Bernanke And Draghi Are Not Trying To Save Our Economies
Obviously, after a week of big-time announcements, the German Supreme Court, Mario Draghi's bond buying scheme and Ben Bernanke's QE3 (both virtually unlimited - or presented as such), it's tempting to think the western world is well on its way to tackling its financial crises. Looking at the stock markets one might even presume all's fine out there already.
Still, that is - or indeed, seems - only true if you focus solely - blinders and all - on the world of finance. If, on the other hand, you would like to know where the world at large is going, that focus is simply too narrow. As central banks increase their balance sheets ever more, it would already take a huge leap of faith to have real confidence in the idea that what various previous European financial operations, as well as the entire alphabet soup of US bail-outs, could not achieve, now will be accomplished by what is basically more of the same, just more.
You only need to recall where all of those previous schemes ended up after the initial market exhilaration: that's right, they necessitated subsequent bail-outs. The narrow focus also tends to blind everybody to who's supposed to be paying for the bail-outs. Which is everybody. In essence, all that has been achieved, and that to a far lesser degree than ostensibly intended, is that banks haven't yet been toppled by their debts, and stock exchange numbers look - sort of - presentable.
The question then becomes: is it worth it? The answer to that is a resounding YES if you're a banker or a stock investor or an incumbent politician (Bernanke announced QE3 a comfortable 7 weeks before the US presidential elections). The answer is an equally resounding, if not outright debilitating, NO if you're not part of that small world where politics and money meet and live in relative splendor. Those who are not invited to that party will be called upon to foot the bill, without having anything to show for it.
It becomes clearer all the time that the financial world is not the world, the whole world and nothing but the world; it's merely a vanishingly small part of it. Yet is is the only part that most of those who follow finance and the economy seem to be watching, under the stubborn illusion that if markets go up, everyone goes up; all boats rise with the tide. Which is a big boatload of delusional nonsense.
The markets have so far only been able to keep up their look-good appearance because they have had, and continue to have - through the world's central banks - access to everyone else's cash, even the cash that everyone, no-one, hasn't even made yet. And all that is going to run off the tracks in spectacular fashion, be it tomorrow or the day after, because you can't run an economy forever on money that no-one has worked for.
Bernanke is willing to throw in another trillion or so - or two- dollars in taxpayer money, allegedly to create jobs, whereas he's already thrown far more at that same slippery wall (and for that same slippery purpose), and nothing much stuck before; so why would it this time around? Because he labeled it "unlimited"? There's no such thing, of course. Just because he can throw in $3 trillion doesn't mean he could just as easily do the same with $30 trillion (the bond markets would have him for breakfast).
Draghi wants to purchase sovereign bonds, that are not worth anything near their face value, at that same face value. But are we still clear on why he claims he wants to do that? Here's why: simply so Spain and Italy can continue to borrow more and more on the international markets. Which they can't and they won't, as Draghi knows as well as those same markets do.
That's not some unfortunate turn of events, it's all part of the plan; it will drive the countries into the very demanding hands of the IMF and ECB, who will hand out more bail-outs, but this time under the same conditions that Greece is facing: fire hundreds of thousands of civil servants, cut pensions, cut benefits, cut wages, longer working days, longer working weeks, and sell anything not bolted down to foreign investors at fire-sale prices.
Bernanke facilitates for international banks to dump their mortgage backed securities stateside and get paid far more than they're worth, with the only "condition" that he "hopes" this will create US jobs. Draghi facilitates for those same banks to get rid of their EU periphery sovereign bonds, so they'll allow for the periphery to stay inside the eurozone. There is nothing in either plan that puts the people first. There is always only that one focus: banks. But banks are not the economy, or rather: not your economy.
In the end, the economy is all people. But Bernanke and Draghi's schemes do not target all people, other than perhaps in very vague allusions: Bernanke pays far too much for worthless mortgage backed securities so the banks whose hands he takes them off have room to lend money into the economy (create more debt), which could hypothetically create jobs.
Well, that would, for one thing, depend on how much more banks have in their vaults in worthless and/or questionable "assets", obviously. But even as Ben spends - future - American tax revenues to buy the paper, that last bit is not revealed: how much more is there left where that last batch came from? Yeah, we‘ve been playing this game for five years now. And we still don't have an answer to that question.
It's sort of become the new normal: there's some unelected guy in a suit who speaks in language that's supposed to make us think he knows what he's talking about, who pledges trillions in additional debt, in whatever currency he deals in, to ostensibly make life better for the very people who are on the hook for those pledges, whether they're successful or not, and they haven't so far; unless someone would like to defend the success of US QE1 and QE2 - viewed from the man in the street's perspective -.
It's funny, I know, that they have been successful, in a sense (just not the one we're consistently and falsely told they're aimed at): they have saved banks from bankruptcy, and the S&P from sinking into triple or double digits. But the man in the street who's losing his home, his job or a large part of his paycheck, benefits, pension, doesn't care about whether the S&P is at 15 or 15000.
It's time to get this through our heads once and for all: Bernanke And Draghi Are Not Trying To Save Our Economies. Perhaps they would if they could, but the question is moot: they know they can't. Instead, they're trying to save the financial system by stealing our remaining wealth while making us believe that the economy and the financial system - a.k.a. the banking industry - are one and the same thing. They are not, and that's why we see our jobs and benefits and homes go up in thin air and smoke while the S&P looks rosy.
Those last two things are connected. The first are not, no matter that so far most people fall for the sleight of hand. Which is sad today, and will turn to tragedy tomorrow.
Well, that didn't take long:
Human Bodies For Fertilizer?
My imagination leaps forward to a time when enlightenment finally comes to the human race.
My imagination doesn't leaps forward, because it's been tried before, with great success, in meatspace not in imagination, by the shipload.
Ain't Homo Magister grand? Say it ain't so!:
Although, first we must figure out how to run the Industrial Civilization on something else instead of debt (running it on disposable slaves is really the only other option), because this is the "Enlightenment" du jour.
Human Bodies For Fertilizer?
My imagination leaps forward to a time when enlightenment finally comes to the human race.
My imagination doesn't leaps forward, because it's been tried before, with great success, in meatspace not in imagination, by the shipload.
Ain't Homo Magister grand? Say it ain't so!:
Although, first we must figure out how to run the Industrial Civilization on something else instead of debt (running it on disposable slaves is really the only other option), because this is the "Enlightenment" du jour.
Nassim wrote:
Considering that agriculture isn't going anywhere anytime soon, because everybody wants civilization to last in one form or another, I smell great opportunities in this venue. Smart money must be pouring in...
past the graveyard...
we pay to bury dead people
This reminded me that during the Victorian era, millions of corpses of India's poor were imported to the UK - by the shipload - for use as fertilizer.
This reminded me that during the Victorian era, millions of corpses of India's poor were imported to the UK - by the shipload - for use as fertilizer.
Considering that agriculture isn't going anywhere anytime soon, because everybody wants civilization to last in one form or another, I smell great opportunities in this venue. Smart money must be pouring in...
past the graveyard... 
@Nassim - Perhaps that is when the custom began, to ensure that our loved ones are treated with dignity and respect. Cemetery burials is a fascinating, but morbid topic for additional research.
en.wikipedia.org/wiki/Cemetery
en.wikipedia.org/wiki/Cemetery
we pay to bury dead people
This reminded me that during the Victorian era, millions of corpses of India's poor were imported to the UK - by the shipload - for use as fertilizer.
This reminded me that during the Victorian era, millions of corpses of India's poor were imported to the UK - by the shipload - for use as fertilizer.
jal -
You are not relevant. The message is the only thing that is relevant.
I am relevant to me.
Good luck convincing me otherwise.
You are not relevant. The message is the only thing that is relevant.
I am relevant to me.
Good luck convincing me otherwise.
@ Synchro
No. I do not ignore the details of the concepts.
It would take a book, or many books, to get into the details and the conclusions would still follow the trend.
The conclusion will still be the same.
As an individual, dig into the subject, it will give you a greater chance of having surviving offsprings.
You are lucky to have been born.
Your offsprings will have to have more luck than your forefathers.
The odds are worst than the casino. The longer you play the greater the odds favor the casino.
You are not relevant. The message is the only thing that is relevant.
Your rote maths ignore those basic concepts and are therefore suspect.
No. I do not ignore the details of the concepts.
It would take a book, or many books, to get into the details and the conclusions would still follow the trend.
The conclusion will still be the same.
As an individual, dig into the subject, it will give you a greater chance of having surviving offsprings.
You are lucky to have been born.
Your offsprings will have to have more luck than your forefathers.
The odds are worst than the casino. The longer you play the greater the odds favor the casino.
You are not relevant. The message is the only thing that is relevant.
The number for doing the tango or football hustle.
Something thats going to knock them out of their feet.
You have prominent people saying buy gold and others are saying it is a gamble.
Something thats going to knock them out of their feet.
You have prominent people saying buy gold and others are saying it is a gamble.
jal wrote:
Have we, who are survivors, of past calamities been taught the messages from the past and acted appropriately to maximize our chances of survival?”
The answer simply is . . . . no.
Charles Darwin introduced the idea of the Survival of the Fittest.
Your analysis reduces everything to a mathematical set of probabilities.
Maths do not replicate the conundrum very well at all.
Your maths assume equal probabilities to every human that is born and potentially replicates. That is an incorrect presumption.
Some humans are born with a higher probability of reproductive success than others. And they will reproduce at a much higher rate than others.
Some humans are born deficient and will not reproduce at all. That portion of humans are a significant percentage of those that exist.
Your rote maths ignore those basic concepts and are therefore suspect.
Have we, who are survivors, of past calamities been taught the messages from the past and acted appropriately to maximize our chances of survival?”
The answer simply is . . . . no.
Charles Darwin introduced the idea of the Survival of the Fittest.
Your analysis reduces everything to a mathematical set of probabilities.
Maths do not replicate the conundrum very well at all.
Your maths assume equal probabilities to every human that is born and potentially replicates. That is an incorrect presumption.
Some humans are born with a higher probability of reproductive success than others. And they will reproduce at a much higher rate than others.
Some humans are born deficient and will not reproduce at all. That portion of humans are a significant percentage of those that exist.
Your rote maths ignore those basic concepts and are therefore suspect.
Jack wrote:
Well, I hardly know where to begin on this one . . .
"Everyone like to gang up on Ilargi for his prediction of the gold price."
Hmmm, what??
Who is calling out Illargi about anything to do with the price of gold? Where are you getting that from? I don't believe Illargi has predicted the track of the gold price at any time in recent memory. If he did, I'm very sorry I missed it.
"So far the gold bugs are winning but the game isn't over until its over.
I still believe that a number will be played on those holding gold."
Winning??? Winning what, exactly? What Game are you referring to?
A "number will be played". What number? 47 Red? 12 Black? What Roulette Wheel are you onto?
"Those who have gold are on a wild spending spree.
That is good for the economy."
Most people I know that hold gold, are NOT spending money wildly. They are, in fact, not spending money much at all. And, if so, how is this GOOD for the economy? What economy are you referring to?
It appears to me that you have forsaken your doctor's advice about taking your medications, and that you need to pick up your prescription at your nearest pharmacy and take them immediately.
Everyone like to gang up on Ilargi for his prediction of the gold price.
So far the gold bugs are winning but the game isn't over until its over.
I still believe that a number will be played on those holding gold.
There is something else to look at here.
Just like when you have home price high people are happy that they have something that's worth a lot of money and they spend like nuts.
Same thing is happening with gold.
Those who have gold are on a wild spending spree.
That is good for the economy.
So far the gold bugs are winning but the game isn't over until its over.
I still believe that a number will be played on those holding gold.
There is something else to look at here.
Just like when you have home price high people are happy that they have something that's worth a lot of money and they spend like nuts.
Same thing is happening with gold.
Those who have gold are on a wild spending spree.
That is good for the economy.
Well, I hardly know where to begin on this one . . .
"Everyone like to gang up on Ilargi for his prediction of the gold price."
Hmmm, what??
Who is calling out Illargi about anything to do with the price of gold? Where are you getting that from? I don't believe Illargi has predicted the track of the gold price at any time in recent memory. If he did, I'm very sorry I missed it.
"So far the gold bugs are winning but the game isn't over until its over.
I still believe that a number will be played on those holding gold."
Winning??? Winning what, exactly? What Game are you referring to?
A "number will be played". What number? 47 Red? 12 Black? What Roulette Wheel are you onto?
"Those who have gold are on a wild spending spree.
That is good for the economy."
Most people I know that hold gold, are NOT spending money wildly. They are, in fact, not spending money much at all. And, if so, how is this GOOD for the economy? What economy are you referring to?
It appears to me that you have forsaken your doctor's advice about taking your medications, and that you need to pick up your prescription at your nearest pharmacy and take them immediately.
Everyone like to gang up on Ilargi for his prediction of the gold price.
So far the gold bugs are winning but the game isn't over until its over.
I still believe that a number will be played on those holding gold.
There is something else to look at here.
Just like when you have home price high people are happy that they have something that's worth a lot of money and they spend like nuts.
Same thing is happening with gold.
Those who have gold are on a wild spending spree.
That is good for the economy.
So far the gold bugs are winning but the game isn't over until its over.
I still believe that a number will be played on those holding gold.
There is something else to look at here.
Just like when you have home price high people are happy that they have something that's worth a lot of money and they spend like nuts.
Same thing is happening with gold.
Those who have gold are on a wild spending spree.
That is good for the economy.
@jal - In a similar frame of mind, it occurred to me that we pay to bury dead people nowadays in nice maintained cemeteries. How far back does this custom go? Throughout history, there have always been small plots of land to bury loved ones, but when did people start paying for this service? And after a couple hundred years being dead, does the current generation care, other than perhaps genealogists.
What will survive, are not the individuals but the message.
You should be asking,
“Will the surviving individuals get the message and act appropriately to maximize their chances of survival?
Have we, who are survivors, of past calamities been taught the messages from the past and acted appropriately to maximize our chances of survival?”
Let’s do a little math to illustrate the probability of having surviving descendants.
Let’s use the past for our calculations.
What is the historical probability of your children surviving?
A generation is 20 years.
There is a doubling of population every 20 years.
Since you are here, then that means that there were 2 people involved in your birth. That’s a doubling.
Your parents also had 2 parents as well. that’s another doubling. You can do the remaining doubling for as many years as you want to go back.
Lets do 10 doubling, ( 200 years).
2, 4, 8, 16, 32, 64, 128, 256, 512, 1,024
Soon, reality will show that it is impossible to keep the doubling because the existing population in the past was less then at present. You are lucky to be alive.
That is the critical fact, the historical probability of surviving.
Here is doubling calculation for 200,000 years to illustrate the probability of surviving.
en.wikipedia.org/wiki/Mitochondrial_Eve
Mitochondrial Eve is estimated to have lived around 200,000 years ago,[2] most likely in East Africa,[3] when Homo sapiens sapiens (anatomically modern humans) were developing as a population distinct from other human sub-species.
Mitochondrial Eve is named after mitochondria and the Biblical Eve.[16] The reference to Eve may lead to the misconception that she was the only living female of her time, even though she co-existed with other females. However, all of her other female contemporaries failed to produce a direct unbroken female line to the present day.
The current concept places between 1,500 and 16,000 effectively interbreeding individuals.
That would mean that the probability of survival could be 1:16,000
Here is another calculation.
The total surface area of the earth 510,072,000 km2, 148,940,000 km2 ,land (29.2 %),361,132,000 km2 water (70.8 %)
361,132,000 km2 water (70.8 %) If we allowed every man, woman and child a square km and filled all the land masses with people the earth would hold no more than 148,940,000 persons. Remember that not all square km of land can support a human.
en.wikipedia.org/wiki/World_population
The world population is the sum total of all living humans on Earth. As of today, it is estimated to number 7.041 billion by the United States Census Bureau (USCB).[1] The USCB estimates that the world population exceeded 7 billion on March 12, 2012.[2] According to a separate estimate by the United Nations Population Fund, it reached this milestone on October 31, 2011.[3][4][5]
That would mean that the probability of survival could be 148,940,000: 7.041 billion.
If you want to include the total surface area of the earth, 510,072,000 km2, and count one km per person then the probability of survival would be 510,072,000:7.041 billion.
You are not relevant. The message is the only thing that is relevant.
You should be asking,
“Will the surviving individuals get the message and act appropriately to maximize their chances of survival?
Have we, who are survivors, of past calamities been taught the messages from the past and acted appropriately to maximize our chances of survival?”
Let’s do a little math to illustrate the probability of having surviving descendants.
Let’s use the past for our calculations.
What is the historical probability of your children surviving?
A generation is 20 years.
There is a doubling of population every 20 years.
Since you are here, then that means that there were 2 people involved in your birth. That’s a doubling.
Your parents also had 2 parents as well. that’s another doubling. You can do the remaining doubling for as many years as you want to go back.
Lets do 10 doubling, ( 200 years).
2, 4, 8, 16, 32, 64, 128, 256, 512, 1,024
Soon, reality will show that it is impossible to keep the doubling because the existing population in the past was less then at present. You are lucky to be alive.
That is the critical fact, the historical probability of surviving.
Here is doubling calculation for 200,000 years to illustrate the probability of surviving.
en.wikipedia.org/wiki/Mitochondrial_Eve
Mitochondrial Eve is estimated to have lived around 200,000 years ago,[2] most likely in East Africa,[3] when Homo sapiens sapiens (anatomically modern humans) were developing as a population distinct from other human sub-species.
Mitochondrial Eve is named after mitochondria and the Biblical Eve.[16] The reference to Eve may lead to the misconception that she was the only living female of her time, even though she co-existed with other females. However, all of her other female contemporaries failed to produce a direct unbroken female line to the present day.
The current concept places between 1,500 and 16,000 effectively interbreeding individuals.
That would mean that the probability of survival could be 1:16,000
Here is another calculation.
The total surface area of the earth 510,072,000 km2, 148,940,000 km2 ,land (29.2 %),361,132,000 km2 water (70.8 %)
361,132,000 km2 water (70.8 %) If we allowed every man, woman and child a square km and filled all the land masses with people the earth would hold no more than 148,940,000 persons. Remember that not all square km of land can support a human.
en.wikipedia.org/wiki/World_population
The world population is the sum total of all living humans on Earth. As of today, it is estimated to number 7.041 billion by the United States Census Bureau (USCB).[1] The USCB estimates that the world population exceeded 7 billion on March 12, 2012.[2] According to a separate estimate by the United Nations Population Fund, it reached this milestone on October 31, 2011.[3][4][5]
That would mean that the probability of survival could be 148,940,000: 7.041 billion.
If you want to include the total surface area of the earth, 510,072,000 km2, and count one km per person then the probability of survival would be 510,072,000:7.041 billion.
You are not relevant. The message is the only thing that is relevant.
Money=time=life spent? Different folks have different sets of "values." As a Voluntaryist, I value Liberty and Freedom to Associate above all other aspects of my adventures on this dirtball, as it spins through time and space. The rest is, ahh, immaterial...er, material? That suggested, may I also recommend one of the most interesting, and simple, little tomes I have ever "consumed." Thankfully, enough years ago to assist in changing my course a couple of degrees away from the swamp. It can be picked up used for under five bucks or so. What are you out?
www.amazon.com/Your-Money-Life-Transforming-Relationship/dp/0140286780
Surprised it's still in print. Then again, maybe it's time has come around again?
Wow, a Latte' costs more of my life, that the time it takes to drink it
ps Get it through the sidebar there, and throw Stoneleigh and Ilargi a bone for all they do here.
www.amazon.com/Your-Money-Life-Transforming-Relationship/dp/0140286780
Surprised it's still in print. Then again, maybe it's time has come around again?
Wow, a Latte' costs more of my life, that the time it takes to drink it
ps Get it through the sidebar there, and throw Stoneleigh and Ilargi a bone for all they do here.
Ilargi said "we have underestimated something; not the power of the central banks to prop up banks and markets, as I see suggested in this thread a few times, but the complacency, gullibility and lack of working neurons of the people who are being stripped bare and led into misery by voluntarily handing over what little of their wealth remains to do the propping up."
What I keep discovering, is that people today believe this current lifestyle is normal. They love to buy, buy, spend, spend, take on even more debt, etc. Somewhere they have lost their critical thinking skills. And no one that I know wants to take responsibility and be accountable for their actions and their decisions. It is always somebody else's fault when things do not go the way they want.
For the 4+ years that I have been reading TAE, I keep trying to step back and become less dependent on the global system. But it is almost impossible because nobody else wants to form a smaller community. Everyone seems to want to grow and expand.
The more I read, it appears that when the music stops, there will be no chairs and we will all flounder until we die. Few people want to voluntarily change, until they have to. And when forced to change, it could be too late to learn basic life-skills.
Edit: When the system does collapse, those of us who have connected the dots and heeded the warnings to prepare, we can try to guide others. It won't be easy.
What I keep discovering, is that people today believe this current lifestyle is normal. They love to buy, buy, spend, spend, take on even more debt, etc. Somewhere they have lost their critical thinking skills. And no one that I know wants to take responsibility and be accountable for their actions and their decisions. It is always somebody else's fault when things do not go the way they want.
For the 4+ years that I have been reading TAE, I keep trying to step back and become less dependent on the global system. But it is almost impossible because nobody else wants to form a smaller community. Everyone seems to want to grow and expand.
The more I read, it appears that when the music stops, there will be no chairs and we will all flounder until we die. Few people want to voluntarily change, until they have to. And when forced to change, it could be too late to learn basic life-skills.
Edit: When the system does collapse, those of us who have connected the dots and heeded the warnings to prepare, we can try to guide others. It won't be easy.
Ilargi said -
... we have underestimated something; not the power of the central banks to prop up banks and markets, as I see suggested in this thread a few times, but the complacency, gullibility and lack of working neurons of the people who are being stripped bare and led into misery by voluntarily handing over what little of their wealth remains to do the propping up.
As someone who suggested this very thing in this thread...I'll respond.
It kind of sounds like you are blaming the victim a little bit. And also, is it an important distinction to make whether it is actual central bank power or gullible victims as long as the outcome is the same? Of course the 22,000 people who work for the Fed don't have the actual power (the stuff devolving from the barrel of Mao's gun); their power resides in the faith given to them by everyone else. But faith IS power. Thats why the system is still in place today.
In addition, this outcome should not be a surprise. Japan as a society displayed this very same sheep-like effect for the past 20 years. And yet we imagined that the west is different - that people everywhere here would simply tear down the current system because the Fed hands a few trillion to the banks?
I get the sense you are upset. But at whom? At yourself for not seeing this possible outcome clearly, or at the participants for not behaving as you think they should?
It reminds me a bit of a trader who would scream at the screen when the trade did not go the way he expected it to. It was the market's fault, you see - it didn't cooperate with the trader's view on how things should have gone. Of course, the market is big and apparently immune to yelling, so this strategy did not lend itself to trading success. (That was me, by the way so I can empathize with where you seem to be coming from)
Having an unchanging and diamond-hard conviction about how and when things in the trading world (or the real world) must play out causes all sorts of trouble when the real world doesn't cooperate.
In retrospect, its easy to see why things have played out this way. Very few of the participants wants the current system to fail. They all have a stake - large or small - in it its continued existence. So the vast bulk of them are willing to allow the people in charge wide latitude to keep things going. After all, its been in place for 100 years and that's longer than anyone here has been alive.
To paraphrase Keynes, "When my understanding of the situation changes, I change my mind. What do you do, sir?”
So now that you have new, and clear evidence that the victims aren't going to rip things apart as readily as you once thought, and that for some reason the system (for whatever reason) is more resilient than you had expected, how has that changed your view of timelines, outcomes, and likelihoods?
... we have underestimated something; not the power of the central banks to prop up banks and markets, as I see suggested in this thread a few times, but the complacency, gullibility and lack of working neurons of the people who are being stripped bare and led into misery by voluntarily handing over what little of their wealth remains to do the propping up.
As someone who suggested this very thing in this thread...I'll respond.
It kind of sounds like you are blaming the victim a little bit. And also, is it an important distinction to make whether it is actual central bank power or gullible victims as long as the outcome is the same? Of course the 22,000 people who work for the Fed don't have the actual power (the stuff devolving from the barrel of Mao's gun); their power resides in the faith given to them by everyone else. But faith IS power. Thats why the system is still in place today.
In addition, this outcome should not be a surprise. Japan as a society displayed this very same sheep-like effect for the past 20 years. And yet we imagined that the west is different - that people everywhere here would simply tear down the current system because the Fed hands a few trillion to the banks?
I get the sense you are upset. But at whom? At yourself for not seeing this possible outcome clearly, or at the participants for not behaving as you think they should?
It reminds me a bit of a trader who would scream at the screen when the trade did not go the way he expected it to. It was the market's fault, you see - it didn't cooperate with the trader's view on how things should have gone. Of course, the market is big and apparently immune to yelling, so this strategy did not lend itself to trading success. (That was me, by the way so I can empathize with where you seem to be coming from)
Having an unchanging and diamond-hard conviction about how and when things in the trading world (or the real world) must play out causes all sorts of trouble when the real world doesn't cooperate.
In retrospect, its easy to see why things have played out this way. Very few of the participants wants the current system to fail. They all have a stake - large or small - in it its continued existence. So the vast bulk of them are willing to allow the people in charge wide latitude to keep things going. After all, its been in place for 100 years and that's longer than anyone here has been alive.
To paraphrase Keynes, "When my understanding of the situation changes, I change my mind. What do you do, sir?”
So now that you have new, and clear evidence that the victims aren't going to rip things apart as readily as you once thought, and that for some reason the system (for whatever reason) is more resilient than you had expected, how has that changed your view of timelines, outcomes, and likelihoods?
Perhaps of interest;
On the "safety" of short treasuries;
They are as safe as the full faith and credit of the Federal Reserve Bank. In observing Bernanke's and Draghi's tweaking and twisting of accepted truths, while squirming in their chairs, quivering lower lips, broken nervous speech, as they embark on unprecedented and radical policy maneuvers, are we inclined to hold our faith in highest esteem for these apparatchiks? They are, after all, sovereign debt instruments, incarnate. For a short answer, might want to google "Russian Bond Market Collapse"
What they don't want to hear? Right here;
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
— Ludwig von Mises
IMHO, they are presently attempting to mix, mish-mash, and otherwise shuffle those astute words into scrambled scrabble letters in every possible way of avoiding their truth.
On stocks (S&P 500)?
"Remember that the stock markets are manic depressive." Warren Buffet
Capital preservation?
I like to reset my "Investor Persona" every so often, by stepping away from the LCD, taking a walk on the beach where I am humbled by the vastness and power of the Mighty Pacific, while reflecting on the fact that I came into this bittersweet existence with nothing, and will be someday departing with same-same. Or;
"There will be two dates on your tombstone...your date of birth and your date of death. The only thing that really matters is that dash in between" Unknown
On predictable outcome?
Give me each play in advance of a Superbowl Game, and the score at the end of each quarter, and I will cover all your expenses on a trip with me to the sports book in Las Vegas!
How long, or bad could it be?
Hop a flight to New Delhi, and catch a ride out to Bhagwanpura (Says a friend, a Mr. Patel, as I haven't been there, but his elucidation is sufficient, for I have experienced other similar environments in South East Asia.) But, smiles most likely could be found there, if one looked closely.
I guess what I'm suggesting here is, listen to every opinion offered, then insert each into your perception "software" and process, scrutinize, and test the whole, to establish the acceptable outcome upon which you are willing to take action, not forgetting to change your mind as the facts change.
Example perception testing thoughts;
"I might buy green backs, then one morning they are replaced by orange backs, at 2:1."
"I might buy bonds, then some unlikely event (black Swan?) takes place, shattering confidence."
"I might buy gold, then India and China go over the edge, flooding the market with it."
"I might buy a "doomstead" only to find it in the eminent domain path of a go fast rail to nowhere."
"I could load up on firearms with the perception anarchy is around the corner, only to find my state has rendered them illegal, I don't turn mine in and end up charged with a felony, riding out the crisis in the safety of a jail cell"
I could go on, but the answer to these dualistic examples is somewhere in the "grey areas" between. So, until our own "Nirvana," may we stop, one day at a time, to smell the roses.
FAQ. OK, Mr. Knowitall, how do we protect ourselves?
Answer. Are you using a lantern to search for fire?
On the "safety" of short treasuries;
They are as safe as the full faith and credit of the Federal Reserve Bank. In observing Bernanke's and Draghi's tweaking and twisting of accepted truths, while squirming in their chairs, quivering lower lips, broken nervous speech, as they embark on unprecedented and radical policy maneuvers, are we inclined to hold our faith in highest esteem for these apparatchiks? They are, after all, sovereign debt instruments, incarnate. For a short answer, might want to google "Russian Bond Market Collapse"
What they don't want to hear? Right here;
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
— Ludwig von Mises
IMHO, they are presently attempting to mix, mish-mash, and otherwise shuffle those astute words into scrambled scrabble letters in every possible way of avoiding their truth.
On stocks (S&P 500)?
"Remember that the stock markets are manic depressive." Warren Buffet
Capital preservation?
I like to reset my "Investor Persona" every so often, by stepping away from the LCD, taking a walk on the beach where I am humbled by the vastness and power of the Mighty Pacific, while reflecting on the fact that I came into this bittersweet existence with nothing, and will be someday departing with same-same. Or;
"There will be two dates on your tombstone...your date of birth and your date of death. The only thing that really matters is that dash in between" Unknown
On predictable outcome?
Give me each play in advance of a Superbowl Game, and the score at the end of each quarter, and I will cover all your expenses on a trip with me to the sports book in Las Vegas!
How long, or bad could it be?
Hop a flight to New Delhi, and catch a ride out to Bhagwanpura (Says a friend, a Mr. Patel, as I haven't been there, but his elucidation is sufficient, for I have experienced other similar environments in South East Asia.) But, smiles most likely could be found there, if one looked closely.
I guess what I'm suggesting here is, listen to every opinion offered, then insert each into your perception "software" and process, scrutinize, and test the whole, to establish the acceptable outcome upon which you are willing to take action, not forgetting to change your mind as the facts change.
Example perception testing thoughts;
"I might buy green backs, then one morning they are replaced by orange backs, at 2:1."
"I might buy bonds, then some unlikely event (black Swan?) takes place, shattering confidence."
"I might buy gold, then India and China go over the edge, flooding the market with it."
"I might buy a "doomstead" only to find it in the eminent domain path of a go fast rail to nowhere."
"I could load up on firearms with the perception anarchy is around the corner, only to find my state has rendered them illegal, I don't turn mine in and end up charged with a felony, riding out the crisis in the safety of a jail cell"
I could go on, but the answer to these dualistic examples is somewhere in the "grey areas" between. So, until our own "Nirvana," may we stop, one day at a time, to smell the roses.
FAQ. OK, Mr. Knowitall, how do we protect ourselves?
Answer. Are you using a lantern to search for fire?
Thank you for taking the time to clarify your view on the length of deflation. Your position is somewhat more clear to me.
That being said:
2 statements have been made 100s of times by TAE previously:
1) short-term US Treasuries should probably be safe for the next couple of years
2) Deflation will continue until the bond markets are fractured, at which point, the market-imposed restrictions on actual money printing would no longer exist.
Therefore, If (as Stoneleigh as previously said countless times) short term US Treasuries are safe for a couple (i.e. 2) years or so, then that IMPLIES (in my mind) a 2-year (or so) time frame of intense deflation before fracturing of the US bond market and the lifting of restrictions on printing.
I emphasize the word implies, because I've always noted vagueness at this point in previous explanations. Maybe I'm alone in that. But I've read you folks closely, and I've never seen this issue clarified.
Now you, above, just argued for a different outcome (i.e. a longer term of deflationary unwind).
To use your exact language:
"The deflating of the by far largest credit bubble in history will take a long time, that's not rocket science. And you still use 1-2 years as an option ....".
So do you think US Treasuries are therefore safe for longer than 2 years? If no, then why not? That core piece of practical reader advice, and the associated explanation, is missing from your statement above. If deflation (or deleveraging as you mention above) is likely to last signficantly longer than 1-2 years, then why wouldn't holding US Treasuries be safe for longer time horizons than 2 years?
It comes down to an issue of how long you expect core bond markets to last (2 years or 20 years). This has nothing to do with gambling and everything to do with capital preservation.
I assume (and I emphasize ASSUME).
that you're saying.....Deflation (deleveraging) will last a long time (longer than 1-2 years) and the economic damage will be so significant that there's likely not going to be much stuff left to buy after a few years due to lack of new production. (the initial material glut caused by an initial sharp fall in demand will have, at that point, been burned away by conflict or gradual use).
That's fine, and I get that. If I'm assuming your explanation correctly. But that's different than saying US Treasuries are only safe for a couple of years or so.
------------------------------------------------------
Here's an easy way to resolve the confusion:
If US Treasuries are only safe for another couple of years, then why is that?
Is it because:
#1) The US bond market is likely broken and money printing has begun by that point
OR,
#2) because there won't be much stuff left to buy at that point, after all the economic/societal damage is done, so holding liquid Treasuries would no longer be a prudent store of value.
That being said:
2 statements have been made 100s of times by TAE previously:
1) short-term US Treasuries should probably be safe for the next couple of years
2) Deflation will continue until the bond markets are fractured, at which point, the market-imposed restrictions on actual money printing would no longer exist.
Therefore, If (as Stoneleigh as previously said countless times) short term US Treasuries are safe for a couple (i.e. 2) years or so, then that IMPLIES (in my mind) a 2-year (or so) time frame of intense deflation before fracturing of the US bond market and the lifting of restrictions on printing.
I emphasize the word implies, because I've always noted vagueness at this point in previous explanations. Maybe I'm alone in that. But I've read you folks closely, and I've never seen this issue clarified.
Now you, above, just argued for a different outcome (i.e. a longer term of deflationary unwind).
To use your exact language:
"The deflating of the by far largest credit bubble in history will take a long time, that's not rocket science. And you still use 1-2 years as an option ....".
So do you think US Treasuries are therefore safe for longer than 2 years? If no, then why not? That core piece of practical reader advice, and the associated explanation, is missing from your statement above. If deflation (or deleveraging as you mention above) is likely to last signficantly longer than 1-2 years, then why wouldn't holding US Treasuries be safe for longer time horizons than 2 years?
It comes down to an issue of how long you expect core bond markets to last (2 years or 20 years). This has nothing to do with gambling and everything to do with capital preservation.
I assume (and I emphasize ASSUME).
that you're saying.....Deflation (deleveraging) will last a long time (longer than 1-2 years) and the economic damage will be so significant that there's likely not going to be much stuff left to buy after a few years due to lack of new production. (the initial material glut caused by an initial sharp fall in demand will have, at that point, been burned away by conflict or gradual use).
That's fine, and I get that. If I'm assuming your explanation correctly. But that's different than saying US Treasuries are only safe for a couple of years or so.
------------------------------------------------------
Here's an easy way to resolve the confusion:
If US Treasuries are only safe for another couple of years, then why is that?
Is it because:
#1) The US bond market is likely broken and money printing has begun by that point
OR,
#2) because there won't be much stuff left to buy at that point, after all the economic/societal damage is done, so holding liquid Treasuries would no longer be a prudent store of value.
Stoneleigh said...
“I have no reason whatsoever to change my view of reality. Nothing I said hinges on the specifics of timing.”
Viscount, this is a rinse and repeat exercise that I don’t feel like participating in anymore. What sets us apart is that you believe in crystal balls and tea leaves, and we do not. When I read the quote above, I'm left wondering what part of it you don’t understand. We are very aware of the fact that timing a crash is difficult, bordering on impossible. Moreover, the S&P is not our main focus, not even close. Not only do you believe in crystal balls, you also feel like gambling. That is something we would never encourage. And that has been clear around here for a very long time.
I'm sorry to see that you still understand so little of the deflationary process that you ask questions such as does it last 1-2 years or 10-20? I'll refrain from asking where Nicole said deflation would be over in 1-2 years, that would just lead to more misinterpreted quotes on your part. The deflating of the by far largest credit bubble in history will take a long time, that's not rocket science. And you still use 1-2 years as an option ....
What's much more important, though, is that it will devastate economic processes as we have come to know them to such an extent that we will have trouble recognizing the world we live in. From that point of view, you might as well say the deleveraging, if you include its effects in the definition, will take many decades to draw to a close. It took 60 years for the South Sea Bubble to give birth to the French revolution.
You say that if the deflation takes 20 years, you start buying hard goods in 15 years. By all means, be my guest. But bear in mind there will be no hard goods to buy in 15 years, or almost none, and the ones that are will cost you all the gold you have squirreled and then some. You’ll also, if you manage that against he odds, have missed 15 years in which to try and learn how to use the tools.
All these things I just said have been said on TAE a hundred times. We haven't changed the core of what we would like the world to hear, and we won't. What I've also said umpteen times, as you undoubtedly know from digging into TAE files, is that we have underestimated something; not the power of the central banks to prop up banks and markets, as I see suggested in this thread a few times, but the complacency, gullibility and lack of working neurons of the people who are being stripped bare and led into misery by voluntarily handing over what little of their wealth remains to do the propping up.
And if you want to focus on the S&P, I'm sure you understand that, if I can summarize the events into one example, it is at 1460 now because the Greek population will be forced to work 6 days a week 13 hours a day. To keep it at levels like these, that 78-hour workweek will soon come to an economy near you. This fish is being gutted quite thoroughly with a blunt knife, and those who think they can beat the zombie markets are fools. I don't write for fools.
As for your list of Nicole's quotes: I'd say she’s been pretty much dead on: at the instances where she pointed out threats, more zombie money was thrown at the system, which simply proves the threats were perceived by the system as real.
Nicole refuses to talk to you anymore, because you’ve "misinterpreted" (see, I'm being nice) her words so many times she's had enough. There are not many people who get her that far, she's always willing to talk to anyone and everyone. Maybe you should learn something from that.
“I have no reason whatsoever to change my view of reality. Nothing I said hinges on the specifics of timing.”
Viscount, this is a rinse and repeat exercise that I don’t feel like participating in anymore. What sets us apart is that you believe in crystal balls and tea leaves, and we do not. When I read the quote above, I'm left wondering what part of it you don’t understand. We are very aware of the fact that timing a crash is difficult, bordering on impossible. Moreover, the S&P is not our main focus, not even close. Not only do you believe in crystal balls, you also feel like gambling. That is something we would never encourage. And that has been clear around here for a very long time.
I'm sorry to see that you still understand so little of the deflationary process that you ask questions such as does it last 1-2 years or 10-20? I'll refrain from asking where Nicole said deflation would be over in 1-2 years, that would just lead to more misinterpreted quotes on your part. The deflating of the by far largest credit bubble in history will take a long time, that's not rocket science. And you still use 1-2 years as an option ....
What's much more important, though, is that it will devastate economic processes as we have come to know them to such an extent that we will have trouble recognizing the world we live in. From that point of view, you might as well say the deleveraging, if you include its effects in the definition, will take many decades to draw to a close. It took 60 years for the South Sea Bubble to give birth to the French revolution.
You say that if the deflation takes 20 years, you start buying hard goods in 15 years. By all means, be my guest. But bear in mind there will be no hard goods to buy in 15 years, or almost none, and the ones that are will cost you all the gold you have squirreled and then some. You’ll also, if you manage that against he odds, have missed 15 years in which to try and learn how to use the tools.
All these things I just said have been said on TAE a hundred times. We haven't changed the core of what we would like the world to hear, and we won't. What I've also said umpteen times, as you undoubtedly know from digging into TAE files, is that we have underestimated something; not the power of the central banks to prop up banks and markets, as I see suggested in this thread a few times, but the complacency, gullibility and lack of working neurons of the people who are being stripped bare and led into misery by voluntarily handing over what little of their wealth remains to do the propping up.
And if you want to focus on the S&P, I'm sure you understand that, if I can summarize the events into one example, it is at 1460 now because the Greek population will be forced to work 6 days a week 13 hours a day. To keep it at levels like these, that 78-hour workweek will soon come to an economy near you. This fish is being gutted quite thoroughly with a blunt knife, and those who think they can beat the zombie markets are fools. I don't write for fools.
As for your list of Nicole's quotes: I'd say she’s been pretty much dead on: at the instances where she pointed out threats, more zombie money was thrown at the system, which simply proves the threats were perceived by the system as real.
Nicole refuses to talk to you anymore, because you’ve "misinterpreted" (see, I'm being nice) her words so many times she's had enough. There are not many people who get her that far, she's always willing to talk to anyone and everyone. Maybe you should learn something from that.
The thread that keeps on giving! Love it!
Do we really believe Stoneleigh and Ilargi possess the clairvoyant powers to be able to draw a timeline with which we may all front run every twist and turn of this whirlwind, and sail off into the sunset rich? Do Draghi and Bernanke really have this tornado under their confident control? If so, why did they let it get this far?
Having run a business, and other assorted gauntlets of life, I have come to accept that crisis knows no script. And successful reaction to crisis depends pretty much on ones ability to improvise, and some luck. In the trades, we call it being able to think on ones feet). Which then depends upon ones critical thinking skill set, and maybe a rabbits foot.
Stoneleigh and Ilargi most definitely excel in the former department.(Maybe they carry a shamrock, I don't know?) Mike Shedlock is another analytical thinker, as well. What they have been, and are offering here is a big heads up. A storm was spotted by them first on the horizon, and is now making landfall. Like any storm, it not only makes unpredictable swings in direction and intensity, but can actually feed on itself. These things are processes, not events, and develop a life of their own. These perceptive thinkers are the notice to mariners. All ships must handle the storm in their own way, under their own individual circumstances.
As others here have noted; that the "Authorities" will serve their own best interests as this otherwise unpredictable chain of events unfolds, is a given. We must simply out maneuver them. Though they radiate an illusion of deity, they put on their pants one leg at a time, like us. The difference is we can travel light, they must drag with them the entire bureaucratic entourage.
A little gold, a few hand tools, shelter, multiple skills, a little cash, fishing gear, some camaraderie with the like minded, keeping a clear mind, oh, and about that rabbits foot;).
But....NO FEAR!
Do we really believe Stoneleigh and Ilargi possess the clairvoyant powers to be able to draw a timeline with which we may all front run every twist and turn of this whirlwind, and sail off into the sunset rich? Do Draghi and Bernanke really have this tornado under their confident control? If so, why did they let it get this far?
Having run a business, and other assorted gauntlets of life, I have come to accept that crisis knows no script. And successful reaction to crisis depends pretty much on ones ability to improvise, and some luck. In the trades, we call it being able to think on ones feet). Which then depends upon ones critical thinking skill set, and maybe a rabbits foot.
Stoneleigh and Ilargi most definitely excel in the former department.(Maybe they carry a shamrock, I don't know?) Mike Shedlock is another analytical thinker, as well. What they have been, and are offering here is a big heads up. A storm was spotted by them first on the horizon, and is now making landfall. Like any storm, it not only makes unpredictable swings in direction and intensity, but can actually feed on itself. These things are processes, not events, and develop a life of their own. These perceptive thinkers are the notice to mariners. All ships must handle the storm in their own way, under their own individual circumstances.
As others here have noted; that the "Authorities" will serve their own best interests as this otherwise unpredictable chain of events unfolds, is a given. We must simply out maneuver them. Though they radiate an illusion of deity, they put on their pants one leg at a time, like us. The difference is we can travel light, they must drag with them the entire bureaucratic entourage.
A little gold, a few hand tools, shelter, multiple skills, a little cash, fishing gear, some camaraderie with the like minded, keeping a clear mind, oh, and about that rabbits foot;).
But....NO FEAR!
@ Reply Synchro, Sir I believe you are in error about having to move your family
If the world ends in a slow whimper rather than a sudden bang you will not have to go anywhere. However please don't take my statement to mean you will be able to live off of your 401k, or a stock portfolio my friend.
Riding a bicycle will probably turn out to be the greatest thing for our health, as well as a steady diet of green tea and home grown veggies.
Not what I call heaven either, but it beats hiding out with the polar bears me thinks.
If the world ends in a slow whimper rather than a sudden bang you will not have to go anywhere. However please don't take my statement to mean you will be able to live off of your 401k, or a stock portfolio my friend.
Riding a bicycle will probably turn out to be the greatest thing for our health, as well as a steady diet of green tea and home grown veggies.
Not what I call heaven either, but it beats hiding out with the polar bears me thinks.
davefairtex wrote:
In an interview on CNBC this morning, Ray Dalio (Founder/CEO of Bridgewater Associates, and one of 2012 Time magazine's 100 most influential people in the world) had this memorable quote:
"Southern Europe faces a 10-15 year managed depression."
I believe that is a succinct analysis of not just Southern Europe, but of what is happening in the entire industrialized world. Japan started it 20 years ago, and the rest have just drifted into it during the last 5 years. It is exactly what Bernanke, Draghi, and the rest of the central bankers KNOW they are doing -- Managed Depression.
How long can they manage it . . . . well, that would be the $64,000. question, would it not? Most interestingly is that they have managed it this long.
Five years ago I read Kunstler's The Long Emergency, shortly after it was first published. After my first reading, I placed the emphasis on the title word Emergency. After I read it the second time, I placed the emphasis on the title word Long.
John Micheal Greer (the Archdruid Report) has also stipulated many times that this devolution is going to be a grinding, drawn-out process. Yes, there will be stair-step drops along the way, but it is not going to be like plunging off a cliff, but more like bouncing off one boulder to another down a steep slope.
The good news is that this gives us all a bit more time to acquire our homesteads and prepare our families for what lies ahead.
Viscount -
How long can this go on? As you have pointed out, a good deal longer than TAE expected.
It brings to mind Keyne's quote: "Markets can remain irrational a lot longer than you and I can remain solvent."
How long can this go on? As you have pointed out, a good deal longer than TAE expected.
It brings to mind Keyne's quote: "Markets can remain irrational a lot longer than you and I can remain solvent."
In an interview on CNBC this morning, Ray Dalio (Founder/CEO of Bridgewater Associates, and one of 2012 Time magazine's 100 most influential people in the world) had this memorable quote:
"Southern Europe faces a 10-15 year managed depression."
I believe that is a succinct analysis of not just Southern Europe, but of what is happening in the entire industrialized world. Japan started it 20 years ago, and the rest have just drifted into it during the last 5 years. It is exactly what Bernanke, Draghi, and the rest of the central bankers KNOW they are doing -- Managed Depression.
How long can they manage it . . . . well, that would be the $64,000. question, would it not? Most interestingly is that they have managed it this long.
Five years ago I read Kunstler's The Long Emergency, shortly after it was first published. After my first reading, I placed the emphasis on the title word Emergency. After I read it the second time, I placed the emphasis on the title word Long.
John Micheal Greer (the Archdruid Report) has also stipulated many times that this devolution is going to be a grinding, drawn-out process. Yes, there will be stair-step drops along the way, but it is not going to be like plunging off a cliff, but more like bouncing off one boulder to another down a steep slope.
The good news is that this gives us all a bit more time to acquire our homesteads and prepare our families for what lies ahead.
davefairtex wrote:
Now Dave...you're talking like a true trader here. It's a bold prediction Stoneleigh made, but was never about a timing certainty, rather a timing probability at the moment. This is very early days. Seriously, if finance all falls apart in a year or two, will we look back in 10 years and say Stoneleigh was so wrong because she was off by 24 months? This is a major, life-changing, SOCIETY-changing, history-changing economic turning point here (if financial collapse can ever even be reduced to a single "point" in time at all).
The prediction that financial trouble is imminent is important for people to take it seriously. It could have happened at any time. It still could. Eventually, the heat might be off. Eventually maybe we can relax and say we dodged a bullet and TAE was "wrong"...but almost everything is WORSE since those calls were made, don't you think? More QE means things were not fixed with QE1 and QE2. In fact, if QE3 turns out to be bigger, I would say that things are much worse. How long can they print? Longer than we expect? Sure. How long is too long. Depends on the individual. I'm comfortable standing on the sidelines for a couple of years. I'm not a trader. But I do not believe any government can print to the degree that is necessary to suddenly fix half a century of credit addiction.
All I'm saying is, even if the big credit event happens in 2 years, in the scheme of a 50 year credit bubble, Stoneleigh won't have been off by much.
Unfortunately, we're in a truly complacent lull at the moment. According to market reactions, QE has apparently worked. But we're not out of the woods.
People shouldn't mistake the lack of obvious collapse for the lack of CATASTROPHIC RISK. We're still in unprecedented times here. I'm still inclined to be very careful. And as Stoneleigh has argued, being very careful and staying on the sidelines is really only about losing some opportunity costs. That's fairly priced insurance, in my opinion.
Not saying there isn't money to be made in the dying days of this economy. Who knows how long the disease will last. Doctors give patients 2 months and they last 2 years. It doesn't mean they're not gonna die. Who you gonna bet on?
Of course until a good chunk of that debt is defaulted upon or nominal incomes rise to make it sustainable, these forces remain in place. How long can this go on? As you have pointed out, a good deal longer than TAE expected.
It brings to mind Keyne's quote: "Markets can remain irrational a lot longer than you and I can remain solvent."
It brings to mind Keyne's quote: "Markets can remain irrational a lot longer than you and I can remain solvent."
Now Dave...you're talking like a true trader here. It's a bold prediction Stoneleigh made, but was never about a timing certainty, rather a timing probability at the moment. This is very early days. Seriously, if finance all falls apart in a year or two, will we look back in 10 years and say Stoneleigh was so wrong because she was off by 24 months? This is a major, life-changing, SOCIETY-changing, history-changing economic turning point here (if financial collapse can ever even be reduced to a single "point" in time at all).
The prediction that financial trouble is imminent is important for people to take it seriously. It could have happened at any time. It still could. Eventually, the heat might be off. Eventually maybe we can relax and say we dodged a bullet and TAE was "wrong"...but almost everything is WORSE since those calls were made, don't you think? More QE means things were not fixed with QE1 and QE2. In fact, if QE3 turns out to be bigger, I would say that things are much worse. How long can they print? Longer than we expect? Sure. How long is too long. Depends on the individual. I'm comfortable standing on the sidelines for a couple of years. I'm not a trader. But I do not believe any government can print to the degree that is necessary to suddenly fix half a century of credit addiction.
All I'm saying is, even if the big credit event happens in 2 years, in the scheme of a 50 year credit bubble, Stoneleigh won't have been off by much.
Unfortunately, we're in a truly complacent lull at the moment. According to market reactions, QE has apparently worked. But we're not out of the woods.
People shouldn't mistake the lack of obvious collapse for the lack of CATASTROPHIC RISK. We're still in unprecedented times here. I'm still inclined to be very careful. And as Stoneleigh has argued, being very careful and staying on the sidelines is really only about losing some opportunity costs. That's fairly priced insurance, in my opinion.
Not saying there isn't money to be made in the dying days of this economy. Who knows how long the disease will last. Doctors give patients 2 months and they last 2 years. It doesn't mean they're not gonna die. Who you gonna bet on?
Viscount -
Fascinating recounting. All these times were immediately prior to an intervention. 1st example: QE2, 2nd example: ECB LTRO, 3rd example: Dragi's "I'll do anything" speech followed up a month later by the latest round of money printing.
I think if anything, this lays out TAE's underestimation of the ability of the interventionists ability to keep the game going. The forces of deflation are there, exactly as they say, but the folks in charge keep finding new ways of changing rules and/or printing money until the problem is made to vanish once again.
Of course until a good chunk of that debt is defaulted upon or nominal incomes rise to make it sustainable, these forces remain in place. How long can this go on? As you have pointed out, a good deal longer than TAE expected.
It brings to mind Keyne's quote: "Markets can remain irrational a lot longer than you and I can remain solvent."
Fascinating recounting. All these times were immediately prior to an intervention. 1st example: QE2, 2nd example: ECB LTRO, 3rd example: Dragi's "I'll do anything" speech followed up a month later by the latest round of money printing.
I think if anything, this lays out TAE's underestimation of the ability of the interventionists ability to keep the game going. The forces of deflation are there, exactly as they say, but the folks in charge keep finding new ways of changing rules and/or printing money until the problem is made to vanish once again.
Of course until a good chunk of that debt is defaulted upon or nominal incomes rise to make it sustainable, these forces remain in place. How long can this go on? As you have pointed out, a good deal longer than TAE expected.
It brings to mind Keyne's quote: "Markets can remain irrational a lot longer than you and I can remain solvent."
Earlier, I commented:
Steve B requested........And Ilargi (referring to me) responded
-------------
JULY 1, 2010 1:02 PM
Stoneleigh said...
"The financial markets are leading the way lower, and the real economy will follow. I think we're likely to see a market cascade event at some point this year."
My comment: Some historical context
S&P 500 = 1022.
On July 1, 2010 when Stoneleigh made this comment, The S&P500 had fallen ~18% over the previous 1.5 months. July 1, 2010, in fact, marked the low point for the market for all of 2010. The market rallied for the rest of the year and ended 20% higher.
----------------------------------------------------------
WEDNESDAY, AUGUST 10, 2011
Stoneleigh said...
"The rally of the past two and a half years continued longer than we had anticipated, but on balance of probabilities it is now over, and we are entering the next phase of the credit crunch……With the dramatic end to the rally (and a loss of over $7.8 trillion in mere days) comes the end of the complacency it engendered. Fear is in the ascendancy once again"
My comment: Some historical context
S&P 500 = 1180
On August 10, 2011, when Stoneleigh made this comment, the S&P500 had fallen ~ 12% over the previous 2 weeks. August 10, 2011, in fact, was very close to the low for the year. Within 1 week from this comment, the market began to rally for the rest of the year and ended the year 6% higher. The rally extended further into 2012 and reached a new nominal high on March 8th 2012 (20% higher).
-------------------------------------------------------
MONDAY, JUNE 18, 2012 9:16 PM
Stoneleigh said...
"The ending of extend-and-pretend is ushering in a new era of fear and uncertainty which is rapidly evolving into the next phase of the on-going credit crunch."
My comment: Some historical context
S&P 500 ~ 1340
On June 18, 2012, when Stoneleigh made this comment, the S&P 500 had fallen ~5% over the previous 3 months from its temporary nominal high in March 2012. Since making that comment, the market has rallied ~9% to reach a new post-financial crisis nominal high (S&P 500 = 1472).
-----------------------------------------------------------
WEDNESDAY, JULY 18, 2012 3:18 PM
Stoneleigh said...
“I have no reason whatsoever to change my view of reality. Nothing I said hinges on the specifics of timing.”
If you look through the archives, you'd be amazed the number of small market dips over the last 3 years that led her to warn of imminent market collapse.
It's pretty much like clockwork.
It's pretty much like clockwork.
Steve B requested........And Ilargi (referring to me) responded
Examples/links would help to evaluate the data,
They always fail him/her.-------------
JULY 1, 2010 1:02 PM
Stoneleigh said...
"The financial markets are leading the way lower, and the real economy will follow. I think we're likely to see a market cascade event at some point this year."
My comment: Some historical context
S&P 500 = 1022.
On July 1, 2010 when Stoneleigh made this comment, The S&P500 had fallen ~18% over the previous 1.5 months. July 1, 2010, in fact, marked the low point for the market for all of 2010. The market rallied for the rest of the year and ended 20% higher.
----------------------------------------------------------
WEDNESDAY, AUGUST 10, 2011
Stoneleigh said...
"The rally of the past two and a half years continued longer than we had anticipated, but on balance of probabilities it is now over, and we are entering the next phase of the credit crunch……With the dramatic end to the rally (and a loss of over $7.8 trillion in mere days) comes the end of the complacency it engendered. Fear is in the ascendancy once again"
My comment: Some historical context
S&P 500 = 1180
On August 10, 2011, when Stoneleigh made this comment, the S&P500 had fallen ~ 12% over the previous 2 weeks. August 10, 2011, in fact, was very close to the low for the year. Within 1 week from this comment, the market began to rally for the rest of the year and ended the year 6% higher. The rally extended further into 2012 and reached a new nominal high on March 8th 2012 (20% higher).
-------------------------------------------------------
MONDAY, JUNE 18, 2012 9:16 PM
Stoneleigh said...
"The ending of extend-and-pretend is ushering in a new era of fear and uncertainty which is rapidly evolving into the next phase of the on-going credit crunch."
My comment: Some historical context
S&P 500 ~ 1340
On June 18, 2012, when Stoneleigh made this comment, the S&P 500 had fallen ~5% over the previous 3 months from its temporary nominal high in March 2012. Since making that comment, the market has rallied ~9% to reach a new post-financial crisis nominal high (S&P 500 = 1472).
-----------------------------------------------------------
WEDNESDAY, JULY 18, 2012 3:18 PM
Stoneleigh said...
“I have no reason whatsoever to change my view of reality. Nothing I said hinges on the specifics of timing.”
Stoneleigh Occupies:
Nicole Foss Lecture Tour:
AUSTRALIA/NEW ZEALAND March-June 2013
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Clean Technology Centre 47 Miro St. 1.30pm
US Fall 2013 - Dates Available
Request Lectures: StoneleighTravels •at• gmail •dot• com.
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