Imminent and severe market correction

[freebird54]

From the latest Harry Dent newsletter....


"Even in the least bearish of our scenarios, with a
near-term top closer to 10,000, the downside for the
Dow is at least 49% in the next year. If the Dow
reaches 10,550 and then falls to as low as 2,710 then
the downside is 74%."

 

[jancha]

I just wonder with the bears out there if any of you still hold any shares? With the GFC eg. There were many who were predicting a fall but it tooks years before it actually happened. Of coarse there'll be another correction to the bull we're having now but when is the question. In the mean time the market keeps going up & the ones not holding any shares are missing out while waiting on a correction which could take years. What makes you think a correction isn't far away would more to the point?

 

[satanoperca]

Because you do not get over the flu in one day.

 

[DB008]

I agree. There has to be another dip soon. The market has had a very strong rally since march this year. Sooner or later some hedge funds will be wanting to take some profits.

 

[jancha]

Because you do not get over the flu in one day.

Yes and some just never recover.

 

[skyQuake]

I agree. There has to be another dip soon. The market has had a very strong rally since march this year. Sooner or later some hedge funds will be wanting to take some profits.

Yup, and they've almost always bought back 2 or 3 days later. (usually at a prem)

 

[Uncle Festivus]

I just wonder with the bears out there if any of you still hold any shares? With the GFC eg. There were many who were predicting a fall but it tooks years before it actually happened. Of coarse there'll be another correction to the bull we're having now but when is the question. In the mean time the market keeps going up & the ones not holding any shares are missing out while waiting on a correction which could take years. What makes you think a correction isn't far away would more to the point?

Another assumption - bulls never short??

 

[Ato]

WayneL posted in the gold price thread:

http://globaleconomicanalysis.blogspot.com/2009/10/gold-and-watched-pot-theory.html

Message Of Gold

The reason for the strength in gold is not US inflation. As I have pointed out many times, gold fell from 850 to 250 over the course of 20 years, with inflation every step of the way. Thus, the inflation story just does not fit.

However, it should be clear that a major financial crisis is in store following a long period of competitive currency devaluation and massive debt and derivatives expansion by nearly every major country on the planet.

The G-7 agreed to do nothing to fix this mess, nor did the previous G-20 meeting. Countries are going to do what they are going to do: follow misguided Keynesian logic that suggests one can spend one's way to prosperity even though the problem is excessive spending across the board.

Might the US dollar blow up? Yes it might. But so could the RMB if China floated it, and so could the British pound. No one seems to see the crisis brewing in Japan with a huge demographic problem, a shrinking population, falling exports, and no way to pay back its national debt.

There is seldom a mention of the problems in European banks who foolishly lent money to the Baltic States in Euros or Swiss Francs and now those Baltic country currencies have collapsed and the loans cannot be paid back. European banks also lent to Latin America and those loans are also suspect. Arguably, European banks are in worse shape than US banks, but no one talks about it, at least in the US.

Spain has unemployment approaching 20% yet must suffer through the same interest rate policy as Germany. Seldom does one hear about this either.

Certainly the UK is a complete basket case with its banks on government life support. Iceland has already blown up, who is next?

Most are not aware of the problems in China, Japan, or Europe. However, the problems in the US are universally well understood. Indeed all eyes are on the dollar and everyone is talking about deficits, monetary printing, and especially unfunded liabilities even though the latter is tomorrow's problem, not today's.

Watched Pot Theory Revisited

A watched pot may boil, but it's not likely to explode, especially when everyone watching the pot expects an explosion any second.

Indeed, it would be fitting if the Ridiculous Hype Over Secret Oil Meetings, helped form a bottom on the US dollar.

Yet, it's easy to see that a financial crisis is brewing.

Somewhere, something is going to blow sky high, but from where I sit, it's as likely to be in the Yen, the Swiss Franc, the British Pound, or something no one is watching at all as opposed to the US dollar specifically.

I've bolded and made larger the relevant parts to me. What are the implications of the yen going belly up, or Japan not being able to pay back all the money it owes? Would it mean utter ruin for the country? African basketcase style? I live in Japan, and upon reading that I suddenly feel ill...

 

[wayneL]

WayneL posted in the gold price thread:

http://globaleconomicanalysis.blogspot.com/2009/10/gold-and-watched-pot-theory.html



I've bolded and made larger the relevant parts to me. What are the implications of the yen going belly up, or Japan not being able to pay back all the money it owes? Would it mean utter ruin for the country? African basketcase style? I live in Japan, and upon reading that I suddenly feel ill...

Ato,

Even Mish has a few plates spinning on the possible outcome. We're deep into chaos theory territory with the world financial system. The butterfly in San Francisco is furiously flapping it's wings, but where the typhoon strikes could be anywhere.

The future relies on the societies inventing their way out of trouble. If anyone can, the Yanks can (with a few caveats... a discussion for another time). I don't know Japan well enough to say, but the question is whether they, as a society, can pull a rabbit out of the hat.

 

[Aussiejeff]

WayneL posted in the gold price thread:

http://globaleconomicanalysis.blogspot.com/2009/10/gold-and-watched-pot-theory.html



I've bolded and made larger the relevant parts to me. What are the implications of the yen going belly up, or Japan not being able to pay back all the money it owes? Would it mean utter ruin for the country? African basketcase style? I live in Japan, and upon reading that I suddenly feel ill...

Simple.

Follow OZ example & open up the immigration floodgates to import say, 10,000,000 young, wealthy families each year for a bit. All that extra demand for everything under the rising sun will boost Japan's fortunes.

Chiz.


aj

 

[Ato]

Ato,

Even Mish has a few plates spinning on the possible outcome. We're deep into chaos theory territory with the world financial system. The butterfly in San Francisco is furiously flapping it's wings, but where the typhoon strikes could be anywhere.

The future relies on the societies inventing their way out of trouble. If anyone can, the Yanks can (with a few caveats... a discussion for another time). I don't know Japan well enough to say, but the question is whether they, as a society, can pull a rabbit out of the hat.

Fair enough. Funnily enough we had a typhoon strike here today The Japanese are pretty inventive and hard workers with a superb quality of service. Guess we'll have to see where that butterfly effect eventually lands though.

Simple.

Follow OZ example & open up the immigration floodgates to import say, 10,000,000 young, wealthy families each year for a bit. All that extra demand for everything under the rising sun will boost Japan's fortunes.

Chiz.


aj

Yeah, immigration gets talked about here, but mainly from the point of view where the elites will allow it only after a snowflakes chance in hell has become commonplace. I really think Japan (as a state) would rather suffer than allow mass immigration.

 

[Awesomandy]

Simple.

Follow OZ example & open up the immigration floodgates to import say, 10,000,000 young, wealthy families each year for a bit. All that extra demand for everything under the rising sun will boost Japan's fortunes.

Chiz.


aj

I know of some administrations that specifically target wealthy and/or high skilled immigrants, but Australia seems to open its doors up to anyone, including those who are looking for support rather than supporting the system. I won't go into the immigration debate here, but purely in terms of finding more people to support the local economy/wealth, I don't think it would have the desired result.

 

[Uncle Festivus]

The US Fed is printing money by the back door - buying back bond issues 5 days later.....which then goes in to ......equity markets to the tune of $35B a week. So long as they can keep this going all will be fine......

Insider selling to insider buying now 45:1

If you start me up
If you start me up I'll never stop
If you start me up
If you start me up I'll never stop
I've been running hot
You got me ticking gonna blow my top
If you start me up
If you start me up I'll never stop - Rolling Stones

Banks have $687 billion of outstanding loans to companies as at July 2009. Five years ago that number was $326 billion. That is a 110% increase in total bank loans to companies in five years. Corporate Australia is significantly more indebted than it has ever been. The standout increase is in loans greater than $2million which has increased from $124 billion in 1998 to $486 billion in 2009, being a 291% increase.

http://www.restructuringworks.com.au/Bank-Lending-Business.html

 

[cutz]

I just wonder with the bears out there if any of you still hold any shares?

Yeah i hold stocks always have, but I'm also a bear, waiting for an massive correction and subsequent explosion in volatility.

Uncle Festivus,

Have you got a link to the insider to mug buy/sell ratio.

 

[explod]

WayneL posted in the gold price thread:

http://globaleconomicanalysis.blogspot.com/2009/10/gold-and-watched-pot-theory.html



I've bolded and made larger the relevant parts to me. What are the implications of the yen going belly up, or Japan not being able to pay back all the money it owes? Would it mean utter ruin for the country? African basketcase style? I live in Japan, and upon reading that I suddenly feel ill...

Yeh a good one Waynel, Japan has been a cot case for more than a decade, and does the potential for all the other economies to blow up somehow insulate the US.

Great jawboning indeed

 

[Uncle Festivus]

Yeah i hold stocks always have, but I'm also a bear, waiting for an massive correction and subsequent explosion in volatility.

Uncle Festivus,

Have you got a link to the insider to mug buy/sell ratio.

Sorry, I've lost the actual source for that figure, but there are several ways to get this data -

http://www.finviz.com/insidertrading.ashx

http://online.wsj.com/mdc/public/page/2_3024-insider1.html?mod=mdc_h_usshl

No surprise consumer services has a massive imbalance?

 

[MR.]

No one seems to see the crisis brewing in Japan with a huge demographic problem, a shrinking population, falling exports, and no way to pay back its national debt.

The following figures are a few years old but perhaps you get my drift.
The following countries national debts in 2006 totalled in “equivalents of US dollars” divided by population:

USA = $8600- per person
Australia = $19400- per person
Europe = $3500- per person
UK = $5600- per person
Japan = $12,000- per person

Japan definitely has some huge challengers as a nation. However don’t forget Japan has huge private savings and had the “equivalent in USD’s” in 2006 of $68,000- in cash deposits per person. Is it fair in a way to assume that really Japan might have (68k savings – 12k national debt) = $56,000- each in cash savings? I’m sure the people of Japan will come to the rescue of the nation before it became a state of China! That is for sure!

Take a look at home or some of the other countries. How well do our/their totals stack up?

 

[Gordon Gekko]

An excellent summary and well worth a read.


"The trick is to get the credulous masses to join the bubble game at high prices. When the bubble bursts, even though asset prices may be the same as they were at the beginning, most people lose money to the few. What's occurring now is another bubble that is again redistributing income from the masses to the few."



http://english.caijing.com.cn/2009-09-28/110267252.html

 

[Uncle Festivus]

The following figures are a few years old but perhaps you get my drift.
The following countries national debts in 2006 totalled in “equivalents of US dollars” divided by population:

USA = $8600- per person
Australia = $19400- per person
Europe = $3500- per person
UK = $5600- per person
Japan = $12,000- per person

Japan definitely has some huge challengers as a nation. However don’t forget Japan has huge private savings and had the “equivalent in USD’s” in 2006 of $68,000- in cash deposits per person. Is it fair in a way to assume that really Japan might have (68k savings – 12k national debt) = $56,000- each in cash savings? I’m sure the people of Japan will come to the rescue of the nation before it became a state of China! That is for sure!

Take a look at home or some of the other countries. How well do our/their totals stack up?

Is there an extra zero for Oz, seems a bit high?

Have a look at this site -

http://buttonwood.economist.com/content/gdc

 

[Mr J]

Yes, I'd like to know how we went from being a country with one of the lower public debts, to one with one of the highest :. While we like to whinge about our debt, we're still far better off in that respect than most other countries.