Check the data after WW2 and in 1980 etc.

Not just confidence, but opportunity: the rest of the industrialized world had been bombed flat or was in major hock with war debt. The US was sitting pretty behind its liquid ramparts, and more than ready to take advantage of the situation. Not to mention that 2/5 of the world’s population (China, India) basically decided to sit out global competition until the 1990s.

We’re starting to look an awful lot like Britain in 1948-9.. And China’s looking an awful lot like the promising, energetic bastard child of America and Singapore…

I bought my positions from 125 all the way down to 85, looking back over the past year and figuring a combination of technical levels and fundamentals would send it back up. Like a rookie, I’m now “all in and praying”. Can’t fight the Fed. Or whatever other market forces other than reality are at work here.

Boston is FULL of empty buildings. Space for rent. Vacant. Space for lease. It’s very unsettling to see so much space available in previously prime locations… These are all non recourse loans that were underwritten on forward looking, proforma-based 1.10-1.25 DSCR’s and they’re going to default. Those bondholders are going to get slaughtered. Are people expecting a bailout of the CMBS market too?

How many mistakes are you supposed to make on the way to success? 1,000? 1,000,000? This market’s getting me there in a hurry… my mistake quota, not the success.

If I had to go anywhere, I would have somebody else drive my car away, and assuming it did not explode upon starting, steal a random temporary vehicle (the additional criminal charges are trivial to what he already faces), and come back to transport me to wherever I wanted (and was allowed) to go.

I believe that the reason the Fed is panicky is that they don’t think they will be able to reverse it.

Whereas controlling inflation is merely a matter of 1) stop printing money and 2) crank up rates to punish those with inflationary expectations; there is no strategy that I know of to encourage people who are too scared and shell-shocked to take risks and spend more than they absolutely have to.

That is the danger in deflation — it is a feedback loop without a way to short-circuit it. One must endure and somehow support the masses of sheeple, so that they will eventually, over time, come to lose their fear and become (a little) adventuresome with their money again. That can take a pretty long time, and more resources than any nation possesses.

In the Great Depression, there was the decade of debt write-downs and pay-downs, in an environment of crushing unemployment and gloom, despite numerous public jobs programs to defeat the unemployment (which did do that job, but did not restore confidence). Then there was WWII, where people earned a strong measure of confidence after defeating a military power that had pretty much whomped the rest of the planet.

Nobody knows which of these things, or indeed, if all of these things together allowed the Great Depression to finally end, with people focussing on other concerns than the dismal economy. Depressions can (and have) gone on a lot longer than a decade. I read somewhere that the collapse of the South Sea bubble around 1720 put England into a depression that lasted about 65 years.

Widespread confidence is a lot harder to create than the emotional climate needed to stop inflation. So central bankers everywhere always err on the side of inflation, rather than deflation. Because once deflation sets in, nobody knows for sure how to turn it around.

So be afraid. Be VERY afraid, and hope like hell that Bernanke can print enough money, and hand it to the people instead of the bankers, so that we can have inflation. Don’t ever wish for even a little taste of deflation, ’cause a little taste can wind up drowning you in it.

REITs are benefitting from lower interest rates and the idea of “inflating away” debt (ha!!).
There will be another great re-entry point for SRS but right now it’s a falling knife.

I think you can be pretty sure that this bear market is not over, however.
The VIX is about to find support at 50, so it may not be too long before we see more volatility.