As we have said many times lately, history rimes… Today´s world looks very much alike the 30s… See what David Rosenberg has to say about it:

“DARING TO COMPARE TODAY TO THE 30’S
Coming off a crash (‘29) and rebound (‘30); aftermath of an asset deflation and credit collapse banks fail (Bank of New York back then, Lehman this time around); natural disaster (dust bowl then, oil spill now); global policy discord (with the U.K. then, with Germany now); geopolitical threats; interventionist governments; ultra low interest rates (long bond yield finished the 1930s below 2%); chronic unemployment (25% then, 17% now); deflation pressures; competitive devaluations; gold bull market (doubled in Sterling terms in the 30s); debt defaults; sputtering recoveries and rallies; onset of consumer frugality.”

As we recommended at the end of 2009 : “We believe that the dominant focus should be on Capital preservation and Income orientation in any form of investment ( bonds, hybrids,Hedges,etc…) and consistent focus on reliable dividend growth and dividend yield.” (http://www.lateralthinking.biz/2010-forecast-new-normal-new-frugal.html)

Be careful out there !!!

As Ray Dalio ( Bridgewater ASS.)  says in Barrons :” There will be substantial nationalization of banks. It is going on now and it will continue. But the same question will be asked even after nationalization: What will happen to the pile of bad stuff?

Let’s say we are going to end up with the good-bank/bad-bank concept. The government is going to put a lot of money in — say $100 billion — and going to get all the garbage at a leverage of, let’s say, 10 to 1. They will have a trillion dollars, but a trillion dollars’ worth of garbage. They still aren’t marking it down. Does this give you comfort?

Then we have the remaining banks, many of which will be broke. The government will have to recapitalize them. The government will try to seek private money to go in with them, but I don’t think they are going to come up with a lot of private money, not nearly the amount needed. “

As we see in the graphic above, The debt service is in the top of the cycle…