Imminent and severe market correction

[Trembling Hand]

Whiskers here is one for you to read and ignore. A commodity hedge fund that has lost money recently. Why because he wasn't manipulating the price up.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a592_W25efSM&refer=home

For every punter long there is someone short. Of course you will ignore that fact as well.

 

[Miner]

Glad you asked. I have no idea what the final figure will be, but here are some possible ideas.

First, a typical severe bear market drops around 40% (1939, 1970, 2000). That sets a target of 8,400. A monster bear (1929) drops over 80%. That's under 3,000. As well, a severe bear market has often left the DOW below the price of gold. Maybe they'll meet in the middle at 5,000.

There is no chart that can tell you what will happen. Read the blogs and the experts, but NEVER the main stream media. Try rgemonitor.com, leap2020.eu and dollarcollapse.com, but there are plenty more. This is a once in a lifetime event, and it's really, really bad. Think about return OF your capital, not return ON your capital.

October could be fun. Not.

Good note
But why October would be fun (even it was a metaphorically said) and not July August. Is it going to be worst then ?

Regards

 

[Bushman]

Thought you long-term Fed critics on this thread would enjoy this article: the heroes of Wall Street inc Paulson. LOL.

http://www.marketwatch.com/news/sto...-99E2-4775-A98D-11F0EC001467&dist=SecMostRead


PS: On undergraduate education, I agree with what has been said about Commerce degrees to an extent. It was more an excercise in 'ticking off the boxes' to become employable. Most of the real learning I have done has been 'on the job' so to speak. There is however no better degree than an Arts degree to learn about human nature. Yet business/financial employers mostly recognise Commerce degrees in Australia? My history major has provided me diddly squat from a dollar point of view. Wouldn't swap it though.

It is a superficial world and maybe what we are experiencing is symptomatic of that.

 

[sassa]

Thought you long-term Fed critics on this thread would enjoy this article: the heroes of Wall Street inc Paulson. LOL.

http://www.marketwatch.com/news/sto...-99E2-4775-A98D-11F0EC001467&dist=SecMostRead

The "critics" will gain pleasure and satisfaction by reading the comments after the article.

 

[explod]

The "critics" will gain pleasure and satisfaction by reading the comments after the article.

Who are the critics?

I gain no pleasure from either article or the following comments. The article of course fails because no content/substance or reasoning is offerred.

I am passionate because I feel for the millions of honest hard working people who are going to suffer for many years due to the inept policies of the US Govt' and the greed of Wall Street.

There is no place for anyone to be smug, what is unravelling is dreadful and will begin to effect a nabour near you.

 

[dhukka]

Thought you long-term Fed critics on this thread would enjoy this article: the heroes of Wall Street inc Paulson. LOL.

http://www.marketwatch.com/news/sto...-99E2-4775-A98D-11F0EC001467&dist=SecMostRead


PS: On undergraduate education, I agree with what has been said about Commerce degrees to an extent. It was more an excercise in 'ticking off the boxes' to become employable. Most of the real learning I have done has been 'on the job' so to speak. There is however no better degree than an Arts degree to learn about human nature. Yet business/financial employers mostly recognise Commerce degrees in Australia? My history major has provided me diddly squat from a dollar point of view. Wouldn't swap it though.

It is a superficial world and maybe what we are experiencing is symptomatic of that.

Great post! Probably because it resonates with me personally. I came straight out of High School went straight into a business degree at Uni and then straight onto the financial world treadmill. It wasn't until I'd thrown it all in and went walkabout that I began to read history and philosophy which filled in a lot of what I had been missing. How can you know where you're going if you don't know where you've been?

 

[pepperoni]

Great post! Probably because it resonates with me personally. I came straight out of High School went straight into a business degree at Uni and then straight onto the financial world treadmill. It wasn't until I'd thrown it all in and went walkabout that I began to read history and philosophy which filled in a lot of what I had been missing. How can you know where you're going if you don't know where you've been?

Agree too ... did commerce and law degrees got whisked into big law firms where I finally actually learnt about the law.

And whilst I have always worked on major projects and PPPs I now know virtually nothing about finance compared to people who work in the business every day.

 

[davo8]

The direction of the stock market in Australia is CONTROLLED y the big banks, if they are going down the market will go down, if they go up, then the market will go up.

When the money starts flowing back into bank shares then money can start flowng back into the other shares.

Most of what you say is true, except this bit. There has been a fundamental shift. It's isn't going to happen like this.

For 100 years or more banks were dead boring. Low P/E, good dividends, mature core blue chip stocks, but not for growth.

Over the past 30 years, banks changed. They learned how to create leverage beyond the limits of fractional reserve banking. During the past 15 years, they and the whole finance sector learned how to create and sell debt at higher and higher leverage, and that translated into insane returns for banks and REITs. RMBS, CMBS, CDS, all that stuff made heaps of profits.

But it's all dead now. No-one is writing those instruments now and no-one would buy them if they did. Banks and investors worldwide are in the process of losing at least $1.6 trillion (IMF). Finance as a primary driver of stock markets is over. Finis. Caput.

So what comes next? My guess is energy, agriculture, mining, commodities. I've sold all my banks and REITs and I'm looking for the next big thing. If there isn't one, we're all just history.

 

[davo8]

Good note
But why October would be fun (even it was a metaphorically said) and not July August. Is it going to be worst then ?

My reading from Jan pin-pointed Aug-Sep as the crisis point, so July is a little early. Historically something like 8 out of 10 of the worst moves have come in October. Maybe this one will too.

I've been posting to this thread for months just trying to get a few people to realise how serious the position is and how bad things could get. Within the next few months we should know if it really is "the big one". The worst is definitely still to come.

BTW I think the Aussie real estate market is going to crash too, for similar credit-related reasons. That should become clearer in the next few months too.

 

[Bushman]

How can you know where you're going if you don't know where you've been?

Ain't that the truth. It is an imprecise guide but it is the best guide we have.

The empire cycle is resonating today as it has since antiquity. Innovate to survive, survive and become satiated, satiation leads to stability and wealth creation, wealth breeds complacency and the cracks begin to appear.

Its been a golden run for the New World since colonialism ate itself in the 1940s and the old world finally passed on the baton. Now the new world is inexorably passing the baton on to the ancient civilisations of the east that originally shaped the philosophy of the old world. Nice symmetry there.

So can the Yanks innovate again, wean itself from the oil fields of the Gulf and ATM of Wall Street, and get back to the basics that made it strong?
They seem to want to build a neo con empire so it might not be such a bad thing if they don't.

 

[pepperoni]

Speaking of the east, I think islamic banking leads to almost full reverves. Quite a contrast to aussie 20x reserve banks.

 

[Whiskers]

Whiskers here is one for you to read and ignore. A commodity hedge fund that has lost money recently. Why because he wasn't manipulating the price up.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a592_W25efSM&refer=home

For every punter long there is someone short. Of course you will ignore that fact as well.

Oooh TH, that's from Bloomberg. Is that source more reliable than CNNNNNNNN or my local footy team.

Seriously though, apples and oranges... to the specific case I postulated.


Big week this week. Freddie and Fannie rescued. The financials are not drawing near as much short term loans from the Fed under the rescue deal the last couple of weeks and oil looking toppy to me.

Futures set for strong open... but with nothing much on the economic calender tonight it's probably a good bet the US will fade out pretty badly in the last hour.

 

[ithatheekret]

How can you know where you're going if you don't know where you've been?

A map , a set of eyes and a rear vision mirror would help ...........

then again Indy Mac had all of the above and it still hit Alt-A and ended up getting deleted by the OTS now they'd best pray the Fed. Deposit Insurance Corp. has enough stuffed under the mattress to cover the losses .

Time for Hank to get the cheque book out again !

 

[ithatheekret]

I thought Unc might like to see this one :

(Hyper)-Inflation, Deflation, HOCG and LOCG


By Francis Schutte .

http://seekingalpha.com/article/84819-hyper-inflation-deflation-hocg-and-locg?source=d_email

It occurs to me more and more often that people have not the slightest idea of what inflation and deflation are, and what the consequences are for the investor. Also, few understand the difference between Inflation and what is defined as "hyperinflation".

The definitions of inflation and deflation will be skipped as these have been explained in detail earlier under academics. It is important to remember that these design and excessive growth and decrease in money and credit and NOT rising or falling prices. Price evolution has to bee seen as a possible consequence.

In economics, hyperinflation is inflation that is "out of control," a condition in which prices increase rapidly as a fiat paper currency loses its value. Formal definitions vary from a cumulative inflation rate over three years approaching 100% (Today, many goods exceed the 100%) to "inflation exceeding 50% a month." In informal usage the term is often applied to much lower rates. As a rule of thumb, normal inflation is reported per year, but hyperinflation is often reported for much shorter intervals, often per month.

The definition used by most economists is "an inflationary cycle without any tendency toward equilibrium." A vicious circle is created in which more and more inflation is created with each iteration of the cycle. Although there is a great deal of debate about the root causes of hyperinflation, it becomes visible when there is an unchecked increase in the money supply or drastic debasement of coinage, and is often associated with wars (or their aftermath - Iraq, Afghanistan), economic depressions, and political or social upheavals.

The reason why it can be so hard to ‘understand’ we have (hyper)inflation is that in a (hyper)inflationary cycle and certainly in the initial stage NOT ALL PRICES RISE. Some prices, by name of these of the HOCG will even tend to fall.



As explained by Von Mises, as a result of Fractional Reserve Banking, fiat money and inflation, at a certain point, the prices of HOCG (high order capital goods) tend to fall and those of LOCG (low order consumer goods) tend to rise. In other words, we have a (hyper)inflation cycle but we still see some prices fall. We have (hyper)inflation and deflation at the same time. Rather confusing.

The shift from HOCG to LOCG exists because of a misallocation of funds. In other words, funds that should have been used to improve the agriculture and to increase the energy supply, were misallocated to for example the real estate market, and were used in the dot.com and stock market bubbles. However, because of oversupply, at a certain point, the demand for HOCG dries up and as suppliers/manufactures scramble to sell the overstock, interest rates go up and prices of HOCG come down.

Meantime, no or little attention has been paid to the LOCG. No new investments nor research were made (because of the misallocation of funds there was no incentive), existing installations/plants became inefficient and outdated. Politicians did not understand the problem either and used the mass psychology to earn votes by not allowing the construction of nuclear power and clean coal plants, by making it difficult and even impossible to drill for more oil and to built new petrochemical refineries. No attention was given to the failing supply of LOCG. At a certain point, we see a growing disequilibrium between supply and demand (Peak oil and food commodities) and we end up having an inelastic supply (peak oil) and a rising or stable demand for the LOCG . Prices start rising at an abnormal rate. There is inflation and sometimes hyperinflation.

Important is to understand that this is the direct result of Fractional Reserve Banking and fiat money creation by the banks and political authorities. In other words, they are at the very origin of the evil they are blaming the speculators for today.

A recession and depression starts and last until all of the misallocated funds have been recycled correctly into the LOCG. The longer the cleaning cycle is delayed by subsequent credit injections by banks and politicians (more fiat money, more misallocations and more inflation), the stronger and pain fuller the cleaning action and potential crash of the HOCG and the recession and depression.

If authorities really mean to stop inflation, they should stop Fractional Reserve Banking and the creation of fiat money.

 

[zt3000]

My reading from Jan pin-pointed Aug-Sep as the crisis point, so July is a little early. Historically something like 8 out of 10 of the worst moves have come in October. Maybe this one will too.

I've been posting to this thread for months just trying to get a few people to realise how serious the position is and how bad things could get. Within the next few months we should know if it really is "the big one". The worst is definitely still to come.

BTW I think the Aussie real estate market is going to crash too, for similar credit-related reasons. That should become clearer in the next few months too.

LoL

there is little to negligable sub-prime problems in Australia. Australian banks are well positioned, they are not trying to raise capital or cutting dividends. They are buy up,

Westpac and St George, NAB ABN Amro Investment Banking Arm

cmon people lol

be positive lol

 

[wayneL]

there is little to negligable sub-prime problems in Australia.

 

[explod]

I thought Unc might like to see this one :

(Hyper)-Inflation, Deflation, HOCG and LOCG


By Francis Schutte .

http://seekingalpha.com/article/84819-hyper-inflation-deflation-hocg-and-locg?source=d_email

It occurs to me more and more often that people have not the slightest idea of what inflation and deflation are, and what the consequences are for the investor. Also, few understand the difference between Inflation and what is defined as "hyperinflation".
.

Thank you Itha, the content is a LOCG and the paste is still in the HOCS catigory.

cheers xplod

 

[Sean K]

Jim Rogers gives a pretty bullish interview on Bloomberg.

Worth a watch/listen.

http://www.bloomberg.com/index.html?Intro=intro3

 

[sassa]

Thought this quote was more appropriate in this thread regarding the Fannie & Freddie problem than in Thought For The day.
When the wolves are howling,crying "angels" only works for a short time.

 

[kingbrown]

The Great Crash of 2008 ?

Carefull what you wish for guys !
As there is very few that are going to benefit from this
i have also been prudent but hard times may soon be upon us
Many people are starting to really worry and yes some deserve it but not all

For me iam up on the fence
Pulled out of the market 1 month ago
Now looking pulling my super out also
I know brokers who have done the same
times me by a million or 3 and we have are going to have a problem

if we are not hit by a sledge hammer 1st We will probably in the end talk ourselves into a recession

see todays news

Re Aussie Property market set to crash

http://www.businessspectator.com.au/bs.nsf/Article/Property-will-tumble-GJRJT?OpenDocument

then more good news

http://www.business24-7.ae/Articles/2008/7/Pages/07152008_2a7cafb78b7f441eac9685251b467102.aspx

The measures announced by US Treasury Secretary fell short of full nationalisation (though that option remains open), but the package is nonetheless so radical that it amounts to a last-ditch solution by the American financial establishment. By seeking US Congressional approval for unlimited authority to lend money to Freddie and Fannie, and give them access to emergency Fed funds while Congress contemplates its reaction, the Treasury has circled the wagons and signalled its determination that the US mortgage market will be the final – and they hope decisive – battle to head off the looming prospect of the Great Crash of 2008.


more again ?

Recession looms as Spain crumbles

The eurozone is tipping into a deeper downturn than America itself despite the tremors in the US mortgage industry, and may already be in full recession for the first time since the launch of the single currency.
Industrial production for the EMU bloc fell 1.9pc in May, according to fresh Eurostat data. It is the sharpest one-month decline for the region since the exchange rate crisis in 1992. Officials in Berlin have warned that Germany's economy could contract by as much as 1.5pc in the second quarter as export orders crumble.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/15/ccspain115.xml