By: ang101000
Yesterday (10:13 pm) Yahoo! Profile:
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'Stocks are overvalued and the US economy is likely to fall back into a recession next year'
'There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.'
Donald Rumsfeld |
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By: mentawaisurf
Yesterday (7:01 pm) Yahoo! Profile:
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Meredith Whitney Calls For Double Dip Recession
Stocks are overvalued and the US economy is likely to fall back into a recession next year, well-known analyst Meredith Whitney told CNBC.
"I haven't been this bearish in a year," she said.
She is right on several things:
The US consumer was going through the biggest credit contraction ever - even bigger than that during the Great Depression. "That credit contraction is accelerating," she said. "There's nowhere to hide at this point. The banking sector is not adequately capitalized and will need to raise more capital in the coming year.
The residential real estate market is likely to worsen and remains a much bigger threat than the commercial property market. The government's mortgage modification program won't result in any major improvement in homeowners' ability to stay above water", she added.
What Meredith is describing is classic deflation. For the complete interview check out;
http://globaleconomicanalysis.blogspot.com/2009/11 /bernanke-vs-meridith-whitney.html |
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By: lasty49
Yesterday (6:23 pm) Yahoo! Profile:
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Ang
Depends on the potency of the Viagra but I'm happy with an "up" day.
Valium is what's warranted in the bear camp. |
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By: jadeshangrila
Yesterday (5:52 pm) Yahoo! Profile:
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| Menta statement- asset prices are being inflated by a weak dollar righ now. Quite the contrary. Low dollar means higher import cost higher consumer good prices and consumer good inflation which the fed is concern about. That would lead to deflation in wealth asset prices as Americans have less money to invest in houses and shares after filling their petrol tanks with imported petrol and buying their imported consumer goods. the Fed is concern that by keeping the interest rate low there will be inflation in consumer goods prices, due to the declining dollar and that will eat into the recovery as people have less money left after consuming or have to consume less. If there was a crash tomorrow the USD will rise but wouldn't reach the height of 2008 and than will continue to decline. It is truely a currency in the long term bearish trend, starting way back in 2000. |
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By: mentawaisurf
Yesterday (5:32 pm) Yahoo! Profile:
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I've always maintained that it's not Armageddon or the end of the world (as some extremists try to portray - even Hollywood with it's new blockbuster '2012'). But we are in an unfolding super-cycle bear market that is unlikely to bottom for several more years. We survived the 1930s and we'll survive this deflationary era too. It won't be pretty but it will be necessary so that we may again progress in a sustainable manner moving forward while not returning to the debt fuelled consumerism and rampant speculation that caused the crisis.
Meanwhile, contrary to what our mainstream economists and financial media are proclaiming, the worst is not over. In fact it appears increasingly likely that the major declines of the bear market lie dead ahead. Caution is the prudent strategy as it's now all about return of investment - not return on investment.
"Since asset prices are being inflated by a weak dollar right now, a dollar reversal could smash this rally, Nouriel Roubini recently commented. The perfectly correlated bubble across all global asset classes gets bigger by the day."
"In the short run, what's happening is that there is a wall of liquidity, not just in the United States but around the world, that is chasing assets. It is equities, commodities, it's credit, it is gold, it is emerging market asset classes".
"We have the mother-of-all carry trades. Everybody is borrowing, shorting the dollar, and investing in assets all over the world."
"Once the dollar reverses, you need to close your shorts, dump assets..."
This unwinding will hit hard and fast and lead to a surge in the USD and a collapse in asset prices around the world, including Australia.
Given the USD seems to be in a major bottoming process, while stocks, commodities, real estate and other currencies appear to be topping, the key market trend reversal is looming. |
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By: rossnhoj
Yesterday (4:58 pm) Yahoo! Profile:
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| Viagra the Australian Builders are on the stuff, all being paid for super public works,being paid very well by the Tax Payer, building The Gillard Memorial Halls, thats now accounted for a 40% increase in public building, RuDDs public expansion,no inflation, expanding economy,all paid by the expanding debt,thats why we need valium at this end. |
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By: ang101000
Yesterday (4:43 pm) Yahoo! Profile:
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Lasty,
did you mentioned Viagra or Valium trend? |
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By: jadeshangrila
Yesterday (4:26 pm) Yahoo! Profile:
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| You sure are right Enough wealth. Thank God I have a deep and big enough cellar to survive a nuclear war hehe. Folks with such fatalistic out look in life wouldn't get very far in the business world. Best just work as a public servant and keep that pay in the bunk. |
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By: enoughwealth
Yesterday (3:06 pm) Yahoo! Profile:
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Some of the comments in this blog remind me more and more of survivalist magazines of the 80s - those who had built fallout shelters and stockpiled guns, ammo and canned food just couldn't wait for the "inevitable" WWIII - and everything they read in the papers and saw on TV reinforced their paranoia.
And some "predictions" are getting to be like a charismatic cult leader who predicts the end of the world - and then keeps on rescheduling it when nothing comes to pass ;) |
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By: ang101000
Yesterday (2:48 pm) Yahoo! Profile:
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Menta,
just a small correction - China does have (more or less)enough resources for internal consumption (the imported resources are used to add value and re-export). |
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By: jaymarcel
Yesterday (2:24 pm) Yahoo! Profile:
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Menta I have been reading a few of the article on the websites you have provided & can see how you can justify this as a possible outcome but for me & the majority out there are finding it too hard to follow.
I like to think a more civilized change will happen before we reach that point, I just see the USA & europe heading down the same path of J@pan & a large shift of power but not all to China. |
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By: jaymarcel
Yesterday (2:08 pm) Yahoo! Profile:
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| Wow & do you see any way of avoiding this? |
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By: mentawaisurf
Yesterday (1:48 pm) Yahoo! Profile:
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| Unfortunately, civil unrest is a given Jay. Hopefully wars remain only regional. Some countries will be effected more than others. Especially nations without a social safety net and an over-reliance on trade coupled with a lack of natural resources (read China). Severe trade protectionism globally will only aggravate the situation. Australia and NZ, given its geographical isolation, abundant natural resources (food producing not iron ore) and secure political structure will survive such a deflationary depression better than most nations. Although the wealth destruction will be global. |
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By: jaymarcel
Yesterday (1:24 pm) Yahoo! Profile:
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| Menta would you go as far as saying worldwide civil unrest? |
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By: ang101000
Yesterday (1:19 pm) Yahoo! Profile:
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Lasty,
and add to that ;they have to employ an ever-increasing number of the rural migrants for social stability. Given that GDP has declined from 13% to (about) 9% due to GFC and subsequent export decline - somebody has to buy all the cr@p that they manage to produce. |
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By: ang101000
Yesterday (1:19 pm) Yahoo! Profile:
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Lasty,
and add to that ;they have to employ an ever-increasing number of the rural migrants for social stability. Given that GDP has declined from 13% to (about) 9% due to GFC and subsequent export decline - somebody has to buy all the cr@p that they manage to produce. |
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By: mentawaisurf
Yesterday (1:18 pm) Yahoo! Profile:
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| Exactly. The inevitable collapse of global financial markets, along with all asset classes including the value of US bonds, would be the largest deflationary event in history. The global economic depression to follow would take at least a decade to recover from. During the deflation the value of the remaining cash, only that which was deposited with the most secure government guaranteed banks would survive intact, would be the only asset that assuredly increases in value (purchasing power). And near the bottom of the deflation those who had safely preserved their wealth will be presented with once-in-a-lifetime buying opportunities - of all asset types. |
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By: lasty49
Yesterday (12:40 pm) Yahoo! Profile:
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Perceptions,
Spot on.
Thats why China is rapidly putting in place a domestic consumer market because they can see the inevitable. |
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By: perceptions_now
Yesterday (12:28 pm) Yahoo! Profile:
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The bankruptcy of the United States is now certain
(Cont)
So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default. The U.S. holds gold, oil, and foreign currency in reserve. The U.S. has 8,133.5 metric tonnes of gold (it is the world's largest holder). That's 16,267,000 pounds. At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. Our short-term foreign debts are far bigger.
So where will the money come from? Total domestic savings in the U.S. are only around $600 billion annually. Even if we all put every penny of our savings into U.S. Treasury debt, we're still going to come up nearly $3 trillion short. That's an annual funding requirement equal to roughly 40% of GDP. Where is the money going to come from? From our foreign creditors? Not according to Greenspan-Guidotti. And not according to the Indian or the Russian central bank, which have stopped buying Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 metric tonnes this month. Sources in Russia say the central bank there will double its gold reserves.
The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or later, our creditors will face a stark choice: Hold our bonds and continue to see the value diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet.
One thing they're not going to do is buy more of our debt. Which central banks will abandon the dollar next?
Link -
http://britanniaradio.blogspot.com/2009/11/bankrup tcy-of-united-states-is-n ow-cert.html |
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By: perceptions_now
Yesterday (12:27 pm) Yahoo! Profile:
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The bankruptcy of the United States is now certain
It's one of those numbers that's so unbelievable you have to actually think about it for a while... Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion. Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from?
Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that's when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.
When governments go bankrupt it's called "a default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists - Alan Greenspan and Pablo Guidotti - published the secret formula in a 1999 academic paper. The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities.
The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured. |
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By: jadeshangrila
Yesterday (11:45 am) Yahoo! Profile:
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| Menta, I certainly hope you are right, but unfortunately the chances of that happening is unlikely seeing that stocks in most countries have not increase past their 2007 highs. There may be a serious correction in the making but stocks will not fall below their lows for various reason, which iclude impoved profits, bad debts been wiped off the slate by the fed, low interest rates, low libor rates and all that money printed recently. And if oil fell to below 40USD than we will see the start of another rally. Brilliant investors always have a watch out for value and they will be there to buy again if the opportunity comes especially when they are cash up once again. they do not have a fatlistic view of the economy or society rather they watch in cautious optimism for the next round. |
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By: mentawaisurf
Yesterday (11:33 am) Yahoo! Profile:
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Everyone from traders to investors, super fund managers to international hedge funds and governments to central banks are betting on an inflationary recovery. That's why a deflationary crash will come as such a shock and have such devastating results. Yet the global trend in falling bank credit and consumer credit, despite all efforts by governments and central banks to re-inflate markets, is a clear warning sign of this rare event (not experienced on a global basis since the 1930s).
The USD will soar not because of economic recovery in the US, but because of USD denominated debt deflation and an unwind of the USD carry-trade which has fuelled the speculation and global asset bubbles since the March lows in financial markets.
Nov. 15 (Bloomberg) - The decline of the dollar and decisions in the U.S. not to raise interest rates have caused "huge" speculation in foreign exchange trading and seriously affected global asset prices, said Liu Mingkang, chairman of the China Banking Regulatory Commission.
"The continuous depreciation in the dollar, and the U.S. government's indication, that in order to resume growth and maintain public confidence, it basically won't raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation".
Liu said this has "seriously affected global asset prices, fuelled speculation in stock and property markets, and created new, real and insurmountable risks to the recovery of the global economy, especially emerging-market economies."
http://www.bloomberg.com/apps/news?pid=20601080&si d=aPggdjyUi.30&
The intensified deflation during 2010 will see the price of all asset classes fall (including gold and oil which will fall well below the $30 lows seen earlier this year). But the deflationary process could take a decade to rebalance debt and asset markets. Given the credit contraction and deflationary unwind started in 2007 don't expect to see any 'real' signs of inflation until at least 2015 ... |
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By: ang101000
Yesterday (10:32 am) Yahoo! Profile:
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Lasty,
I will give time; till 4 PM today, is that good enough? Now, I am going for a coffee and a smoke! |
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By: lasty49
Yesterday (8:48 am) Yahoo! Profile:
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Ang,
Give it time love ;-).
The US will continue on its low interest rate policy for some time to come.
The trend remains intact.
The Fed is happy with the US dollars orderly decline.
We mentioned about this area being correctional and we have seen profit takers enter.
The question remains: "Where else are you going to stick your cash?" |
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By: ang101000
Yesterday (8:06 am) Yahoo! Profile:
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Lasty,
Viagra isn't working, market impotence persist... |
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