Imminent and severe market correction

[kransky]

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

yes your right...
http://mediamatters.org/items/200812040005

why was such crap aired on our news in oz?

 

[kransky]

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

I expect Roubini is much smarter than i... but a massive and prolonged deflation rewards the responsible savers and i just dont think the responsible will be rewarded and the irresponsible punished... that would just be too good to be true

plus china would then be able to buy EVERYTHING so logic says hyperinflation when the usd collapses



"logic" LOL

 

[kransky]

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.

I am becoming increasingly scared because i am leaning this way also
:hide:

 

[wayneL]

I expect Roubini is much smarter than i... but a massive and prolonged deflation rewards the responsible savers and i just dont think the responsible will be rewarded and the irresponsible punished... that would just be too good to be true

plus china would then be able to buy EVERYTHING so logic says hyperinflation when the usd collapses



"logic" LOL

Do folks think we are overusing the term "hyperinflation". I think we are. While I would never discount true hyperinflation in one or more anglo economy, "high" inflation being probable after a period of deflation, I strongly doubt we'll get true hyperinflation in the anglo economies.

http://en.wikipedia.org/wiki/Hyperinflation

That said, we must be vigilant for early signs of it in the commodities markets.

 

[wayneL]

Not a bad article from "Pesto" as he is now known here (as the BBC face of the Credit Crunch).

A crash as historic as the end of communism
The credit crunch has destroyed casino capitalism. From the rubble a new, less divisive, economic model will emerge
Robert Peston - http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article5309917.ece

 

[davo8]

I expect Roubini is much smarter than i... but a massive and prolonged deflation rewards the responsible savers and i just dont think the responsible will be rewarded and the irresponsible punished... that would just be too good to be true

plus china would then be able to buy EVERYTHING so logic says hyperinflation when the usd collapses.

Roubini is in the unfortunate position of having made a good call, and now everyone is watching. No, I don't think severe deflation is possible, because although you can destroy credit you can't destroy fiat money. Likewise, I don't think hyperinflation is possible, because that would mean printing physical bank notes with lots of zeros on them.

But I do think a default on the US T-bond and the USD is possible. In that case USD financial assets would drop very, very fast as people try to get out. Watch for May-Jun 2009.

 

[wayneL]

...because although you can destroy credit you can't destroy fiat money.

Eh?

I think you might want to reconsider that view, FWIW.

 

[dhukka]

Eh?

I think you might want to reconsider that view, FWIW.

Especially since every experiment with fiat money in history has been a failure.

 

[kransky]

Is the Fed Taking the First Steps to Selective Default and Devaluation?

http://jessescrossroadscafe.blogspot.com/2008/12/is-fed-taking-first-steps-to-default-or.html

interesting....

 

[wayneL]

More gloom from Gloomberg http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKNSK0gYlqB0

Q Ratio Signals ‘Horrific’ Market Bottom, CLSA Says (Update2)
Email | Print | A A A

By Patrick Rial

Dec. 10 (Bloomberg) -- A global stock slump may have further to go, according to Tobin’s Q ratio, which compares the market value of companies to the cost of their constituent parts, CLSA Ltd. strategist Russell Napier said.

The ratio, developed in 1969 by Nobel Prize-winning economist James Tobin, shows the Standard & Poor’s 500 Index is still too expensive relative to the cost of replacing assets, said Napier. While the 39 percent drop in the index this year pushed equity prices below replacement cost, history suggests the ratio must sink further as deflation sets in, he said. The S&P may plunge another 55 percent to 400 by 2014, Napier said.

 

[noirua]

More gloom from Gloomberg http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKNSK0gYlqB0

Q Ratio Signals ‘Horrific’ Market Bottom, CLSA Says (Update2)
Email | Print | A A A

By Patrick Rial

Dec. 10 (Bloomberg) -- A global stock slump may have further to go, according to Tobin’s Q ratio, which compares the market value of companies to the cost of their constituent parts, CLSA Ltd. strategist Russell Napier said.

The ratio, developed in 1969 by Nobel Prize-winning economist James Tobin, shows the Standard & Poor’s 500 Index is still too expensive relative to the cost of replacing assets, said Napier. While the 39 percent drop in the index this year pushed equity prices below replacement cost, history suggests the ratio must sink further as deflation sets in, he said. The S&P may plunge another 55 percent to 400 by 2014, Napier said./QUOTE]

Thanks for all of that post. I wonder how much the constituents have changed since the 1987 crash. Even the tortoise changes of the DOW 30 are gathering speed.
What I mean really is, how can we compare indices that have changed so much in their makeup.
The FTSE 100 index (101 stocks) seems to be full of companies foreign to the UK.
Even Macquarie Bank has so many foreign interests it makes Aussie indexes increasingly foreign and always vulnerable to foreigners pulling out cash.

 

[Aussiejeff]

More gloom from Gloomberg http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKNSK0gYlqB0

Thanks for all of that post. I wonder how much the constituents have changed since the 1987 crash. Even the tortoise changes of the DOW 30 are gathering speed.
What I mean really is, how can we compare indices that have changed so much in their makeup.
The FTSE 100 index (101 stocks) seems to be full of companies foreign to the UK.
Even Macquarie Bank has so many foreign interests it makes Aussie indexes increasingly foreign and always vulnerable to foreigners pulling out cash.

Totally agree noirua. It's all become so terribly and inextricably ..... COMPLICATED!

Perish the thought that if it is all so complicated now, what will it be like in say, 10-20 years?

 

[noirua]

Totally agree noirua. It's all become so terribly and inextricably ..... COMPLICATED!

Perish the thought that if it is all so complicated now, what will it be like in say, 10-20 years?

Yes, there may well be a new ASX China 200 index, for companies whose principal market is Hong Kong or China. Or the company is controlled through China 'A' shares.

 

[davo8]

Eh?
I think you might want to reconsider that view, FWIW.

Deflation requires a reduction in the money supply. I said it's not possible to destroy fiat money once created, in the sense you can't destroy 10% or 20% of the money. Money can change ownership, but once created it's indestructible so long as the system survives.

It is possible to destroy the currency as a whole. There are many ways to do that, with Zimbabwe and Iceland showing a couple of possibilities. France had the Franc, New Franc then Euro, so the old ones are "destroyed" in a sense.

It's also possible to destroy the value of currency.

There are hints that both Europe and the Fed have a "master plan". Europe wants the USD to collapse and be replaced by a new non-US system. The USA wants to devalue its debts and retain its role as the global reserve currency. Not everyone will get what they want.

I see this reaching a climax by around the middle of next year: summer 2009. There are many steps along the way. These are very smart guys who don't care if they look stupid while they get exactly what they want.

 

[kransky]

These are very smart guys who don't care if they look stupid while they get exactly what they want.

This has to be correct...

 

[wayneL]

Sehr Gut, Frau Merkel.

http://www.timesonline.co.uk/tol/comment/columnists/rosemary_righter/article5327458.ece

Germans reject Keynesian self destruction.

Deutchland uber alles!!

 

[doctorj]

Germans reject Keynesian self destruction.

Deutchland uber alles!!

Doesn't that article explain exactly why Germany is able to "keep its powder dry" rather than join the Keynesian gravy train?

What good will Keynesian-style countercyclical stimulus packages do to inspire the frugal German consumer? It's easy for Merkel to criticise, but who will buy all the BMWs that employ such a large number of Germans?

 

[wayneL]

Doesn't that article explain exactly why Germany is able to "keep its powder dry" rather than join the Keynesian gravy train?

What good will Keynesian-style countercyclical stimulus packages do to inspire the frugal German consumer? It's easy for Merkel to criticise, but who will buy all the BMWs that employ such a large number of Germans?

Well, not many will be MEWed for quite some time, that's for sure.

However I'll take the A4 Cabriolet off my neighbor's hands at the right price. It will have to be cheap, because Audi drivers have won themselves an even worse reputation than Beamer drivers... (deservedly in my observation).

I was thinking of going and supporting their breweries and bratwurst industry soon too.

 

[doctorj]

I was thinking of going and supporting their breweries and bratwurst industry soon too.

Me too, but unfortunately the Great British Peso doesn't go as far as it used to

So instead I'm off to Geneva in an hour or so to support their fondu, chocolate and knife industries

 

[noirua]

Doesn't that article explain exactly why Germany is able to "keep its powder dry" rather than join the Keynesian gravy train?

What good will Keynesian-style countercyclical stimulus packages do to inspire the frugal German consumer? It's easy for Merkel to criticise, but who will buy all the BMWs that employ such a large number of Germans?

There lie Germany's big problems as the emancipation of East Germany and its industries, has made it the most industrialized European country.