Generational Dynamics Forum - New Site

Back to the stock market. We'd previously talked about the fact that the stock market had passed the normal time element for an ending spike but that an ending spike is typically seen. It looks like we are now experiencing that spike. I had sort of described it as the idea that if Bernake panicked again in a similar manner to how he panicked and slammed interest rates down in 2007, we might see this spike. And getting back to oil prices, it's been my thesis that most of the $47 rise in oil over the $100 level in 2008 was due to Bernake's panic attack when he learned subprime was not contained, despite his previous assurances that it was. As an aside, it's interesting that his current panic attack is also focused on the continuing problems in the real estate market that have never really been solved since the subprime market unraveled. So instead of cleaning that mess up, he is insistent on repeating the damage he previous did, but on a larger scale.

If the spike moves true to previous forms, we may not be in a new bull market as many are currently saying, but at the end of this run. But it could have a huge and short run left in it, perhaps 3-5% in just a few days might be a guess. But any guess is inherently unpredictable.

If anyone has done any research into this or has some links, it would be interesting to see them. I remember several weeks ago Marc Faber was predicting an ending spike to 1450-1500, followed by a crash. That has been an excellent prediction so far. Viewing it more closely now, the top end of his range looks reasonable.

aedens wrote:H, the issue is Fishers note on expectations you noted correctly as we know. It's in inflation expectations they trust in certitude.

In simple terms, I look at it as: If they are going to keep the debt house of cards from collapsing by keeping asset prices level, that will have a cost asociated with it. The cost will be paid by a continuing and permanent reduction in the real economy through the absence of a normal deflationary cleansing process, where instead of those holding the unsustainable debts pay, payment is made through a lack of lower prices and a loss of purchasing power. Another comment I would make as an aside with regard to the stock market is that a normal bear market is not to be feared, but a bear market in the context of a civilizational collapse is feared because the market will go to what it is intrinsically worth, which is zero. What I mean by that is the only reason there is "profit" in the corporate accounting now is because the US government is deficit spending at the rate of $1.5 trillion per year. The defense contractors say they will not be in business if the US government budget is balanced, and that seems right. But at the same time, the deficit spending cannot continue. So investors are buying phantom earnings. These phantom earnings come from the same source as discussed above - the citizen pays but the benefits accrue to the top approximately 1%.
Fed press conferences are held to state than anyone can get in on that lottery when in fact not many can to any great extent.

So investors are buying phantom earnings. A mixed market will be a hopeful thought in a few years H, they do not even pretend to
hide it any more. Ask K street what plan B is? They have no issue asset stripping tier markets at all on the way forward.
This is a top look down issue. As we know they get first bite since the Banks are shielded in the last phase as we noted from the last hot influx.
I do feel atypical charting will not apply to this for some time as mentioned on beta nonsense we seen. Nominal price targeting is for club members now and they are not unabashed at rubbing it in. It is clear now even more of a tiered market structure from the consolidation and shedding overtly moving forward I sense now. Best guess for now. http://www.marketwatch.com/investing/index/DXY We touched on this back pages on we are YEN now

aedens wrote:I do feel atypical charting will apply to thisfor some time.

This would be my thought; you can tell me if I'm right or wrong. This will continue until either: they can draw the public in and get the public to take the high priced stock off their hands as they have at the end of previous bubbles; or, the thing cannibalizes itself flash crash style. The new reality is that keeping asset prices high puts a cost on the public that precludes them having extra money for investment. So I think it is the latter condition that will apply. Given that, it's my guess that the final meltup has beeen extreme and perhaps more long lasting as they stubbornly tried to suck the public in, but what happens from here could look more like the South Sea Bubble unraveling than anything we have seen in our lifetimes. Perhaps that's what Faber has in mind, but he never really states explicity how he comes to his conclusions. He has stated many times in the past that "Bernake is a money printer" but I don't know if that formed the basis of his prediction.

aedens wrote:They have no issue asset stripping tier markets at all on the way forward.

It's probably a first derivative function, though, that requires an increasing rate of stripping from a smaller base which may not be possible to sustain the bubble at higher and higher levels. I'm not sure that would change the actual ending formation on the chart much given the levels the markets are at versus what is left to strip, namely from the periphery as has been stated.

That requires an increasing rate of stripping from a smaller base. Good point to work forward H. Did not get that far to draw clearer context, but did allude to it back a few pages, I will pull it forward. The thought was chain supply management. Facts remain some are better at it so stripping on some segments is to strong of a drain on a conditional opportunity. As we know, Sogo shosha groups are sufficiently diversified to withstand periodic downturns in certain sectors of the economy. Even still, the market share of the sogo shosha has declined because numerous manufacturers in a variety of industries have opened up plants in countries with weaker currencies and because Japanese companies have started to manage their own international trade. This we noted clearly in the Forums on the signal that we confirmed. This will mirror back as supply chain realities. As I mentioned when the river lowers the turbulence is seen and modified to flow efficiencies to supply. We have mastered that market reality for our markets. The second tiered to say lightly have a option to perform. As above note the DXY. It fits for some views so I await the responses for now.

aedens wrote:The thought was chain supply management.

I was thinking in general terms that includes suppliers but hadn't thought of that specifically. If we look at the US large caps, we see where the top of the pyramid can put pressure on the bottom; one way is putting price pressure on increasingly desperate suppliers. Another is stripping wealth out of the peripheral countries like Iceland and Greece or even China. Combining that, if Apple were assembling in the US of course Apple would still be profitable and the US would be wealthier, but Apple would not be wealthier. As the top of the US pyramid cannibalizes the bottom of the pyramid in many different ways, the large cap US stock market can rise. What I find interesting is the importance the market attaches to US employment. It's an obsession that is only overshadowed by the QE obsession, but they are related. That indicates to me that in order for the stock market to be healthy in the absence of QE money, the wage earner is the marginal source of profit for the US large caps. And we do have a dwindling base there that seems to correlate with QE injections. It gives the Fed mandate a perverse logic and gives Bernake a perverse cover for saying reduced employment is a basis for QE, when it is really a direct backdoor bailout for unprofitable corporations. I noted a few pages back that Yahoo may make money with a QE but otherwise may not. I'll have to take a look at the performance of Yahoo stock this week. Obviously Apple is a clever operator and major indirect beneficiary of any QE, as much of that money naturally ends up in their coffers.

Two genearal theories are accepted:
(1) Prices rise as Cost-Push inflation, or inflation that begins when rising costs result in increased prices.
(2) Demand-Pull inflation, or when people’s ability to spend rises more rapidly than the availability of goods and services.

(1)State, Gunpowder (2) Allocation, Division of Labor (3) Consumer, ruthless arbiter
Reality as we regard, the wage earner is the marginal source of profit for the US large caps.
Acounting yes, geographical node is issue number two of conditions to existance to Capital allocations
tolerated by number one.
Sticky wages for condition one apply. Condition one is captial that is tolerated by condition for two which is
capital markets allocation. I suggest one and two have masters as we have linked the consequences before numerous
times. We know the consequences they deny so it is the basic when, not why.
Forty percent of all profits are off shore I read some time back.

New Yorker piece entitled "What Good Is Wall Street?", John Cassidy noted that investment banks had moved away from their traditional role as the middleman between one man's savings and a company worthy of investment. Investment banks now not only run the casino, they play the game with an increasing amount of their own money. They own the States point blank since Congress is lets say... Captured and no amount of Taxpayer apathy will now
never, ever get it back. If we wonder why Global Blowback surrounds us I would convey the last Forty years cover that sin. To many forget fiat is designed for one function as we covered here. The truth is that fiat economics has been designed to completely hide the monetary system that is the economy as conveyed. We have been warned forever to never trust any Bank in any Generation. And they wonder why still?

http://www.youtube.com/watch?v=MVb59TS6 ... re=related

Taxpayers are greater fools and we are attacked for trying to mind our own business. I am not a JB fan per se, but he called all the issues today in 1958 so go ahead and look bland and deny it if you must. Americans elected are useful and cheerful, and the core rot is now putrid in the dead center middle also.
The cheerful and useful elected gave it all away as Marx knew they would over time. Do many go looking around as No Man and decide who gets your money?
No deed goes unjudged they say. So who in the Sam Hell deserves a vote?
http://www.scribd.com/doc/104546616/Min ... ppen-Again It still annoys me that Washington thinks voting matters anyway. Same voices bleating and glass eyed. I did not vote for that as the foundation of truth is rotted beyond recognition and worthy of much support. The whole spectrum appears putrid.
COG - Continuity Of Government for the dead letter and FUD - Fear, Uncertainty and Doubt, for the sheep who deserve it. I respect the Office only.
The only noted issue is the effective tax rate gradualism of child abuse to those who had no voice of these Tyrants just as Lord Acton warned.
He is the only regard to the future I realize. Acton contributed to a succession of Catholic journals whose mission was to help liberalize the Church: the bimonthly Rambler (1858-1862), quarterly Home and Foreign Review (1862-1864), and weekly Chronicle (1867-1868). These efforts were defeated in 1870 when the Vatican Council declared that the Pope was an infallible authority on Church dogma. Because Dollinger was a priest, his refusal to submit resulted in excommunication. Acton, a layman, wasn’t required to officially acknowledge the Vatican Council decrees, and he remained within the Church. It was during this period that Acton wrote one of his most prophetic essays, “Nationality” (1862), which offered an early warning about totalitarianism: “Whenever a single definite object is made the supreme end of the State, be it the advantage of a class, the safety or the power of a country, the greatest happiness of the greatest number, or the support of any speculative idea, the State becomes for the time inevitably absolute. Liberty alone demands for its realization the limitation of the public authority, for liberty is the only object which benefits all alike, and provokes no sincere opposition.”
Not all his views are plausible of tolerances many years later but he has more regard for our Nation even today than they who are alive.
I would of wished that Lee would of answered Acton on the question and recourse of States Rights. Lincoln was building a Republic as we would convey today to meet competition from the Continent of Militarism noted abroad. For example in 1860’s Germany was made up of small or little states. However, in the period of 1864 to 1871 the largest state Prussia had three wars. This culminated in bringing the rest of Germany under its control. In the last war it defeated France and seized Alsace-Lorraine. At that time, the Chancellor Otto Von Bismarck was fearful that France would take revenge by creating an alliance with powerful powers in Europe such as Russia and Austria. To stop this happening, Bismarck made alliances with all major mainland powers in Europe such as Russia, Hungary, Austria and Italy. As well, Germany maintained good relationship with Britain. This made France powerless. For 40 years Britain did not involve itself in European affairs. However, after the dual entente between Russia and France, Britain declared to patch up with France even though France was their traditional rivals. In 1904 British signed entente cordiale acknowledging French control of Morocco and French acknowledging British control of Egypt. I always noted this was the other seed of demise for the Monarchists demise and we have captured numerous views to the formations of Cartel finance which have escalated the scale and scope we see today on the Generational Dynamic format to new cluster groups of scale. The addition of proclamation in 2009 from Von Rumpey in the Euro clearly articulated the Hubris of Socialist design veiled as effective change to the naive ear. Today the bent of mind is we get eliminated economically for the three unforgivable American affronts to the Creator and then full measure of marked buy and sell on the World in his time as we know. http://www.sacred-texts.com/chr/tbr/tbr028.htm I do not know given the avarice and full measure of the times he will avert. Given the Middle East reality to the next rider it will not be pretty for some time. I undestand the current monetary base argument but to me at this point of time it is lacking resolve as we knew it would. Like I conveyed you have three choices as Benjamin Franklin conveyed. I liked the hard rain analogy we used to this relentless moral breakdown ongoing I view.
http://www.youtube.com/watch?v=X4kdfQEBwO0 Facts today with numbers and not fabricated nonsense from the Hill. There are countless corupt thieves getting "the payments." They are stealing from the taxpayers unabated. I now see the next bubble and the lastest scam. Crop Insurance direct payments of 95 percent average. Aggregate costs have exploded. Unable to track payments. Concentrated payments. Biggest scam of the Planet

Higgenbotham wrote:Back to the stock market. We'd previously talked about the fact that the stock market had passed the normal time element for an ending spike but that an ending spike is typically seen. It looks like we are now experiencing that spike. I had sort of described it as the idea that if Bernake panicked again in a similar manner to how he panicked and slammed interest rates down in 2007, we might see this spike.

I think Noland and Hussman are a couple of very smart guys with a good understanding of what is going on. What they are saying fits with the idea of a spike before a crash. It seems likely to me.

"There is at this point no doubt in my mind that we are witnessing the greatest monetary fiasco ever."
"History will be unkind."
" this week our central bank took a giant leap from radical to virtual rogue central banking."
" It is, as well, the nature of speculative manias for things to turn crazy in the destabilizing terminal-phase."
http://www.safehaven.com/article/26934/qe-forever

"With the financial world fixated on Draghi, Bernanke and endless QE, global markets now wildly diverge from economic fundamentals."
"Monetary policy has been locked in super ultra-loose mode now entering an unprecedented fifth year. "
"Students of the late-1920s appreciate how late-cycle policy-induced market and economic distortions laid the groundwork for financial collapse and depression. Especially in 1928 and early-1929, highly speculative financial markets diverged from faltering global economic fundamentals. Our nation's business came to be precariously dominated by "money changers," financial leveraging and market speculation."
" In both cases, short squeezes played a prevailing role in fueling "blow off" speculative rallies."
"Actually, the most precarious backdrops unfold during a confluence of serious fundamental deterioration, perceived acute systemic fragilities, aggressive monetary policymaking and an already highly speculative market environment. "
" Today's Bubble is unique in the degree to which it encompasses global markets and economies. "
"Indeed, there is little doubt that the Draghi and Bernanke Plans are only exacerbating global systemic fragilities. They've bought some more time, but at rapidly inflating costs. We desperately needed global policymakers working assiduously to extricate themselves from market interventions and manipulations. They've again done the very opposite."
http://www.safehaven.com/article/26831/ ... e-its-1929

"The Fed now holds virtually no Treasury debt of maturity of less than 3 years, as Operation Twist and other efforts have been designed to force investors to choke on short-dated paper yielding next to nothing, in hopes of forcing them into riskier securities."
"In regard to why inflation has remained low, a useful way to see the relationship between the monetary base, interest rates, GDP and inflation is the “exchange equation”: MV = PQ, where M is base money, V is velocity, P is prices, and Q is real output. As is evident from the liquidity preference chart, base velocity (PQ/M) is tightly related to short-term interest rates. In fact, as long as short-term interest rates fall in response to increases in the monetary base, those increases have virtually no effect on real output, but instead translate almost directly into declines in velocity. Again, some data from 1947 to the present: "
" If we examine the way that QE actually operates, and how and why risk premiums have responded to prior rounds, it is entirely unclear that a further round will have much effect beyond an initial spike of enthusiasm."
http://www.hussmanfunds.com/wmc/wmc120910.htm

Proactive people http://www.youtube.com/watch?v=c0KYU2j0 ... re=related
Wonder why we are annoyed at times? I am a 80-20 I will ask the wifey later
but you know how that will go.... Opinions can be group think distortions to some.
Some of us unplugged from the noise for a reason already.

virtually no effect on real output Even the PMI local is off Vin.
We know they need 2.58% growth to tread water.
Vin if the velocity get traction the Hot money will seek your ends.

http://www.theatlantic.com/business/arc ... ve/256601/
I do not fell traction will enable hot aggregate inflation as we conveyed months ago to each other in resolve.
The invasion of property right in the depression not the market albeit itself hit the market between the eyes like a 2x4
and I will dig up the paper to provide granual evidence as Fisher noted on the other side of the coin as he did.
To many moving parts at the moment to gauge effective and nominal rate change....
Dave left few notes on ZH we have been framing out here also on the BOJ and our Price Targeting "nominal"
we just seen and more suspected. H had a graph on the slippage we noted as rope burn on the Dow on the actual nominal value
to the acepted linear log funtion utilized. It was ~9 percent then and the confusion on some Beta values got us thinking
just what are they doing. As we viewed "inclined" they are going BOJ