup boom. If it lets interest rates rise and lets markets finance it, the economy will go into tailspin. It's possible that it will try a combination of both. That will still lead to a massive crackup boom in certain sectors, followed by a bust few years down the line. But the early part of the crack up boom always feels good.

It's going to be a rocky ride. I am fastening my seat belts.

Indonesia, 1998 and Egypt, 2011

What really happened in Indonesia before the overthrow of Suharto?
What really happened in Egypt before 2011 before the overthrow of Mubarak?

There was a stock market boom driven by loose monetary policy rather than fundamentals.
When the bust came, food prices were high and currency was in crisis. In the new business cycle, money was no longer going into stocks but rather into daily food items.

Did you know that Egypt was the best performing stock market in the world in 2005 and it did well in years previous to the financial crisis?

Egypt stock market returns in 2005

Pakistan to enter hyperinflation in next few years

After Zimbabwe, it appears that it is Pakistan's turn to enter hyperinflation.
The budget is double the revenue. It is unsustainable. Army gets bulk of the budget and
is a state within a state. Spending cuts cannot happen. The economy is in a downward spiral. The fall of Pakistani Rupee will only accelerate and hyperinflation will be obvious in the next few years.

Investment Strategy

I am sharing my investment strategy. Please share yours.

My investment strategy -
A business cycle lasts 4-7 years. Go long on certain assets at beginning of the business cycle. After 3 years into the cycle, start selling those assets slowly and raise cash. As the fed raises interest rates, slowly buy government bonds. By buying bonds, you are just front-running the fed because fed will be buying it when the recession hits. Keep selling the assets and raising cash as the cycle matures.
Watch for credit contraction. Once you are sure that we are in credit contraction, go short with some money for extra points. But cover your shorts every 1-2 days.

When fed has done lowering rates, sell the bonds. Slowly, start buying certain assets.

Every business cycle is different. So, you may have to buy different assets in different business cycles. Also, you don't have to be exact in your timing. Just approximate.