Financial topics

Investments, gold, currencies, surviving after a financial meltdown
Higgenbotham
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Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Gordo wrote:
Higgenbotham wrote: What I find really ironic is that the more John logically lays out the future of economic collapse, genocidal wars, pandemics, starvation, and homelessness, and the more that actual events show this future to be taking shape, the more strongly people resist. They would rather believe that Helicopter Ben can just print more money and lead us triumphantly into the shiny new age of information, biotech, and nanotech with just a few minor speed bumps along the way.
There is "big picture" and then "BIG picture". You are obviously alluding to comments I have made, but I think mis-characterizing them. In the "BIG" picture - the Great Depression itself was a "minor speed bump" along the path of relentless, exponential, unending, technological improvement. So there is no reason to believe that GD2 (great depression 2.0) would be anything otherwise. Furthermore, I think there are MANY reasons to believe that GD2 will NOT be anywhere near as devastating as GD1. If you'd like to rehash those arguments I'm game...

As for little "big" picture - I've always maintained that I think the market is heading lower - I just don't think its going to go straight down. No one here knows. A 40% down year could be followed by a 30-40% up year (which is no where near recovering the previous year's losses) and then another 40% down year. Or maybe we just get 40% down years for 3 years in a row. Who knows. But one thing I do know is that the market isn't going to plunge every time earnings or this and that economic numbers are bad. The biggest rallies will start when "news" is the worst.
John notes in his blog that he has gotten significant resistance from people as of late in his e-mails saying that he is too gloomy (edit--Now I have to eat these words because I read back through it and the last reference to any resistance is "a tiny bit of criticism" received in advance of the inauguration).

If you were the only one highlighting the Helicopter Ben argument it wouldn't really be notable, but that is a mainstream argument and the way I characterized it is how the mainstream does--Helicopter Ben can just create another bubble, or print money. The guys over at financialsense.com are a good example--their claim last year being that people just don't understand what the Fed can do and why deflation is impossible. Jimmy Rogers and Marc Faber are two more. Malleni would have fallen into that category and there are probably a couple dozen lurkers here who believe that too.

But of course since you are the only one here who is highlighting it, that comment does seem to be directed toward you and I would have thought that too if I had read it. When I have a direct coment on what somebody says, then I quote whatever they said, but it was an indirect comment. As far as your characterization, I would call that a significant speed bump within the lifetime of an individual and was aware of your stance on that.

Most people that I know are still expecting minor speed bumps within their lifetimes, are still invested in stocks for the long run, are foaming at the mouth over the inauguration and prospects for the reincarnation of FDR in a much better form, and so on. The few people I have pointed to this site will not read it. When I echo something that can be read here, I am usually treated like a lunatic.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
Higgenbotham
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Joined: Wed Sep 24, 2008 11:28 pm

Re: Financial topics

Post by Higgenbotham »

Gordo wrote:Furthermore, I think there are MANY reasons to believe that GD2 will NOT be anywhere near as devastating as GD1. If you'd like to rehash those arguments I'm game...
I don't want you to rehash broad statements. So, for example, one of the things you said at the beginning of this topic (meaning this whole 86 page topic so far) was that our market will be similar to Japan's post bubble. One of the reasons I remember you giving was that our debt to GDP level is about where Japan's was in 1990, that Japan doubled their debt to GDP level, and we can do the same. I mentioned some differences between the US and Japan and also said that I wasn't aware that Japan had gone that far into debt. I found the statistics on that soon thereafter. Anyway, one of the differences I mentioned among many was that our bubble is denominated in the world's reserve currency whereas Japan's was not and that we have a derivatives bubble whereas Japan did not. That in itself is a broad statement, and maybe it wasn't well enough defined that anybody felt like addressing it. Since then, I've defined here and there what that means specifically. For example, I talked about money market funds and how subprime, credit card, auto, and student loan debts are moved off the balance sheets of banks and securitized, then end up as cash balances in money market accounts. I also mentioned how a small percentage of those securities were illiquid at the time an annual report came out for a certain money market fund, then talked about how the same type of liquidity problem in subprime nearly resulted in a stock market panic. So over a period of time, I took a general statement I had made and eventually defined it in terms of specific examples which demonstrated what I was talking about.

That's the kind of thing I'd like to see you do. If you believe the Fed can just create as much money as they want and I can't remember exactly how you posed the question, then show exactly how they would do that and how it would alleviate a problem. Then people can respond to that if it doesn't make sense or not if it does. For example, if they are going to create money, where are they going to put it, how would the bookkeeping be done, what would the statutory authority be, is there a policy statement that describes that process, what might be the circumstances under which that decision would be made, etc. That would be new and useful information because I can't remember someone ever having described that process. People have described it generally, but it seems to me that what everything really comes down to is either exchanging assets or government borrowing and neither of those are really money creation (like Weimar anyway), and government borrowing has its limits in emergency situations.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
jecht8
Posts: 7
Joined: Sat Nov 22, 2008 4:03 pm

Re: Financial topics

Post by jecht8 »

John,

In regards to your recent (Jan 22) weblog posting concerning the media's portrayal of oil speculation. It's likely you have heard about the term peak oil, referring to a peak in the world rate of oil production. It appears that production peaked in mid-2005 (after all, anything that can't continue forever won't).

Perhaps this is the shortfall we should be looking to as it relates to the recent surge in oil prices.

http://localfuture.org/charts/20080301/ ... rLarge.GIF
freddyv
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Re: Financial topics

Post by freddyv »

Gordo wrote:
John wrote:"Plunge" does not equal "crash."
I laugh every time I see John talking about how a stock market
plunge is imminent because last quarter's earnings sucked so bad

Happy?
John wrote:Idiot. Errrrrrrr I mean Gen-Xer.
Is this where the forum is headed?
I think it is and it's because we have one contributer who, IMO, is not intellectully honest and that person is you, Gordo. I have banned people from my forums and if I have a vote I would love to see you gone. I think the thing that really bothers me is that you remind me of me when I was younger and much stupider and thought that goading people was amusing...it's not, it's childish.

Bye, Gordo. Even if you stay in the forum I am done with you because you are intellectually dishonest and provide nothing of any significance and that's a shame because you obviously have a brain that could be put to good use.

--Fred
shoshin
Posts: 211
Joined: Sun Sep 21, 2008 4:05 pm

Re: Financial topics

Post by shoshin »

I wonder if the board members can comment on the "safety" of such hedge investments as DXD, RSW, SDS, QID....all of which are negatively correlated with the stock indices. They have all done quite nicely for me, but I worry what will happen in a panic selling event.

I apologize if this has been covered previously. Just point me toward the relevant posting(s).
Higgenbotham
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Re: Financial topics

Post by Higgenbotham »

It's my guess that the world financial situation has now gone critical and that a generational crash is coming very soon, possibly even today or Monday. The stock index futures are down heavily this morning with the S&Ps down 22 points and sitting right on critical support, the dollar is up over 1%, and gold is getting safe haven buying.

The problems look to be to be accelerating exponentially. The banking system appears to have reached insolvency in the past few days or weeks (nobody really knows for sure as it isn't likely any bonafide audits can even be done given the inablity to mark many assets to market), large company job losses are accelerating beyond a critical point where it is likely the debt markets will seize up, earnings are imploding, and the politicians in Washington and the public are mesmerized and clueless.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
MarshAviator
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Joined: Tue Oct 07, 2008 3:40 pm

Re: Financial topics

Post by MarshAviator »


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Re: Financial topics

New postby Higgenbotham on Fri Jan 23, 2009 9:27 am
It's my guess that the world financial situation has now gone critical and that a generational crash is coming very soon, possibly even today or Monday. The stock index futures are down heavily this morning with the S&Ps down 22 points and sitting right on critical support, the dollar is up over 1%, and gold is getting safe haven buying.

The problems look to be to be accelerating exponentially. The banking system appears to have reached insolvency in the past few days or weeks (nobody really knows for sure as it isn't likely any bonafide audits can even be done given the inablity to mark many assets to market), large company job losses are accelerating beyond a critical point where it is likely the debt markets will seize up, earnings are imploding, and the politicians in Washington and the public are mesmerized and clueless.
It's only a question when, but I have been wondering if the various markets are leading or lagging indicators of THIS generational crash.
What I mean is that history doesn't exactly repeat, it rimes, there are similarities but not the exact same pattern.
When does the common man on the street (not just the investor or business professional) start to panic?

If the general public starts to panic then we could be in for some sort of sea change with major structural changes more than just a cycle of boom and bust.
Everyone I talk to in business from suppliers sales staff to senior management are on the same page, pay down debt, don't buy anything at all other than food, fuel, medicine. People are really beginning to worry it's more than just a recession.

Another thing, most see their 401K's either in really long terms (30+ years away) or as almost worthless.
People and not just banks are hording cash.

Personally if it takes another year I will be stunned.
freddyv
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Re: Financial topics

Post by freddyv »

shoshin wrote:I wonder if the board members can comment on the "safety" of such hedge investments as DXD, RSW, SDS, QID....all of which are negatively correlated with the stock indices. They have all done quite nicely for me, but I worry what will happen in a panic selling event.

I apologize if this has been covered previously. Just point me toward the relevant posting(s).

I started using SDS well over a year ago and in that time it has performed as expected and during times of market panic has performed extremely well and has always provided plenty of liquidity.

That's just my perspective, for what it's worth.

--Fred
freddyv
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Re: Financial topics

Post by freddyv »

http://www.cnbc.com/id/28809112 wrote: China will make clear its displeasure at U.S. accusations of currency manipulation but hold its anger in check in the belief that President Barack Obama is simply posturing, Chinese analysts said on Friday.
This could be a small thing that will simply fade away but why would Obama make this one of the first issues he addresses if he is not serious about it?

--Fred
Higgenbotham
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Re: Financial topics

Post by Higgenbotham »

I usually check the blogs at the end of the day. It's kind of strange that Mish posted almost the same thoughts this morning on his blog about 2 hours after I posted here, plus some interesting statistics. I don't have a network of contacts or any special information, so these conclusions are being drawn independently at the same time, and that is kind of scary. As always, nobody knows what is going to happen. I thought commodities reached their high prices in November 2007, so that tells everyone how much I know.
Extreme Leverage In Reverse Portends Global Systemic Crash
http://globaleconomicanalysis.blogspot. ... tends.html
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.
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