Are We Approaching An Epic Failure?

Posted by Hoe Brothers Investment Mgmt - comment by Dennis Gartman

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Are we approaching an Epic Failure

Are we approaching an Epic Failure

Americans love great stories. In fact, they are downright infatuated with them.

THE DOW INDUSTRIALS: Cast any trend line you wish to cast, but it is either broken already or in the act of being broken. Today shall not be pretty; indeed we fear that today will be uncommonly… even frightenly….ugly. We’ll not be surprised to see the Dow down 250 or more today. – Dennis Gartman For a Trial Subscription go to The Gartman Letter

Are We Approaching An Epic Failure?

This shouldn’t come as a surprise to anyone since the art of storytelling has been embedded into the DNA of this country from day one of the American Revolution when our Founding Fathers decided that being governed without representation was no longer tolerable. Over the last 235 years, this country has had the blessing of being able to add to its repository of remarkable stories with the influx of immigrants from around the
world that brought along with them their knowledge and cultures to this melting pot, creating an eclectic amalgamation that adopted the best attributes of each culture, while slowly discarding anything superfluous. In flowed new ideas, technological breakthroughs and resilience and out went ignorance, racism and lack of respect for the fellow man. The stories that we wrote in this country were so inspiring, that we even exported them to the rest of the world with the advent of Hollywood, but now it looks like a different type of story is being written. It has become a horror film that has us on a journey toward a metaphorical, abject town named Epic Fail.

Hollywood wishes that they could write a script as frightening as the one for Epic Fail.Art often imitates life, but why any artist would want to imitate this story is beyond me. This is a story of the next chapter of the United States. It is filled with politicians that are reliably-unreliable in the face of a gigantic tsunami of global sovereign debt (and BP oil), financial crony capitalism (“We don’t break laws because we pay our lobbyists to make them!”), baby boomers retiring en masse to encounter a Social Security-Medicare- Medicaid-ponzi scheme, geopolitical strife with Iran and North Korea, a China real estate bubble, global food and energy shortages and much more.  Heck, there’s even an Icelandic volcano to boot!

While our good buddy Helicopter Ben1 needs to find out that there’s more to life than printing really, really, really ridiculous amounts of money, at least he’s providing us with the parchment on which the citizens of the United States (and the world) can finish writing this story. I’m not sure how this collective story is going to end, but let’s take a look at the obstacles we’ll be facing and how we can prepare for them so we don’t end up in a situation where we get caught between a rock and a hard place . . . or in this case a Mayan calendar and 2012.

Items on Our Radar

Regrettably, the typical investment path cannot be mapped out in Google Maps. We can’t ever know all of the total events that lay between you and your financial goal(s), but we do know that a contrarian, value investment philosophy that focuses on capital appreciation while garnering additional income can be a compass toward achieving respectable returns. While the number of outstanding risks are too numerous to be counted, listed below is a sample of what we believe are material areas that pose risks to your sanity, health and financial portfolio.

1.Sovereign Debt Crisis – European PIIGS, UK, Japan and the USA
2.USA Crony Capitalism and a Political Re-Awakening
3.States and Municipal Budget Shortfalls:Swimming in Oceans of Debt
4.Baby Boomers:Will Golden Years Be Golden?
5.Elephant in the Room:The Commercial Real Estate Debt Bubble
6.Peak Oil:Even the Rappers Get It
7.China:The Great Imbalance
8.Other Blips On Our Radar
9.What We’re About

While at first glance, it appears that these situations are all mutually exclusive of each other, we want to remind our investors and readers that life cannot be simplified into grocery lists. These situations are inter-related within one large connected system and the outcome of one will undoubtedly have consequences on others.

1.Sovereign Debt Crisis – European PIIGS, UK, Japan and the USA

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