yellowcake hunters chase a mirage, page-7

Good pickup followme.

Yes, the US is still in big trouble. The outstanding private debt is something like 40 trillion, down from about 50-60 trillion when the GFC started. World trade is declining despite all the calls to avoid protectionism of the 1930s. Unemployment is already above 1930s levels (using the same metric - it's been fiddled with to deceive). Sub-prime mortgages were the tip of the iceberg. The Option ARM, Alt-A, and Commercial real estate loans are all going to start resetting from the end of this year, with the bulk in 2010-11. The baby boomers are reaching retirement so the US is about to lose their significant contribution to GDP and also take the double hit of them causing a larger drain on the economy in terms of healthcare and social security costs. Even the alternative energy movement, which we're all counting on for PEN's future, carries with it a big burden on GDP. Lower GDP means lower ability to counteract the forces of deleveraging.

I think PEN as a company will be largely insulated from this, but the company and the share price are two very different things. I'm overweight PEN in my portfolio and my biggest concern is not whether PEN is viable, it's whether the world economy is viable and what effect it'll have on PEN if/when it comes crashing down. Even though PEN is an extremely sound company right now, financially, we saw last year that no stock is safe when deleveraging hits. Some of the people getting margin calls on garbage like TLS will have to sell down stocks such as PEN.

dt