Saturday, February 21, 2009

Ya Think????

Reuters this morning features this story:

Soros sees no bottom for world financial "collapse"

The essence of which (the "money quote") being: "We witnessed the collapse of the financial system. It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

Soros knows that what we had been living through for the past several decades was not real prosperity. It was a synthetic prosperity built on synthetic wealth, and all based upon everything was more valuable than it really was. A sort of "mark to market" mentality permeated the world economic vision. All leading to the equally false idea that, if you paid $100,000 for a house three years ago, and it was appraised for $200,000 now, you had just "made" $100,000. Which meant, of course that you "take out" that equity and pee it away on vacations and new TV's. I was personally chided by friends and business associates over the "folly" of letting all that equity "go to waste".

To me, the truly amazing - TRULY AMAZING - thing is hearing the various talking heads on TV (or the internet) going on about "the bottom" and so many stocks being such "bargains". I have never seen a group of people living so deeply in denial. What we are living through is a fundamental change in our economy, or rather our economic system. The essence of this is of course the (FALSE) idea that, for example, the value of General Motors was many multiples of the "book" value, because it was a known fact that GM would grow so far in the future. Well, guess what, it isn't. Just like the value of a horse is equal to what it can do for you (pull a plow, for example), the value - TRUE VALUE - of any company is what it does NOW. Sure, you can anticipate growth, but remember that it is ANTICIPATED value, not real, present value.

Only now the world's conciousness has woken up to the fact that this was all ANTICIPATED value. And unless and until the PAPER assets of the world fall back in line with the REAL assets of the world, the bottom will never be reached. The problem though, is being prolonged by the fact that Wall Street, the Business Media, and all their minions have yet to accept these facts, and keep buying (or supporting) the paper assets as best they can. Because they have yet to come to grips with the fact that they were all wrong, and were all willing sycophants in the construction and maintenance of a financial house of cards. So, for all of you in the "Business Media" that are among the multiple millions of the followers of this blog, please hear me...


Now, accept the fact that you are also pretty smart, and have the ability, once you have "handled the truth" to be a part of the recovery - a good recovery built on sound numbers. Have at it, and help where you can, and get wealthy if you can. But don't try to bulls**t us anymore. We won't buy it.

No comments: