Financial topics

Investments, gold, currencies, surviving after a financial meltdown
wvbill
Posts: 65
Joined: Sun Oct 05, 2008 9:46 pm

Re: Financial topics

Post by wvbill »

I feel the final blow to the recovery and stock market could be the Christmas Shopping season.

If the markets have not crashed by November (which I feel they should), then once it becomes clear that the consumer is dead -- which will be evident by Christmas shopping season -- it will be clear there is no recovery.

The debt must unwind. The only question is when, and how much longer people will buy the fantasy.

I continue to hold inverse index funds, currently 4% underwater -- I want to be "in" when the downturn comes.

Bill

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: CNBC Interview with Nouriel Roubini, 9/14/2009

Post by Higgenbotham »

John wrote:There are many comments to be made on this interview, but for now
I'll just say that the economy has much, much farther to go down than
Roubini realizes.
John
First, he is saying that there will be no more failures like Lehman in the banking system.

Next, he says that housing will decline another 12% and half of all mortgages will be under water.

I think his next assumption is that more quantitative easing will be done to provide the money to make up for that and other shortfalls. He says that may create inflation.

But I think the real shortfall is in wages relative to the cost of other things. So unless wages can be inflated faster than household costs, I'm not sure that prevents the ultimate bankruptcy of the system once the inflation moves through the chain.

Also, those businesses that don't receive direct support will go bankrupt because their costs will rise but they will be unable to pass them on to an increasingly impoverished population.

After awhile, the chain reaction of bankruptcies will cause deflation anyway.

What am I missing?
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

John
Posts: 11479
Joined: Sat Sep 20, 2008 12:10 pm
Location: Cambridge, MA USA
Contact:

Re: CNBC Interview with Nouriel Roubini, 9/14/2009

Post by John »

Higgenbotham wrote:
John wrote:There are many comments to be made on this interview, but for now
I'll just say that the economy has much, much farther to go down than
Roubini realizes.
John
First, he is saying that there will be no more failures like Lehman in the banking system.

Next, he says that housing will decline another 12% and half of all mortgages will be under water.

I think his next assumption is that more quantitative easing will be done to provide the money to make up for that and other shortfalls. He says that may create inflation.

But I think the real shortfall is in wages relative to the cost of other things. So unless wages can be inflated faster than household costs, I'm not sure that prevents the ultimate bankruptcy of the system once the inflation moves through the chain.

Also, those businesses that don't receive direct support will go bankrupt because their costs will rise but they will be unable to pass them on to an increasingly impoverished population.

After awhile, the chain reaction of bankruptcies will cause deflation anyway.

What am I missing?
I don't think you're missing anything. I was wondering the same thing -- if so many
things are going wrong, how can he be so sure that there won't be another meltdown?
He's contradicting himself.

John

aedens
Posts: 4753
Joined: Tue Nov 04, 2008 4:13 pm

Re: Financial topics

Post by aedens »

Economic Calendar:

Tues: PPI, Core PPI, Retail Sales, NY Empire State Manufacturing, and Business Inventories;
Wed: CPI, Core CPI, Capacity Utilization, and Industrial Production;
Thurs: Building Permits, Housing Starts, Initial Jobless Claims, and the Philadelphia Fed.

We have not seen an increase in the monthly payment rate which would indicate that people are paying off their credit card debt faster than they have in the past. -- Cynthia Ullrich Fitch Ratings

CONSUMER CREDIT OUTSTANDING (Billions of dollars)
Q3-2588.0 Q42592.1 Q1 r 2517.0 Q2 r 2475.5 May r 2493.4 Jun r 2475.5 Jul p 2457.6

http://www.federalreserve.gov/releases/g19/current/

http://www.wlmlab.com/top25.asp?ln=lnall

Can you believe these libtards-----> http://www.reuters.com/article/wtUSInve ... YM20090915

Labor Force Statistics from the Current Population Survey
Attachments
LNS12300000_118121_1252997480528.gif
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aedens
Posts: 4753
Joined: Tue Nov 04, 2008 4:13 pm

Re: CNBC Interview with Nouriel Roubini, 9/14/2009

Post by aedens »

Higgenbotham wrote:
John wrote:There are many comments to be made on this interview, but for now
I'll just say that the economy has much, much farther to go down than
Roubini realizes.
John
First, he is saying that there will be no more failures like Lehman in the banking system.

Next, he says that housing will decline another 12% and half of all mortgages will be under water.

I think his next assumption is that more quantitative easing will be done to provide the money to make up for that and other shortfalls. He says that may create inflation.

But I think the real shortfall is in wages relative to the cost of other things. So unless wages can be inflated faster than household costs, I'm not sure that prevents the ultimate bankruptcy of the system once the inflation moves through the chain.

Also, those businesses that don't receive direct support will go bankrupt because their costs will rise but they will be unable to pass them on to an increasingly impoverished population.

After awhile, the chain reaction of bankruptcies will cause deflation anyway.

What am I missing?
http://generationaldynamics.com/forum/v ... 1990#p4173 and germans CB buying TBills and Not Bund to get past G20 meeting.

Fed's Trade-Weighted Dollar Index against the Major Currencies (Euro, Sterling, Yen, etc) where the U.S. trade deficit isn't and against the OITP (Other Important Trading Partners -- Brazil, Russia, India, China) where the U.S. trade deficit is. In the last 90-days, the dollar has depreciated near 8% against the major trading currencies and only -1.5% against the OITP.

Discern carefully http://www.tnr.com/article/economy/peki ... r-shoulder but they need to understand that we are at ideological cross roads. Notice today who Mr. Obama anounced and who he did not such as SEC, FINRA ect..... Mr. Obama is tired of the kids in the sandbox. So am I, and I think his education is nearly completed. Gentlemen we have been at the crossroads long enough. This what I do know to date.

"A bank that generates the major part of its income from trading should not be allowed to have a banking license," Volcker, an economic adviser to the Obama administration, said.
Asked about introducing caps for bankers' pay, Volcker said bankers would find a way around that.
"We're seeing it already; it's obscene what they're earning," he said.
One year after the Lehman Brothers collapse, Volcker said he feared Wall Street would return to its old ways and "we will miss the train for reform".
He said he did not think inflation was an immediate threat given the high unemployment and weak global economic growth.
Asked about the high U.S. deficit, Volcker said it was not a problem for the time being.
To tackle the crisis the Federal Reserve had injected an enormous amount of liquidity into the system, he said.
"For now we can absorb this but it could be a problem when the economy starts to grow again".
Volcker said the rating agencies had contributed to the breakdown of the financial system.

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

Re: Financial topics

Post by Gordo »

The previous greatest sucker's rally in history, play by play. Here's what people were thinking during the "new bull market" of early 1930.

The newspaper quotes from the 1930's could easily be mistaken for today's commentary if you didn't know the dates.

John
Posts: 11479
Joined: Sat Sep 20, 2008 12:10 pm
Location: Cambridge, MA USA
Contact:

Parabolic

Post by John »

The market is going parabolic today. The S&P 500 is up 15 points so
far today, to 1067. Just another 13 until it reaches 1080.

John

Samir
Posts: 32
Joined: Wed Apr 29, 2009 10:45 am

Re: Financial topics

Post by Samir »

Wall Street Pursues Profit in Bundles of Life Insurance

Not sure if this has been mentioned here yet, but apprently Wall Street is not done with their odd financial instruments. So clearly we have not learned the lessions that the previous generations learned. That is assuming investors are actually biting on these things.

aedens
Posts: 4753
Joined: Tue Nov 04, 2008 4:13 pm

Re: Financial topics

Post by aedens »

Samir wrote:Wall Street Pursues Profit in Bundles of Life Insurance

Not sure if this has been mentioned here yet, but apprently Wall Street is not done with their odd financial instruments.
So clearly we have not learned the lessions that the previous generations learned. That is assuming investors are actually biting on these things.
Yes there are some mention of it in forums and two Bankers we incarcerated from our federal case for covenant violations.
http://www.lisassociation.org/vlsaamemb ... tition.pdf

The viatical settlement industry emerged out of the AIDS crisis of the early 1980s, when terminally ill patients no longer able to
support themselves began to look for ways to sell the right to receive benefits under their life insurance policies to third-party purchasers to pay for essential medical care and other end-of-life expenses.
See
Charles Duhigg, Late in Life, Finding a Bonanza in Life Insurance, N.Y. TIMES, Dec. 17, 2006 (“Hedge funds, financial institutions like Credit Suisse and Deutsche Bank, and investors like Warren E. Buffett are spending billions to buy life insurance policies from the elderly.”). According to the Fourth Circuit, “t is estimated that $13 billion worth of life insurance policies were sold by policyholders to providers in 2005—up from $5 million in 1989 and $200 million in 1998—and it is projected that by 2030 the number could reach $160 billion.” Pet. App. 7a. The federal government itself has stimulated the viatical settlement market by amending the Internal Revenue
Code to exclude the proceeds of a viatical settlement from the viator’s taxable income. 26 U.S.C. § 101(g)(2).
The growth of this market spurred state efforts to regulate viatical and life settlements to ensure that insureds are treated fairly when selling their policy benefits. Approximately 38 States have enacted various versions of the Viatical Settlements Model Act developed by the National Association of Insurance Commissioners (“NAIC”), or similar model legislation drafted by the National Conference of Insurance
Legislators.

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Parabolic (Maximum Ruin Update)

Post by Higgenbotham »

John wrote:The market is going parabolic today. The S&P 500 is up 15 points so
far today, to 1067. Just another 13 until it reaches 1080.

John
John,

I took my loss today, as what is going on looks nothing like what I expected (for example, look how much gold and silver went up today and how low the dollar is - I had predicted that would not happen). Shorting this bear market rally destroyed almost 8% of my net worth. The S&P is up 13.5% from where I started shorting.

Analyzing my psychology heading into this exercise in Maximum Ruin (which has probably been gleaned by anyone reading this thread): First, I had made some money in the previous bubble from 2003 until 2007, although I did sell everything 1-2 years before their respective highs (real estate, stocks, etc). Then I was short at the top of the stock market in 2007 and made some money there. And, as we know from the forum, I made a little money last Fall buying and selling stocks. So I hadn't lost a dime going into this exercise. I think what can happen in such cases is that a person becomes overconfident and doesn't consider their actions carefully enough. In addition, the overconfidence results in the failure to take the actions that one knows should be taken. I knew that I should be in safe cash and tangibles and should not be fooling with the market.

As I watched my money get destroyed today, I told myself over and over that this will be the last time I ever speculate. I realized that the actions that had led to my previous success (or perhaps luck would be a better word) were based on similar thinking to what had led to taking the short position to begin with, but that I was basically standing in front of a tsunami that I had incorrectly identified. As we stated the other day, this market environment is nothing like that which existed previous to the crisis (and perhaps will be less similar to the past generational crisis than anticipated). During that time, it always seemed like the market would forgive your errors and let you out gently.

Generally, the country hasn't learned this lesson yet, but this small exercise in Maximum Ruin gives me a taste of what is coming and how people are going to feel when it is over. It's going to be a very different world once this market crashes for real. Of course, having an understanding of what is coming makes all the difference because we all know that the days of easy money are over and once your savings are lost it will be impossible to recover them. One of the big problems I see is that our leaders have convinced many that the days of easy money are not over, when in fact they most likely are. Without that knowledge, losing this money probably wouldn't have bothered me much. For example, about 12 years ago, I lost about 20% of my money in the market. At that time, it didn't bother me nearly as much as losing 8% today and, in fact, I hadn't ever calculated the percentage until just recently. Looking back on that now, I must have been nuts but I guess that's what third turnings are about and fourth turnings exist to sober people up.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

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