Imminent and severe market correction

[baja]

unionised auto workers in the us get US$73/hr.. does it make sense to bail that nonsense out?

they dont get $73 in the pocket. Thats what it costs the company, not what the employee gets deposited in their account.

Auto workers make around $28 an hour plus benefits. The $73 an hour is the total cost for labor past and present retired and not retired divided by total number of actual hours worked. I posted this because I hear that number thrown around and would gladly take $73 an hour and take care of my own benefits. Thats $45 an hour for benefits. Very misleading. Really just a lie.

 

[GreatPig]

the market is always right

I wonder what would happen if it ever was wrong...

GP

 

[IFocus]

I wonder what would happen if it ever was wrong...

GP

GP the market regularly gets it wrong.......hupmmm when my stops get hit

 

[noirua]

It could well be, the time of severe corrections has ended. Interest rates are falling and stocks that are able to maintain dividends are going to look increasingly cheap.
So the market will continue to see some disasters as far as individual companies are concerned, but main indexes may start a long steady recovery despite the economy turning down.

 

[Wysiwyg]

It could well be, the time of severe corrections has ended. Interest rates are falling and stocks that are able to maintain dividends are going to look increasingly cheap.
So the market will continue to see some disasters as far as individual companies are concerned, but main indexes may start a long steady recovery despite the economy turning down.

Sheesh, I wouldn`t mind another shot at an index low, probably the safest entry one can get.Now if I say "I can`t see another index low being put in" then it should happen.

 

[nunthewiser]

Personally think we havent seen the overall low as yet but im from geraldton , what would i know

 

[explod]

I wonder what would happen if it ever was wrong...

GP

Like what happenned as it looked like going to 6000 (AllOrds)

 

[sassa]

"A severe global recession will lead to deflationary pressures. Falling demand will lead to lower inflation as companies cut prices to reduce excess inventory. Slack in labour markets from rising unemployment will control labor costs and wage growth. Further slack in commodity markets as prices fall will lead to sharply lower inflation. Thus inflation in advanced economies will fall towards the 1 per cent level that leads to concerns about deflation.

"Deflation is dangerous as it leads to a liquidity trap, a deflation trap and a debt deflation trap: nominal policy rates cannot fall below zero and thus monetary policy becomes ineffective. We are already in this liquidity trap since the Fed funds target rate is still 1 per cent but the effective one is close to zero as the Federal Reserve has flooded the financial system with liquidity; and by early 2009 the target Fed funds rate will formally hit 0 per cent. Also, in deflation the fall in prices means the real cost of capital is high - despite policy rates close to zero - leading to further falls in consumption and investment. This fall in demand and prices leads to a vicious circle: incomes and jobs are cut, leading to further falls in demand and prices (a deflation trap); and the real value of nominal debts rises (a debt deflation trap) making debtors' problems more severe and leading to a rising risk of corporate and household defaults that will exacerbate credit losses of financial institutions."

- Professor Nouriel Roubini of New York University

http://www.frontlinethoughts.com/gateway.asp?ref=reprint

 

[The Edge]

Saturday 6 December 2008

From an earlier observation:

> Can anyone come to terms with the absurdity
> of Washington in regards to the auto industry?

> I mean, they are prepared to pay trillions to
> bail out rich bankers, yet aren't prepared to
> stump up a measly 20 billion to save a million
> jobs. It makes absolutely no friggin sense...

That it makes no sense speaks to the success of
the international banking regime, aka the New
World Order.

Over a period of almost a centruy, addressing the US,
the Federal Reserve Sytem, since 1913, has directed
everything that pertains to 'money,' starting with
the elimination of specie-backed currency, replaced
by Federal Reserve Notes, issued by a private
corporation, The Federal Reserve Bank/System.

During this same span of time, the bankers created
the Crash of '29, [through manipulation - another story]
which culminated in the bankruptcy and demise of the
US as a sovereign country. Roosevelt closed the banks,
ostensibly to prevent a run on money, but to give the
Fed time to replace the banking system completely over
to the Fed Res System. As a country, the US was now
bankrupt, not revealed to the public as the reason for
closing down the system for several days.

Now in bankruptcy, the Secretary of the Treasury become
the official over-seeing the running of the US. When the
initial plans for the $750 billion bailout were announced, if
anyone paid attention, it was to be under the complete
control of the Treasury Secretary, with no oversight or
review of any and all decisions made by him.

Why?

He is the official that represents the creditors of the US,
the behind-the-scenes central bank system.

Backing up a bit, if one is not familiar with how the
Rothchilds took over the Bank of England, of course,
along with several other banking systems throughout
Europe, then this story will sound too incredible to
believe. To that, I say, read your history.

Rather than get into the mechanics, or details of all
this all evolved, to answer the Q:

> Can anyone come to terms with the absurdity
> of Washington in regards to the auto industry?

Yes, but only within the context of that to which I
have alluded above. Through decades of changing
the US currency from gold/silver backing to only
being backed by nothing, [all US Notes were destroyed
by the Fed to eliminate them from circulation] to ensure
the gradual, imperceptable replacement with fiat paper.

The school system was taken over by the now corporate
US, accomplished by the 14th Amendment, making ALL
citizens of the UNITED STATES, [ a corporation], or
citizens subject to the federal givernment, [anothe story].
The Fed had to control information, and the dumbing down
of Americans began. The US scholl system went from one
of the best in the world to one of, not quite the worst.

This was not by accident.

Rothchild made his fortune by providing money for
various countries to finance their wars, thus becoming
indebted to the Rothschild financial empire.

"Permit me to issue and control the money of the nation
and I care not who makes its laws." ”” Mayer Amsched
Rothchild, a prominent European banker in the 18th century

Those were not idle words.

It was the Federal Reserve Act, passed on 23 December
1913 that effectively ended the Republican form of
government of the United States of America, to be
replaced by democracy, one of the worst possible forms
of government.

In a Republic, the rights of one are protected from the
interests of a majority.

In a democracy, the majority rules, and if one understands
how democracy functions, it is Socialism/Communism
coming to fruition. The US is more communist in structure
and practice than Russia. It is just that most have come
to believe that democracy is a good thing, aka brainwashing.

Democracy is insidious. Do a google comparison between
a Republican form of government and a democratic form of
government.

Back to the omnipotent Fed.

"This Federal Reserve Act establishes the most gigantic
trust on earth. When the President (Wilson) signs this bill
the invisible government of the Monetary Power will be
legalized. ”” Hon. Charles A. Lindbergh, Sr., Dec. 23, 1913

That it was passed on December 23, 1913, two days
before Christmas, when most all the the members who
stood in opposition to this Act were home on holiday, the
most important piece of legislation was secreted through
the remaining sycophants of Congress, directed by just
a few powerful men.

It was long-standing custom not to pass any legislation
during the Christmans holidays, instead waiting until
January, when all members of Congress returned from
holiday. Why else would the monst important peice of
legislation affecting the US financial system be passed
under such suspect circumstances, under secrecy?

There are no accidents.

The first member to head up the Federal Reserve was a
German Jew, not even a U S citizen, brought in from
Germany to set up the system, again, all done in secrecy.
To this day, the Federal Reserve System is not accountable
to any government. If you are not aware, the FRS is NOT
a part of the US government!

At no time have I lost sight of the question posed, but
to give a simple answer requires knowledge of a complex
overthrow of one of the richest, most powerful countries
in the world. All without firing a single shot.

I take that back. Only two shots were fired.

President Lincoln was going to issue Notes backed by the
US government, to finance the Civil War between the States,
instead of money issues by the banking system.

Where was the money coming from? The London Rothchilds
were funding the north, while the Paris Rothchilds were
funding the Confederate South. To use financing other than
from them was unacceptable.

BANG.

Prsident Kennedy was about to pass legislation to issue
4 bilion in silver certificates, still in circulation prior to
1964, instead of issuing fiat Federal Reserve Notes.

BANG.

An effective and judicious use of bullets.

The first piece of legislation passed by FDR, within
five days of taking office, was to close down the
banking system and make the ownership of gold illegal
for US citizens to hold.

The bankers did not want anyone but them to have
all the gold.

One of the first pieces of legislation passed by Lyndon
Johnson, successor to JFK, was to cancel the bill to
issue silver-backed certificates. Subsequently, all siver
backing was eliminated in 1964, even in coins.

So, why did Congress, unwitting marionettes, help
bail out the bankers first? They have to protect the
system from its utlimate collapse from happening.

What about the auto industry and the millions of jobs
lost in the process?

Who gives a **** about "human resources." They are
not part of the system, and they can always be
replaced. [Ever wonder why "personnel departments"
were replaced by the "departments of human resources?"]


Few understand the significance of words, anymore.
On national television, addressing the situation of the
auto industry and the disasterous implications, in his
typically eloquent delvery, Bush said,

"I understand how the people are experiencing hard
times, but we have to do everything we can to protect
the system, and we will."

The sytem is more important than the people, and it
must be protected at all costs.

The reason why nothing makes "no friggin sense" is
because few are aware of the transition that took
place in the United States, since 23 December 1913,
and indeed, throughout the world.

Central Banks are Fascist in derivation, if I recall
correctly, but that matters not. Central banks control
the money system, now a single network throughout
the world, the lynchpin of The New World Order.

There is more, but it is the best way I could address
the legitimacy of the question. When one begins to
comprehend that the world is not what it seems, that
it is led by unseen forces, forces that will tolerate
nothing opposing it, answers begin to make eminent
sense.

Follow the money. Always, follow the money.


Just one opinion.

 

[dhukka]

I suppose you are referring to that panel of 'economists' (NBER) report.

Firstly, it's a recession by their criteria but NOT by the conventional method (two consequitive months of negative GDP), so it's hardly overwhelmingly, or "Full Blown" as was my comment... and the announcement doesn't seem to have any dramatic effect of the 'foreward looking' markets.

Actually, with minor recessions/slowdowns, they are usually over by the time any offical call is made as I believe with high probability this will be after Obama gets in office... even if the current qtr is negative, the markets will be focused foreward looking.

So, for all practical purposes it'll be purely accademic for 'idealist' economists, number crunchers, librarians and the like... cos the bull had already bolted and started procreating again. :

You actually did yourself a favour a while back and stopped commenting on economic matters because it was obvious to all an sundry that you had no clue, but now you wish to highlight your shortcomings even further, so who I am to stop you?

The NBER's method is not only the conventional method, it is the only method. The 2 consecutive quarter's of negative growth is a rule of thumb measure. On any graph and every reference to recessions made by any economist, they use the dates defined by the NBER. If the 2 quarter method were used, there wouldn't have been a recession in 2001. Citing a reference to the age does not bolster your case, it actually diminishes it as the media continually gets this wrong.

If the current quarter is negative? 4Q08 GDP will be down 4 - 5%, plunges in employment, factory orders, retail sales, industrial production and ISM'a below 40 will ensure that. This will easily be the worst recession since 1982 if not since the end of WWII.

The stock market usually does head up well before the recession ends but when will this one end? I don't pretend to know, but I expect the same crowd who were banking on a second half 2008 surge in the economy to be disappointed again in the second half of 2009. Any recovery will be tepid at best.

 

[dhukka]

Basically, we wait for him to turn into a bear, then buy with ears pinned back.

Yep, Whiskers has been a very accurate contrary indicator of economic and market direction.

 

[dhukka]

Two points... context again... I trade the market, you are taking a long term trend. You trying to correlate our comments is akin to an endurance bike rider comparing/arguing stratergy/time line with a sprinter. Different goal posts, different reward points.

If you had read all of my posts you would have seen that I have been very bearish on some things, particularly oil proven correct, against the wisdom of some and moderately bullish to bearish on others at various times. After all the market is there to be traded.

Secondly, since you highlighted the adjective relating to recession, you confirm my arguement... 2001 was a marginal (technical) recession as is the current case so far... ie not 'fullblown' like I said.

So, let me update my 'trading' outlook for the next couple of months. Oil, bearish to flat. Minerals, flat turning stronger into the new year. Precious metals, medium term bullish, longer term (year or so) bearish. Financials, flat... more regulation to come before turning mildly bullish. Residential roperty, forget US... Aus flat to mildly bullish outlook. Retail, generally OK but with lower traditional peak time sales volume.

Again, complete and utter rubbish, your metaphors are meaningless and your outlook is irrelevant to the topic. Your consistent efforts to twist meaning and change the subject are pathetic. Btw, why would you think anyone is interested in you outlook for anything? As a indication of what not to do? The meaning of your previous statement is crystal clear, you said the US economy would not even come close to a "full blown" recession. Here is the NBER's definition of a recession

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

By definition, for the NBER to call a recession, a significant decline in economic activity across the economy has to take place and for a lengthy period of time. Thus there was nothing 'marginal' or 'technical' about the 2001recession. By definition if the US economy is in recession, it is 'full blown'.

Calling a recession marginal means you don't understand the meaning of a recession as defined by the NBER. If you want to compare recessions, then of course you can say the 2001 recession was less severe than 1973-75 or 1981-82 but that isn't what you said is it?

Now if you want to argue that full blown means steep drops in GDP, which you probably will argue as you try to squirm your way out of being wrong once again, it doesn't matter. GDP in 4Q08 will be down at least 4%.

Even if it wasn't down sharply, you'd still be wrong, you said "wouldn't even come close", clearly a recession as defined above means it is close to whatever definition you invent for full blown.

 

[Glen48]

Apart from the well know example of a recession V a depression what are the technical stats. of a depression?
If USA has only just discovered they have been a recession since 07 who knows they could be in a depression now?

 

[dhukka]

Apart from the well know example of a recession V a depression what are the technical stats. of a depression?
If USA has only just discovered they have been a recession since 07 who knows they could be in a depression now?

Glen. prior to the 1930's depression was used to describe periods that we today call recessions. Post WWII it was decided not to call them depressions anymore because of the negative conotations associated with depressions. So there is no strict definition of a depression but there is a general rule of thumb to distinguish a depression from a recession. A depression is loosely defined as fall in real GDP of 10% or more. By that measure he haven't had a depression since 1937 - 38.

 

[Glen48]

Davo 8 Let me correct you on one thing I can't see OZ coming out of this until about 2012, there is to much Fed help to let it collapse as quickly as it should.
Maybe we should be studying Tulips, Dot Com bubbles to get an idea where this will end.
We should also try and agree what the future will bring, Falling USD, deflation, Hyperinflation , gold up, Jobs, life style living in tents growing your own vegies. 3 rd World conditions, what will it take to turn it around, we can never go back to what we had.
I use to think about history and how hard it was to survive and glad i wasn't alive then now in x yrs time people will look back to to the great depression of 2007 - 200?? and wonder how we could get ourselves in such a mess.
Strange how people who never work a day in their lives well soon be just as well of as those who had.

 

[explod]

but regardless of whether a recession has been called 'official', slight, fullblown or otherwise a year in arears is of little consequence, unless you're a perma bear hell-bent on talking yourself and everyone else into disaster...

So if you happened to see it all coming and tried to warn others "you're a perm bear hell-bent on talking yourself and everyone into disaster" Crap

There are a number of 'positive' influences coming up including the inauguration of Obama and the calming effect that is likely to have on Americas associates that one should keep in mind for trading and probably long term investment opportunities.

Well the news out this morning indicates Wall Street is aghast at Obama's pessimistic take on the financials

I'm sorry, but I'm just not a 'perma' 'follower'. I don't lag behind to see what works for others and then hope to replicate. I'm always optimistically looking for 'opportunities', tipping a toe in the water.

Now, just to recap before I sign off and get back to something profitable, this latest string of arguement, no more personality attack, from dhukka started over splitting hairs on the interpretation of the degree of 'recession'. An example of degree/interpretation... take oil for example. From a sharemarket (oil) sector perspective it was very bullish for ages while the financials and the general economy was turning bearish. Similarly, there will be sectors turning bullish well before the wider economy looks good.

Do you honestly read back over the garbage that you put forward. You have been padding after the permas for months and because you dont dig it you just BLAH BLAH away.

It takes leadership, of which there is new coming, to turn sentiment, confidence and markets.

That's why these generalisations of recession, boom, crisis or whatever mean less to some than others.

So the world will be saved by Obama, wish him all the best. You indicated (and I'll go back if required and bring them forward) that the Bush Admin would save us also. So the price of scrap steel dropping from $500 a tone to $90 a ton in three months is a generalisation perhaps.

 

[Glen48]

B O has pledged $600 B to create jobs and save the US auto industry, just tack it on the 8 Trillion and rising.
How much longer can they keep borrowing and yet all seem to think the USD will always be strong????

 

[waz]

Exactly what is this 600bil going to be spent on?
Also, how do we know its going to create 2.5mil jobs?

Ive read about how they will embark on its biggest infrastructure investment since the 1950s. Even if you could create those jobs, whats to say that the unemployed workforce is skilled to take on those jobs.

A person who got layed of from Starbucks doesnt exactly have the qualifications to build a road.

 

[Whiskers]

B O has pledged $600 B to create jobs and save the US auto industry, just tack it on the 8 Trillion and rising.
How much longer can they keep borrowing and yet all seem to think the USD will always be strong????

Only seen a little detail of what he plans, which I think includes some pretty severe attitudinal and managerial changes such as less models and more economecial models and kurbs on executive extravagance.

I think it is virtual self defence policy that he wants to maintain some sort of core vehicle building capacity and expertise.

I was bullish the USD for all it's latest run. The reason is not as simplistic as the strength of the US but a collection of issues in the current phenonemum that the USD is the proxy world currency.

But I'm turning mildly bearish recently. I'm not sure whether it'll go a bit higher before it falls again, but I suspect that if Obama gets what he wants it may kick a bit higher before falling at a slower rate than otherwise under Bushs' policies.

Exactly what is this 600bil going to be spent on?
Also, how do we know its going to create 2.5mil jobs?

Ive read about how they will embark on its biggest infrastructure investment since the 1950s. Even if you could create those jobs, whats to say that the unemployed workforce is skilled to take on those jobs.

A person who got layed of from Starbucks doesnt exactly have the qualifications to build a road.

Fair questions waz. We should start to get some detail over the coming weeks.

Re civil construction, I think you'll find they have plenty of engineers and supervisors. They are the last to be retrenched after the unskilled labourers, skilled labourers, plant operators, tradies, clerical staff and so on.

The labouring and skilled labouring jobs don't take long to get the hang of for keen people. Plant operation, tradies and clericial etc isn't much different no matter whether house construction where there has been numerous layoffs or civil construction, eg carpenters, concreters, plumber and drainers, book keeping , accounting etc still do the same things just in a bit different environment.

 

[davo8]

And then we wait...for the last bubble to pop.

There was the dot com bubble, then the property bubble, then the commodity bubble and now the Treasury bubble.

I wonder what happens when that one pops.

I think Sarkozy will light a candle.:arsch: