It is rare when I read something with which I agree 100%. Here is such a case, this succint interview with Jeremy Grantham (in the Globe & Mail).

You draw comparisons between what’s happening today and the start of the Great Depression.

We’re in that 1929-30 window, where we’ve had a shock to the system. But the secondary effects - less consumption, lower profit margins, lower GDP, lower employment, lower global trade - are beginning to work through the system. They’re steadfastly ignored because they’re still quite slight. It takes a year, 18 months [or] even longer for some of these effects to show up.

As the article notes, Jeremy, like me, got out of the NASDAQ bubble way too early. However, it is encouraging to note that his analysis and mine come up with the same answers.

Don Coxe’s May Recommendations. Don’t blame me, blame him.

What’s the hard - contrarian - trade today?

• Short equities, especially tech
• Short oil and commodities in general
• Long bonds
• Long the US dollar against the euro
• Short the yen against the dollar

Since you ask, yes, I’m feeling a bit lucky.

Crude oil futures are pushing $120, $119.90 last I saw.

The Fed started to lower rates on August 17th. of last year, 2007. Since then, commodity prices as measured by the CRB index have increased about 40%, the price of oil alone is up from $70 to $120. In other words, another financial bubble is being born, this time in commodities. When will these guys realize that cutting interest rates is the problem, not the solution?

One of the major problems in 1929 was a collapse in commodity prices, which had been maintained at high levels by pools, formed to counter the low farm prices of 1920-21. High prices led to over-production and eventually the pools could not maintain their prices. Farmers failed, and the country banks which had been financing them could not repay loans from the money center banks. It seems incredible to me, but we could be setting up for something similar to happen. Especially with Mr Bernanke, the so-called expert on the Great Depression at the helm.

Edit: Costco today announced it will limit the purchases of flour, rice, and cooking oil in New York City and on the West coast.

As a confirmed bubblephobic, I exited my metals and energy positions last summer. Of course they’ve gone on to new highs by a lot. But my bubble detector went off. Too much unanimity, too many TV ads and retail speculation.

So, for the record, I think commodity prices are cruisin’ for a bruisin’.

And if as and when commodities start to collapse then we might well see the stock market go too.