Nice country - shame about the motorways. The reference of course is to Germany and its appalling autobahns - a kind of parallel universe where the laws of physics clearly don't apply, especially to the drivers of fat Audis in torrential rain. Work is being done - more than was evident a year ago in fact, presumably as a result of the government's desperation for re - election, but it's a drop in the ocean really. Or a drop in a thunderstorm perhaps - the oil - laden spray that comes off the (generally broken up) road surface from the overwhelming lorry traffic is just horrendous. So much for the great German "economic miracle"! And as for all the 150 mph Audis (the current weapon of choice for sure), maybe the idea is that the autobahn condition is simply part of Frau Merkel's "scrappage" scheme and a way to keep big new cars flowing out of showrooms. Not funny actually - there were morons hammering down the outside lane at well over 100 mph - some without lights - in minimal visibility and often within a few metres of the idiot doing the same thing in front. And of course the laws of physics DO still apply - the drivers (and hopefully there were no passengers in either vehicle) of at least two cars we saw, had most definitely swapped their big fat Audi for another type of long black vehicle that wouldn't be taking them to a showroom to buy a replacement car any time soon......was IW scared? You bet! "Terrified" would be the word. Anyway, the whole mess resulted in a 2am return home on Wednesday morning and a very, very grumpy start to "normal service" a while later - if you happen to have received a rather curt response to your mentoring questions these past few days, you'll know why! Oh - and if your name is "Micha" and you drive a blue, Latvian registered lorry, you are truly the stupidest man on the planet......

Anyway, that's the first rant for today - on to the next one. The password to access these ramblings will be changing on Monday 29th June (before the next WICS and video updates are published because Colin can't do these till Monday evening - so this is probably the final WICS for some of you.) Yesterday I emailed everyone whose "no cost" sub has expired, inviting them to continue - but, as ever, there have been a pile of "bouncebacks" of the message - generally involving all the "usual suspects" like Ukonline, AOL, Supanet, Hotmail etc etc - and also for some reason this time, Australian based ISPs. Anyway, if YOU received access at no cost BEFORE 1st March this year and have NOT received the relevant invitation to continue, please check your junk mail and also please refer to Colin's excellent "mail management" information on the TTEW website. If you still can't find the message but want to continue receiving WICS and the video updates, please email me before next weekend. As regards those of you who are already "fully paid up masochists", you can expect to have received the new password by Tuesday evening 23rd June - again, if you haven't, please check your junk mail etc as above and then contact me if necessary. Password changes are necessary - obviously - but they are always a total pain due to so many "difficult" ISPs - and perhaps also to the forgetful, who from time to time haven't emptied the meagre storage permitted by many such ISPs - quite a few bouncebacks are saying "Mailbox full".... OK - end of rant number two!

Onward to matters more "economic" and to begin today's ramblings, here's a recent email from "Andrew" and my response thereto - it's an interesting question indeed:

"Hi Ian
As the inflation vs deflation debate rages on - the deflationists argue that there is huge destruction of money due to defaults etc. But I do not understand how a default is a destruction of money. If I borrow 12 000 quid to buy a car and then buy the car and then default on the 12 000 - yes it is true that the 12 000 is no longer on the balance sheet of the bank but the original 12000 is in the hands of the car dealer who will then in turn go and spend it on goods. The money printing replaces the 12000 on the bank's balance sheet but the original 12000 is still in the system. So we have double the money, once the second lot enters the system that has to be inflationary? Would welcome your comments.
All the best
Andrew"

My reply was as follows:

"Andrew - in that example, yes, the dealer spends the dosh - but please refer to "Bastiat" in the WICS search engine as regards the overall benefit to an economy.
Also, the notional £12k that the bank then MIGHT get from say the Fed, via printing money, is only that - a notional amount - because the bank won't lend it out again IF indeed it actually gets it anyway - once bitten, twice shy etc etc. Banks are frantically trying to pay the Fed back, not try to get more from them (or BOE, ECB, whatever). Thus, "double" will NOT enter the overall equation.
'Deflation rules', basically! - and that is actually great news for anyone with cash. You won't need £12k the next time you want a car - you'll get the same one for £2k - and I am not joking. There is no viable "inflation" argument that meantime holds water - that will be a few years away yet".

Moving along to "stable doors" (use the search engine if you're not sure what is meant here), we see that the Obama one has given "stronger regulatory powers" to the Fed to "control" banks. Ho ho ho - that'll be the same Obama (it's not a common American name after all) who plans to issue another $3.25trn of US Treasury debt by September, and let his buddies at Goldmans get the $zillions of commission for placing it then? Goldmans' executive bonuses for 2009 are already being called "the biggest in the history of the company" - regulation, schmegulation eh........

Back in the UK, nae peerage for Mervyn the BOE governor then - he wants banks that are "too big" to be cut down to size and get no taxpayer assistance - not the same tune as Wee Allie the no longer pretend chancellor is singing then. Well done Merv - stable door wide open or not! (Not that it will make a hoot of difference of course - Wee Allie might have wriggled out of his puppet suit but he's still in thrall to "the system" and he doesn't really understand the problem anyway - only one [extremely unlikely!] politician seems to have a grasp of what is going to happen - see somewhere below for more, in the email from "David"....)

Next, how about the latest excuse from the UK's Office of National Statistics (ONS) anent the most recent drop in retail sales - it sounds like somebody from John Lewis' must have been consulted: "An unusually cold Spring" is seemingly the culprit this time. Still in the UK, it appears that it's not only MPs that are up to no good as regards their finances - Sport England - some kind of quango - has "misplaced" about £20m of taxpayers' cash in some kind of (alleged) slush fund. The dosh has apparently vanished. Tut tut, Sir Trevor.......And as regards other slush funds, maybe the first cracks are appearing in BAE's hitherto impenetrable armour in that respect, with an Austrian court's decision to prosecute some aristo or other who allegedly did a fair old bit of bribery on behalf of that company. (More via the search engine, if you can be bothered - "BAE" will suffice.)

Onward - and the "green shoots of recovery" so frequently mentioned in these ramblings, are still growing according to just about everyone except Mervyn - a dangerous time indeed for "investors". Sainsbury's and GKN are just two of the many companies that will undoubtedly try to take advantage of the growing "feel good" factor among the sheep, with their "rights issues" coming at "the right time" to grab your dosh if you're a bit slow on the uptake - in fact, "slow on the uptake" might be a really good idea...... The IW definition of "rights issues" can be found by typing that into the search engine.

Another amusing wee snippet noted yesterday - you'll probably know that Formula One racing is in a bit of a tiz currently, with some of the (best) teams planning to break away and set up their own thing, independent of Messrs Mosley and Ecclestone. Mosley's comment thereon was "They're just trying to grab power and money." Gosh, surely not? After all, Mosley and Ecclestone wouldn't dream of doing anything so tacky.

OK - one more email then, occasioned perhaps by the fact that the use of anti depressants is "soaring as recession bites" according to a newspaper headline? - this one is from "David" and it's worth sharing methinks:

"Dear Ian,
I was thinking - why should you be the only one to have the pleasure of rambling? As a woodpecker is laughing merrily in my orchard, I thought I'd do a little rambling myself.
The other day I was listening to Any Questions. You may be surprised to hear that one of its speakers made me think of you. Or, more accurately, what you said the other week: "what has expanded the most since the end of WW2? How about credit, and its mirror image, debt?"
The speaker was Frank Field, still thinking the unthinkable. I think you might relish this, on a question about government cuts: -"This year and in future years - way into the future - governments are going to have to borrow £ 220,000 million a year to balance the books. And it's wrong to say we did this sort of thing after the war. After the war all our allies were in surplus and willing to lend us money. All our allies now - G8 - are all heavily borrowing money. And my worry is that the money markets, the debt market, will not support this weight of debt. If that happens then the collapse comes very very quickly. Because the day that the debt is not being shifted, it's reported back to the government, and the government have to make decisions before the markets open at something like 8 o'clock the next morning. And we'll have cuts, undreamed of now, as panic measure. "This is the time for radicals to be alive."
This sounds perilously like honesty from a politician. What do you think of that?
Moving along (to use a favourite phrase of yours), I can't help a little frisson of amusement every time you report (slightly indignantly - indignant - moi?! - IW) that, yet again, you are being accused of being a pessimist. As a pessimist myself I see nothing dishonourable about pessimism, though it's certainly worth trying to rid oneself of it. Have you read an excellent book, "Learned Optimism", by Martin Seligman? (Its central idea is that pessimism is commonly learned from a parent and, if so learned, can be unlearned; and optimism can be learned in its place.) Seligman workout that optimism is a key qualification for insurance salesmen, because they can deal with the string of refusals much better than pessimists; so when (on his advice) insurance companies changed their recruitment bytesting candidates for optimism/pessimism, the turnover of staff dropped substantially. No doubt optimism is also a key qualification for traders, as the optimist will take losing trades in his stride, whereas the pessimist will start saying "I'm useless at this, I'm always getting it wrong, I'd better give up". So the mere fact that you're a trader suggest that you're an optimist. Of course, if you felt like it, you could take a little test in the book, which will show where you stand on the optimist-pessimist scale. (So you would have further ammunition to throw at readers, e.g. certification as an optimist by a leading psychologist).
But there's a link with politicians here, which you might not welcome:
Seligman established that whether people vote for the politicians who sound the most optimistic, even when what the say is pie in the sky. And he tested this by predicting a real election result successfully. Perhaps one's natural cynicism about politicians should be aimed at the electorate too..
Sadly, though, it has to be said that optimism works by the brain deluding its owner into thinking that he/she is unusually talented in all the activities that matter (and that the activities he/she isn't so good at really aren't that important). So the optimistic brain is no more moral than a politician (I thought you'd like that), as is shown by another excellent book: A Mind of Its Own, by Cordelia Fine. But, as the book points out: "don't feel angry with your vain brain for shielding you from the truth. There is in fact a category of people who get unusually close to the truth about themselves and the world. Their self-perceptions are more balanced, they assign responsibility for success and failure more even-handedly, and their predictions for the future are more realistic. These people are living testimony to the dangers of self-knowledge. They are the clinically depressed."
Cheerful stuff!
Best regards,
David."

Here's my response:

'David - not sure whether I should thank you for this or not.......I am sorely tempted to reproduce it in WICS in fact. Amusing & interesting stuff - never thought I had much in common with Frank Field but you learn something new every day! Cordelia Fine should certainly know about depression......I did a quick email "round robin" within the family re "clinically depressed" but the response was (scarily) consistent - "Nope - you're definitely not clinically "depressed"......clinically "insane" would be much more accurate."
More importantly, I'm pleased you have a woodpecker in your orchard.
Ian'.

The serious point of course - and the real reason for reproducing the above correspondence - is that "psychology" matters hugely in the trading environment, because it's "mass psychology" that moves prices - it really is that simple. I had a quick look once at the books mentioned by David - the Seligman one is interesting enough in my view, but as for the other one.........aaghhh... As far as trading goes, the Mark Douglas book mentioned here previously (The Disciplined Trader) is the best for this kind of application - tedious read though it is!

Anyway, that has been a mighty long ramble today - on to some charts and first there are three of "triangles" - all schematic and not relating to any specific chart. They're here in response to a request from "Howard", who wanted to see these, minus all the clutter and potential confusion of an actual chart. I hope they prove useful. Then we'll update Spirax Sarco from WICS of 26th April this year - it seems to be getting some pretty good horizontal support. Finally there's a look at the Nasdaq100 index, last featured in video clip 2480 - it fell out of the wee wedge and now has a bit of support along the bottom line of the bigger channel. Interesting!

OK - that's all for today then (whew!) - the next videos will be on Tuesday evening 23rd June, not Wednesday as usual - and the next WICS will be published on Monday 29th June, not Sunday as usual - due to my webmaster's other commitments. On that note, all the best for the future to those of you who won't be resubscribing, and I'll see the rest of you masochists here again on the 29th!

Ian.

'IMPORTANT NOTICE: These WICS charts are for EDUCATIONAL PURPOSES ONLY. They represent only MY understanding of what is happening in the market for any particular share, stock, commodity or index. In NO circumstances should they be construed as recommendations to trade. If I choose to trade what I see, that is MY decision. YOU must, in turn, come to YOUR OWN conclusions about what action, if any, YOU might choose to take'.