Financial topics

Investments, gold, currencies, surviving after a financial meltdown
aedens
Posts: 4753
Joined: Tue Nov 04, 2008 4:13 pm

Re: Financial topics

Post by aedens »

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Higgenbotham
Posts: 7436
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Re: Financial topics

Post by Higgenbotham »

During what I believe were similar stages of the Tulip Bubble and the South Sea Bubble, there appeared open revulsion or formal governmental attempts to curb the bubbles (August 18, 1720 Bubble Act enforcement during the South Sea Bubble for example). So far in China and the US, there is only talk of curbing the bubbles (Chinese authoritites hinted last week and in the US there is HR 1207). Despite my belief to the contrary, the markets still seem unperturbed by HR 1207, swine flu, earnings or anything else. The bubble in Shanghai reached a new high last night and likewise in New York just a few minutes ago, exceeding the historical models I am using as well as (it appears anyway) the likely time window set up by Didier Sornette and others who used different methods to estimate that the bubble in Shanghai would burst between July 17 and 27. If they used 80% probability for that time window, then 7 days beyond it would put it well into the the upper 90's assuming normal distribution of outcomes. But as we know, the world is not normally distributed. I continue to stay short and watch in amazement!
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

freddyv
Posts: 305
Joined: Sat Oct 04, 2008 4:23 am
Location: Oregon, USA
Contact:

Re: Financial topics

Post by freddyv »

Higgenbotham wrote:
John wrote:I don't want to put words into anyone's mouth, but I believe that
Higgenbotham, Gordo, and freddyv all said some time ago that they
were going short. I imagine that they're all in a great deal of
(financial) pain right now.

Sincerely,

John

...and loving it! (Thanks to Don Adams of 'Get Smart' fame for that quote)

Yes, I have been taking a beating on my short positions for literally months now but those positions were meant to hedge against an economic slowdown and until I see clear evidence that the future looks bright and sunny I will stay with that position. Anyone who jumped on the short bandwagon late deserves a beating just like someone who jumps on this bullish bandwagon that's loading up right now.

It does hurt to lose money but if I am totally wrong and the economy simply turns around and begins growing and everyone is happy then my strategy has served its purpose and my business will grow and easily make up for what I lost in the stock market. If the stock market tanks again as I believe it will I will be protected even if my business suffers. That really should be everyone's strategy in times like these: to protect and survive.

I find myself sticking to my original strategy but also steping back and making sure that I can survive an even longer downturn that originally expected. Here's my worst case scenario:

The DJIA "fills the gap" left by the crash in October 2008, moving above 10,000, to within less than 10% of the 11,000 level of August/September of 2008. This creates the false sense of security needed to get many more suckers on the bandwagon in order to destroy as much wealth as possible (I remember discussing this here a year ago, at least) and then it proceeds upon its merry way to 'retrace' its gains...only much to Jim Cramer's dismay, the market didn't hit bottom in May 2009 but continues to make new lows on its way to fill an even bigger gap left during the rise from 1982 to 2007.

An endless series of unintended consequences exposes the weakness in the American and European economies as unemployment remains grows to real levels worse than The Great Depression and the stock market moves ever lower. Even those who "control the markets" such as Goldman Sachs are beaten senseless, losing more money than they can shake their own, personal, Treasury Secretary at.

The American taxpayer is slowly paying their way out of debt only to find that AIG, Citigroup and all the other bailouts and stimulus really were paid for by them. Anger grows and then despression sets in when people can't quite figure out who is to blame for all of this. America becomes a third-world country, without the will to climb out of the depression. Video games and cable TV are still cheap and as long as the power stays on....

--- End of worst case secario.

I hope I am wrong but how can we ever deal with the debt we as a nation have unless we actually face reality? We are not facing reality and those of us that believe Generational Dynamics is truly predictive should be able to see that this is going to be a long process, just as long as the process that got us into this mess. I believe that the only real mistake John (and I) has made in all of this is not seeing just how long of a process this crisis era will be. It's easy to get caught up in the similarity to history but our crisis era will play out in its own, unique way and will often do what we least expect of it. We will not have a Great Depresson and Hitler; perhaps we will have a Long Depression and a coup?

What each of us must do is make sure that we and the ones we care about can survive a worst case scenario. If we are wrong then perhaps we have lost some money but we should be glad if that's the case.

--Fred

JimZ
Posts: 34
Joined: Sat Oct 11, 2008 9:04 am

Re: Financial topics

Post by JimZ »

Freddyv said:
I hope I am wrong but how can we ever deal with the debt we as a nation have unless we actually face reality? We are not facing reality and those of us that believe Generational Dynamics is truly predictive should be able to see that this is going to be a long process, just as long as the process that got us into this mess. I believe that the only real mistake John (and I) has made in all of this is not seeing just how long of a process this crisis era will be. It's easy to get caught up in the similarity to history but our crisis era will play out in its own, unique way and will often do what we least expect of it. We will not have a Great Depresson and Hitler; perhaps we will have a Long Depression and a coup?
And down goes the tax revenues as well - off, in the biggest drop since 1932. Hmmm, that year keeps popping up.

http://news.yahoo.com/s/ap/us_plummeting_taxes

As far as a "coup" goes, some could argue that has already occurred.

xakzen
Posts: 80
Joined: Wed Mar 25, 2009 11:59 am

Re: Financial topics

Post by xakzen »

Higgenbotham wrote:... The bubble in Shanghai reached a new high last night and likewise in New York just a few minutes ago, exceeding the historical models I am using as well as (it appears anyway) the likely time window set up by Didier Sornette and others who used different methods to estimate that the bubble in Shanghai would burst between July 17 and 27. If they used 80% probability for that time window, then 7 days beyond it would put it well into the the upper 90's assuming normal distribution of outcomes. ...
Maybe it's not too late to rule out your Shanghai scenario:

http://www.msnbc.msn.com/id/32262705/ns ... d_business

I remember a few years ago the CCP tried to cool off stock speculation and it's transaction fee increases were blamed for the inevitable crash. They will probably try something different this time with the same results.

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

Re: Financial topics

Post by Higgenbotham »

xakzen wrote:Maybe it's not too late to rule out your Shanghai scenario:

http://www.msnbc.msn.com/id/32262705/ns ... d_business

I remember a few years ago the CCP tried to cool off stock speculation and it's transaction fee increases were blamed for the inevitable crash. They will probably try something different this time with the same results.
The longer the Chinese procrastinate, the less likely they can deflate the bubble in an orderly way. So I don't think it's too late for the scenario, but my posts do show that, try as one might, it is very difficult to time the top of a bubble. I remember what you mentioned about the transaction fees from a couple years ago because I was short at that time and looking for an accident in Shanghai. My timing was off by 2.5 months on that one. To me, the current scenario looks much more dangerous because people are speculating on objects (stock shares) based on a belief in the revival of earnings which have been drastically reduced. So it seems kind of similar to speculating on tulip bulbs or South Sea shares.

This article also shows something mentioned a month or so ago, that being that nothing at all has been learned in the past 2 years. That's part of why I believe that the "real" generational stock market crash is still coming up. Stocks look more overvalued than they did 2 years ago. The fact that corporate tax revenues are down 57% year over year in the US demonstrates that pretty well.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

freddyv
Posts: 305
Joined: Sat Oct 04, 2008 4:23 am
Location: Oregon, USA
Contact:

Re: Financial topics

Post by freddyv »

For those of you ready to give up and go bullish just look at what is really going on and then take some advice from an old, old, man who has been carefully watching the stock market since well before I was born.
Richard Russell wrote: Incidentally, two of the greatest attributes an investor can possess are —

(1) Phenomenal patience. Most amateurs are impatient and they demand action. The desire for action has probably cost more people more money than anything else I know of. Please re-read “Rich Man, Poor Man” article on the home page.

(2) A knowledge of history, and an appreciation of risk. The great fortunes in the stock market have been made in the BUYING. There is no substitute for buying great values. Great values usually present themselves at true bear market bottoms at a time when nobody will touch them

...

We’ve experienced 27 years of generally rising prices from 1980 to 2007, in which profits were easily and readily available. However, over time, the markets tend to even out. Therefore, I foresee a long period ahead when the opposite holds true, and in which it will be very difficult to accumulate profits and very easy to lose money. I hope I’m wrong, but that’s what I expect
--Fred

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

Re: Financial topics

Post by aedens »

Rep. Richard Neal, D-Mass., chairman of the House subcommittee that oversees fuel taxes, is working on a package to make the fund more self-sufficient.
The Estimated Costs to Households From the Cap-and-Trade Provisions of H.R. 2454
http://www.cbo.gov/ftpdocs/103xx/doc103 ... ranges.xls <-------- notice amount
And the costs will be measured of course by best Government revenue nuetral means.
==============================================
Then: Sun Dec 07, 2008 3:10 pm
Sir,
Being pressed for time today can you remember that scammer's name you linked for the coming carbon energy credit scam to unfold very soon on ill advised investors.
==============================================
Meanwhile: http://hosted.ap.org/dynamic/stories/N/ ... TE=DEFAULT
Non payment for carbon credits already to be funded by as we can assume the taxpayer very soon one way or another to the spin
doctors of revenue nuetral acromony.
http://www.cbo.gov/ftpdocs/104xx/doc104 ... ffsets.pdf
And what under there all seing eye has changed?
http://www.eia.doe.gov/cneaf/alternate/ ... ends08.pdf
Consumption:
Renewable energy consumption grew by 7 percent between 2007 and 2008, despite a 2
percent decline in total U.S. energy consumption (Table 1). Total renewable energy
consumption increased by 487 trillion Btu to 7,301 trillion Btu. This is the highest level
attained based on EIA estimates of renewable energy back to 1949, and is due to
substantial increases in the use of biofuels, wind and solar energy. Renewable energy’s
share of total U.S. energy consumption was over 7 percent in 2008, compared to 6
percent in 2004
Just another option we do not need or want as a taxpayer. Energy plan? Since when has
Washington had a viable plan since the 70's Oil cash grab? There only ability is "all Government"
cost more than needed for a free market.

In addition:
If you listened to Timmy G. today, tax increase, all is on the table <--- Timmy call rate from now on. Given stats it is
almost here A. Taxpayer there just filling in the blanks since what output value to they provide as employers?
Comprehensive household income equals pretax cash income plus income from other sources. Pretax cash income is the sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement benefits plus taxes paid by businesses (corporate income taxes and the employer's share of Social Security, Medicare, and federal unemployment insurance payroll taxes) and employee contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance).
http://www.heritage.org/Research/Energy ... table1.pdf
How to generate severe stagflation in the years 2010 through 2019 right on que thanks Washington provided below.
The Macroeconomic Effects of Tax Changes: Estimates Based on a new Measure of Fiscal Shocks, by Christina D. and David H. Romer (March 2007). (Christina Romer now chairs the president's Council of Economic Advisors). This study found that the tax multiplier is 3, meaning that each dollar rise in taxes will reduce private spending by $3."
In the same vein: This is from Professor Fisher's book entitled 100% Money, revised edition
published by The Adelphi Company (1936)

There is a growing opinion among specialists in this field that the per
capita money income is approximately equal to three times the per capita
money in circulation. Should this opinion be confirmed - that money and
money income maintain an approximately constant ratio or even that this
would be true in the absence of great booms and depressions - we would
reach the rather startling conclusion that to maintain the dollar as a
fixed fraction of per capita income would amount to the same thing as
fixing the per capita supply of money and that the only statistics needed
by the Currency Commission would be those of population.
We cannot, as
yet, be sure that the two criteria - a fixed per capita quantity of money
and a dollar as a fixed fraction of the per capita income - are so nearly
the same; but we can at least be sure that the per capita quantity plan
would not be a bad solution of the money problem.

Debased and flushed to dead banks to the proclivity of few causing
consumer resentment

August 2, 1930
Walter P. Chrysler sees improvement in auto industry, believes business generally on upturn; not overly optimistic about immediate future, but believes business in almost every line has hit bottom; also believes commodity prices at bottom. Pres. Grace of Bethlehem Steel confident bottom reached in steel demand and prices. Erie Rail Pres. C. Denney sees some signs of improvement.
Last edited by aedens on Thu Aug 06, 2009 10:01 pm, edited 15 times in total.

xakzen
Posts: 80
Joined: Wed Mar 25, 2009 11:59 am

Re: Financial topics

Post by xakzen »

Higgenbotham wrote:The longer the Chinese procrastinate, the less likely they can deflate the bubble in an orderly way.
I do not believe anyone has ever been successful deflated a bubble (and at least been able to claim credit for having done so). Much as Greenspan complained of "irrational exuberance", several Chinese officials at the time complained about their then stock bubble in 2007(?) to no effect. It wasn't until they imposed the fees that the bubble popped. Again this time they will likely have to limit credit to pop this one.

As far as the US stock market the earliest I anticipate a turn around is when Q3 earnings actually don't double as every analyst is forecasting. Or possibly as early as this month if back to school retail sales do not materialize.
This article also shows something mentioned a month or so ago, that being that nothing at all has been learned in the past 2 years. That's part of why I believe that the "real" generational stock market crash is still coming up.
I agree and the antic dote about the man investing his life savings into the Shanghai bubble is proof.

In the spirit of full disclose I have been stopped out of most of my short positions because of margin requirements. Costly lesson learned I hope and in complete agreement with John's Maximum Ruin principle. Fortunately I don't gamble (invest) with money I need.

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

Re: Financial topics

Post by aedens »

Higgenbotham wrote:During what I believe were similar stages of the Tulip Bubble and the South Sea Bubble, there appeared open revulsion or formal governmental attempts to curb the bubbles (August 18, 1720 Bubble Act enforcement during the South Sea Bubble for example). So far in China and the US, there is only talk of curbing the bubbles (Chinese authoritites hinted last week and in the US there is HR 1207). Despite my belief to the contrary, the markets still seem unperturbed by HR 1207, swine flu, earnings or anything else. The bubble in Shanghai reached a new high last night and likewise in New York just a few minutes ago, exceeding the historical models I am using as well as (it appears anyway) the likely time window set up by Didier Sornette and others who used different methods to estimate that the bubble in Shanghai would burst between July 17 and 27. If they used 80% probability for that time window, then 7 days beyond it would put it well into the the upper 90's assuming normal distribution of outcomes. But as we know, the world is not normally distributed. I continue to stay short and watch in amazement!

Many have pointed out in severe stress times equity survived and bonds where crushed. May we see the Equity market rush as the endgame play.
It happened to them then and someone may remember the article timeline to the event. I have the acticle in mind but not the cycle time line to the
exhaustion correlation of the event but it is apparent there in that timeline today as we have noted. You can get a free ticket out of New York now
since that is the blowback from oh so special New York to there citizens. Meanwhile, its bank payout time.
Like many said before debased money is debased people. No irony, just simple truth in history.
Last edited by aedens on Thu Aug 06, 2009 10:53 pm, edited 1 time in total.

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