Generational Dynamics Forum - New Site

I was reading suggestions on how to save your 401k. I spoke with some union members of an airline who were faced with this same problem. What some of them I have heard have done, was to get a divorce from their spouse and "give up " their 401k as part of the settlement, then after the money was received they would re-marry.
This seems extreem but if this can work...why not? I would be curious if anyone here knows if this would work.

From a web site reader:

> I really enjoyed this interview. This clarifies a lot of the
> questions I am hearing and discussions with friends about why this
> Paulson bailout plan is a joke.

> It's more entertaining and informative than most Bloomberg
> financial interviews because Dr. Nouriel Roubini appeals to basic
> common sense.

> http://search.bloomberg.com/search?q=ro ... mit=submit

> The fact that our government hasn't enlisted the majority of
> economists who agree with Roubini for an alternative plan to
> Paulson's plan, is a complete failure of leadership.

> You may also find that he preaches some serious gloom and doom IF
> things are not cleaned up in the right way but keep in mind that
> this guy (Nouriel) has forcasted the events of today years in
> advance.

As I've already mentioned in the Web Log, I'm really not particularly
impressed with what Roubini is saying, since it appears to me that
he's just covering his ass. He's saying that "they didn't take my
advice," which means that if no disaster happens he won't look silly,
while if a disaster does happen, then he can say he predicted it.

What this whole web site is about, and has been since I started it in
2002/2003, is to make specific predictions and then see if they come
true, and they always have. Anyone can couch a prediction in such a
way that it comes out right no matter what happens later, and in fact
that's exactly what Roubini and other people do. What I've done on
this web site is make predictions which can be proven right or wrong,
and which have turned out to be right, and that makes this web site
unique in the world.

John

This is from a web site reader in Australia:

> Apparently the bailout is to buy mortgaged backed securities, not
> in the US, but in foreign countries such as Australia, Germany the
> UK and China. America's foreign debts are now due and need to pay
> up otherwise it will be forced to foreclose. (This may lead to
> that global war we are all looking forward to)

> It seems to be the case where America is borrowing money to pay
> for its borrowed money. Where does it stop?

> What will it mean to the foreign countries when they receive this
> cash injection into the economies?

> Will property rebound and sends us into another boom? (Australia
> is stagnant at the moment in the housing sector, prices have
> fallen but not dramatically and it is said that we have been in a
> boom for some time)

> If it does boom then what, they sell these securities and crash
> our market as well once they have made their money and revived
> the American economy.

> The CNBC interview can be found on youtube, just search "real
> reason for bailout"

This is what I might have believed up until I read the Bubble that
Broke the World last year.

** The bubble that broke the world
** http://www.generationaldynamics.com/cgi ... rett071009

This shows how the Germans borrowed money from the Americans to pay
the money they owed to the British and French, and the British and
French used the same money to repay the Americans. When the real
bank crisis began in 1931, everyone canceled the Germans' debt.

It's been apparent for several years that America could never repay
its debts. I've said so many times on this web site, and now even
the politicians are noticing it, including in China.

So my expectation is that the Chinese, Japanese and other countries
will cancel the Americans' debt, just as we did in 1931. They'll do
this because it's in their own best interest: The collapse of the
American economy would mean the collapse of their economies, and
the debts aren't going to be repaid anyway.

John

A message from a web site reader:

> Excuse me, my English is far from perfect. I have just read your
> analysis with great enthousiasm. This is a very different
> approach than what I am used to read in papers.

> Very refreshing to see that you also looked at Nikkei index. This
> is the first logical explantion for the stock movements the last
> 10 years, I have heard so far.

> I'm very interested in this kind of approach on other indexes,
> like Hang Seng, the Indian Exchange, AEX and BRICK Markets.

> I tried to gather information on stock history, but cant find
> anything before 1990. Do you have those kind of generational
> dynamics on those indexes?

I considered myself to be very lucky to find the historical Nikkei
index all the way back to 1914. It was fascinating, because it showed
that the generational crashes of the Tokyo Stock Exchange occurred in
1919 and and 1990, with exactly the spacing that Generational
Dynamics predicts.

** Japan's real estate crash may finally end after 16 years
** http://www.generationaldynamics.com/cgi ... 20#e070220

I would love to find the historical stock indexes for the other
countries you mention, but I never have, unless I'm willing to pay
several hundred dollars. Perhaps some day I'll get together with
several other interested parties, and we'll all pay for them,
splitting the price.

John

catfishncod wrote: > John, almost all your predictions are based off the assumption
> that we are going to recapitulate the 1929-1933 Great Depression
> crash. Will you allow an alternate hypothesis?

This really isn't true. My predictions are based entirely on
generational trends going back for centuries. The purpose of the
constant comparisons to 1929-1933 is to show by empirical evidence
that the generational predictions are in fact coming true. I've also
provided comparisons to previous generational crashes, going as far
back as Tulipomania.

Scott Reynolds Nelson wrote: > When commentators invoke 1929, I am dubious. According to most
> historians and economists, that depression had more to do with
> overlarge factory inventories, a stock-market crash, and Germany's
> inability to pay back war debts, which then led to continuing
> strain on British gold reserves. None of those factors is really
> an issue now...
> http://chronicle.com/temp/reprint.php?i ... 4hy9z83x18

This paragraph is bizarre. Today we have the same kinds of things:
overlarge factory inventories (in China), a stock-market crash (in
China), and America's inability to pay back debts. Add to that the
credit crunch and the continuing string of bank failures, and it's
really hard for me to figure out what Scott Reynolds Nelson is
thinking.

When you compare today's situations to the post-1929 situation, you
have to compare America in 1931 to China today, and Germany in 1931
to America today. Then the comparison is almost precisely identical.

** The bubble that broke the world
** http://www.generationaldynamics.com/cgi ... rett071009

catfishncod wrote: > 1873 was the near the end of the Fourth Turning here in America
> (I'm sorry, Mr. Howe and ghost-of-Mr.-Strauss, but the Fourth
> Turning did not end at Appomattox. Southerners know this deep in
> their bones. It ended in 1876-7 when Reconstruction died and the
> country was unified by the completion of the transcontinental
> railroad.) but it was near the beginning in Europe. (If anyone has
> good evidence of 4T in Europe before the events of 1870-71, let me
> know.) What was Europe like in 1874-1884? THAT may be where we are
> headed...

America's Fourth Turning did indeed end in 1865. The Reconstruction
Era was a First Turning, a Recovery Era. It may have been hideously
painful for the South, but it was no Crisis Era.

On the continent, the crisis wars were the wars of German
unification, the Franco-Prussian war, and the Paris Commune.

The real puzzle is to identify England's crisis war. There was a
long discussion of this a couple of years ago, concluding that
England's crisis war was the American civil war.

I went to books.google.com , and searched for free books on "history
of england." I ended up reviewing three of them, although the first
had the most comprehensive coverage of the American Civil War, and the
other two basically confirmed the first, although in briefer
form.

• British History in the Nineteenth Century (1782-1901)
  By George Macaulay Trevelyan, 1922, pp. 329-338
  http://books.google.com/books?vid=OCLC0 ... #PPA329,M1
• A Short History of England, Edward Potts Cheyney, 1904, pp. 653-655
  http://books.google.com/books?vid=OCLC2 ... 4-PA653,M1
• A History of England from the Earliest Times to the Death of Queen
  Victoria, Benjamin Stites Terry, 1908, pp. 1033-1035
  http://books.google.com/books?vid=OCLC0 ... -PA1035,M1

I summarized the situation as follows:

• Just prior to the American Civil War, there was almost a war with
  France caused by panic.
• England's upper classes favored the South, who were most similar
  to England's upper classes.
• England's lower classes favored the North, who were most similar
  to England's lower classes.
• The British government remained officially neutral, though they
  favored the South.
• The northern blockade of Southern ports, preventing the export of
  cotton, inflicted great hardship on Lancashire's cotton mills, which
  depended on the cotton for work
• The British government was tempted to break the blockade, but
  decided to stay neutral.
  
  This was the opposite situation from the Napoleonic wars, where
  England had blockaded Europe's ports, and America began the War of
  1812 to break the blockade.
• Even Britain's neutrality was resented by Northerners, who felt
  it indirectly supported the South.
• The South didn't like it much either, since they wanted real help
  from the English.
• When Northern Captain Wilkes boarded an British ship and removed
  two Confederate envoys, the incident caused Britain to start
  preparing for war against the North. It was averted only because the
  North backed down, freed the envoys, and apologized.
• The Confederacy purchased a ship, the CSS Alabama, from Britain
  through France as an intermediary, to the embarassment of Britain
  when the ship was launched. Later, an international tribunal awarded
  America damages from Britain for violating neutrality.

There are a few examples of a country going through a crisis era
preparing for war, but never going to war, such as Switzerland and
Iceland in WW II. This is another example.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.GenerationalDynamics.com/forum

** Should you shift your money to Europe?

The bad news is that Europe is in the midst of a major banking crisis
that was heightened today when a bailout plan for Germany's Hypo Real
Estate collapsed.

http://online.wsj.com/article/SB1223198 ... lenews_wsj

The good news is that the panicky euroland countries are guaranteeing
all bank deposits.

Ireland was heavily criticized earlier this week when it provided a
$600 billion guarantee to all deposits, of whatever size, in all
Irish banks. The reason given was that the Irish feared a run on
Irish banks by panicky depositors afraid of losing their money.

European leaders accused Ireland of a "going it alone" approach that
ignored the needs of the entire European Union. Some leaders accused
Ireland of trying to seduce depositors in other countries to move
their funds to Irish banks, risking a run on OTHER European banks.
By Thursday, Greece had joined Ireland, by guaranteeing all bank
deposits in Greek banks.

http://www.guardian.co.uk/business/2008 ... ks.banking

At a meeting of European leaders in Paris on Saturday to deal with
the banking crisis, many leaders wanted to take a hard-line position
that the banks must deal with their own problems. Hypo bank, in
particular, already had a rescue plan in place, with $50 billion to
be provided by other banks.

The European leaders in particular rejected a US-like bank bailout,
mostly because it would be almost impossible to achieve. All
American banks are regulated in the same way, but euroland banks in
different countries operate under wildly different sets of
regulations. So any attempt at a uniform European response to the
banking crisis would immediately get bogged down in different details
in every different country.

But it took only one day for the entire non-agreement to collapse
completely. The other banks backed out of the rescue plan for Hypo
bank, and now a panicked German government has guaranteed the savings
in all German banks,

http://www.iht.com/articles/ap/2008/10/ ... anteed.php

As I'm writing this, officials in Berlin are having frantic meetings
with a familiar theme: The Hypo bank rescue has to be achieved by 7
PM ET Sunday -- when the Asian markets open.

Stay tuned.

But now, suppose you have ten million dollars in the bank. Only
$100,000 is guaranteed by the FDIC, and so if your bank fails, then
you would lose $9,900,000.

You now have another option: Transfer your funds to an Irish, Greek
or German bank, where the funds will be completely insured.

Will the insurance hold up if a bank fails? I have no idea. I don't
even know whether the entire European banking system will collapse by
Friday. So for many people, the best solution is still to stuff the
$10 million into your mattress.

Sincerely,

John

John J. Xenakis
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.GenerationalDynamics.com/forum

John wrote:Dear Gordo,
You and I have been exchanging e-mail messages for - what? - 3 or 4
years now? And you're still writing stuff like this? Can it really
be that not a single word I've written has sunken in with you?

I like your site because we have a lot of common interests, I usually write you when I disagree with something, but that doesn't mean I disagree with everything, and I like reading your perspective even when Ithink it is a little off or totally off. You stimulate my mind, get me to think about things differently, etc. So don't get mad when I don't buy into your ideas fully, I never will but that's OK, you don't buy into my ideas either so we have something in common

John wrote:Dear Gordo,
You're talking about this hare-brained "capitulation" concept. I'm
telling you, Gordo, you're dreaming.

With all due respect, I don't think you get the "capitulation concept" as it relates to trading. You know very well that markets don't go straight down. There will always be counter-trend rallies. If you reread my post, you can tell that I'm not some naive super bull. I have been trading on sentiment indicators ('capitulation' indicators if you want to call it that) for over 10 years, I made money in every year of the bear market from 2000-2003. The last time this year when "all the stars aligned", it was a significant short term market bottom to the day, and I made quite a lot of money even though I did not put a large portion of my trading account on the line (and I'm not doing so currently either). There are all types of people out there - some should probably use the next big bounce to finally get out of the market if they have been riding the wave down all this time. Others might want to wait for a big bounce to get short. Crazies might want to go long and short. I don't care really. I'm just telling you what I'm doing and what I'm seeing.

But first and foremost, some of you guys need to wake up! You guys should all be cynical of the recent mainstream media blathering about the New Great Depression . One of my favorite economists (and successful fund manager) Dr. Hussman, put it this way: "The same financial news anchors and Wall Street analysts that constantly gurgled about the market's resilience and strong fundamentals at the top, and all the way down, suddenly shifted to warning about Depression, economic meltdown, and bread lines - bread lines! - when they saw a big bucket of money that would only become available if the public was scared out of its gourd. Now you'll hear the same chatter until the Fed cuts rates again (which it almost has to do simply to maintain credibility, because the effective Fed Funds rate - which is hovering below 1% - is already so much lower than the 2% target). Call me cynical. This Depression talk is just outrageous - especially from people who didn't have the slightest sense that any of this was coming."

John wrote: Things are moving much more quickly than that. Wow! I can't believe
what I'm reading from you.

It may feel like it to you, but you will be proven wrong (again). These things take many years to work out, this time will not be an exception. Took 3 years for the market to bottom from '29-'32, Japan took 15 years ('90-2005)

John wrote: So take your 10% and sell. You're going to lose everything.

You have no idea exactly what I even bought, and you can just make a blanket statement like that? Every tax free muni will go under? Like treasuries, they can be backed by taxpayer dollars. You can pick and choose your issues based on risk factors from prior high default periods. The worst period for muni bonds was just after the 1873 Depression, with about 24 percent of outstanding municipal debt in default, and this was concentrated in the regions that had been growing the fastest. So even in a worst case senario my odds of getting wiped out are probably substantially less than 24% since I did not pick issues in areas that could be considered the fastest growing. Personally I think that even with 20% unemployment, which isn't going to happen over the next 2 years, there would be little reason to believe that a massive number of muni bonds will default. To be a good investor you have to be able to recognize value. When people are panicking, and forced to raise cash, they often sell their best assets at deep discounts - this is when you should be buying.

John wrote: > Another conservative thing you can do right now - you can make
> quite a lot of money borrowing at 0% teaser rates from credit card
> companies right now and stashing the cash in FDIC insured CDs. I
> am aggressively doing this and currently have just under $300,000
> borrowed (which is probably a sign that the credit card issuers
> are going to get killed a year from now).

Well guess what, Gordo? The rest of us don't get $300,000 credit
lines like you do. You're in a different class than the rest of us.

I disagree. People of all classes are doing this, maybe not to the same scale, but the idea is the same. I don't want to turn the discussion off course, but if anyone is interested you should do some research on your own, a couple places to start would be:
http://www.fatwallet.com/forums/finance
http://app-o-rama.com/

There are threads at the first link describing in detail how to get very big credit lines. It takes time, I've been doing this stuff for many years, there are a lot of things to learn. You will find details on managing your credit score, cashing out on sign up bonuses, getting line increases, consolidating lines, establishing business credit, etc.

Gordo wrote:So don't get mad when I don't buy into your ideas fully, I never will but that's OK, you don't buy into my ideas either so we have something in common

You misunderstand me. I'm not mad at you because you don't agree with me.

I'm mad at you because I've known you for a while now, and you're going to
totally screw yourself.

John

In March, I wrote the following:

** Country of Iceland may be close to financial default
** http://www.generationaldynamics.com/cgi ... 31#e080331

For several years, Iceland has been acting like a hedge fund, instead
of a country, and the króna ("krona" or "crown") currency was
crashing.

This morning, Iceland is facing financial meltdown, as trading in all
finance shares has been suspended.

http://www.telegraph.co.uk/finance/fina ... ement.html

Those of you who have told me that the dollar would become worthless
can now begin to see why you were wrong. The dollar is in a
deflationary spiral, which makes it increasingly valuable, while other
currencies, including the euro, are collapsing. This is the article I
posted last night:

** European integration is collapsing as banking crisis spreads rapidly
** http://www.generationaldynamics.com/cgi ... 06#e081006

The only other currency I'd be willing to bet on is the yen. Why?
Because Japan has already gone through a generational crash in 1990,
and they're a nation of survivors of that crash. I'd bet that if
there were a way to take a survey of Japanese mattresses, a lot of
them would be found to be stuffed with cash.

John

John wrote: ...

Those of you who have told me that the dollar would become worthless
can now begin to see why you were wrong. The dollar is in a
deflationary spiral, which makes it increasingly valuable, while other
currencies, including the euro, are collapsing. This is the article I
posted last night:

** European integration is collapsing as banking crisis spreads rapidly
** http://www.generationaldynamics.com/cgi ... 06#e081006

The only other currency I'd be willing to bet on is the yen. Why?
Because Japan has already gone through a generational crash in 1990,
and they're a nation of survivors of that crash. I'd bet that if
there were a way to take a survey of Japanese mattresses, a lot of
them would be found to be stuffed with cash.

John

Sorry John,

I just read this:
http://www.bloomberg.com/apps/news?pid= ... refer=home

What you think:
How much money has FED?
Even if there is obviously a deflationary spiral, the FED produced still the bigist amount of the "cash" as reported.

If we just forget the generational dynamic and crashes and concentrate to facts - is it not little bit strange that China with so much billions of US dollars will collapse, and Japan and its currency, with almost the same amount - will be the winner?

Best regards
Malleni