Financial topics

[Higgenbotham]

The market didn't do what I expected today

Economics and finances has been a life long interest, but I find that when I am down on an investment my interest is lower than when I am making money.

Whether I am winning or losing hasn't seemed to make much difference. My accounts went to a new all time high about a week ago and close to it this week at the low. That didn't really spark any interest either and you'll notice I probably didn't post anything on those days. On the other hand, back in February or so when my accounts were at their low for the year, I was posting a lot. The only reason I've posted positions is because John asked about it and I realized that what I say and do can be different things, so decided to post them and have kept up with that, but that's about it. I don't find the day to day news or commentary interesting and no longer read the blogs either.

Good call on the 27th Aedens.

[John]

Dear Higgie,

> Whether I am winning or losing hasn't seemed to make much
> difference. My accounts went to a new all time high about a week
> ago and close to it this week at the low. That didn't really
> spark any interest either and you'll notice I probably didn't post
> anything on those days. On the other hand, back in February or so
> when my accounts were at their low for the year, I was posting a
> lot. The only reason I've posted positions is because John asked
> about it and I realized that what I say and do can be different
> things, so decided to post them and have kept up with that, but
> that's about it. I don't find the day to day news or commentary
> interesting and no longer read the blogs either.

> Good call on the 27th Aedens.

Is it really a good idea to be 100% short when you're in that mood?

You sound depressed.

John

[Higgenbotham]

Dear Higgie,

Is it really a good idea to be 100% short when you're in that mood?

You sound depressed.

John

Three aspects to your question.

First, I think a huge economic and social collapse is right around the corner, so getting ready for that is my focus. I've been talking about it on here for 2 years, but all that time it looked to be somewhere out there. That's no longer true.

Second, as mentioned earlier, the endgame of that sooner rather than later is going to be lower stock prices, so the day to day fluctuations and adjustments of trading are no longer of much interest. Meaning that if someone makes adjustments as I have been doing, they will likely miss the big move down and not get another chance to get in. So I remain "more" staunchly short than I have in the past. Remember how you were afraid I would miss the big move down after I covered my shorts on September 16, 2009? Now I really believe this is what will likely happen if someone does cover their shorts.

Third, yes, you are correct that all of this is horribly depressing. I could expound for several pages here about the decisions in Europe, etc., and how they are going to lead to a worldwide collapse but it's really pointless. In addition, there's already been enough information posted on this thread that anyone who has read it can connect the dots themselves. At this point, all one can do is use all their energy to prepare, as you have been saying.

[jdcpapa]

Dear Higgie,

Is it really a good idea to be 100% short when you're in that mood?

You sound depressed.

John

Three aspects to your question.

First, I think a huge economic and social collapse is right around the corner, so getting ready for that is my focus. I've been talking about it on here for 2 years, but all that time it looked to be somewhere out there. That's no longer true.

Second, as mentioned earlier, the endgame of that sooner rather than later is going to be lower stock prices, so the day to day fluctuations and adjustments of trading are no longer of much interest. Meaning that if someone makes adjustments as I have been doing, they will likely miss the big move down and not get another chance to get in. So I remain "more" staunchly short than I have in the past. Remember how you were afraid I would miss the big move down after I covered my shorts on September 16, 2009? Now I really believe this is what will likely happen if someone does cover their shorts.

Third, yes, you are correct that all of this is horribly depressing. I could expound for several pages here about the decisions in Europe, etc., and how they are going to lead to a worldwide collapse but it's really pointless. In addition, there's already been enough information posted on this thread that anyone who has read it can connect the dots themselves. At this point, all one can do is use all their energy to prepare, as you have been saying.

Greetings,

I have come to the same conclusion. The analysis is done. It’s time to accept, adapt and move on. I have already prepared. I wish the endgame could be lower stock prices.

Regards,

jdcpapa (John)

[Higgenbotham]

A few months ago, there was some discussion about preparation and one thing I brought up was that in order to prepare properly there has to be an idea of the scale of the upcoming collapse. It's only been in the past few weeks that I've come to the firm conclusion that the scale will be larger rather than smaller. Previous to that, I made statements saying that it could be or that things were moving in that direction. Aedens asked a couple weeks ago about my statement in 2009 that big box retail would be reconstituted and I replied that I no longer think it will be. A lot of things that could have been saved will no longer be saved in my opinion. What that means in practical terms is if the scale of the collapse is going to be larger rather than smaller, then there's more to do and different things to do than, say, if the collapse is going to be on the scale of the Great Depression.

From the previous discussions (with Lily).

March 8, 2011

Where and how to best survive a possible collapse is unknowable at this point.

The most important general variable needed to determine that is the scale and speed of any upcoming collapse. Also, the means by which it occurs is an important variable.

If the scale and speed of the collapse is large and sudden, location and preparations would need to be entirely different than a case in which the collapse is equally large and drawn out due to different mechanisms. And so on.

People sometimes point to the Great Depression as an example of where to relocate. Life in the rural dust bowl areas was very hard and a disproportionate number of banks in those areas failed. Life in the cities was relatively good. Knowing that is completely irrelevant to an upcoming collapse.

Probably the best thing to do at this point is to have various scenarios understood along with undertaking easy to implement strategies. For each scenario, have a plan in place for how to deal with that. As an example, let's say it's understood that pandemics could figure prominently in an upcoming collapse. If that's the predominant means by which a collapse occurs (and it very well could be even though it's not recognized now) then a remote island location is probably about as good as it gets. Once the pandemic reduces the population, a lot of other problems go away. Nature usually has a way of taking the most efficient route.

One of the big problems in all of this is that the locations that are the best post collapse are the worst pre collapse. That's almost by definition it seems. Nowadays things out on the periphery aren't very good due to the huge sucking sound coming from Washington. All of the resources are being sucked into the center of the system. Once Washington collapses and the vacuum is shut down, things will be pretty good out there, relatively speaking. But if one moves 10 years too early, they may not have many resources left once things really do shut down.

March 26, 2011

This is a difficult topic. I'll first state a few thoughts that may or may not be correct or useful in answering this but form a basis for looking at the specific question. Since 1932 happened, I don't think there is any way to completely nullify its long term effects - they will reverberate for centuries, then gradually die out. The only way in my view to completely neutralize an event like this so soon is to go through a Dark Age and societal reorganization that is sufficient in length for the collective memory and response to disappear. It may be true that Bernanke is trying to neutralize the effects as best he can by studying that incident in isolation and attempting to recreate a proper environment with one gigantic intervention. The problem with that, I think, is the system is probably too complex to isolate one historical event and neutralize it because history didn't start in 1932. In doing so, my fear, which I think is well founded, is that by trying to stave off the collapse of a part of the structure where in 1932 everything did eventually survive pretty much intact, these actions will 3 or 5 or 10 years down the road collapse a much larger part of the financial system. On the other hand, that may be inevitable, or it may be a good thing in the long run - better than losing just part of the system now as occurred in 1932/3. I suspect, though, that's not the case, and that taking the banks into receivership in 2008 and going through the process of investors taking haircuts which is the basis upon which Western Civilization was founded and has prospered for many centuries would have been the correct path to take. The incorrect path I feel Bernanke et al have taken is the path that I believe will lead to a scale of collapse that is on the order of 50 or 100 years.

One reason for thinking that is the convergence of many cyclical factors as we are discussing. So while I don't think what you mentioned is the "main event" we are dealing with, it is part of the mix of things that are converging on the same or similar timelines. By trying to spread out the effects of the real estate bust, Fed and Treasury will be dealing with multiple problems all at once instead of cleaning up one problem at a time. It becomes possible that they will lose control of the multiple problems at a critical time.

I believe all this is now a done deal.

[OLD1953]

As you know I do a good deal of travel in my work, and I've noticed a number of former big box stores that have been converted to something I guess you could call tiny malls. The big building is broken up into sections with plywood or other separators, and each section has its own small merchant. I've seen this in Toronto and Memphis and in a city in north Ontario (can't think of the name right now) and some other places. Usually there is a specialty grocery store with a deli in the largest section, or several small food vendors, and the rest will be selling anything from farm produce to clothes to jewelery or electronics. They come across as kind of a blend of a flea market and a consignment shop. They are a bit chaotic, but I kind of like stopping in those places. And the food is usually good, though much of it will make your arteries scream in horror.

I doubt the buildings will be left to rot forever, and that's one possibility for their use. Another possibility would be renting them to the Salvation Army or other groups for soup kitchens and short term living areas.

Seems to me that a bank run in Greece combined with a housing bubble bursting in China would shortly cause the market to fall.

[aedens]

Well Higg my 8-18-11 call did not land and I will check later the tech break I noted of the breakdown.
If I remember off hand it was a 11 percent leakage I noted. Other indicators noted I was close to
4 pecent of underpinning that session. Yea things were that convoluted on that deviation.
Being private investors as we are we will never be spot on and we have all emphasized that.
It is apparent that events are strained and inside I sure as hell do not want to see
it but we damn sure know better in the GD context. All they bought was confusion in the herd
as in investor sentiment time. I have the weekend to consider the dispersion effect model from the Moral Suasion
that was noted from my reading from a brief from the central bank of argentina.
It fit the critera of there bent of mind and my interia of thought.
Given the situation created as it is now to events to civilian agitation we trend here
the order of magnitude does merit on my part to go dark. I have been reading Burke
and older documentation as of late to moderate my view on a dichotomy between thought and action
of Political hubris.

[OLD1953]

If we had no hubris, we'd have no politicians.

MF Global going down for the third time! Not pretty.

http://www.forbes.com/sites/halahtourya ... s-weekend/

MF holds $6.3 billion worth of bonds issued by Italy, Spain, Belgium, Ireland and Portugal. Couple that with quarterly losses of $191 million and it’s a recipe for disaster.

[Higgenbotham]

This report came out September 30, but I didn't read it until this morning. As mentioned, I came to the firm conclusion a few weeks ago that the scale of the upcoming collapse will be large. This is based on looking at facts. I don't know what facts ECRI looks at or how they do things because it's all proprietary.

http://www.businesscycle.com/reports_in ... tails/1091

Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.

ECRI’s recession call isn’t based on just one or two leading indexes, but on dozens of specialized leading indexes, including the U.S. Long Leading Index, which was the first to turn down – before the Arab Spring and Japanese earthquake – to be followed by downturns in the Weekly Leading Index and other shorter-leading indexes. In fact, the most reliable forward-looking indicators are now collectively behaving as they did on the cusp of full-blown recessions, not “soft landings.”

It’s important to understand that recession doesn’t mean a bad economy – we’ve had that for years now. It means an economy that keeps worsening, because it’s locked into a vicious cycle. It means that the jobless rate, already above 9%, will go much higher, and the federal budget deficit, already above a trillion dollars, will soar.

Here’s what ECRI’s recession call really says: if you think this is a bad economy, you haven’t seen anything yet.

In my opinion, a good model for the future of the US retail economy will be what I saw on a cold February 2006 in Mogilev, Belarus, one of the poorest parts of the former USSR. There, I saw vendors standing outside in the freezing cold selling essentials (food, soap, etc.) off of carts. As I recall, they were using an old athletic field that had been converted to this purpose. I paid a very brilliant unemployed person to put me up in a Kruschev flat and spend a week showing me exactly how they were living post collapse. This particular family purchased most, but not all, of their goods from these outdoor vendors. The vendors made 5 or 10 dollars per day.

[bluebird]

From reading here and elsewhere around the blogosphere, I have also concluded that the scale of the upcoming collapse will be very large. I am not so worried about myself and spouse, as we are in our early 60s, but I do worry about my children and my young grandchildren. They will be living in conditions much like my grandparents did in the early 1900s, assuming they survive. Unfortunately, they are clueless and have other priorities preferring to spend, spend, spend on all the latest techie gadgets, houses, cars, clothes, and taking exotic vacations. I wish I could be more hopeful about their future.