# Robert Wiedemer: A bigger fall than the GFC?



## Aussiesteve (5 November 2013)

Robert Wiedemer apparently says in his book "Aftershock" that we are headed for a bigger fall than the GFC.
His point is that the last few decades have been built on a bubble rather than productivity and that there will be an asset crash by 2014 of up to 50%. Just wondering what people thoughts are on this.  Fear mongering or common sense? I'm undecided myself.

Links:
http://www.moneynews.com/Outbrain/b...-stock/2012/08/29/id/450265?PROMO_CODE=FE8A-1

Here's a Youtube interview: http://www.youtube.com/watch?v=CLDjPqAf7AQ

On the opposite tack: http://www.forbes.com/sites/investo...ho-predict-the-collpase-of-money-are-wrong/2/


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## CanOz (5 November 2013)

I can say with 100% certainty that he is right, we will have another bust....

Been doing so for decades, boom/bust_boom/bust_boom/bust

All the bears come out to play, build their mud brick shelters and hoard tinned food...that's when you buy everything you can get your hands on...

Perhaps this one will be bigger, perhaps not. If its one thing we have proven as a race, we are very bad at predicting the future with certainty in terms of scale.


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## pavilion103 (5 November 2013)

I think we are likely to but I don't know the specifics. 

All I know is that I'll be keeping two eyes glued to the markers to give myself the best chance possible to profit from it, should it occur!


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## McLovin (5 November 2013)

His premise, that productivity has flatlined for decades, is wrong. The real issue, in the US, is that the gains in productivity have flowed to the wealthy rather than to the workers. Real wages in the US peaked in the 1970's and have been going backwards since then.

As for his prediction, it might happen it might not.


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## Bort (5 November 2013)

Why read the papers when you can make an action plan for when price indicates you need to act?

Why get concerned when channel 9 news is predicting a massive storm across your state when you can close your windows, park in the garage and check you paid your insurance?

Crash - fait accompli. 

Whether you have an action plan - ?


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## trainspotter (6 November 2013)

Bort said:


> Why read the papers when you can make an action plan for when price indicates you need to act?
> 
> Why get concerned when channel 9 news is predicting a massive storm across your state when you can close your windows, park in the garage and check you paid your insurance?
> 
> ...




+1 ... markets come and go, opportunities knock, prices rise and fall. Only difference is a few more 000's behind the game. Trick is to make money on the inception and serious coin on the way out of the end result.

Why stop at 50% ? The sky is falling so go the whole biscuit and prove anarchy. Not only fiscal debt keeps the world sane at the moment. People who fail to plan ... plan to fail.


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## tech/a (6 November 2013)

All well and good to----err plan.
But if the US defaults I doubt anyone could plan for the domino effect it will generate.

Anarchy---highly likely-- when governments cant pay for essential services and people want -- need essential services---you'll see anarchy.
Just look at Greece or Syria to see past minor glimpses of -- "out of control".

Ignorance is bliss.


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## Macro Polo (6 November 2013)

tech/a said:


> All well and good to----err plan.
> But if the US defaults I doubt anyone could plan for the domino effect it will generate.
> 
> Anarchy---highly likely-- when governments cant pay for essential services and people want -- need essential services---you'll see anarchy.




People would probably be happier if they stopped worrying about a US default - it is not going to happen, the blow off valve for spiraling debt never needs to be default because of the way primary dealers are forced to make a market for treasury auctions. This means if all else fails, the government can forcibly extend private bank credit to buy new treasuries (worst case is probably inflation, not default). But that is only if things get so bad - more likely China's growth model (repressed consumption, forced investment) blows up and the US trade deficit becomes structurally lower and China stops managing it's currency by building up reserves of US treasuries.

As for equities though, it would probably take a 50% fall or more for long term valuations to reach territory that would signal a new secular bull market (CAPE10 etc.), so it's definitely possible.


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## trainspotter (6 November 2013)

tech/a said:


> All well and good to----err plan.
> But if the US defaults I doubt anyone could plan for the domino effect it will generate.
> 
> Anarchy---highly likely-- when governments cant pay for essential services and people want -- need essential services---you'll see anarchy.
> ...




Don't forget Portugal with national 25% unemployment and 50% unemployment if you are under 25. Was there last year. Beer is 70 cents a glass, dining a la carte' is about $15.00 AUD. Nearly every house has a vege garden and a chicken coop. Rent a room for 17 Euros a month. Mass demonstration in Lisbon due to Guvmint austerity measures.

Already happening throughout Europe ... Spain not much better. Loved Tarifa and it's cafe' laid back style. 

US defaulting is unlikely IMO as both sides of politics like to sabre rattle to get their own way. Lack of planning from the Obama administration in general. 

The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury. Like Macro Polo said ... China sneezes it will be the USA that gets the cold.


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## Macro Polo (6 November 2013)

trainspotter said:


> The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury. Like Macro Polo said ... China sneezes it will be the USA that gets the cold.




Almost, but I look at it the other way round - China's economic model has basically forced the US to run a current account deficit, not the other way round, the US hasn't forced China to run a trade surplus! Mostly because the US is the only market large enough to handle such trade imbalances and so China's trade surplus policies are forced upon the US as a deficit. There is plenty of demand for US debt, with or without China, and the US would be in a more healthy situation if there was less foreign demand for US paper, as a smaller trade and current account deficit would allow the US economy to start growing in a healthy manner again rather than moving from bubble to bubble.

China sneezes and Australia catches a cold is more in line with my thinking. US to outperform us both after another market hiccup to get valuations back to something sensible.


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## trainspotter (6 November 2013)

Macro Polo said:


> Almost, but I look at it the other way round - China's economic model has basically forced the US to run a current account deficit, not the other way round, the US hasn't forced China to run a trade surplus! Mostly because the US is the only market large enough to handle such trade imbalances and so China's trade surplus policies are forced upon the US as a deficit. There is plenty of demand for US debt, with or without China, and the US would be in a more healthy situation if there was less foreign demand for US paper, as a smaller trade and current account deficit would allow the US economy to start growing in a healthy manner again rather than moving from bubble to bubble.
> 
> China sneezes and Australia catches a cold is more in line with my thinking. US to outperform us both after another market hiccup to get valuations back to something sensible.




You say potato ... I say potato. China is depressing the value of the yuan by purchasing USA bonds etc. Agreed. China would have a fair bit to say about the debt ceiling impasse as well I am thinking.

20% of all our export goes to China. China owns very little of our debt. China on the other hand owns approx 8% of publicly held debt of the US. Concerned? Not me ...


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## trainspotter (6 November 2013)

http://www.pagetutor.com/trillion/index.html

What does a trillion look like? 

*Export contracts signed at a major trade fair in China hit their lowest in four years, state media reported, indicating foreign demand for the country's goods is still weak.*

The value of export deals signed at the China Import and Export Fair reached 194.61 billion yuan ($A33.41 billion), the lowest since the depths of the financial crisis in 2009, the official Xinhua news agency said after the event closed Monday.

The figure also marked a fall of three per cent from the last autumn session and a 10.9 per cent decline from the spring session this year, according to a statement on the fair's website.

The twice-yearly event - also called the Canton Fair after the former foreign designation for the southern city of Guangzhou - was created in 1957 and is the largest trade event in China making it a barometer of the country's foreign trade, Xinhua said.

'The decrease from both the spring and last autumn sessions indicated that the world economic recovery remains on an uncertain and unstable course, which continues to challenge the stability and development of China's foreign trade,' the report quoted fair spokesman Liu Jianjun as saying.

Exports to emerging markets including India, Brazil and those in southeast Asia, generally fell year on year, with those to the Middle East leading the decrease with a drop of 15.5 per cent, according to the fair's statement.

Shipments to the United States and Japan increased 11.8 per cent and 42.8 per cent year-on-year respectively, in contrast with a fall of 2.4 per cent to the European Union, it added.

http://www.skynews.com.au/businessnews/article.aspx?id=921721

:holysheep:


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