Imminent and severe market correction

Average Joe · 17 September 2009

Thousands Of Rusting Ship Hulls Are A Fitting Tribute To The Speculative Market Bubble

Great post from Zerohedge, using vesseltracker.com to track out of charter ships. Looks like th ebaltic dry index is not going up anytime soon.

Singapore:

Chinese coast:

more pictures on link:
http://www.zerohedge.com/article/thousands-rusting-ship-hulls-are-fitting-tribute-speculative-market-bubble

Ato · 17 September 2009

Knobby22 said:
I agree. Even after all this time we have people wanting to go back to the 19th century way of doing things. Basing everything on a bit of metal. The ultimate conservatives.

Look at history. The countries that first came out of the Great Depression wrer the ones that decided to get rid of the gold standard and put liquidity into the system.

The current malaise is caused by poor government regulation and poor central bank decisions. Australia's success shows that if you control these things you won't go broke.

There are a lot of interest groups influencing the media particuarly in the USA to get their short terms aims up against the good of the world. Take what they say with a kilo of salt.

Fwiw I think this comment is rather insightful.

The issue seems less to do with a fiat currency versus a hard currency such as gold, and alot more to do with the failure of poor government and poor central bank (and the possibly continued failure).

I understand both sides of the currency argument, I think, but in this day and age going back to the gold standard I think is not really possible. Surely it could be abused to keep wealth in the hands of a few, just as a fiat currency can be manipulated.

explod · 17 September 2009

Ato said:
Fwiw I think this comment is rather insightful.

The issue seems less to do with a fiat currency versus a hard currency such as gold, and alot more to do with the failure of poor government and poor central bank (and the possibly continued failure).

I understand both sides of the currency argument, I think, but in this day and age going back to the gold standard I think is not really possible. Surely it could be abused to keep wealth in the hands of a few, just as a fiat currency can be manipulated.

The way things are going it wont matter, the only things that will have value soon are those that you can eat or those things that you can use to get something to eat. Money is fast losing its value and food is becoming scarce and so on.

If you have some land, you can live on it. If you do some work of value you will want to get paid by either food of something that will get you food.

Too many wines, must be another bright spark that can finish it off. Anyhow get the drift. Even gold will be useless. On second thoughts another wine while I v got some.

MrBurns · 17 September 2009

explod said:
The way things are going it wont matter, the only things that will have value soon are those that you can eat or those things that you can use to get something to eat. Money is fast losing its value and food is becoming scarce and so on.

If you have some land, you can live on it. If you do some work of value you will want to get paid by either food of something that will get you food.

Too many wines, must be another bright spark that can finish it off. Anyhow get the drift. Even gold will be useless. On second thoughts another wine while I v got some.

Real estate - no matter how it's value fluctuates you can always live in it camp on it or work in it, the intrinsic value is always there.

As long as there is no debt on it of course.

Ato · 17 September 2009

explod said:
The way things are going it wont matter, the only things that will have value soon are those that you can eat or those things that you can use to get something to eat. Money is fast losing its value and food is becoming scarce and so on.

I enjoy reading your posts, explod, so please dont think I'm having a go. But can you back any of that up with concrete details? In particular the last part I bolded. While I personally think things will get somewhat worse than they currently are, speaking very generally, I dont think we're heading for some kind of Malthusian catastrophe. I'm pretty pessimistic, but even I have trouble being that pezzy (I could very well be wrong though, in which case I guess I'll see most of you guys in hell? )

explod · 17 September 2009

Ato said:
I enjoy reading your posts, explod, so please dont think I'm having a go. But can you back any of that up with concrete details? In particular the last part I bolded. While I personally think things will get somewhat worse than they currently are, speaking very generally, I dont think we're heading for some kind of Malthusian catastrophe. I'm pretty pessimistic, but even I have trouble being that pezzy (I could very well be wrong though, in which case I guess I'll see most of you guys in hell? )

People are starving across the planet, in third world countries particularly(largely ignored by the polular press mind), even in the good ole US of A the issue of food stamps is increasing exponentially. Why, overcrowding, even the UK; seasonal problems effecting crop production, increase of deseases hitting livestock. Oceans being fished out.

A bit of googling will back it up.

And hell does not exist IMHO so have a good time while you can.

MrBurns · 17 September 2009

explod said:
And hell does not exist IMHO so have a good time while you can.

Hell exists on earth for those that deserve it.

gooner · 17 September 2009

explod said:
People are starving across the planet, in third world countries particularly(largely ignored by the polular press mind), even in the good ole US of A the issue of food stamps is increasing exponentially. Why, overcrowding, even the UK; seasonal problems effecting crop production, increase of deseases hitting livestock. Oceans being fished out.

A bit of googling will back it up.

And hell does not exist IMHO so have a good time while you can.

China and India will start moving to more meat based diets which requires more feedstock. Once economy kicks up again, POO up to what US$200-US$300. Fertilisers will start getting expensive. All impacts the food chain.

Ato · 17 September 2009

explod said:
People are starving across the planet, in third world countries particularly(largely ignored by the polular press mind), even in the good ole US of A the issue of food stamps is increasing exponentially. Why, overcrowding, even the UK; seasonal problems effecting crop production, increase of deseases hitting livestock. Oceans being fished out.

A bit of googling will back it up.

And hell does not exist IMHO so have a good time while you can.

Fair enough, I'll have a look around for info. What's your time frame for the 'event' then?

(Yes, sorry, the hell thing was just a figure of speech, a bad one >_> I believe all religion belongs in the realm of fiction.)

trainspotter · 17 September 2009

Reply to post by Average Joe ..... Ummmmmm having sailed through the Singapore Straits and the South China Sea those amount of ships waiting/not moving is not uncommon. Most of the time they are waiting to be loaded as there is not enough facilities to handle the amount of ships. TRUE many of them will not be seaworthy but I do not think they will leave them to rust? I would be thinking they would scrap them for the metal PRONTO.

Fire up Google Earth and have a look at Surabaya if you want to see ships jammed in on top of each other. The picture below is of Freighters unloading and jostling for positions.

Glen48 · 17 September 2009

I agree with the above have my 2 acres for 4 K and hope to be there end of next month to build a house, no rules over there pick a place and start work ride out the depression and hope Rudd leaves enough n money for a small pension.
Who else is coming?

explod · 17 September 2009

Ato said:
Fair enough, I'll have a look around for info. What's your time frame for the 'event' then?

(Yes, sorry, the hell thing was just a figure of speech, a bad one >_> I believe all religion belongs in the realm of fiction.)

Nothing in the hell thing but good to have some banter in among the gloom, so keep it up

Time frame, for a lot of people we are there now. Here in Aus., unemployment is starting to bite. The loss of confidence from last October, and the asset contractions are yet to bite. I think we will see a very clear picture of the real state of things in 12 months and IMHO (emphasize that) it will be dismal for the lower and into the middle classes.

dhukka · 17 September 2009

explod,

re positive US GDP growth in 3Q09, the charts below tell the story, Industrial production up in July and August, retail sales up strongly in August. If you want to claim that the bump in growth in the third quarter is entirely due to government stimulus on cash for clunkers and inventory restocking etc. then you'll get no argument from me. The big question is whether the 3Q09 can generate a self-reinforcing positive growth cycle. I remain skeptical on that score.

Gone Fishin · 18 September 2009

trainspotter said:
Reply to post by Average Joe ..... Ummmmmm having sailed through the Singapore Straits and the South China Sea those amount of ships waiting/not moving is not uncommon. Most of the time they are waiting to be loaded as there is not enough facilities to handle the amount of ships. TRUE many of them will not be seaworthy but I do not think they will leave them to rust? I would be thinking they would scrap them for the metal PRONTO.

Fire up Google Earth and have a look at Surabaya if you want to see ships jammed in on top of each other. The picture below is of Freighters unloading and jostling for positions.

Great thanks. Any proof when the photos were actually taken? I know I looked at google on my house two years ago, and exactly the same photo today. Care to explain?

Uncle Festivus · 18 September 2009

dhukka said:
explod,

re positive US GDP growth in 3Q09, the charts below tell the story, Industrial production up in July and August, retail sales up strongly in August. If you want to claim that the bump in growth in the third quarter is entirely due to government stimulus on cash for clunkers and inventory restocking etc. then you'll get no argument from me. The big question is whether the 3Q09 can generate a self-reinforcing positive growth cycle. I remain skeptical on that score.

Dhukka, Would it be possible to overlay the Dow or SP500 on the industrial production chart? Interesting to see just how muchfuture expectation is being 'priced in' to this rally compared to where index's were previously compared to IP?

Nice charts BTW

Ato · 18 September 2009

explod said:
Nothing in the hell thing but good to have some banter in among the gloom, so keep it up

Time frame, for a lot of people we are there now. Here in Aus., unemployment is starting to bite. The loss of confidence from last October, and the asset contractions are yet to bite. I think we will see a very clear picture of the real state of things in 12 months and IMHO (emphasize that) it will be dismal for the lower and into the middle classes.

Goodo, well in that case I think perhaps I misinterpreted your earlier comment about trading services for food. I was interpreting it as a close Malthusian catastrophe (MC) type event, but if your timeframe is now, and maybe 12 months from now, then I dont think it is anything near as bad as a MC event. It is certainly sad for those people who find themselves suffering, but I dont think things are going to fall apart for society en masse, as suggested in a MC event.

I've lived in Japan for the past decade and while things here havent been so great, they havent been utterly terrible either. There have certainly been no four horsemen ride in or the like, as some would have suggested.

All that said, please dont think I'm a bull in disguise. I think that things are bad, and will probably get worse before they get better. But I just dont see some kind of MC event happening. Humans are too resilient for that, we've had so many chances to destroy ourselves till now, and yet managed to pull through.

dhukka · 18 September 2009

Uncle Festivus said:
Dhukka, Would it be possible to overlay the Dow or SP500 on the industrial production chart? Interesting to see just how muchfuture expectation is being 'priced in' to this rally compared to where index's were previously compared to IP?

Nice charts BTW

Uncle there is definitely a correlation, note that in the early 90's the stock market anticipated the rise in IP but in 2002 the stock market continued to fall even after IP had turned up. This time round the market has clearly preempted the rise in IP but I think the case can be made that a lot of expectation has been built into the market already.

swm79 · 18 September 2009

i agree dhukka

the problem is, is that the market is pricing in short term earnings recovery. but the numbers on short term earnings recovery just dont add up... most of those being the big weights in the ASX200: i.e. CBA WBC ANZ WES WOW

and all of these coys have indicated worse than expected earnings for FY10

but market is pricing in FY11 earnings forecasts

Real1ty · 18 September 2009

swm79 said:
i agree dhukka

the problem is, is that the market is pricing in short term earnings recovery. but the numbers on short term earnings recovery just dont add up... most of those being the big weights in the ASX200: i.e. CBA WBC ANZ WES WOW

and all of these coys have indicated worse than expected earnings for FY10

but market is pricing in FY11 earnings forecasts

Many companies are now running a lot leaner than they were, something that was highlighted during the last US reporting season especially.

A lot of companies beat expectations as the bottom line was better than was expected and we rallied accordingly.

This was met with laughter and derision by many who believed the world was being fooled as expectations were not based on revenue growth but cost cutting.(They must have thought they were the only ones that could see this )

The market has continued to rally with hardly a blip on the radar since then.

A lot of companies have the possibility (And that is what it is, not a guarantee but a possibility or maybe opportunity is a better word) to produce excellent results from greater margins, less competition, bargain based purchases etc etc.

Conversely they have headwinds as well, of course, especially reduced consumer spending and increased debt costs etc

I don't agree that companies have indicated worse earnings than last year but imo they have been cautiously optimistic.

You don't know what the market is pricing in nor do i or anyone else but i believe that many that query the sustainability of this rally and believe that the next reporting season will see disappointing results will be disappointed once again.

Of course like everything in life, time will tell.

moXJO · 18 September 2009

When things like this happen, you start to wonder though.
http://money.cnn.com/2009/09/17/news/economy/Philadelphia_budget_crisis/index.htm?postversion=2009091711

Showdown over Philadelphia budget crisisPhiladelphia will shut libraries, playgrounds and courts by Oct. 2 if the state doesn't grant a tax hike and pension relief. Other cities also could face dire straits.

NEW YORK (CNNMoney.com) -- Hard times are hitting the people of Philadelphia, one way or another.

The best-case scenario: Philadelphians will pay 14.3% more in sales taxes for the next five years. This is on top of earlier cuts that already reduced library hours, tree trimming, snow plowing and collection of tires and bulk items.

At worst, they'll lose their libraries, courts, playgrounds and senior centers. Residents will have nearly 1,050 fewer police officers and firefighters to protect them, and they'll have to hold onto their garbage for two weeks.

What ultimately happens hinges on whether the Pennsylvania Legislature approves the city's request to hike its sales tax by 1 percentage point and defer pension payments for two years. Mayor Michael Nutter has said he'll send out 3,000 layoff notices and order the shutdowns to begin Oct. 2 if lawmakers don't give him an answer by Friday.

"We deeply regret to inform you that due to the lack of State budget authority, the City of Philadelphia may no longer have the funds to provide a full range of critical services, severely impacting our residents, businesses and visitors," according to a message posted on the city's Web site. Nutter declined a request for comment.

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