Financial topics

[Oakwood]

I've taken an exchange John and I had from another forum and moved it here because it now belongs in financial topics. John alleges that he has been very good at predicting things. In the last paragraph I dispute his predictive skills.


Oakwood wrote:> <JOHN:As far as I know, there is no web site or analyst or journalist
> in the world with anything remotely close to the predictive
> success of this web site, for the last 8 years. Assuming that's
> true (and I believe it is), then this is the only web site in the
> world that will tell you what's really going on in the world.>>

> Well, aren't we full of ourselves? I read you web site because you
> often provide some interesting insights. But you seem to have a
> rather inflated view about how remarkable and/or unique those
> insights are. Sure, your theory is a unique amalgamation, but that
> doesn't mean that you're the only web site in the world that's
> will tell us what's "really going on." You provide some of the
> answers to a small part of the puzzle. There are a lot of other
> great web sites that provide a lot of great information/ideas too
> (e.g. The Automatic Earth, Zero Hedge). The problem with any
> theory, no matter how great, is that it also limits your
> vision. Your beginning to sound a bit grandiose, kind of like
> Glenn Beck, who now says God's been talking to him and has given
> him a hundred year plan for America.

JOHN: Oakwood, there are many excellent web sites, and I depend on them
myself for information and insight. But the Generational Dynamics
forecasting methodology, which is documented on numerous places on
this web site, has no peer, and has produced one correct prediction
after another. That's why no other web site in the world, as far as I
know, has anything remotely close to the predictive success of this
web site. And I've been called a lot worse than "grandiose."

Many of these other web sites infuriate me, because the writers refuse
to draw the obvious conclusions. They'll say that debt is increasing,
the dollar's in danger, the euro's in danger, etc., etc., but instead
of biting the bullet and saying we're headed for a crash, they make
some vapid, meaningless statement like, "Unless the Bush/Obama
administration changes direction and follows my left/right ideological
path, then things are going to get worse." Many of them, like
Roubini, change their forecasts every time the weather changes. They
all brilliantly forecast the past, but this is the only web site that
goes out on a limb and successfully forecasts the future.

However, not to be entirely negative, Ambrose Evans-Pritchard has
written a lot of realistic stuff, as has Wolfgang Münchau. I've
quoted both of them a number of times, as they stand out well above
most of the mainstream journalists.

______________________________________________________________________________

OAKWOOD: John, you've entirely failed to predict the recent liquidity-driven 50% or so rise in the stock market over the last year. Yes, I agree the stock market is going to crash again, big-time, but timing is the key. So yeah, one day you will be right, and you will be able to say I've been telling you!!! But admit it, for the past year, you've been wrong, and yelling chicken-little hasn't helped many of your Dear Readers.

On March 20, 2009 you said: "So for those of you wondering how long this dead cat bounce will last, it might be over already, or it might last several more weeks."
5/9/2009: " And so, Dear Reader, if you plan to stay in the stock market because your assets had lost over 50% of their peak value, and now are down only 40% of their peak value, then let me assure you that this current rally is a "bear market rally." ... Much worse is yet to come. "
6/5/2009: "I wish you the best of luck whatever you decide to do, but if you buy long into this market, you're going to lose a lot of money. "
7/15/2009: "So I'll be joining everyone else to watch breathlessly what happens this week. Will this week's earnings reports clarify the direction of the market? I guess we'll know by Friday afternoon. " (Events were actually in the opposite direction you expected. Since you phrased your prediction as a question you couldn't lose. If something bad had happened you would have said you predicted it).
8/8/2009:"For readers of this web site, I'm warning you again as I've warned you so many times before: I wish you the best of luck, whatever you decide to do, but if you invest in this stock market, then you're going to lose a very great deal of money. "
9/17/2009: "If true, then this new stock market bubble is actually being caused by day traders competing with each other to bid up stock prices. This is dangerous because bad news can cause stock prices to fall very rapidly, if day traders begin to panic. " (Wrong: The increase in stock prices has been driven by increased liquidity and HFT).
10/5/2009:"Is the bear market rally finally over? " (No, it wasn't, but since you phrased your prediction as a question, you couldn't be held to it again. Had the rally been over, you could've said, see, I predicted it on October 5th!)
10/27/2009: ""What would Nouriel Roubini say if he believed that a global market crash was imminent? And the answer is that he'd be saying what he said in the above transcript. " (Roubini predicts a global market crash is coming--but not in the 'near future'--but you believe his words have an ulterior meaning. Looks like he was right, at least the way I define "imminent.").

[Oakwood]

I found another, earlier prediction, I think is significant:

4/2/06
"As I've been saying since 2002, Generational Dynamics predicts that America is entering a new 1930s style Great Depression, with a stock market crash to the Dow 3000-4000 range by the 2007 time frame."

[aedens]

I think the important thing is change from the inside and hope Oakwood can provide some facets to consider. The most impressive element is we agree to disagree but have as all have stood on the shoulders of others to the Generational Dynamics framework which presents itself as it is. Considering we have wished to be proven incorrect as many web editor's will and do embrace. As for me the moment conveys the lack of your people to our people attitude which in turn digressed to ad homimen attacks of a group of people in our Corporation which only survives to serve the customer. It is no issue to me at all since it serves to remind how much needs to be done to focus individuals on the importance of the division of labor which all are subject to. I have found GD a vital tool to consider and really the more you understand it the more it presents itself to remove ideological leverages the division of labor asserts to control which they cannot control in the first place. As you can see I have a Austrian bent of mind and as we watch the
Keynes cult assert that active government intervention is necessary to ensure economic growth and stability. Keynasions though critics point to the theory's inability to explain stagflation in the United States during the 1970s. Given the current state of affairs we have some Gentlemen of our Global Corporate group coming to ascertain the validity of our group to serve the customer with more duties from capital garnered from very tough choices in the predicated business cycle. We have some very talented people on the forums and we have never to my knowledge used a shoe horn to fit a GD to assert any position. The emphasis I have noted is to our finding and you can be certain your opinion will be weighed to validity of regard as our group struggles to convey diverse backgrounds we possess. Please share links so the informed can decide in all our journey to Economic stability from stagnation again we are working through to to serve others. Please feel free to paruse the forums which we donate our time and thought's.

Kindest regards,
Aeden

==========================================================================================================================
May 14, 2010 - Retail Rise Short Lived:

The rise in our Retail Index that we reported last week proved to be somewhat fleeting, as the index reversed direction shortly after we made our remarks and dropped from slight growth to year-over-year contraction in excess of 4% in less than a week. This is by far the most volatile index in our set, and over the last several days the index recovered to some extent, but was still showing negative 'growth'.

The PMI conveyed a uptick.
http://www.ism.ws/ISMReport/NonMfgROB.cfm
BTW thanks Freddyv for the consumer link
http://www.consumerindexes.com/Fred

Website http://www.acclaiminvesting.com/freddyv

[vincecate]

You'll understand why it's in the interest of China (and Japan and Europe and the Mideast) to do everything possible to save the dollar. My expectation, as I've said many times, is that China and Japan and others will cancel America's debt, for two reasons: (1) The strength of their own economies will depend on the strength of the American economy; and (2) They'll realize that the debts will never be repaid anyway.

So take a look at The Bubble that Broke the World, and think about how it applies to today.

It is an interesting comparison. But there are big differences.

Germany would have paid off their debts by 1923 if they were in German paper money. The US debts are in US paper money. The US will print and pay.

The other thing is that while it may be in everybody's interest to have the US economy healthy, each country on its own is better off to use its US bonds to buy something else right away, before things get really bad. With todays computerized forex markets Russia, or Brazil, etc could unload their bonds in a day or two and people might not even notice till the next TIC report came out more than a month later. In this situation where the first to bolt gets the best deal, I think we can expect panic selling at some point. I don't think France could have sold their German debt off like that.

That book points out that France and England spent a long time building up the case that they could only pay their debts if Germany kept paying its debts. This meant it did not really bother them to have Germany stop paying as they just stopped paying America. China is not in such a setup.

-- Vince

[vincecate]

The panic of 1987 was triggered by some chaotic (in the sense of Chaos Theory) event that nobody knows, to my knowledge.

The leveraged buy outs were driven by the fact that earnings could avoid taxes if it was paying interest on bonds. So companies were worth more after a buyout. This drove up stock prices. Then the government started talking about changing the rules so they did not lose the tax money. Right after that was the crash. It was all very rational really. See more at:

http://pair.offshore.ai/38yearcycle/#1987crash

- Vince

[OLD1953]

The question is, is it possible to avoid an enormous crash down to very low levels on the DOW, truly massive and unmanagable unemployment, and/or a collapse or default of banks or defaults by nations that issue bonds.

I do not believe it is possible, because any and all possible cures will require planned contractions in GDP. No country will go that route willingly. They'll do anything to avoid that, and that means we are like that cartoon character that just keeps nailing planks end to end till the whole thing collapses out from under him.

When I see the Fed promoting a drop in GDP, then I'll figure we've got a chance. Otherwise, no.

(Ok, name the cure that won't result in a planned drop in GDP. Figure it through to the end. You CAN NOT reduce/regulate the financials without limiting their profits from 97% leverage, else you just papered over the problem, nailed another plank across the canyon. The financials are a HUGE thing. As long as they are dangling out there over the chasm, anything, soverign default in Europe, another hit on housing, ANYTHING, can cause it all to fall apart. And limiting their profits by limiting their risks will drop GDP. And we won't do that willingly.)

[JLak]

Although Higgy has started to erode my confidence, I for one still believe that the fed, government, and banks will (successfully) do everything possible to keep the metrics slightly positive in dollar terms over a 90-180 day moving average, despite the 'secular' crash and disastrous consequences for the middle class.

Might as well update the charts to show you again.

dow_adj_1901.jpg (105.02 KiB) Viewed 6657 times

The market crash already happened. There was no 'real' bounce. Real wages got annihilated to prevent unemployment.

I'd say we're into the 1935-1945 era which was touted as a great recovery, but was really just the effect of bimetallism. There is no winning trade unless you are on the reserve board and get first dibs on the new cash.

"I didn't become president to help out a bunch of fat cat bankers on Wall Street" - somebody that doesn't appear to understand the banking system

[vincecate]

Answer: The government can default because it can't pay its debts. And it can't pay its debts by creating more debts. And that's why your suggestion fails.

The normal mode of operation for the US government is to pay debts by creating more debts. They are spending far more than they get in as taxes and so don't pay down debt with tax money. When bonds come due it prints a new bond, sells that, and uses the cash to pay the first bond. I think "rolling over debt" is more in the average month than new debt at this point because so many people have moved into short term bonds.

If nobody else buys the new bond then the Fed will print up some money and buy it. The Fed may hide this fact buy buying a toxic asset from a bank and having the bank buy the bonds. If the Fed does not do that the government will change the people running the Fed or the rules for the Fed.

The US government will not default by not paying. It will default by paying with money that is not worth what money used to be worth.

-- Vince

[jwfid]

Oakwood,

I think you are missing one essential component of generational dynamics. GD cannot predict the actions of individuals. GD predictions cannot tell you when or how. I believe the extensive rally in the stock market was due to several entirely unpredictable events. Government stimulus programs, direct treasury and fed intervention, government and corporate propaganda, quantitative easing, and I'm sure others here can add some more. I think all of us were surprised by the events of the past year.

On the other hand, I've been thinking about Isaac Asimov's Foundation series I read a few years ago. It is interesting to watch the politicians pretty much forced to make all the wrong decisions. The politicians and other leaders all really had no other choice (if they wanted to keep their job a little longer)! In the end, with 20/20 hindsight, I think almost everything that has happened so far could have been predicted!

Has anyone else read the Foundation novels?

Joe

[sadhic]

OAKWOOD,
Though the below GD prediction by John is not related to financial topics but I felt it is appropriate to mention here.
John by using GD exactly predicted that the recently fought Srilanka-LTTE war will end in an explosive manner and there will be a deep silence thereafter what exactly happened.


U can count on any one , any Tamil/srilanka guys , Indian government , srilankan government as every one fear and confused and don’t know what will happened when war approaches its climax on may second week 2009. LTTE war is not as simple as outside world thought. It is a long standing dispute some around 200 thousand people died .It really dramatic and unbelievable that a deep silence (still I do not call it as peace) will prevail after the war and it is a shocking event that the war ended in an explosive manner. Every one excepting a gorilla war to continue etc. Even now Indian government (and Tamil state gov in India), srilankan govt excepting a gorilla war to emerge and expecting a larger disturbance. But contrary there is a deep silence and both parties are healing their wounds and promising themselves that a war like this should not be fought again; exactly what john said by means of GD.


below link is a tip to understand that these tamil/srilanka groups are very well established even 1000 years ago
http://en.wikipedia.org/wiki/Brihadeeswarar_Temple