The Daily Reckoning Australia newsletter of today is kind of short but what really got my attention was  short term treasury bonds trading at a negative yield. In other words, they cost more to buy than they are worth when redeemed at full maturity, which is completely unprecedented. Apparently, traders think that US bonds are the best place to put one's money, even at a negative yield (guess they figure it just loses money less rapidly??!?) If I was an investing man and had any money, small problem that, no money, I would have gone short on oil in July and had money but alas that trade is gone, and oil has very little room left  to go lower and no fundamentals for a rapid increase near term. Matter of fact it lost another $6 a barrel after OPEC swore on everything but the Bible that it was going to cut production by up to 2 million barrels per day last week. Kind of like the stock market after Bernecke, Paulson and co. pushed the funds rate to zero, small rise and then the continuing plummet. The perceived reality is nobody has enough cred for the market to have a lasting faith in, and things are not even close to being unwound yet. Think the housing bubble is bad, wait until the commercial paper starts to shred.  Oh and BTW, AP asked the largest banks, you know, the billion dollar bailout babies, what they did with our money, and they either said they did not know or they refused to tell. We do know they have been doing everything BUT what the purpose of the money was intended for, which was lending it to people so they could  buy  some of those repossessed houses. What to do, short of applying for a bailout?  I would probably buy some gold futures on pullbacks (gold is even for 2008 if you can believe it, after hundreds of dollar per ounce price swings! But further into the deleveraging/deflation cycle I would start looking at gold stocks on producers, like Newmont gold for example, because they will be bargain basement price after the stock crunch and cost less to buy with  higher upside  return than physical gold), and do option puts (selling a commodity short) on overpriced commodities like copper, uranium etc that are going to crash and burn as manufacturing plummets. The same holds for stocks, one can sell short a company stock, so if you do reverse analysis and look for the weakest of the major players in a sector or industry, you can make money on their way down. The real problem, as these authors note, is that everything seems so obvious that everybody KNOWS what has  to happen in the markets. (which is the sure sign to run the other way, or at least wonder why all lemmings love cliffs...) The real kicker is the timing..., just ask me as I was right on the direction of every trade I made but lost my money because of timing, usually by being too early into a trade. I really think in the short term gold, and gold stocks,  are going to take a hit also, perhaps down to the $600 range before the deleveraging is done and inflation kicks in. One thought I want to leave with you as an investing strategy these people don't talk about, and that is you can make money when companies and commodities are going down, not just when they are going up, so your asset management strategy does not have to be solely preservation. You can recoup your nest egg now and watch for the change in gold and other commodities when the inflation spike comes, which will be more rapid than the oil spike and slump was, in my opinion. I just think deflation is going to continue for the next few months and any money you can spare is better placed on strategic short bets. 

I have read quite a bit on both sides of the argument about how Obama is going to govern, and I am not totally convinced even he knows. From the time he sprang onto the national stage two years ago, he has been the epitome of pragmatism. Nothing has been too large, or sacred, to "throw under the bus" if it seemed to imperil his chances to gain the Presidency. Does that mean he has no guiding star other than power, or that he is truly an astute politician, one of the most stellar practitioners of rhetorical chicanery in modern history? By the way, I do not mean the forgoing in a positive light. Obama is not a typical liberal, in that he is not wedded to any one tenet of the liberal cause, except abortion, and even then there was no real challenge to call him on it(the partial birth fiasco ran more on whether he lied, not the substance of what he was espousing). Faced with an enraged electorate, I think he would have thrown his opposition to the "born-alive" bill under the bus too. So what does this have the do with Charles' column? Just that Obama has dreams, but when they meet reality, as his "withdraw from Iraq immediately!" met the NSA daily briefings, the dreams change to pragmatism. His vision of America is probably not that shared by most Townhall readers, but his ability to effectively Change what he Hoped to...? Pragmatically, it's not gonna happen.

Thank you for an excellent column, Laura, and for addressing what is most on my mind this election cycle, the "what then" question. I have been working with my brother to turn his business around because he made some choices that had the potential to cost him a lot of money yet he did not enact the needed fixes I advised  until after he lost his shirt. Now he is completely changing his business without guarantee of success, a thing that would not have been necessary had he listened 6 months ago to basic business principles. What he did and what our government is doing now is so similar I want to shake somebody besides myself! Why is it that the needed common sense is sooooo absent on both a national and individual level? My brother needed to identify where he was losing money and cease operating in those areas before he could concentrate on profit making ventures, but thought refusing to fill orders (nothing like paying people to buy from you!) he had no legal obligation to fulfill would somehow damage his reputation (or something). Meanwhile, if his business goes bankrupt, he will have NO reputation, and no business. That is where you hit the nail on the head in this article, where we will be at as a nation if we do not engage in the policy analysis and tough fiscal decisions now, rather than wait for the inevitable crisis. Common sense dictates that you cannot spend more than than you make indefinitely, and government produces no goods or services, it just redistributes wealth. Even in printing new money, it actually robs citizens because of the devaluing of the extant money supply. The really fear inducing possibility is nobody will address root causes until the other shoe drops and one of the major governmental entitlement programs goes bankrupt..., then 800 billion will be small change. I like Newt's ideas for changing and fixing our broken economic paradigms in government, but confess that sometimes I wonder if there is enough common sense left in America to make them work. If Obama gets elected by a majority, what little hopes I have are going to be pretty nigh destroyed. Anyway, thank you again for an excellent column, and if you have any ideas on how to get people to invest in foresight instead of pay dearly for hindsight, I would sure like to know:-)