Imminent and severe market correction

[GreatPig]

the assumption of all the deposits of Integrity Bank by Regions Bank

That must be reassuring. Regions was listed as one of the Dead-Man-Walking banks in a recent John Mauldin newsletter (written by Bennet Sedacca).

You may need to register to read the newsletter.

GP

 

[Whiskers]

Optimism? That is the issue with interpreting the written word but I would not describe the underlying theme of this thread as being optimistic. And yes I have been following this thread for over a year and yes I did not have a margin loan or used my house as an ATM so good for me.

But it is depression this and depression that. You will have very real threat of unemployment in a depression so the fact that you did not margin into ANZ will be meaningless. But the risks have been pointed out ad naseum by now so whatever I have to say about the current 'crisis' is meaningless too.

Everyone seems to forget that the world recovered from its depression last time around. I mean it took fascism eating itself to do so but we did it. We will all be better investors due to this credit maelstrom or at the very least regulation will be in place to avoid the excesses. After all the Fannie and Freddie model, spawned from the last depression, has worked well for 80 odd years which is a pretty good policy if you ask me. Now it needs to be re-jigged for the next generaion. Big deal.

You should all be celebrating the demise of Bear Stearns and hopefully Lehmann Bros and a few pissant regional banks too as this will mean your kids will have a better future. Take some pain, redefine the model and move on. Humans are self interested after all. There will be another up in the asset cycle.

I am a lot more optimistic today compared to 12 months ago; and it means we no longer have to hear about the 'War on Terror'!! Remember that abstract media construct?

Bludy good post Bushman.

I'm in accord with the notion that, just because a few businesses and banks fail that the end of the world is nigh... is nonsense.

Businesses and banks fail, merge, reorganise or whatever all the time.

It's normal and obvious that in tough economic times that more weaker and vulnerable ones will go, just as it's obvious that in boom times every two bit entrepreneur starts a new business that is fundamentally flawed or becomes mismanaged and is doomed to go when the economic cycle wanes.

I like a bit of conversation and chit chat, like most people... but some of the stuff of discussion here makes good humour and wit, but really for me most of it is just emotional frustration that things aren't evolving in some sort of perceived idealistic model.

The world isn't perfect... at least in many peoples eyes... but it does manage to evolve perfectly according to the laws of cause and effect, action and reaction.

Reminds me a bit of the sterotypical old busybodies getting together for a bit of a winge and gripe about anything and everything of everyone else's business... a bit self absorbing I think... and loosing touch with their own intellectual and intuitional tools to make the best of the idealistically imperfect hand they are dealt.

In other words the world is evolving all the time. It happens for a reason. Best try to get attuned.

 

[wayneL]

Everyone seems to forget that the world recovered from its depression last time around. I mean it took fascism eating itself to do so but we did it. We will all be better investors due to this credit maelstrom or at the very least regulation will be in place to avoid the excesses. After all the Fannie and Freddie model, spawned from the last depression, has worked well for 80 odd years which is a pretty good policy if you ask me. Now it needs to be re-jigged for the next generaion. Big deal.

You should all be celebrating the demise of Bear Stearns and hopefully Lehmann Bros and a few pissant regional banks too as this will mean your kids will have a better future. Take some pain, redefine the model and move on. Humans are self interested after all. There will be another up in the asset cycle.

I am a lot more optimistic today compared to 12 months ago; and it means we no longer have to hear about the 'War on Terror'!! Remember that abstract media construct?

You see I think bears are serious misunderstood and misrepresented. Most of us are not calling for Armageddon, though we may use that word hyperbolically. We (and certainly me) are calling for exactly the above scenario; resetting, rejigging, clearing out malinvestment and then moving on.

CLASSIC AUSTRIAN ECONOMICS.

As I have stated ad nauseum, bears are bulls. Bears are only bearish so they can be bulls again.

As we go into the northern hemisphere autumn, should I hope for more blooms from my now tatty looking petunias, should I invest in sunlamps and heaters to try to trick them into thinking it's still summer, or should I start preparing for winter and looking forward to next summer's blooms?

Financial winter is upon us folks, but that IS cause to be optimistic, because as winter follows summer and autumn, spring and summer follows winter.

There will come a point when this bear becomes unremittingly bullish and the economy tankage over here is exciting. I've prepared for it (a tad early so it turned out, but greedscam, crash gordon, et al had the sunlamps out on the petunias), so now I start preparing for the spring.

I'm still a bear for a while, but the bull is waking up as a result.

When was Warren Buffett most bullish? When did he buy stocks with his ears pinned back? When did Warren say his "spending drunken sailor" quote?

Yep, when blood was running in the streets, when market PE was 7 or 8 or something.

Market tankage is a time for bullishness and optimism... just not too soon into it. This will take a little while to play out, it's only just starting.

 

[explod]

Market tankage is a time for bullishness and optimism... just not too soon into it. This will take a little while to play out, it's only just starting.

A great post that I think is right on and mirrors my own feelings and approach. Exciting times ahead for the wary.

And the steps will be such as, currencies, then special materials to new industries ad in fanitum.

I await a day when I can buy some BHP for less that $20. Absolute fear driven heard mentality will hand it to us on a platter. But I am gunna make a bit out of gold first.

I also notice out our way land banking has already started by long term players wanting to preserve capital away from the financials.

 

[dhukka]

You see I think bears are serious misunderstood and misrepresented. Most of us are not calling for Armageddon, though we may use that word hyperbolically. We (and certainly me) are calling for exactly the above scenario; resetting, rejigging, clearing out malinvestment and then moving on.

CLASSIC AUSTRIAN ECONOMICS.

As I have stated ad nauseum, bears are bulls. Bears are only bearish so they can be bulls again.

Yep that sums it perfectly wayne.

You've got to wonder what makes these delicate flowers so emotionally fragile that they feel the need to run around and tell everybody that it's not the end of the world, even though nobody said it was. Projecting their own insecurities perhaps?

There was a famous magazine cover back in 1982, I forget which one, that proudly pronuonced "The Death of Equities" That was when the market P/E hit an all time bottom just below 8. I don't expect the market P/E to get back below 8 but when we start to see that kind of sentiment I'll be jumping in with both meet and a margin loan to boot.

 

[Kauri]

According to the UK Sunday Telegraph Lehman Brothers is this weekend locked in talks with a group of foreign government-backed investment funds in an effort to secure billions of dollars in new equity capital. The Sunday Telegraph has learned that Lehman has intensified talks in recent days with Korea Development Bank about a capital injection of as much as 6 BLN USD. KDB has drafted in bankers from the heavyweight advisory boutique Perella Weinberg to provide counsel on the talks, which could be concluded this week. According to the UK Telegraph if the talks with the Koreans fall through, Lehman is lining up alternative investment from other sources, including Citic Securities, a Chinese brokerage. Lehman is also holding talks with a number of sovereign funds from the Middle East, which have been invited to participate in a capital-raising. These are understood to include investors from Abu Dhabi and Qatar.

In an interview that appeared in the Saturday UK Guardian, UK Chancellor Darling is quoted as saying that the UK is facing "arguably the worst" economic downturn in 60 years which will be "more profound and long- lasting" than people had expected. The Guardian article stated that Darling admitted that he had no idea how serious the credit crunch would become.
Later in the weekend Darling took the airways to "clarify" his comments saying that he was referring to global economic conditions rather than those in Britain.

Alls well with the financial world... crack another bottle of Xanadu..ooops.. maybe .. nnooop.. they've gone too..uummm

Cheers
......Kauri

 

[CanOz]

If the facts on Chris Martenson's site are anything to go by, its only going to get worse....or at least it will be a very different life in the next two decades for most of us.


Here's a new thread, i really appreciate your comments Kauri, along with all the other realists here.
https://www.aussiestockforums.com/forums/showthread.php?t=12227
Cheers,


CanOz

 

[dhukka]

If the facts on Chris Martenson's site are anything to go by, its only going to get worse....or at least it will be a very different life in the next two decades for most of us.


Here's a new thread, i really appreciate your comments Kauri, along with all the other realists here.
https://www.aussiestockforums.com/forums/showthread.php?t=12227
Cheers,


CanOz

Thanks immensely for than canaus, I think it's difficult to cover so many topics in a two and half hour course but he has done a fantastic job of attemptiing it. A lot of the stuff on money and fuzzy stats I was well aware of but his analysis of peak oil and the concept ERoEI was eye opening. Can't wait for the last 3 chapters. Don't know that I necessarily agree with all his conclusions but I do agree that the next 20 years will be much different than the last 20.

 

[CanOz]

Thanks immensely for than canaus, I think it's difficult to cover so many topics in a two and half hour course but he has done a fantastic job of attemptiing it. A lot of the stuff on money and fuzzy stats I was well aware of but his analysis of peak oil and the concept ERoEI was eye opening. Can't wait for the last 3 chapters. Don't know that I necessarily agree with all his conclusions but I do agree that the next 20 years will be much different than the last 20.

Certainly an eye opener for sure.

I'll update the other thread as the last three chapters become available.

Cheers,


CanOz

 

[Bushman]

You've got to wonder what makes these delicate flowers so emotionally fragile that they feel the need to run around and tell everybody that it's not the end of the world, even though nobody said it was. Projecting their own insecurities perhaps?

.

I am sure you have heard to one about people in glass houses. Have a read of your statement above from a neutral point of view and then tell me where it sits on the 'emotional intelligence' scale?

So from what I can ascertain, a bear is a bull with an anxiety disorder? Please, please - it is said with my tongue firmly in my cheek.

 

[IFocus]

You see I think bears are serious misunderstood and misrepresented. Most of us are not calling for Armageddon, though we may use that word hyperbolically. We (and certainly me) are calling for exactly the above scenario; resetting, rejigging, clearing out malinvestment and then moving on.

CLASSIC AUSTRIAN ECONOMICS.

As I have stated ad nauseum, bears are bulls. Bears are only bearish so they can be bulls again.

As we go into the northern hemisphere autumn, should I hope for more blooms from my now tatty looking petunias, should I invest in sunlamps and heaters to try to trick them into thinking it's still summer, or should I start preparing for winter and looking forward to next summer's blooms?

Financial winter is upon us folks, but that IS cause to be optimistic, because as winter follows summer and autumn, spring and summer follows winter.

There will come a point when this bear becomes unremittingly bullish and the economy tankage over here is exciting. I've prepared for it (a tad early so it turned out, but greedscam, crash gordon, et al had the sunlamps out on the petunias), so now I start preparing for the spring.

I'm still a bear for a while, but the bull is waking up as a result.

When was Warren Buffett most bullish? When did he buy stocks with his ears pinned back? When did Warren say his "spending drunken sailor" quote?

Yep, when blood was running in the streets, when market PE was 7 or 8 or something.

Market tankage is a time for bullishness and optimism... just not too soon into it. This will take a little while to play out, it's only just starting.

This must be a great post it mirrors my own opinion

Still need some serious fearful events to shake the fur off this bear market.

 

[explod]

This must be a great post it mirrors my own opinion

Still need some serious fearful events to shake the fur off this bear market.

As fear approaches, the senses numb to only what an individual wants to believe. There are many sears to choose from who will strike the right cord for comfort.

A good translation, "the savvy will sucker the navvies out of their last dollar and more before they realise they have been robbed".

The Reserve dropped it today to gather a bit more tinder dry fuel, the savvy will use the window of opportunity to get out.

 

[Bushman]

As fear approaches, the senses numb to only what an individual wants to believe. There are many sears to choose from who will strike the right cord for comfort.

.

Very poetic. I like it.

Global inflation is the economic variable to 'fear' if you are looking to return to equities. Make sure there are a few inflation hedges in your portfolio. Cash does not meet this criteria.

 

[davo8]

Global inflation is the economic variable to 'fear' if you are looking to return to equities. Make sure there are a few inflation hedges in your portfolio. Cash does not meet this criteria.

I don't think so. The phenomenon we are seeing is debt destruction aka deflation. Anybody using lots of leverage is getting killed. Hedge funds, investment banks, mortage banks all get hurt.

Inflation will only get seriously going if central governments print lots of money and give it to consumers (to spend) not rich guys (to reduce their losses). My guess is that deflation will outweigh inflation across the system.

In deflation all assets reduce in value (even gold). If you have illiquid inflation hedges during deflationary times you are toast.

Only two assets I know really survive deflation. One is productive land; the other is productive business, but without debt. At present, cash getting 8% is looking quite good.

Actually you should pray for inflation. The other thing is far, far worse.

 

[Kauri]

RBS analysts in a note to clients today said Barclays may need to raise as much a Stg 7.5 bln to bring its capital ratio in line with investment banking peers. RBS cut its rating on Barclay's stock to "sell" from "hold".
Now watch Barclays cut its rating on the haggis munchers..

Cheers
...........Kauri

 

[Kauri]

and so it goes on ... and on.. and.....aaaaahh.. something you can bank on..

Merrill's talks to sell a significant amount of bad loans to Korea Asset Management Corp are faltering because of a dispute over price according to the Korean firm's CEO. Failure to strike a deal may indicate Merrill and Lehman may have to cut prices for assets that they are trying to sell as mortgage-related losses widen.
Cheers
............Kauri

 

[Miner]

and so it goes on ... and on.. and.....aaaaahh.. something you can bank on..

Merrill's talks to sell a significant amount of bad loans to Korea Asset Management Corp are faltering because of a dispute over price according to the Korean firm's CEO. Failure to strike a deal may indicate Merrill and Lehman may have to cut prices for assets that they are trying to sell as mortgage-related losses widen.
Cheers
............Kauri

Welcome you back Kauri - certainly your absence was felt

Hope you have been working harder for us to provide your reserach

With DJ constant fall including last night 344 , sagging Oz dollar, we need your brain in this forum for us to protect from severity

 

[Aussiejeff]

and so it goes on ... and on.. and.....aaaaahh.. something you can bank on..

Merrill's talks to sell a significant amount of bad loans to Korea Asset Management Corp are faltering because of a dispute over price according to the Korean firm's CEO. Failure to strike a deal may indicate Merrill and Lehman may have to cut prices for assets that they are trying to sell as mortgage-related losses widen.
Cheers
............Kauri

It's all grist for the mill right now...

Check out this uplifting forecast -


U.S. Must Buy Assets to Prevent `Tsunami,' Gross Says (Update3)

http://www.bloomberg.com/apps/news?pid=20602004&sid=aZLLPW9YEa60&refer=world_indices

How deep are the Fed's pockets? Come to think of it, how deep are our OWN guvmint's Future Fund pockets?


Shall we say, minus 150 pts for the ASX today??



aj

 

[Bushman]

.

Actually you should pray for inflation. The other thing is far, far worse.

Tell that to the Zimbabweans. Rampant inflation is a humanitarian disaster. Be careful what you wish for. Have a look at inflation rates for the BRIC economies and consider that they are now exporting inflation, rather than deflation, to the world. Throw in commodities, oil and the fact that America will attempt to 'inflate' their way out of trouble (via an increase in money supply). Inflation will be the long-term threat to global growth.

You are focussing on the bursting of an asset bubble. All we are seeing a return to real supply and demand equilibrium for all asset classes . Securitisation of long-term asset plays (property and infrastructure) was never a good idea as you are funding long-term investments with short-term capital structures and investor expectations (the 'yield, yield, yield' at any cost chorus).

Anyway my 2c.

 

[sassa]

Is this the truth or a warning of what may be coming or speculation?

Last week saw the publication of Q2 US whole economy profits data. They were shockingly bad. Core measures of profitability are in free-fall and have now reached a tipping point, where corporate activity could easily implode. We have also reached the point where companies give up ‘manipulating’ their profits higher and admit they are actually in free-fall. A combination of economic and reported profits slumping will catalyse the next equity downleg.

http://www.bigpicture.typepad.com/