what happens to a stock (company) when it floats a bond issue and it goes bad…cost of capital is up…blood in the water for the shorts….it becomes a pariah.

U.S. treasuries will go up generating a push up to all debt rates…worse though it will lead to the final realization that we as a country are bankrupt (not technically because we have our own printing press…and it will run as last resort to keep things going in the face of political suicide to not “do something”) i fear we will lose reserve currency status and panic from the dollar will ensue…

my thought is to buy american stocks of companies that produce commodities priced on the world market…commodities of essentials such as coal oil food etc. I would be skittish of companies with to much overseas holdings as trade wars will likely happen as a crisis response…nationalizations will occur. Gold, some, but remember it was confiscated in depression…the gov’t will do WHATEVER it takes to quell any potential uprisings…have some actual money in your wallet, silver dollars, etc…………..i fear it could get much worse (after all the abyss…is an unfathomable place…black swan events will occur) before it gets better…but a nation spoiled on debt could rise a new and restored…albeit with a standard of living far more comparable to our trade partners.

I think that it is critical for us to come to grips that China will not buy as much debt in the future.

Not only has their source of revenue dramatically decreased, but they also need the money more than ever at home. In addition, for Obama’s plan to work, we must ‘buy American’ more than ever and that will decrease the Chinese bond thirst even further. China will continue to buy debt, but it will decrease just when we need it the most. I challenge anyone to dispute this. It will happen and be front page news.

So! What should you do to plan for it?

http://www.iht.com/articles/2009/01/07/business/yuan.php

Market is not a game with set time limits. Bulls win some bears win some – depending on the time window. But, fundamentals favor one over the other in certain time windows. I believe now they favor bear case. Also, bulls vs. bears is not a debate like left vs. right, nor do you need to give equal time for both.

At the risk of sounding defensive – I am not a permabear. I made the most money as a bull in the bear market of 2000-2003 by buying beaten down out of favor stocks. I will do the same this time also, but the time is not right, yet.

if you have been following my intraday comments, you would know that while I am bearish on overall market, I have been saying some of the beaten down stocks are forming a base and could rally – the likes of CBG, DDR, GGP. Ironically, these are commercial real estate plays and am very bearish on the sector. GGP is almost sure to file for bankruptcy. But I am bullish on the stock.

That said, what I say may not be what you want to hear, but that is how I see it. If you are bullish and want to hear what you want to hear, just tune to CNBC..

And some people are waiting at SPY=89 to buy stocks. Idan used to be very bearish, and last week, he actually wanted to buy at SPY=90.

With CITI group right in the middle of the stage, I would not consider any long.

SPY could go under 87 again if CITI is in trouble. Watchout XLF all the time. If it broke 11.46, where is the next stop?