Financial topics

Investments, gold, currencies, surviving after a financial meltdown
Matt1989
Posts: 170
Joined: Sun Sep 21, 2008 12:30 am

Re: Financial topics

Post by Matt1989 »

malleni wrote: Additional, if you predict a "war in Europe" and "massive homelessness, starvation and bankruptcy in America" - it is not difficult to understand who you think, will "easier" go through this crises.
Europe's effed probably a little worse than America since there are so many competing factions.

Who comes out strongest from this mess? My guess is Brazil.
malleni
Posts: 150
Joined: Sun Sep 21, 2008 3:34 pm

Re: Financial topics

Post by malleni »

Sorry Matt,
I do not understand what Brazil has to do with Europe?
Matt1989
Posts: 170
Joined: Sun Sep 21, 2008 12:30 am

Re: Financial topics

Post by Matt1989 »

malleni wrote:Sorry Matt,
I do not understand what Brazil has to do with Europe?
I expect that the nations that emerge from this crisis will be significantly weaker. The major exception is Brazil, which is in a 2T.
Matt1989
Posts: 170
Joined: Sun Sep 21, 2008 12:30 am

Re: Financial topics

Post by Matt1989 »

OK prediction time:

Massive sell-off tomorrow.
mark
Posts: 33
Joined: Tue Oct 28, 2008 6:48 pm

Re: Financial topics

Post by mark »

I agree
John
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Location: Cambridge, MA USA
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Re: Financial topics

Post by John »

Matt1989 wrote:OK prediction time:

Massive sell-off tomorrow.
That would be my expectation as well, but currently
market futures are up sharply.

http://www.bloomberg.com/markets/stocks/futures.html

Sincerely,

John
stevendeklerck
Posts: 4
Joined: Mon Oct 27, 2008 10:48 am

Re: Financial topics

Post by stevendeklerck »

WITH RESPECT TO THE EURO

All my cash (50% of my portfolio) is in X euro notes, i.e., the notes printed by the German Bundesbank.

20% of my portfolio is in German Government bonds.

If the EMU implodes, there will be a flight to safety --> German notes and bonds.

Just my take.

Best regards,

Steven
Gordo
Posts: 122
Joined: Mon Sep 22, 2008 11:18 am

Re: Financial topics

Post by Gordo »

To summarize - someone basically asked "what if you are wrong?" and your response in a nutshell was "I can't be wrong".
John wrote: OK, so theory tells me that there has to be a generational panic and
crash. There's no doubt about that.
Part of the problem is that you still haven't really defined any of the terms you use. Another problem is that you project your ideas without considering alternatives. Let me just throw some thoughts into the mix. I'm not saying this is what I believe, just some things I've been thinking about. The generational theories, which make a lot of sense (and lets be clear, this has been written about extensively by many people) nevertheless CANNOT predict minute details, only general trends. The path that these trends take, are unpredictable, and influenced by new factors not present during the previous generations that faced similar circumstances.

Lets be specific. Generational theory can (and did) predict that as everyone from the last generation died off, lending standards would probably loosen, credit excess would develop, regulations would become lax, bubbles would form. Essentially most people forget about what happened the last time, it is not on the minds of politicians and regulators who maybe could have been in a position to limit some of the excesses. OK - that's the basics.

Generational theory CANNOT tell you there will be a great depression like the last one or mass starvation and homelessness - the thought that it can is absurd. I'm not saying these things CAN'T happen, they might or might not (probably not).

Lets take another look at the '29-'32 period. What started as a credit crunch, turned into a massive run on banks. This CANNOT HAPPEN TODAY AND WILL NOT HAPPEN TODAY. SO the idea that we learned NOTHING from the previous generation is not true. We didn't have FDIC insurance back then, today we do. We were "stuck" on a gold standard back then, today we are not (don't confuse what I'm saying, I don't think a gold standard is necessarily a bad thing although its kind of stupid in many ways but that is getting off subject). The federal government can and will print any amount of money necessary to insure that any sort of widespread run on banks doesn't happen. This is of critical importance in analyzing this situation. People alive today can't really fathom the situation from '29-'32, the run on banks was devastating, people lost their savings and never trusted banks again (many of them for the rest of their lives). There was another major factor at the time which is not present today, they had the dust bowl caused by severe drought and poor agricultural practices. These factors contributed to massive loss of confidence and high unemployment. Furthermore - the government waited too long (until 1934) to devalue the currency, which might have limited the devastating affects of deflation.

Contrast that with factors from today - typically completely overlooked by generational analysts. Today we are more productive than humans have ever been in all human history. I laugh when I hear idiots lamenting the loss of manufacturing or farming jobs - this is a wonderful byproduct and benefit of technology. Mechanization IS A GOOD THING, we all benefit from it, and it ensures that standards of living keep going up as has been the case for decades, and will only accelerate further in the future (perhaps with a few minor bumps in the road). The affects of these gains are CUMULATIVE. Did you know that even as recently as a few decades ago the stock market was open for trading on Saturday? The whole concept of a 5 day work week is relatively new, our ancestors worked their butts off 6 days a week from before sun-up to after sun down, and had little to show for all their effort. The world is completely different today then it was 80 years ago, and the difference 80 years from now will be exponentially more dramatic as we continue the march towards the singularity. Eventually there will probably be a time when we no longer have to "work" in any sort of traditional sense, mechanization and free energy will provide all of our needs at almost no cost, and people will be free to do basically anything they want.

A new great depression that is a lot like the last one is impossible. There, I said it. Yes - IMPOSSIBLE.
That certainly doesn't mean everything is roses. I would not be surprised if we ended up with an 80-90% REAL decline in stock indexes, a significant uptick in unemployment, and a big decrease in consumer spending, but none of this is the end of the world. Japan recently had a similar decline, and unemployment remained low throughout the entire debacle, there wasn't mass starvation or homelessness. Furthermore, note that I said REAL decline - that is in inflation adjusted dollars. If the US depreciates the dollar, stock indexes will lose value AS THEY GO UP - this (along with the technology factor) is a concept a lot of people just don't seem able to comprehend.
Last edited by Gordo on Thu Oct 30, 2008 2:18 pm, edited 2 times in total.
John
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Market Summary, Thursday afternoon, October 30, 2008

Post by John »

-- Market Summary, Thursday afternoon, October 30, 2008

There seems to be a general feeling that the market has reached
bottom, and that the market is on its way up again.

Art Cashin described it this way, completely contradicting his past
remarks: "It looks less and less likely that we’re going to get a
significant retest and/or break of the lows. This rally looks like it
might have some legs."
http://www.cnbc.com/id/27455468

It doesn't take much for these guys to turn into googly-eyed
dreamers. There's no concern for the precipitous drop in corporate
earnings estimates, no concern for negative GDP figures, no concern
for the historically high volatility levels. It just feels good.

Sincerely,

John
malleni
Posts: 150
Joined: Sun Sep 21, 2008 3:34 pm

Re: Financial topics

Post by malleni »

Gordo,
great discussion!
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