The God Trade

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The Reverence Episode. The Alchemist @writes_sweeney finds himself exalting at the triple religious whammy of Easter, Passover and Ramadan. But it's Franz Kafka that holds sway. The messiah will come only when he is no longer necessary; he will come only on the day after his arrival. The  Acid Capitalist  proclaims that the mysticism demanded to see the future for risk assets demands that you listen to those pursuing deviant pathways. He offers up his wooly hat as evidence...reject the front pages, listen to the Church of Acid Capitalism.
The editing this week has been excessive, "buts", "umms", " "halting silences", they've all been eliminated. The result being that the boys sound as though they've dropped some speed. Have no fear, wisdom awaits the patient. 
First on the block, the recurring message that society's fear for the planet has left the hydrocarbon complex under-valued, priced for imminent death and yet the impervious Saudi dollar peg sits unchallenged. Acid wisdom states that when the lego bricks don't fit, you have a  giant trading opportunity. 
Where have all the dollars gone? A common refrain at cyclical turning points. Stocks are down, government bond prices have been massacred, just where are those dollars? The Capitalist reveals the perils of turning points. That when dollar assets are destroyed, dollar liabilities remain forever, setting off a mighty stampede to deleverage. The Fed's greatest nightmare. 
In the 1920s the credit system was predicated on gold, by contrast it is dollar collateral that feeds today's eurodollar credit system. Gold scarcity, and the demands placed on society to cover gold deficits in the 1920s, caused the global economy to crash spectacularly in the 1930s. Could the same thing be playing out again with the dollar? Will the touch  point be a renminbi devaluation? Ruminations and distant rumblings are laid bare. 
The Alchemist has discovered Libya. Has he dropped some acid? The Capitalist adopts the Ringo Star note of diffidence when pressured to film the Let it Be album there. But in a world constantly changing, in a world where the giant Australian superannuation funds are suddenly pouring money into UK public sector assets, who is really the mad one.? "If I was responsible for $300 bn in pension assets, why not commit a cumulative $15bn over 30 years investing there? I would write it off each year (15 basis points) but in 50 to 100 years it might look very differently - the power of convexity"
Libya has got proximity. The sustainable energy of the future will not be transported. It's just unimaginable. Better to tap wind and solar in the desert and its sparsely populated hinterlands and relocate  gas guzzling, carbon polluting industries from the northern territories. The boys are willing to conceive of alternative realities. But first, someone's got to provide a robust democracy that can cradle and protect the mammoth investments required. Will it happen?  Life changes, and 15 basis points a year, for the convexity of capturing change? The Acid Capitalist is in.
Gluts of pessimism by economic agents can create scarcities in the future that in turn can feed an orgy of price explosions to the upside. The Acid Capitalist reveals all the skeletons in his cupboard.

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