Financial topics

[Higgenbotham]

I read a 40 year stock veteran comment that Apple was the only thing holding the market up today. My interpretion was that while Apple had some effect, it wasn't path altering. In 2000 and 2007, I didn't think the stock market was a true bubble in the sense of the Tulip and the South Sea Bubbles. In those bubbles the marketplace was chasing one object of speculation. There were other companies traded besides the South Sea Company but that has garnered the historical attention. Surely, the Fed could in theory secretly create dollars and buy Apple stock to support the price of Apple stock and thus some of the major indices, perhaps holding the indices up that don't contain Apple. I don't believe they would do that, though, as they would understand the great danger of doing so. And I don't think Apple will turn into the full blown bubble that the South Sea Company did (going up many fold then down many fold while comprising a significant chunk of the economy and market). However, we must also realize that Apple IS up 7 fold in 3 years. That is a fact.

The more significant danger I see is that the overall economy is being propped up by government borrowing and government transfer payments that are unsustainable. I just don't think most people realize the extent to which this is the case and the extent to which the economic numbers would not be close to what they are without $1.5 trillion per year in unsustainable Federal debt buildup.

Good rant, OLD. I've never been one to think Ron Paul has the solution either. In fact, I'm not sure he even understands the money system well enough to solve the problem. And as far as state government being more corrupt, whoa, I've seen and heard a boatload of stuff that corroborates that. In Wisconsin, the majority leader in the assembly about 10 years back was indicted on 19 charges that in theory could have landed him in prison for 200 years. If I remember correctly, and I'm sure I do, it was reported that he openly told people that they would not get an appointment in his office without bringing campaign contributions and if they didn't bring money to get their asses out of his office.

Bernanke's ZIRP policy has eliminated $450 billion in purchasing power decisions.

This is a transfer from the real economy to the financial black holes. If it were a gold standard eocnomy today it would be the equivalent of seizing the percentage of gold that represents the inflation rate minus ZIRP (zero of course) each year and destroying it. It also has similarities to the yearly gold ransom that Attila (and later his sons) demanded from the Romans each year before the empire collapsed. ZIRP is Bernanke's yearly seizure for the banks and it is a pre Dark Age looting process.

[aedens]

The market is being strangled. When you find a positive step forward it is ties up capital for years.
http://www.scotusblog.com/2012/03/opini ... -practice/

[OLD1953]

To inflate they'd have to create and circulate money by giving it to someone who would spend it. Not going to happen. Govt gives money to banks and banks only.

I think the election will send so many crossed signals, either Congress will do nothing during the lame duck session, in which case there's an end to giveaways, a tax increase, another downward bump in the economy, and jobs programs, or they manage to make a deal, but the deal will consist of tax increases, an end to big bank giveaways and jobs programs instead of spending on nothing.

Just MHO, this one is anyone's race. I'd not be a bit surprised to see Paul on the ticket as VP, or Obama ditching Biden. This is going to be a cusp between one cycle and the next.

[Trevor]

I'm amazing how many people simply say "Don't worry, we can always print money." Yeah, that's real reassuring, considering the economic climate. When I mention that Japan did the same thing, there's usually a blank look.

I've looked up the history of bubbles and the ultimate devastation depends on two things: how long the bubble lasts and how big a region it covers. The Japanese bubble was pretty bad, yeah, but it was confined just to Japan, meaning it didn't effect everyone else very much and allowed them to keep their heads above water, even though their economy has been slow ever since.

This one, however, has lasted for 16 years and it covers most of the globe, similar to the 1920's. In some ways, it's bigger than the 1920's when you take China and India into consideration. I'm just wondering why it's been delayed for as long as it has.

[aedens]

http://www.youtube.com/watch?feature=pl ... 0-L1HhitpY

[Higgenbotham]

My nephew did a history project on the 1920s Florida real estate bubble. They found a lot of local records from that era and dug into the details. After he completed the project, I asked them how big the 1920s Florida real estate bubble was compared to the more recent bubble. They said there is no comparison - our recent real estate bubble may have been 100 times as large across the entirety of the US in their estimation. All I really know for certain is that when the 1920s real estate bubble burst, it barely put a dent in the stock market.

As far as Japan, they were able to export their way out of complete collapse but of course when a worldwide bubble bursts not every country has that solution available.

One time, we had a discussion here about when the bubble started. There were 3 options that seemed possible - it started when debt became money in the US in 1933, it started with the dissolution of Bretton-Woods in 1971, or it started with the generational change in 1995. My vote is 1971 because that's when the derivatives genie came out of the bottle, the debt skyrocketed, and the bailouts started. Chrysler received a huge bailout, relatively speaking, in 1983 or so. Citi, recently discussed, was bailed out by South Dakota and usury in the early 1980s. The debt skyrocketed in the 1980s and the hero generation was up in arms but nothing was done to stop it. The PPT (Working Group) was formed after the 1987 crash to support the stock market. Ross Perot ran for election in 1992 and promised to balance the books but only 9% of the voters chose him. The S&L crisis was patched together in the early 1990s. I think the reason these things are true is that this entire saeculum has been a long 80 year Unraveling. Within the huge Unraveling have existed the generational sub periods that are normally thought of. I believe the next saeculum has the potential to be a long 60-80 year crisis period. Cycles within cycles in other words, also discussed by others in other forums.

[Marc]

I think the reason these [aforementioned] things are true [regarding post-WWII bailouts, derivatives, etc.] is that this entire saeculum has been a long 80 year Unraveling. Within the huge Unraveling have existed the generational sub periods that are normally thought of. I believe the next saeculum has the potential to be a long 60-80 year crisis period. Cycles within cycles in other words, also discussed by others in other forums.

This may well be the case. In merging Strauss & Howe (and Xenakis) with Alvin Toffler (of Future Shock and The Third Wave fame), our recent, current, and near-future generational saecula/turnings have likely intersected, and promise to intersect, in startling ways relating to Western society's transition from a modern to a postmodern society. Part of this transition seems to emanate from a postwar, human-liberation and manifest-destiny entitlement philosophy in that we are really entitled to have all of our cake and eat it, too — and spend and use resources, financial and otherwise, almost without limits. (This applies to liberals and conservatives, and libertarians and statists as well.) In our present Fourth Turning, we are heroically doing an amazing job so far of keeping most of the dike from breaking, so to speak, by using almost every financial trick available to us, despite the mega-bubble and concomitant pending crisis being created in doing so. The 21st century may well be a trying exercise in our trying to match available resources with sustainability before we can really successfully match collective human satisfaction with sustainability, so to speak. Thanks, Higgie, for sharing! —Best regards, Marc

[aedens]

http://www.marketwatch.com/story/small- ... 2012-03-22

[Trevor]

Just read an article that's talking about the criticism leveled towards Ben Bernanke, in spite of the fact that he "saved the world economy". He's done nothing of the sort and I think even he is starting to realize it. Of course, we've all got our roles to play. His is to pump money into the economy until we realize that it has failed.

[vincecate]

I read a 40 year stock veteran comment that Apple was the only thing holding the market up today.

I guess I was not the only one thinking of shorting Apple Friday. I did not actually do it. Though really I think a flash crash is really the result of stop-loss orders getting triggered. Could be plenty of people getting worried over the weekend. Be interesting to see what happens Monday. That high on Apple might mark the turning point on the market.

Apple Flash Crash: Stock Halted After Trade Causes 9% Plunge

"Shares of Apple, the world’s most valuable company, plunged 9 percent on a single trade, causing it to be halted by the single stock circuit breaker rule because of volatility.

"A single trade of 100 shares at a price of $542.80 hit the tape at 10:57 coming from the BATS Exchange. The previous trade seconds earlier was at a price of $598.26. "

http://www.cnbc.com/id/46835129

Update: It was reopened minutes later and was back at $600. NASDAQ canceled trades. Hum.
http://www.valuewalk.com/2012/03/apple- ... activated/