Who thinks there will be a slump?

[sptrawler]

Who thinks there will be a major correction. The U.S market is being proped up by free money at 0% interest, that is being pumped into an economy that has zero house growth and their manufacturing is competing against China. The U.S stock market has gone up 100% since the GFC but their currency has dropped heaps. The U.S dollar is the underpinning currency i.e they have to stop printing it eventually or people will lose confidence in it. Then the free money won't be pumping up ailing companies.
When this happens the correction has to happen, otherwise mahem happens with currencies. I am no economist, but you just can't keep printing money or why am I going to work?

 

[GumbyLearner]

Re: who thinks a slump

For what specifically?

 

[sptrawler]

Re: who thinks a slump

The replies will answer that

 

[jbocker]

Who thinks there will be a major correction. The U.S market is being proped up by free money at 0% interest, that is being pumped into an economy that has zero house growth and their manufacturing is competing against China. The U.S stock market has gone up 100% since the GFC but their currency has dropped heaps. The U.S dollar is the underpinning currency i.e they have to stop printing it eventually or people will lose confidence in it. Then the free money won't be pumping up ailing companies.
When this happens the correction has to happen, otherwise mahem happens with currencies. I am no economist, but you just can't keep printing money or why am I going to work?

Alan Greenspan does ...


Uncle Sam heading closer to a fresh financial meltdown

from the article today, "The man who brought us the global financial crisis, Alan Greenspan, has spoken out on how to fix the system. Of all the advice he might give, he has given the most unexpected. In essence, he has said: "Don't even try." ...."

http://www.smh.com.au/opinion/polit...-fresh-financial-meltdown-20110404-1cyil.html

 

[Julia]

Sptrawler, you have left out the bankrupt nations in Europe, the horrible mess in Japan, and the brawl right here over the carbon tax.

I've been pondering this for some time now, but markets everywhere seem to be ignoring these fundamentals and - perhaps in a state of collective denial - just going ahead anyway.

It seems even that there has come to be an acceptance that governments everywhere will do whatever it takes, no matter how full of moral hazard and irresponsibility this might be, to prop the system up.

Another factor in Australia is that probably interest rates have peaked for quite a while (banks are finding it much easier to access money) so those who have sat out in cash are starting to reconsider their options, given the apparently rising market.

I don't know. Just thoughts which might be quite incorrect.

 

[sptrawler]

Well Julia, like you I think the upward ever upward idea has fundamental flaws. I have taken a lot of gains out. Also think a storm may be brewing

 

[GumbyLearner]

Alan Greenspan does ...


Uncle Sam heading closer to a fresh financial meltdown

from the article today, "The man who brought us the global financial crisis, Alan Greenspan, has spoken out on how to fix the system. Of all the advice he might give, he has given the most unexpected. In essence, he has said: "Don't even try." ...."

http://www.smh.com.au/opinion/polit...-fresh-financial-meltdown-20110404-1cyil.html

But wasn't Greenspan a lover of Ayn Rand. The market should be free and unhindered and be able to govern itself...

Lucky I bought some bullion! phew Prior to the Bush/Obama bailout of the "strength" within the free market. LOL

Not to mention the Goldman Sux crew still in charge. God help Australia if Turntable (Turnbull) every runs the country. He would be far worse than any UN obsequious pleb like Krudd.

 

[sptrawler]

By the way where have they moved us. Obviously they dont like the mention of a correction , but isn't that what forums are about, people floating their ideas and having them knocked around

 

[Tanaka]

It seems even that there has come to be an acceptance that governments everywhere will do whatever it takes, no matter how full of moral hazard and irresponsibility this might be, to prop the system up.

Yep, the system cried for a lollipop and mummy gave it one during GFC. The system has nothing to fear knowing that it can always stamp its feet and throw a temper tantrum every time it needs something.
:bowdown::swear:

 

[GumbyLearner]

Yep, the system cried for a lollipop and mummy gave it one during GFC. The system has nothing to fear knowing that it can always stamp its feet and throw a temper tantrum every time it needs something.
:bowdown::swear:

like a bailout

 

[sptrawler]

Well Gumby learner, I tend to think the Australian public is feeling the way I do, savings up borrowings down, new home starts down, home loans generaly at a serious low. The problem is even the plebs have a lot more info available to them so they now know China had a trade defecit last quarter. So now they have to fund the infrastructure build from their money instead of U.S dollars. If they have a trade defecit next quarter lets see what happens to commodities.

 

[Uncle Festivus]

I don't think there will be a slump - I think there will be a complete collapse!

Only the timing is unknown?

 

[joea]

"A new form of inflation is increasingly described in the blogosphere.
It better explains the pricing paradox Mr. Bernanke has failed to embrace.
It's called "biflation".

Everything you already own - a house, a car, a stock portfolio - has rapidly
declined in value. Everything you actually need to buy - food, gasoline, medicine, education - is going up."

DJ Newswires Al Lewis.

Colin Twiggs attached this to his Trading Diary. I thought it was very appropiate.

 

[sptrawler]

The other issue is the plebs think wow the Dow has doubled, but that is on the back of cheap money(quantative easing- money printing) and has to be weighed up against devalued currency. The reality is the dow has doubled, but against most currencies the $U.S has dropped a lot, therefore I would think the next reporting season would have to see these companies report increased profits to support the higher share prices. That is devalued currency should equate to more exports, if this doesn't happen the share price surge should retract. Well thats what this pleb thinks.

 

[robusta]

I can say without a doubt there is sure to be a slump, there is also going to be a boom. The timing and order of these are in doubt however. My plan is to take advantage of either event.

 

[thesnowyforest]

based on industry reports there could be a slump mid year whilst the world/markets realise the world is not going to end come the end of QE2, there will be no QE3 as the US is improving and then,......The mother of all Rallies in the last 4 months of the year.

 

[lookout]

If demand is pulled forward there has to be a future slump in line with reduced disposable income. I think the graphs at this link describe our future; volatility within a downward trend: http://dshort.com/articles/2010/mega-bear-2000.html

 

[konkon]

Who thinks there will be a major correction. The U.S market is being proped up by free money at 0% interest, that is being pumped into an economy that has zero house growth and their manufacturing is competing against China. The U.S stock market has gone up 100% since the GFC but their currency has dropped heaps. The U.S dollar is the underpinning currency i.e they have to stop printing it eventually or people will lose confidence in it. Then the free money won't be pumping up ailing companies.
When this happens the correction has to happen, otherwise mahem happens with currencies. I am no economist, but you just can't keep printing money or why am I going to work?

As long as the Federal Reserve in the US keeps adopting a quantitative easing approach or something equivalent, there will NOT be a major correction. This is over the next six to twelve months; even longer if the Fed keeps stimulating the economy, and it has to.

The Fed has to keep stimulating the 'Wall Street' economy. If it stops quantitative easing and just gives up on stimulating the economy, then you can expect the VIX to rise and for there to be more volatility; which, given where we are, would mean the Dow etc will fall a fair bit!

The US dollar is a concern at the moment. If it keeps correcting and has no floor, then expect all stock markets around the world to crash, even without consumer money like in 2008. My guess is if the Fed keeps easing like it has been, then this will delay and maybe even prevent a crash of the USD and stock markets. I think the Fed is kind of buying time and hoping for better times, in the real economy - which will happen.

Well, keep working and save if you can.

 

[operandi]

IMO.... Fed owns all those lovely assets, they need to sell em to get "flat" and make a buck. How do u get asset prices up? Inflation, how do u get inflation? higher prices of "stuff" like food or oil. So lets push oil up or even better take the oil from the world and sell it on. How and where do markets price inflation. Bond futures prices. Quantitative easing is old hat, manufactured inflation is the new "black".

 

[explod]

And meanwhile back in our own little backyard.

Out shopping with the bride this morning and talking to a fellow with a business in the Frankston central shopping centre. Stated:

His business is down 30% in the last two weeks, many of his nearby associates reporting similar, but then he confided, "if this shopping centre called for all the tenants to pay back rent half the shops would be shut."

If there is an interest rate rise he said, we have had it.