# When will the market pick up/recover?



## agro (13 August 2008)

i am guessing christmas..

anyone else want to have a stab

resources r just getting mauled at the moment


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## prawn_86 (13 August 2008)

Well a usual bull market last about 18 - 24 months historically, and we are about a year in, so im tipping about this time next year things will really start to take off again and all the taxi drivers (hello Kennas) will flood back in


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## questionall_42 (13 August 2008)

prawn_86 said:


> Well a usual *bull *market last about 18 - 24 months historically, and we are about a year in, so im tipping about this time next year things will really start to take off again and all the taxi drivers (hello Kennas) will flood back in




The power of one word... wouldn't it be great if we were one year into a new bull market...

As for the prediction: I can't see any new bull market evolving... ...


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## prawn_86 (13 August 2008)

LOL thanks for picking that up.

Obviously i meant BEAR market.

I think there will be another bull market. Im sure in all the other bear markets people were saying "i cant see another good run happening", but it does always seem to...


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## jono_oz (13 August 2008)

Hi guys,
I am only a beginner at this - but I was wondering if someone could explain to me how if, St George and Bendigo Banks have a 40-50% increase in profits and CBA has a 7% increase to $4Billion-ish dollars, our banking system is in crisis??? 

It seems to me that the whole American disaster is simply superimposed onto our banking system.

I am constantly confused by conflicting media reports of imminent recession, Vs the RBA needing to slow down our rampant economy? Can someone tell me which is it? Is our economy so rampant that it needs slowing or are we in a recession? 

John the confused!


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## CanOz (13 August 2008)

jono_oz said:


> Hi guys,
> I am only a beginner at this - but I was wondering if someone could explain to me how if, St George and Bendigo Banks have a 40-50% increase in profits and CBA has a 7% increase to $4Billion-ish dollars, our banking system is in crisis???
> 
> It seems to me that the whole American disaster is simply superimposed onto our banking system.
> ...




John, I'll have a little stab at this for you. Believe me we are all beginners or Arm Chair Economists, but hell its interesting!

Generally Aussie banks are in better shape (they claim) than US banks and most international banks. They had less exposure to sub prime loans through those derivatives than did other banks so they can actually record some gains instead of losses. CBA i believe had more exposure than STGB and BB. Can anyone confirm this? 

They say there is a banking crisis because there is still a credit crunch, or a lower supply of credit than there was a few years ago. This is reflected in the difference between the O/Night or discount rate and the lending rate. The bank lending rates tend to be higher because there is, or they think there is, more risk in lending at this time and they require a larger premium to make money. Credit is tight, and this among other things will affect the growth of the economy.

The RBA, while trying to fight inflation realizes that its measures are probably working to slow down the economy and rein in inflation (so it thinks). Its now seeing some stats showing that the economy is slowing and they may need to hold rates or even cut rates to avoid a hard landing (a steep decline in growth ending in recession). Maybe they will just talk down the dollar and hold the rates. Some of this lost growth is due to fewer exports (from a strong dollar) and some is due to less domestic demand in the form of consumer spending, and perhaps very little housing growth....i'm not going there in this thread though.

Anyone else care to explain further? You there Dhukka?

Cheers,

CanOz


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## agro (13 August 2008)

jono_oz said:


> Hi guys,
> I am only a beginner at this - but I was wondering if someone could explain to me how if, St George and Bendigo Banks have a 40-50% increase in profits and CBA has a 7% increase to $4Billion-ish dollars, our banking system is in crisis???
> 
> It seems to me that the whole American disaster is simply superimposed onto our banking system.
> ...




to some extent i think what we choose to beleive is based on what the media feeds us..

if media says we are doom and gloom then people will crack it ..

i beleive our economy is stronger than ever, 

don't beleive this bs about the commodity demand from china weakening

until they start making buildings out of plastic they will always need raw materials


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## wayneL (13 August 2008)

agro said:


> to some extent i think what we choose to beleive is based on what the media feeds us..
> 
> if media says we are doom and gloom then people will crack it ..
> 
> ...



You still need oil to make plastic.

But.... what if commodity demand weakens? Even static demand would probably result in price falls in the near/medium term as more supply comes on line.

Now that the olympics develpoment push is now done and dusted, extra demand will have to come from somewhere.


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## tech/a (13 August 2008)

*When will the market pick up/recover?*

At around 4100 ish


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## wayneL (13 August 2008)

tech/a said:


> *When* will the market pick up/recover?
> 
> At around 4100 ish




Is that a level or a date? ::

I'm far more bullish at 2013.


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## jersey10 (13 August 2008)

wayneL said:


> Is that a level or a date? ::
> 
> LOL
> 
> very good Wayne


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## gav (13 August 2008)

I guess it all depends on your interpretation of a "pick up" or "recovery".  Is 5400 a recovery? How about 5800? And how long does it need to stay above that for it to be defined as a 'recovery'?

I dont care too much what the market as a whole does, as the SP of the companies I have $$$ in go up! :


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## agro (14 August 2008)

good too see commodities back in focus today

stronger for longer


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## explod (14 August 2008)

agro said:


> good too see commodities back in focus today
> 
> stronger for longer





Yes, an up day with the Banks down.   Reckon we will see a lot more of this.


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## korrupt_1 (14 August 2008)

santa says xmas... because he will bring goodies for everyone... 

I'd stick my stockings out and say that the santa rally will be big this year...


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## Tysonboss1 (14 August 2008)

My feelling is that the market is bouncing off the bottom now,.. 

I am actively buying back in now to select stocks, However I am not expecting a quick recovery but things should strart to strenghten from here on in.


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## Go Nuke (14 August 2008)

jono_oz said:


> Hi guys,
> I am only a beginner at this - but I was wondering if someone could explain to me how if, St George and Bendigo Banks have a 40-50% increase in profits and CBA has a 7% increase to $4Billion-ish dollars, our banking system is in crisis???
> 
> It seems to me that the whole American disaster is simply superimposed onto our banking system.
> ...




Well..its like this.

Our banks are in better shape than say U.S banks with little exposure to the sub prime market.
Though because of the credit crunch as CanOz said there are higher borrowing costs for banks, so the poor buggers at CBA only made a $4Bil+ profit.

Here are some statements made by the Deputy Governor of the reserve bank today...


> When we look at bank profitability, we find that Australian banks are around the top of the international range. On the surface, this could indicate a lesser degree of competition than elsewhere. But when we look a bit deeper it seems that an important reason for the high profitability of Australian banks is their unusually low bad debt experience. Over the past decade or so, bad debts of Australian banks have been about half the long run average, and also around half the experience of overseas banks. This has been the result of the very strong domestic economy. It is also worth noting that other Australian industries have been very profitable over this period.
> 
> If we adjust for the unusually low bad debts of recent years, the profitability of Australian banks falls back to around the middle of the international range.





Though I'm sure he also said the other day that the lending rate for banks had come down and that there would be no reason for the banks not to pass on any official rate cuts *in full*

of course banks being the greedy bastards that they are, will NOT cut interest rates *in full* if the reserve bank does.

As for the market turning around, well typicaly as resouces go up, banks go down. With the strengthening U.S dollar i think resources will level out or decline and the financials will slowly begin a wobbly climb back up.


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## njc.corp (14 August 2008)

i think all this talk is related to media-

since i hate blaming people-i will blame the media-

they cause problems only to sell papers-(no actual honest facts and stat's)

i have heard nothing in the media apart from bad new's

the interest rate's and oil prices was un called for and the jump was to harsh-(lets not lie about that)

we all know this is a good country and we are tough-but yet we seem to follow the silly people-

i am not rich or loaded- i just know how much i can repay back-

while i see people going crazy on buying a house and $100,000 and car's all on credit-?

when rates go up or something hits the fan-they cry? give me a break-and rip out money stress-

the australian are under stress because they can manage their loan's

i mean this credit crunch is related to people who cant pay back or am i wrong here?

what happen to the good old days when u needed a decent % for a house loan- i knew their was going to be problems when u give people 100-110 % $$$?

did the banks fall alseep or got greedy? seems they are paying the price and the myth of banks never losing is not a myth but a relaity now-

i do think 6-12 months of pain to come-due to other peoples lack of thinking-

can anyone tell me how long the last good run lasted for?

or maybe i am getting to serious for this topic-

Thanks

Nick--


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## sqwark7600 (18 August 2008)

Tysonboss1 said:


> My feelling is that the market is bouncing off the bottom now,..
> 
> I am actively buying back in now to select stocks, However I am not expecting a quick recovery but things should strart to strenghten from here on in.




I tend to agree and am positioned accordingly. If I could see the negatives in the following sentiment stimuli I would not be so confident.

Consumers:
House prices are cheaper and falling.
Interest rates are under negative pressure.
Australian housing loans are full recourse as opposed to US non-recourse.
Australian unemployment is still healthy.
Banking:
The 2007 CDO feeding frenzy is restricted to US-$300bn and EU bankers-$200bn except for our NAB.
Banks will probably track the RBA rate down.
There is a lot of investment cash on the sideline.
Inflation is yesterday's problem.
Recession is still a forecast and not a reality.
Commodities
Our commodities and AUD are cheap.
Mining capacity infrastructure spending is expanding.
Our prime commodity markets have eased off their demand peaks but are still potentially strong.
Intuition
The forecasting herd is calling a major world economic downturn.
Sentiment seems frustrated but skeptical.
Lower volume may indicate long repositioning and shorting are close to an end. 

My opinion only, it still remains your call.


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## agro (18 August 2008)

Tysonboss1 said:


> My feelling is that the market is bouncing off the bottom now,..
> 
> I am actively buying back in now to select stocks, However I am not expecting a quick recovery but things should strart to strenghten from here on in.




tend to agree

i think after the Olympics we should see a big recovery in our resource sector..

lets not forget the chinese steel mills are shut down for the time being

after that our big 3 miners - bhp, rio and fmg can start sending ships over again


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## tronic72 (18 August 2008)

agro said:


> tend to agree
> 
> i think after the Olympics we should see a big recovery in our resource sector..
> 
> ...




Could also easily go the other way around.

Think about how much of our resources have been used to help create all the infrastructure for the games. Once they are over, then what? 

Recession is likely in AU, and virtually underway in North America. The UK property market is down 30%. China & India are only steaming ahead because the west has had so much "spending money". I don't think anyone can deny that Australia has moved from the sheep's back, to the Mining Tip Truck's Air-conditioned cabin in terms of who it's riding on. Take the demand for resources out of the equation and we could be in a heap of trouble. What will we sell? Food? Sorry no can do, don't have any water.

I got my hair cut today and the Barber said business is really slow. Also saw the baker was trying to sell. That's the sort of grass-roots feedback I've started hearing around the traps. I don't think we've seen the bottom yet.

My 2c


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## Beej (18 August 2008)

tronic72 said:


> Could also easily go the other way around.
> 
> Think about how much of our resources have been used to help create all the infrastructure for the games. Once they are over, then what?




The Olympic infrastructure is a drop in the ocean in an economy that is building the equivalent of a city the size of Brisbane every month.....

Beej


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## fordxbt (18 August 2008)

Beej said:


> The Olympic infrastructure is a drop in the ocean in an economy that is building the equivalent of a city the size of Brisbane every month.....
> Beej




you trying to say brisbane's tiny 
id agree about the CBD area anyway


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## son of baglimit (18 August 2008)

i dont know the exact details but.........

refer to europe markets in march 2003 - in one night, pretty much collapsed, losing well over 5%, and recovered most of it late in the session.

thats my trigger.


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## tech/a (18 August 2008)

Well I disagree.
Infact my analysis is the exact opposite.

Much has been written in the Parent XAO thread.
I agree with most at 4300-4100 as a possible end of this pattern.


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## jersey10 (18 August 2008)

tech/a said:


> Well I disagree.
> Infact my analysis is the exact opposite.
> 
> Much has been written in the Parent XAO thread.
> I agree with most at 4300-4100 as a possible end of this pattern.





What is your time frame before we hit that target Tech? 
And then what? The start of a new bull market?


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## tech/a (18 August 2008)

Bugga just noticed I put that in the wrong thread.

Time---I really dont know.
Analysis "timing" isnt my thing.
But some others have offered up some insight.

But as for the start of a NEW bull market that should last for years.
I tend to agree with those who are saying years--5-7 yrs.

Between now and then ranging between 6880 and ---who knows.


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## Flathead Flick (18 August 2008)

tech/a said:


> But as for the start of a NEW bull market that should last for years.
> I tend to agree with those who are saying years--5-7 yrs..




Based on what? The stars? You gotta have something to back this up.


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## agro (18 August 2008)

tech/a said:


> Bugga just noticed I put that in the wrong thread.
> 
> Time---I really dont know.
> Analysis "timing" isnt my thing.
> ...




where did you learn all that t/a graphing from?

also,

so if you had to consider a long-term view, most of the stocks now look cheap as chips really?

e.g. BHP at 38 , could well b 100 within 5 years?


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## tech/a (18 August 2008)

Flathead Flick said:


> Based on what? The stars? You gotta have something to back this up.





No not at all. 
The analysis comes from a few who are more experienced in the field of Elliott and fib than I.
I guess we wont know if they are right until either.
(1) The timeline of 5-7 yrs expires
(2) Price breaks the upper limits before the expiration of the timeline.

But like all analysis technical and or fundamental its is simply opinion which in the end is proven or not.



> where did you learn all that t/a graphing from?




I guess over 14 yrs of tech analysis I've picked up the odd thing.Its basic Elliott.



> also,
> 
> so if you had to consider a long-term view, most of the stocks now look cheap as chips really?
> 
> e.g. BHP at 38 , could well b 100 within 5 years?




Yes of course--- but like property you can hold it for years and see it do zip and you could do that with any number of stocks BHP included.
Ther trick we ALL are trying to apply is timing.
Best utilization of our $$s.
If we knew that BHP wasnt going to move much between $30- and $50 over the next 5-7 yrs but could go from $30-150 closer to the end of that time line we may consider better use of that $500K we have sitting ready to invest in BHP while we wait!


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## J.B.Nimble (18 August 2008)

wayneL said:


> Now that the olympics develpoment push is now done and dusted, extra demand will have to come from somewhere.






agro said:


> i think after the Olympics we should see a big recovery in our resource sector..
> 
> lets not forget the chinese steel mills are shut down for the time being
> 
> after that our big 3 miners - bhp, rio and fmg can start sending ships over again






tronic72 said:


> Could also easily go the other way around.
> 
> Think about how much of our resources have been used to help create all the infrastructure for the games. Once they are over, then what?






Beej said:


> The Olympic infrastructure is a drop in the ocean in an economy that is building the equivalent of a city the size of Brisbane every month.....




Pretty clear that the post Olympics blues is a factor (whether it be neutral or negative) in everyones thinking. Let's be absolutely clear about this - yes, other Olympic cities have suffered the blues but China is not a city. It is a nation and a pretty big one at that. This from the China Daily today...



> To prepare for the Games, Beijing spent about 13 billion yuan ($1.89 billion) to build sports facilities and 280 billion yuan ($40.75 billion) to improve urban infrastructure.
> 
> Such investments helped Beijing's economy grow an estimated 10 percent faster in the past seven years, said Yang Kaizhong, president of Beijing Economic and Social Development Research Institute.
> 
> ...




http://www.chinadaily.com.cn/china/2008-08/18/content_6944441.htm

I guess you have to live here to see it happening... everywhere. The city building that Beej refers to... picture the outskirts of a town that you have never heard of and you drive past a building site with 50 tower cranes, each one hovering over an apartment block in the making - and that is just one building site in one town that you have never heard of. Try as they might, and they do, even the central government struggles to slow this down. It's amazing to witness it happen. I'm picking it to continue to shape the global economy for the next twenty years.


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## wayneL (18 August 2008)

To return to the context:







wayneL said:


> But.... what if commodity demand weakens? Even static demand would probably result in price falls in the near/medium term as more supply comes on line.
> 
> Now that the olympics develpoment push is now done and dusted, *extra* demand will have to come from somewhere.


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## Wysiwyg (19 August 2008)

> Try as they might, and they do, even the central government struggles to slow this down. It's amazing to witness it happen. I'm picking it to continue to shape the global economy for the next twenty years.




First thought i had reading that is, why is there such high demand for more infrastructure and who is creating the demand.

The government runs the show as far as i know.The building of an empire like we have never seen before maybe.Modernisation and upgrade maybe.They`re going to have to export alot of something aren`t they?


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## tcoates (19 August 2008)

In case you were unsure whether we hit the bottom...

http://www.eurekareport.com.au/iis/iis.nsf/pages/4AA7A272E4B388E3CA2574A9008070F1?OpenDocument

Damn it. Now I am still confused.

Tim

PS. In fairness, these are the views from various financial inst. but goes to show there is still a variety of opinion as to where we are currently situated in the market.


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## Aussiest (19 August 2008)

I actually find the Eureka Report authors heavily biased towards buying into the market / the market going up. They must have a vested interest in it .


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## Aussiest (19 August 2008)

Oh yeah, and it seems full of authors who all want to raise their profile in the hope of being the next market guru. I take most things written in the Eureka Report with a grain of salt.


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## white_goodman (19 August 2008)

tech/a said:


> Well I disagree.
> Infact my analysis is the exact opposite.
> 
> Much has been written in the Parent XAO thread.
> I agree with most at 4300-4100 as a possible end of this pattern.




hmmm so at 4200ish we shall see a nice wave 1 hopefully followed by a nice wave 3... does elliot wave give a time factor on when this is happening or just that Wave A = Wave C?


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## sqwark7600 (21 August 2008)

wayneL said:


> You still need oil to make plastic.
> 
> But.... what if commodity demand weakens? Even static demand would probably result in price falls in the near/medium term as more supply comes on line.
> 
> Now that the olympics develpoment push is now done and dusted, extra demand will have to come from somewhere.




And yesterday with a commodity turn on the rumour of a pending Chinese growth stimulus announcement you seem to have the situation and sentiment pegged. :iagree:


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## Julia (22 August 2008)

Aussiest said:


> I actually find the Eureka Report authors heavily biased towards buying into the market / the market going up. They must have a vested interest in it .



Yes, of course they have.  They are part of a large industry which functions on consumers being in the market.  If everyone decided, stuff the market - it's too hard - and put their funds in the bank at 8% instead, well their jobs become a bit shaky.

So we'll continue to see various so called analysts telling us XYZ is really cheap at present and a good buy.   BNB, anyone?


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## prana (28 August 2008)

njc.corp said:


> i
> the interest rate's and oil prices was un called for and the jump was to harsh-(lets not lie about that)
> 
> we all know this is a good country and we are tough-but yet we seem to follow the silly people-
> ...




There's certainly some interesting questions raised here in this topic, and this one is an interesting post - I thought I'd participate. Apart from someones explanation above re cash rate target, I should also point out there is a historical reason for the asset growth thus far that has fuelled inflation of credit growth faster than 'normal'. In this, the consumption shifts from the expense via operating cash, to asset credit. Although you correctly pointed out above that the credit crunch was triggered by the housing crisis, its the tip of the iceberg. So much of the credit market is not 'just' houses, negative credit resulting from large deflation of assets (triggered by subprime) that has experienced too much boom. The result of ignoring inflation and fuelling excessive consumption, and now the opposite, the destruction of asset valuation due to the result of too much inflation and bad monetory policy, and the crushing result of attempting to kick start the economy by money supply dilution through more consumption (MORE CONSUMPTION!!!! It's ludicrous)). Undoing this 'trend' is going to be extremely difficult - and will probably never really be the same again - we'll probably end up somewhere in between the 2 extremes when equilibrium arrives. 

The question about how it affects Australia, it does heavily. When money dilution occurs (in USD) many non-divisable commodities are traded against real money value, as well as sentiment. When both are being fuelled by tigtening supplies and increasing demand, this creates a huge forward bubble in futures taking into effect the dying dollar - this inflates our economy too far. It is in my opinion, (I'm probably a minority I dont know) that the RBA is indeed doing an excellent job in forward predicting inflation and now this asset deflation period.

I don't want to say too much more in case I get booted out of this forum - but instead of blaming the media, I'd like to ask you this question Nick - do you feel you are being made to pay for the war in Iraq, the mortgage crisis of Freddie & Fannie's irresponsibilities, and now deal with the shrinking (or even negative) credit due to irresponsible asset bubble creation ?  Needless to say, I am not a big fan of Bernanke and together with the Bush administration, I really do believe this is the root of the problems. I also believe this steals from the already hungry and starving ppl of the lesser developed nations by further fuelling their inflation (food exports rush). It's a dangerous game they play, and it costs ppl their lives. I don't blame the media, I blame Helicopter Ben, and Bush.



ps. I'd also like to know when the market will show signs of recovery. All elliot wave stuff is great for my reading cause I dont understand it, and can't do it (but I'm very open to it)


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## lakemac (2 September 2008)

Watch the credit creation/destruction in the country of interest.

Withdraw/destroy the credit - asset prices drop.
Expand/create credit - asset prices go up.

Great Depression - reduction of credit from 1929 to 1933.
Japanese Depression - reduction in credit (window guidance) from 1990.

Oz house price boom - expansion of credit from 2000.

Other examples:
Intrawar Germany - hyperinflation due to massive credit creation.
Zimbabwe - recent times - same hyperinflation thru credit creation.

Germany - recent times - on ice thru credit restriction (so the Chinese could buy German engineering).

The thing to watch closely is the credit creation/destruction in China. When credit is removed (which will happen shortly) China will stop in its tracks as Japan did in 1990.

Question to ask is why does this happen. Answer? Control. In every case credit control is done by the banks. In every case the banks have wanted to control a particular thing. Great Depression - non-Fed ie. independent banks. Japanese depression starting 1990 - BoJ wanted to gain control of interest rates from the government.

The current point of control is in China. Check recent legislative changes there - personal ownership of land. Control the credit and you control the country.

When will be bottom out? Watch for the drop in credit in China. When credit starts to dry up in China watch out - our economy is headed south. The credit will flow again once asset control in China is gained by the banks.


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## Gundini (19 September 2008)

lakemac said:


> Watch the credit creation/destruction in the country of interest.
> 
> 
> The thing to watch closely is the credit creation/destruction in China. When credit is removed (which will happen shortly) China will stop in its tracks as Japan did in 1990.
> ...




Prospective tenants have pulled out of Mori's new Shanghai tower.

 "It's impossible nowadays to keep financial crises in one area," says Minoru Mori, chief executive of Japan's Mori Building, which just cut the ribbon on the 101-story Shanghai World Financial Center, China's tallest skyscraper. He ought to know: Lehman Brothers (LEH) recently scrapped plans to move into the building, and Morgan Stanley said it would rent only four floors instead of eight. 

As lakemac suggested, "when credit starts to dry up in China watch out - our economy is headed south".

I tell you it gets pretty scary when you google some of these key words, like China and credit squeeze...

Full story here  http://www.businessweek.com/magazin...7487391.htm?campaign_id=rss_topEmailedStories


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## rub92me (19 September 2008)

Yep lakemac (Steve's) observations are worh a careful read, as are his other articles. Think of a long string of dominoes stacked all the way from the US to China (and India and Brazil and and and....) They started falling in the US about 12 months ago in all directions, and have picked up speed exponentially in falling since. Probably less than 10% of the dominoes have fallen. Global bank and government intervention would be needed to stop this, but we simply don't have that multilateral cooperation to make that very feasible.


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## lakemac (20 September 2008)

nice to know a few people are at least reading what I wrote 

right now the last gasp of the credit expansion is going on before our own eyes trying to prop up what ultimately should have fallen further.

be careful buying this bounce is about max 1 month away from the final fall.

anyone say dead cat?

as to china, a good friend of mine (actually my trading mentor who is incredibly good at what he does) reckons china will slow (from 12% pa to about 7% pa) but not stop. I believe it will be even slower (3% pa) which will effectively put china into a recession.

the control of property in china's main cities is what the banks are after. you can only do that with a credit crunch (cf Japan 1990 which was tearing along at 10% pa growth - why did it stop in its tracks in 1990 - google "window guidance japan"). gaining control of property for cents in the dollar (think Lehman collapse) is a wonderful start to controlling a country.

so watch the china syndrome - coming to an economy near you in the next couple of months.

once that credit crunch happens then and only then am I moving my super once again from cash to shares


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## lakemac (20 September 2008)

oh and did you see the lame attempts to prop up share prices by making short selling illegal.

only going to drag out the pain and make the eventual collapse more severe.

you may (or may not) have realised the current upswing is mainly due to short covering and fresh credit going into the system.

ah central bank credit - mainlined straight into the veins of the stock and bond markets. What a high (pun intended ).

interesting question for you guys.
answer this: why is the US dollar rising even when the FED is creating credit at such a rapid rate? Remember credit creation by definition devalues the US dollar as there are more $ around for the same (or less) underlying assets. you would expect the US dollar to fall if more credit is being issued.

and another interesting note for you: in this current credit creation mini-cycle note the money is not being lent for mortgages by member banks but is being issued to governments to bail out failing institutions. Note that kind of money is incredibly liquid - only one place for that. See my comments above about market rises.

got to go - money to be made (also researching another con - the current medical/dietary advice regarding a "balanced diet". Turns out low-carb high fat IS good for you...).


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## CanOz (20 September 2008)

lakemac said:


> oh and did you see the lame attempts to prop up share prices by making short selling illegal.
> 
> only going to drag out the pain and make the eventual collapse more severe.
> 
> ...




The USD is rising? Still? I think the trend has changed now, you agree?

CanOz


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## lakemac (20 September 2008)

Dow theory would have to disagree with you CanOz...

I should have been more specific sorry.
I meant rising against most if not all major currencies.







notice how it started to jump in the months before the fall happened...
Someone knows something.
Chinese credit holds the key...


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## mayk (20 September 2008)

lakemac said:


> Chinese credit holds the key...




Do you think that the 'powers to be' are in the process of freezing the U.S economy to shift the focus to China?

Or are you of the view that Chinese growth has reached its peak and is now on a steady decline for years to come?

I have read almost all your posts and they make sense. I don't know why you post so little. I guess it is more about quality than quantity... Do you blog?


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## CanOz (20 September 2008)

lakemac said:


> Dow theory would have to disagree with you CanOz...
> 
> I should have been more specific sorry.
> I meant rising against most if not all major currencies.
> ...




The chart i posted was the US dollar index, the basket of currencies against the buck. The rally IMO was definatly helped by some kind of intervention by the central banks. Like all intervention attempts it can't fight the trend, fundemental or otherwise for forever.

These new attempts at socialsing the losses will only add to dollar weakness over the long term, and higher commodity prices.

Obviously this is from material that i've read recently and its the views of Faber, Rogers, Chuck Butler etc.

The thing i can't get over i that the majority of people chose to believe the mainstream media, and don't seek out unbiased opinions. Bush was so funny the other night trying to say the economy and the markets would be fine blah, blah, blah....its almost sickening to listen to.

The intervention causing the equity markets to rally won't last either and in the end will only make the fall harder i reckon.

Cheers,


CanOz


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## M34N (20 September 2008)

lakemac said:


> I should have been more specific sorry.
> I meant rising against most if not all major currencies.




Well, ever since it became clear that the UK was heading into recession, along with the banking problems there and across all of Europe, it's not a surprise. We have to remember the fall of the US dollar index to its lowest levels (ie. near 70) was before it became apparent the US wasn't the only one with problems.

Plus there was speculation that rates would actually go up, but I highly doubt that at least until the markets start to stabilize.

That's why I believe we may see a drop in the US dollar, people have been factoring in a rate rise there for over a month (since its rally from the lows), and I wonder how many people still think they will raise rates when the government has to actually take $500+ billion worth of debt off the balance sheets of companies to make them survive? And the fact they had to take over Fannie and Freddie, then watched Lehman and Bear Stearns go broke, then Merrill was forced to merge with BoA, then AIG had to become state-controlled...

Maybe the US currency will become exactly that of your avatar :

But anyway over this week, the US dollar hasn't fared as well, and as I posted in the XAO analysis thread, was actually down against the Euro even when the Dow was up 350! A clear sign of short-covering I suspect.

The bear in me suspects this is nowhere near the end of this crisis...


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## lakemac (20 September 2008)

(sorry canoz I didn't check your chart thoroughly - I thought it was just $A/$US - apologies).

My question is why, even in the face of such massive credit injection, the $US going up. That must mean a *massive* conversion of other currency holdings into $US. Minor adjustments of interest rates only waver the market - not seismicly shift it.

My theory - big money is getting ready for the recession in China (also think revaluation of the yuan). Time will tell.


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## CanOz (21 September 2008)

lakemac said:


> My theory - big money is getting ready for the recession in China (also think revaluation of the yuan). Time will tell.




I don't know, a recession would mean a huge contraction from present growth levels on a scale not seen before. They are investing in infrastrure here too, with massive projects underway. These large projects in all major cities provide lots of jobs and have huge spinoff efftects. You can't imagine it will replace the loss of exports of course, but certainly would help curtail some of the effects.

Also, remember to that the Chinese middle class were and still are good savers, and that money is now being spent as consumption increases here. Our economies rely much more on consumtion than the Asian's. 

Can the combination of the infrastructure investment and an increase in consumption, to do some degree fueled by credit expansion, help keep the growth rate positive? I tend to think so, but time will tell, with other factors like global inflation having the opposite effect on growth too.

Cheers,


CanOz


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## lakemac (21 September 2008)

"a recession would mean a huge contraction from present growth levels on a scale not seen before"...

canoz go back in recent history.
In the 1980's Japan was in a similar position. It was buying/building/making everything. At school I remember we were told to learn Japanese.
What happened?
Credit in 1990 got turned off - completely (see Richard Werner's "Princes of the Yen" excellent reference book for this plus the German connection).
Japan stopped in its tracks.
All it took was one year and they were moribund.

Same thing in the US. Ever heard of the term the "roaring twenties". The US was enjoying unprecedented economic growth. Within 1 year they were in the throws of the largest economic downturn in the world. Credit got turned off.

By the way I have the raw money supply data prepared by the US Comptroller from that era if anyone (including the doubters) is interested.

Go back into English history, German, French - all had moments of economic booms that came to a crashing halt - all because of a drop in credit. In each case you will find one or two families involved with the central banks set up in those countries prior to the boom and crash (See Nial Kelly's book on the Rothschild dynasty - two volumes - very heavy going and not for the feint hearted) (ok who pinched my copy - missing volume 2 in my bookshelf).

I don't have data on the Chinese savings ratios (anyone got a source of raw data? I am interested.). However, I would point out the old Pareto rule - 80% vs 20%. Remember the ratio of savings to credit is at least 100 to 1. So even if the Chinese are good savers it is not going to help if the credit is turned off.
The Japanese in the 1980's were good savers too. Didn't help them one bit.


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## sparc (26 September 2008)

Hi Lakemac...

I understand what you are saying.

one question, perhaps a silly one, what about the chinese soverign funds,  would this not be enough...?

also would it not be difficult for the bankers to get hold of assets in china, i am not sure how much the rules are for foreign ownership has changed considering the government is communist.

regards.


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## OzWaveGuy (29 September 2008)

jono_oz said:


> Hi guys,
> I am only a beginner at this - but I was wondering if someone could explain to me how if, St George and Bendigo Banks have a 40-50% increase in profits and CBA has a 7% increase to $4Billion-ish dollars, our banking system is in crisis???
> 
> It seems to me that the whole American disaster is simply superimposed onto our banking system.
> ...




Don't be confused! Whilst News has an impact on the market to some degree  - mainly when correcting, the reality is that people drive the market eg Social Mood. In a bull market, even the bad news is good news a lot of the time. 

A majority of the analyst are "repeaters" who don't understand the market but are very good at explaining how an event caused the market after the fact. 

As an example, I was looking at CNN money when the US left interest rates on hold on Sep 16th and the title of the morning was "Stocks slip as Fed doesn't budge", however since the article went up, stocks did a 180 degree turn and the DJI was up 110points. So the headline should have read  "Stocks slip (then gain) as Fed doesn't budge". 

Plenty of examples from the so called "experts" where they describe an increase in interest rates is good for stocks, then the following month it's bad for stocks. 

It would be very unlikely for people to make money if you knew tomorrow's headlines today. eg 911 was a good example - you could have successfully shorted the market for a week, before being overrun by a bull leg that would take the DJI to a new high - who would have thought? The shooting of JFK is another. In individual stocks, news CAN make a difference eg, massive Profit/Loss etc, but very few stocks can swim against the current and will get swept away with the market (bull or bear).

Hope this gives some insight.


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## burglar (2 December 2010)

jono_oz said:


> Hi guys,
> ... I am constantly confused by conflicting media reports of imminent recession, ...
> John the confused!



jono_oz,

I am constantly confused by conflicting media reports.

I make up my own mind!
Decided the Chinese Commodity Boom was strong enough to eclipse the GFC.

Second biggest mistake in my life. 

To get on topic, show me the chart in 6 months time, I'll show you when the market pick ups.


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## Sean K (2 December 2010)

burglar said:


> Decided the Chinese Commodity Boom was strong enough to eclipse the GFC.



It still might be in the scheme of things.

Add India and Brazil.

We wont know for a few years.

One day it will be Africa's turn.


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