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<\/a><\/p>\nHe travels widely, meets important people and has seven kids, five of whom are adopted.<\/p>\n
I had the privilege of listening\u00a0 to him speak at a dinner last night. He’s “massivelybullish” two to four years from now. His\u00a0 main easons:<\/p>\n
1. The endgame. The U.S. politicians will eventually solve our deficit problems.\u00a0 Europe will also be solved. It may not be pretty. It may or may not be the end of the world as we know. But it will be over.<\/p>\n
2. The pricey, high pensions for overnment emplyees will be cut, and\/or paid more from their salaries. Check out the recent votes in San Jose and Wisconsin. Those “cut the pension votes” will catch fire across the country.<\/p>\n
3. The U.S. will soon be energy self-sufficient, and maybe actually exporting natural gas. We’ll have a balance of trade surplus. Who could have thought that five years ago? Today natural gas in the U.S. is $2. They pay $17 in Japan and $15 in Europe.<\/p>\n
His trades:<\/p>\n
+ Buy Australian government bonds. Short the Aussie dollar.\u00a0 I don’t agree with shorting the Australian dollar. He believes there’s a massive housing bubble in Australia getting ready to burst. I think he’s wrong. It’s big, but not massive. I’m long the Aussie dollar via my bank CDs there.<\/p>\n
+ Go long natural gas. . It may fall to $1.50. Mauldin says he’s looking to buy gas wells — “holes in the\u00a0 ground” — but maybe in 6-9 months when the price falls to $1.50.<\/p>\n
+ Don’t buy gold, the pound sterling, the euro or equities. Says Mauldin, “I don’t want to be long this market.”<\/p>\n
He wonders, as I do, why anyone is keeping their euros in European banks, virtually all of which are insolvent — they lent too much to sovereign governments, who now can’t repay their loans.. He marvels at the Geeks.<\/p>\n
There is already a run on European banks, as euros flee to Switzerland and the U.S. I personally wonder when the massive run will take place. Not all deposits in European banks are insured. Why would anyone have their money in them? Beats me.<\/p>\n
If they start massively printing euros, that will lead to a deflationary recession, which is truly awful.<\/p>\n
He says his friends are telling him it’s increasingly hard to get Euros out of ATM machines in Euros. you have to visit several machines to get a hundred euros.<\/p>\n
Hint: Take American paper money. Many places prefer it. If you were running a hotel or restaurant in Ireland or Greece or Italy, wouldn’t you?<\/p>\n
Mauldin believes, as I do, Spain will default and there’ll be “haircuts” off Spanish government debt. A $100 bond will be worth, say, $50. This will seriously affect European banks which own oodles of government debt. and haven’t written their balance sheets down. Spain will become Greece, he says.<\/p>\n
What about France? Their new socialist boss may or may not find that the country can’t pay for his proposals, like cutting retirement age from 62 to 60 . (He should raise it to 70.) If he rams his ideas through, Oih Veh.<\/p>\n
Concludes Mauldin, “It is cheaper to keep the Euro together.\u00a0 Breaking it up will cost trillions. But will the sovereign euro countries be prepared to give up their sovereignities and form (in essence) a United States of Europe? Note: we don’t have central banks and treasury departments in each of our state capitals.<\/p>\n
Meantime, Jamie Dimon testifies today. He will tell us it’s a blip, no big deal, it won’t happen again and he’s sorry. Ya de ya.<\/p>\n
Congress will try to figure out if it was gambling or risk management. Good luck. I’m still short JPM. I believe there are more cockroaches coming for JPM.<\/p>\n