Are we missing something here?

Monario · 2 May 2009

Hi all, I am writing this to gain a little insight to others views on where we are headed within Australia’s economy and the world economy.

After years of research and learning, and closely examining the current world climate in recent times I feel some concern in where we may be headed within key economies. By no means am I displeased with gains that have been made in recent weeks/months throughout different countries and economies however I feel that many of us are blinded by the real ingrown issues, problems that have taken decades to develop and have only just, or are yet to come to light.

Are we headed for something much worse than we have experienced in the last 12-18months, and are the majority of investors blinded by the current and apparently cheap share and commodity prices, and the healthy gains been made within these.

The reason I ask such questions is the majority of the root causes for our current situation are actually still present, and rather than having been written off, paid down, liquidated or otherwise removed from key economies, have in my opinion been side stepped, all with the help of immense spending and borrowings from world governments. With this has also come massive global contractions of companies and their workforces forcing many people out of work and in some cases their homes (contributing to further losses, many yet to be realised).

In today’s markets we are seeing strong growth, but is this through actual growth or rather companies maintaining or increasing profits via cut backs in staffing levels R&D, maintenance etc(in this form, another type of toxicity that will unfold in future markets),. And if it does happen to be more of the later (my current opinion), I think we are all in for a huge shock. For if this is the case the contractions been made to date will not be felt by markets for some time, and I fear when they hit it will be ten fold to what we have just experienced, this time with no cushioning from the swollen government purses that have apparently softened the blow (softened or held back for a time?) we have, or, are yet to feel, and with governments in never before reached levels of debt, with populations that have bigger than ever unemployment figures, deepening the lack of funds.

Apart from a minority of smart economies the world is currently carrying massive debt, a lot of which is highly toxic and still yet to be realised.

With that said, are we headed into the unknown, starring into to the abyss so to speak., a black hole we are all continuing to poor good money after bad. Or is this just an over pessimistic view of a bounce in world economies, that are now back on track and mending themselves.

I hope I have managed to give a basic understanding of what is on my mind, however, I would be happy to go into more detail if anyone wishes. Please keep in mind these are just thoughts I am mulling over, and I am looking for others opinions...

Mon....

GumbyLearner · 2 May 2009

I'm no expert Monario. But I wouldn't be surprised if we retest the lows this year on the XAO and S&P. I'm still bearish and tend to agree with Von Mises like economists that inflation will be a problem in the years to come.

Here's an interesting article I stumbled upon which may help understand the unfolding scenario of the holders of US Debt. It discusses the increased use of the Yuan as a trading currency and lack of faith in US dollar-denominated trade. IMO this is a once in a lifetime paradigm shift.

http://www.kitco.com/ind/AuthenticMoney/apr272009.html

China is the largest holder of US Treasuries. China announced recently that it has significantly increased it's gold reserves. Interesting to note they used a non-government associated entity to accumulate the gold and transferred it to their central bank.

Find out more about the US Dollar and US Bonds and Treasury notes and WHO holds them.

But then again like I said I'm no expert just a bearish gold bug who spews propaganda without charts.

Anyway thanks for starting the thread.

Do your own research

GumbyLearner · 2 May 2009

Here's also a good vid about the property crisis in America. It's about 6 months old but the mortgages spoken about haven't even come to fruition. It includes a really pretty yet gruesome chart from credit suisse. So ignore the date! I know I should post a similar one about OZ, but remember the OZ economy is just a sideshow that follows US trends.

Here's also a great song I found

Do your own research

metric · 2 May 2009

there are some hints here. this was posted on wiredpirate, is not an article from some journo, but comes straight from reinhardts idea of the world. its hard to fault....

What is globalization?

Globalization is nothing more than the constant search for cheap labour and the constant upgrading of infrastructure all across the earth. Thus improving the infrastructure of previously ‘unindustrialized countries’ and accessing a whole new ununionized labour pool. The new world’s that are created and improved through road, rail, energy, and hospital projects that are built by huge multinational corporations and paid for by unwitting outside investors. Before all the public works’ projects are completed there is a debasement to pay for the projects with outside investors’ money because it was ‘lost’ during the stock market crash or crash of a company’s stock (debasement of vehicle of monetary exchange).

During the debasement period the “inside” investors are selling short, 401k’s/entitlements etc. are frozen until the company pays out whatever debts it can with whatever liquid it has left., then the company goes bankrupt, it’s assets are filtered off to a subsidiary/holding co that was formed prior to debasement, the projects they were building get snapped up at fire sale prices. Now the projects are paid for, the companies get their money and the country gets its infrastructure for their people to work jobs cheaper than other people in the Old World will work them

Along the globalization trail, TPTB monopolize all the resources they can under corrupt regimes that most of the time they put into power. Then take control of all essential parts of the economy; food supply, energy and mineral resources, fresh water sources, precious stones, cash crops, telecom, and healthcare. The foreign multinational corporations use cheap labour to assemble their goods while owning all other utilities the people of the country use. Once the cheap labour and resources are exploited, the globalists pick up and start the search for a new land to build up. Every new world is built on the dollar of outside investors and tax payers. Outsourcing is the only way the king can afford the peasants wages.

It started with canals, ships, and marinas in olden days and evolved into railroads, locomotives, then into trucks and roads, and most recently aviation. Every logistic means throughout history has been payed for by the outside investor through the use of debasements. Bubbles are built up on the word that ‘the good times will never end’ and popped on ‘we never saw this coming’ - all made possible by governments pretending to fail all across the world. All three tiers of government (soon to be four; federal, state, municipal, and soon, Union) are chalked full of failures.

The same groups of companies get the contracts for foreign nation building, usually spawned off each other, tracing their way back to a group of banks that operate throughout the world. These companies debase vehicles of monetary exchange (stocks and stock markets). Most of them having intimate ties with the World Bank. The financiers’ of globalization stay the same. Once projects are completed and economies successfully debased, wars are waged to pay for economic recovery and fulfill whatever geopolitical agenda these global financiers have. After the era of fraud there is a period of boom and the cycle repeats itself, the size of the war usually depends on the size of the debasement that preceded it.

Once the Vehicle of Monetary Exchange is debased, the stolen money is laundered through various organizations (charities, non-profits, Legatus, museums). Once the money has been laundered there needs to be a war to destroy the paper trail (the fog of war) so they need an event to set off the war. If multiple countries’ economies are down, it will be a global war (each country fighting with it’s favourite enemy). At this time the financial sector will air its laundry, and we’ll start hearing about frauds and accounting errors. This will lead to federal bodies (FINRA, SEC) bringing cases against the scapegoats (Skilling, Conrad Black) and we will have show trials with show judges (Crater, Landis). The trials will bring justice to the ‘rogue conspirators and that’s that.

The new bubbles are usually being built up as the current bubble is popping. These bubbles are allowed to happen through manipulation of laws. In America, the crash (era’s of fraud) usually coincides with the end of one presidency and the start of another and occur every 4 years. In the lame duck sessions of a presidency, all previous corporate criminals get pardons. This timeline repeats itself throughout history

OneBigWorld · 14 May 2009

Apart from a minority of smart economies the world is currently carrying massive debt, a lot of which is highly toxic and still yet to be realised.

With that said, are we headed into the unknown, starring into to the abyss so to speak., a black hole we are all continuing to poor good money after bad. Or is this just an over pessimistic view of a bounce in world economies, that are now back on track and mending themselves.

The US people I am following (slightly contrarian/alerted me to the coming depression in 07) have this to say about some of the issues you are concerned with.....Granted , it's US centric.
From a conversation in March.

I have been following this thread for a while and am enjoying all the posts by ZBoy, but am not convinced this rally runs past mid april. Unemployment numbers will be what wipes this rally out, followed by dollar worries/manipulations.
I disagree. Investors have already prepared for maximum gloom, therefore even if the unemployment numbers are horrid, that will be exactly what investors were already expecting, therefore it won't be a shock. As the saying goes, the market climbs a "wall of worry". And we've got plenty of "worry" to fuel the climb.

Also, it's important to remember that the markets behave in such a way as to benefit the least number of participants. Because most amateur and retail investors still don't trust this rally, it will continue until they do. Then once they jump in and complacency starts to set in, that's when the reversal will be at hand.

In the meantime, in keeping with the concept of benefiting the least number of participants, along the way there will be some sharp pullbacks to headfake traders and investors. But until we see a sentiment shift, the larger trend for the next few months or longer is likely up.

In addition, all the inflationary moves being done by the government and Fed will insure that Treasuries will continue lower, and equities will continue higher.

I didn't say the reports would cause the market to turn back just stop continuing at its current velocity. I have a suspicion this is more market volatility for the sake of money making. Investors were sick of 6500 wanted a buying signal got it bought in and are either pulling or about to pull the trigger on selling.
Depends on which investors you're referring to. As always, you want to be on the same side as the corporate insiders. And while most amateur and retail investors were capitulating in November and again at the beginning of March and selling out at multi-decade bottoms, corporate insider buying vs. insider selling was at a multi-decade extreme. Couple that with a VIX and VXO above 50, and you have just about the most glaring buy signal you could ask for.

There will be pullbacks and sharp dips along the way, nothing goes straight up. But until we see corporate insider selling vs. buying turn the other way and VIX and VXO approach 20 or below, the correct side of the market to be on will be the long side.

What is the current opinion on the hyper-inflation subject? Is this still possible in the near term or will we expect to see a few more tremors and then some easing in the situation?
I believe hyper-inflation is inevitable, but is still a couple years away. If things continue to unfold as expected, we'll see a short term breakout of temporary inflation this year, which will cause stocks, commodities and precious metals to rally strongly and Treasuries and the Dollar to reach new lows. The Fed will likely overcorrect the other way (that's pretty much all the Fed ever does, is overcorrect), which will bring about true deflation, not just the deleveraging that we've seen the past 6 months.

We'll probably be caught in a deflationary spiral for 12-24 months, during which time the stock market and real estate will move to new all time lows, precious metals will pull back to current levels, and Treasuries and the Dollar will rally strongly once again.

The government and Fed will be hell bent on reversing the deflation, and in the process will print and borrow more money than anyone can conceive. Of course, the monster will rage out of control, and the result will be hyper-inflation. The Dollar will finally collapse, and gold and silver will reach their true peaks, probably some time around late 2011-2012.

Are we missing something here?

Monario

GumbyLearner

GumbyLearner

metric

OneBigWorld

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