That's what they HAVE been doing for years. And not just bankers.MarshAviator wrote: I propose that bankers adopt the pirates creed: "Take what you can, give nothing back".
It would be the first honest thing they have done in years.
John
Financial topics
Re: Financial topics
John
dow:base through history
Here is a better chart for the Dow instead:
Red lines are the 5%,50% and 95% levels. The observation about these levels is so obvious I don't need to say anything.
But on a slightly different topic...
Notice the slide that continues for 20 years until WWII was won and the US hegemony became the rule. Specifically, this was a victory for capitalism after an era of uncertainty.
This seems obvious, whereas the vague concepts of 'stimulus' seem pretty half-baked to me at least.
Then there is another 20 year decline from the 60s to the 80s during the communist ascendancy, which failed to materialize and so the markets came back up on another victory for the free-market system.
I don't think this is totally about earnings because the indices are not individual companies, but reflect the ebb and flow of a free market system. To me, a regular guy with a regular job, a military background and a ritzy ditzy education, I see a waning faith in the continued existence of free-market capitalism. This would be consistent with every other broad market decline in US history. The crisis war will not solve the problem, but a victory in a crisis war for the side of freedom will.
- dow_adj.jpg (58.57 KiB) Viewed 7957 times
But on a slightly different topic...
Notice the slide that continues for 20 years until WWII was won and the US hegemony became the rule. Specifically, this was a victory for capitalism after an era of uncertainty.
This seems obvious, whereas the vague concepts of 'stimulus' seem pretty half-baked to me at least.
Then there is another 20 year decline from the 60s to the 80s during the communist ascendancy, which failed to materialize and so the markets came back up on another victory for the free-market system.
I don't think this is totally about earnings because the indices are not individual companies, but reflect the ebb and flow of a free market system. To me, a regular guy with a regular job, a military background and a ritzy ditzy education, I see a waning faith in the continued existence of free-market capitalism. This would be consistent with every other broad market decline in US history. The crisis war will not solve the problem, but a victory in a crisis war for the side of freedom will.
Re: Financial topics
Another chart with even more history: (sorry if this is getting tedious)
Purple is using estimated monetary base from a loglinear model using the years 1918 to 1930 as estimators.
Red is a loglinear model fit to the whole dataset.
Again, this is not a short-term predictor, especially since the scale of the treasury and fed actions to rapidly expand the monetary base are unprecedented in US history, as is the credit contraction. Nor is it a long-term predictor because we have no idea what will happen geopolitically.
Why did I use M0 instead of credit instruments? Because it is the most basic measure, the data is available and any other measure of money supply is subject to interpretation.
- dow_adj_1901.jpg (105.96 KiB) Viewed 7818 times
Red is a loglinear model fit to the whole dataset.
Again, this is not a short-term predictor, especially since the scale of the treasury and fed actions to rapidly expand the monetary base are unprecedented in US history, as is the credit contraction. Nor is it a long-term predictor because we have no idea what will happen geopolitically.
Why did I use M0 instead of credit instruments? Because it is the most basic measure, the data is available and any other measure of money supply is subject to interpretation.
Re: Financial topics
I'm not going to read much of this because there is a lot of chasing rabbits down holes. The Fed reports the monetary base because that is the amount of liability the Fed has to the system. The mess is the fact that private credit can't expand any more on a normal basis and it has little or nothing to do with PE's and other crap that is being talked here. The goverments really can't sustain anything and Bernanke wasn't born smarter than 99.9% of all people, maybe not over 50%. People are in positions like this for reasons other than brains. In any case, his philosophy is that if something is bankrupt, you might as well see how bankrupt you can get it before it collapses. Irving Fisher was wrong about the economy when the depression started and he was wrong about what caused the depression. The only way they are going to stop a deflationary depression is to create a Weimar Republic in the US. There are more noses cut off in the ditches of leadership around the world than can be counted. We have global warming supposedly, which is probably another attempt of governments to gain control of and brand their people like they are cattle and they are going to do something about it, but in the meantime they are going to put out stimulous packages that make certain that as much in the way of pollution and destruction of natural resources as possible goes on. We are going to solve an insolvency problem with an even greater insolvency. We are going to take 3% dividends on stocks while the corporate bonds of most stocks are paying 10% to 15%? Some group of academic idiots seems to believe that you are supposed to compare stocks to treasuries. I am glad they don't raise livestock because they would put female pigs in with bulls and cows in with boars. There are 900 million miles between what is represented by a risk free asset as treasuries are and entities whose bonds are trading as bottom of the swamp junk.
90% of the time in history, stocks have been cheaper than they are now, but you would think a bonanza was to be had for those that would pile in while those that stayed out would be left crying. 20 years from now we are still going to be trying to get out of this trading range, which is being pushed as a bargain price. In the meantime, those that get in are going to lose everything they have. As John likes to repeat, we are at a stage that the world changes in ways that few are going to be able to follow. A collapse in demand for goods and credit is just part of the equation. I would venture that 50% of the Nasdaq and SPX would be in bankruptcy right now if not for government bailouts and ignored accounting fraud. I read today that the government is threatening a Texas financial firm while turning a blind eye to the NY firms that are in much worse financial shape. The morals of the country have gone to hell to the point that the entire country is nothing but a bunch of blind gamblers who know nothing about value. The owner of the Texas Rangers and Dallas Stars is out of credit, not that he ever put a dime up to buy anything. His bankers will be nicer to him than they will be to you and I, you can bet.
90% of the time in history, stocks have been cheaper than they are now, but you would think a bonanza was to be had for those that would pile in while those that stayed out would be left crying. 20 years from now we are still going to be trying to get out of this trading range, which is being pushed as a bargain price. In the meantime, those that get in are going to lose everything they have. As John likes to repeat, we are at a stage that the world changes in ways that few are going to be able to follow. A collapse in demand for goods and credit is just part of the equation. I would venture that 50% of the Nasdaq and SPX would be in bankruptcy right now if not for government bailouts and ignored accounting fraud. I read today that the government is threatening a Texas financial firm while turning a blind eye to the NY firms that are in much worse financial shape. The morals of the country have gone to hell to the point that the entire country is nothing but a bunch of blind gamblers who know nothing about value. The owner of the Texas Rangers and Dallas Stars is out of credit, not that he ever put a dime up to buy anything. His bankers will be nicer to him than they will be to you and I, you can bet.
Re: Financial topics
Consider the situation where you are wrong on the former and right on the latter. Think about it.mannfm11 wrote:The goverments really can't sustain anything and Bernanke wasn't born smarter than 99.9% of all people, maybe not over 50%. ... The only way they are going to stop a deflationary depression is to create a Weimar Republic in the US.
I'm not an economist, but I did study global energy balance radiometry at MIT. Global warming may be a problem, but a small increase in CO2 has almost no effect on heat capture (infrared transmission). The focus on "carbon emissions" is total BS.mannfm11 wrote:We have global warming supposedly, which is probably another attempt of governments to gain control of and brand their people like they are cattle and they are going to do something about it, but in the meantime they are going to put out stimulous packages that make certain that as much in the way of pollution and destruction of natural resources as possible goes on.
Yes, and the chart shows that. Look at it. Before Roosevelt, the Dow oscillated from 10 to 40 and after Roosevelt, 5 to 20. Note that this change did not take place in 1929, but 8 years later in 1937. Similarly today we have a crash in 2000 and then a systemic change 8 years later. I don't know what the new oscillation will be around, but I'd guess much lower, 1 to 4 maybe? Just watch. When we go to war, the monetary base will increase 8x while the markets will increase 2x and we'll call it a recovery because we'll be back to the numbers at the peak, nevermind that the real value has dropped to 1/20th. Also, unemployment will drop because the formula drops people out of the calculation after a year or so and GDP will be way up because of the inflated prices that government pays for stuff.mannfm11 wrote:20 years from now we are still going to be trying to get out of this trading range, which is being pushed as a bargain price.
The point of the chart is to say that if you look at the real numbers adjusted for monetary base manipulation, you can see graphically what's obvious to any 90-year-old that you talk to; that prosperity took a nosedive in the 30s and never recovered. We're now taking another one, and we'll never recover from it. Maybe this is why only 37% of adults under 30 think that capitalism is better than socialism. This is our crisis generation. http://www.rasmussenreports.com/public_ ... _socialism
The Deflation - is impossible in fiat money system
Hi StilesBC,StilesBC wrote:Malleni,
The vast majority of what you hear about "printing" isn't actually printing. It is fiddling around with numbers on a screen. You need to understand the difference between money and credit (Geld und Schuld. Es gibt ein grosse Unterschied). We have been tricked into believing that they are the same thing. For decades they were the same, because debt was "liquid". Now it is illiquid. Creating more of it does nothing.
Even if it was attempted to actually print physical notes on a scale that would have some overall impact on the total supply of money and credit, you need to have the demand for those notes to be used for accumulating assets in order to create inflation. If the Fed creates notes and gives them to the banks, they will just sit there. Nobody needs them to carry out their activities. If the Fed just shipped the money to every American (which is preposterous and likely illegal), people would just take it to the bank and pay off some of their debts. The bank would have all the money again, and send it back to the Fed.
There is only demand for physical currency at a certain proportion to the size of the entire economy (~5%). The problem is that debt is 400% greater than the entire economy. It's like pissing in the ocean. Sure, if you piss enough, you might start changing the sea levels. But it's not going to create Mel Gibson's Waterworld all over again.
Sorry that I do not answered before, but I was quite busy those days.
Yes.
I understand your stand point, but for me it looks like you would not want to see situation from another one.
Besides all these ridiculous comments (NOT yours) - which appear sometimes on this forum and the "mother site" like:
- "somebody ... somehow will bail out us ..." - (of course - USA is state of question... )
- "the United States of America (US Treasury) can default on its debt - but USD will remain strong..."
.... I think that you are not in those nonsense too deeply, as some...
(Perhaps because you are not an American - but Canadian citizen.)
The text: (China daily - Who will 'feed' the US?):
http://www.chinadaily.com.cn/bizchina/2 ... 8783_2.htm
(please try to understand that - influent people OUTSIDE US do not think as US citizens...)
1.
I am giving you a text OUTSIDE from American paradigm thinking.
(The "American paradigm thinking" is - "we (Americans) are the World. If we going down (even if we deserved!) - everybody going down!"....
Of course you are clever enough to understand that WILL NOT happened! "Others" experienced huge problems because of American misguided economy - BUT will also find the way OUT... undoubtedly.
2.
You are (unfortunately) so fixed as many on this side on the "credit destruction".
That - automatically (according "deflationists") - mean "monetary deflation" because they understand each sort of Deflation - as Monetary deflation... AND sice the "credit is same as money" - that shoul be the one "monetary deflation". (Or this "very ugly one" (according deflationists of course!) - similar as in 30-ties last century)
Of course - this is NOT true! AND everybody can see it until now!
Unfortunately, the crises is quite complex, and the main cause (the US government(s)) even if they are the main guilty - try to camouflage the real situation and deepness of it.
- If we looking just on the "credit destruction" - that YES.
You have right.
It means a huge "deflationary" power which try to press PRICES (!) down.
If PRICES (!) of housing, commodities etc - falling down - it does NOT mean automatically "the monetary deflation".
It means "DEFLATION" in the prices of housing (commodities?) - but NOT monetary deflation.
Definitely not.
(Even US government (with President Franklin D. Roosevelt) was simply proved it in March 1933 when they NOT just "brake the deflationary spiral" in the time of COUPLE WEEKS(!!!) but actualy started huge inflationary spiral at this time.
Simple measures, as.... - taking the United States government off the gold standard – effectively confiscating all investment gold from US citizens at a 41% mandatory discount)... With simple words - fiat money "printing".)
The Deflation in prices of houses - would continue for sure. Those are simple - overvalued! If you would like to call it - as "deflation" - OK... be my guest.... But I would rather call it "market correction".
On the other side - if you looking of a company which "survived - deflation"...:
- it will probably need credit too
- the credit is expensive those days
- since they have not much competitors after many "defaulted on debt" and on the other side their production is become more expensive - this company can ONLY increase their prices!
Outcome - is clear. Monopoly positioning and increase of the prices... even in "deflationary environment".
How you call it?
In simply words (as paraphrase to title on your blogg) - the Deflation (monetary one) - is impossible in fiat money system!
- your last statement about "demand for physical currency" is in my opinion - quite right!
What FED making now - is NOT to "print money out of the thin air"...
They CAN NOT do it at all!
NO.
They "printed" REAL money!
The "money out of the thin air" can only be printed by commercial banks - but they do not giving any credits anymore! They fight for - survival!
On this blogg many people just "forgetting" that increadibly much money is used by State too. (Espetialy in the case of the United States of America!!!... With all those "democratic wars", control and financial and military to other states, "removing of regimes".... and so on!!! Somewhere I found that 70% of all citizens in USA are dependent of - military!!! Scary. Isn't it?)
So Privat, industry and banks are OUT of money!
On the other side - THE STATE (!) desperately need "real money" and FED - helping it diligently!
I think that ONLY problem for now is that US biggest note is 100$ bill (Am I right?)...
To achieve goal (i.e. to bail out the State debt (Treasury)) - FED need to go at least to the 1000$ bill!
How you could call it?
- Regarding "non-American" view on the GFC - I sent a link from China Daily and with comments of one influent Chinese and Japanese on it.
As sooner Americans understand:
1. they are NOT the "center of the World", but unfortunately "Center (and cause) of the GFC"
2. that people in the other parts of World MUST to think to best of THEMSELVES (NOT for "American best"!)
3. that process of - Crush of US Empire is irreversible - and it is started for while ago.
American citizens (as well other citizens of the Planet) can only positioned themselves better.
Nonsense of type I read on this site:
- buy US Treasury (they are "safe investments")...
- US was "first in the crises and will be the first - out."...
- USD will "remain strong" (even if the State US collapsed)...
-.... and so on....
CAN NOT HELP one average American investor or citizen!
Those just blinding them!
Thank you for me.
Good luck.
Re: Financial topics
http://mises.org/story/2892malleni wrote:
CAN NOT HELP one average American investor or citizen!
Those just blinding them!
Thank you for me.
Good luck.
Last edited by aedens on Mon Apr 13, 2009 3:57 am, edited 3 times in total.
Re: Financial topics
http://mises.org/story/2892aedens wrote:malleni wrote:
CAN NOT HELP one average American investor or citizen!
Those just blinding them!
Thank you for me.
Good luck.
Meanwhile things are warming up.
Then,
Gao Xiqing, an adviser to then-Chinese Premier Zhu Rongji, said in 2000 "that if you look at every one of these (derivative) products, they make sense. But in aggregate, they are bull----. They are crap. They serve to cheat people."
Now as observed in rising setiment over the population not mentally vacant to the free market.
*Not my opinion below*
Now, that the fantasy is over, and the bullshit has begun, We still have one power left to thwart the power grab—the ballot box. We can vote each and every one of the jackals out of office once they come up for re-election, and keep voting incumbents out of office so they don’t ever get a chance to become entrenched power-brokers and money-robbers.
This also extends to anything else we can “vote” out—CEOs, certain powerful products, certain powerful companies, etc. How do we do it? We vote with our wallets, we boycott, we protest, we dump shares, and we encourage others to do the same.
Onward,
As I conveyed earlier in the mid 80's as i was inclined to regard the actual state of affairs. It has taken this time as John has most avidly conveyed on this historical point of contextual generational trends. Given the actual condition of affairs it should be a interesting summer of discontent. I have written my Senator again but i already know there position in Washington for many years now to there relagated status. As for capital I am firmly on the sidelines given the excellent observation from many on this site based to reason. The public does not understand there is no senate, just servants to the imperium and that did not happen over night did it? It happens to be that we should give what we can and socialism takes what it not theres.
Ten principles for a Black Swan-proof world
http://www.ft.com/cms/s/0/5d5aa24e-23a4 ... ck_check=1
http://suddendebt.blogspot.com/
http://zerohedge.blogspot.com/2009/04/i ... idity.html
What retail investors fail to acknowledge is that the quants close out a majority of their ultra-short term positions at the end of each trading day, meaning that the vanilla money is stuck as a hot potato bagholder to what can only be classified as an unprecedented ponzi scheme. As the overall market volume is substantially lower now than it has been in the recent past, this strategy has in fact been working and will likely continue to do so... until it fails and we witness a repeat of the August 2007 quant failure events...
Last edited by aedens on Mon Apr 13, 2009 5:28 am, edited 12 times in total.
Re: Financial topics
Is the final plunge on the way? Take a look at Standard & Poor's updated numbers at
http://www2.standardandpoors.com/spf/xl ... EPSEST.XLS
The rally we have seen recently is exactly what is needed to set us up for a continued decline in the stock market and these earnings are the guiding light that will take the market where it needs to go (lower) over the next year or so.
I have tried to put myself in a bullish frame-of-mind but just can't come up with a good enough scenario that would jutify the current level of the stock market and in fact, have a hard time seeing the S&P above 500 or the Dow above 5,000, even with PE10, peak earnings or even a slowly improving economy. Only a quickly improving economy would create a scenario were current stock prices are reasonable.
What really ties all of this together for me is how everyone, with just a few exceptions, has been willing to ignore, lie about or justify current P/E levels. That can no longer go on. Just as a tsunami will overwhelm everything in its path, earnings that will be negative 6 months out, and are 3x too high 9 - 12 months out, will overwhelm all other data because earnings are what stock prices are all about. Earnings are the bottom line and the numbers I quote are analyst's estimates, which are likely to be high.
Yes, stocks could continue to work higher for several weeks as more and more suckers are tempted to get in "before it's too late" but please don't be one of them. I believe we are now at the point were we see massive, across-the-board wealth destruction as the ENTIRE stock market readjusts to new valuations that we haven't seen since the early 1980's.
--Fred
http://www.acclaiminvesting.com
http://www2.standardandpoors.com/spf/xl ... EPSEST.XLS
Q4 earnings are finalized and the current P/E ratio is 57 and heading to 1,944 and then into negative territory for the first time ever. In fact the Dow had a few years of negative earnings during the early years of the Great Depression so this really isn't the first time.Q1 estimated to be down -22.5%, ex/Financials it is down -32.7%, hence the warnings
ACTUALS
12/31/2008 903.25 -$0.09 -$23.25 18.24 60.70
The rally we have seen recently is exactly what is needed to set us up for a continued decline in the stock market and these earnings are the guiding light that will take the market where it needs to go (lower) over the next year or so.
I have tried to put myself in a bullish frame-of-mind but just can't come up with a good enough scenario that would jutify the current level of the stock market and in fact, have a hard time seeing the S&P above 500 or the Dow above 5,000, even with PE10, peak earnings or even a slowly improving economy. Only a quickly improving economy would create a scenario were current stock prices are reasonable.
What really ties all of this together for me is how everyone, with just a few exceptions, has been willing to ignore, lie about or justify current P/E levels. That can no longer go on. Just as a tsunami will overwhelm everything in its path, earnings that will be negative 6 months out, and are 3x too high 9 - 12 months out, will overwhelm all other data because earnings are what stock prices are all about. Earnings are the bottom line and the numbers I quote are analyst's estimates, which are likely to be high.
Yes, stocks could continue to work higher for several weeks as more and more suckers are tempted to get in "before it's too late" but please don't be one of them. I believe we are now at the point were we see massive, across-the-board wealth destruction as the ENTIRE stock market readjusts to new valuations that we haven't seen since the early 1980's.
--Fred
http://www.acclaiminvesting.com
Re: Financial topics
I told someone I work with today that the official P/E ratio had
skyrocketed to 60. He said, "Oh yeah, you're a doom and gloom guy.
You ought to take a break."
John
skyrocketed to 60. He said, "Oh yeah, you're a doom and gloom guy.
You ought to take a break."
John
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