Financial topics

[John]

> As I watch this thing unfold, it looks almost unstoppable, like
> the human race is programmed to make this happen. The "beehive
> smash" of the shorts the past 2 days had absolutely no reason to
> occur - the employment number didn't warrant it; nothing did that
> I know of. Likewise, Monday's crash. No obvious reason for it
> besides...greed, fear, and generational dynamics - maybe it can't
> be stopped no matter what.

This week, the CBO reported that Obamacare was causing people to stop
working.

The Obama administration that this is exactly as desired, because
these people can now spend more time pursuing hobbies like painting,
or spend more time with their families.

I can only think that this kind of statement is a sign of total
desperation. Obamacare is systematically destroying large segments of
the economy, as if they were Bashar al-Assad's barrel bombs destroying
whole neighborhoods.

The Obama administration is seeing this destruction going on. They
believe that if they can only keep the destruction going for a few
years, then everything will be sorted out, and Obama's name will go
down in history for government medical care. This is the standard
Nomad/Gen-X nihilistic paradigm: Destroy everything so that you can
start over with a blank slate, also sometimes stated as "You have to
break a few eggs to make an omelet."

The phrase "cognitive dissonance" refers to believing in two
contradictory thoughts. Here's what I wrote last year:

> There is one major example left: Obamacare. I condemned this
> proposal when it was first made because it was a repeat of
> President Nixon's wage-price controls, which were an economic
> disaster. Nixon's wage-price controls were supposed to reduce
> inflation, but instead inflation surged to historically high
> levels under the controls. Obamacare was supposed to reduce
> health care costs, but instead health care costs are already
> surging to historically high levels. Obamacare is shaping up to
> be as much of an economic disaster as Nixon's wage-price controls.
> Obama is thoroughly committed to seeing Obamacare implemented.
> The typical cognitive dissonance behavioral pattern indicates that
> he will do anything that he has the power to do to force Obamacare
> to be implemented.

Cognitive dissonance is a powerful force because it forces a
confrontation between "ideology" and "reality." It results in
extremely destructive behavior, as people in power try and fail to
prevent "reality" from occurring. The longer this behavior continues,
the more destructive it is.

So when you say, "maybe it can't be stopped no matter what," we both
know that it will be stopped one day by reality. The only question is
how much destruction will occur before then.

[Higgenbotham]

I have mentioned to several people that I think the market is about to crash and they each laughed.

That's one of the best signs I see that would indicate you are right.

The longer this behavior continues, the more destructive it is.

That's the part that has worried me since the second half of 2011. At that point, I felt the destructive behavior had been going on too long to make a recovery, and it's gotten a lot worse since then. It appears the stock market is certain to crash and where that hits bottom and what the fallout looks like will probably be our first indication of how much destruction has taken place. I believe over 90% of the stock market will be wiped out within a few weeks and most or all of the Dow 30 will be bankrupt by 2016. Let's see how it goes.

[gerald]

John, regarding you question of how much destruction will occur? Lets hope it is not as bad as the Soviets and the Aral Sea, which was once the worlds fourth largest body of saline water.

http://www.artificialowl.net/2009/04/di ... recks.html -( see photos of ships in the desert )

"The disappearance of the lake was no surprise to the Soviets; they expected it to happen long before. As early as in 1964, Aleksandr Asarin at the Hydroproject Institute pointed out that the lake was doomed explaining, "It was part of the five-year plans, approved by the council of ministers and the Politburo. Nobody on a lower level would dare to say a word contradicting those plans, even if it was the fate of the Aral Sea."

------------- I hope we have more guts then they, in dealing with "leaders" --------

[jcsok]

I would change my login to "Cognative Dissonance", but its too long, and taken by someone else on another forum, therefore not original.

As the middle class is being wiped out at a rapid pace, it amazes me the worker ants that have no clue, and expect things to get better. Yet I have no discussions with anyone who does not recognize that the entire world is screwed up, and still everyone continues their daily life with their head in the sand.

Higg - Although the doomer in me at times agrees with your analysis of rapid collapse, and the parallels with the '29 market collapse, I still have to stick my head in the sand also, and disagree that a societal collapse will occur that rapidly. I believe that the world will experience a moderate decline because of the infrastructure in place. With one caveat - I can see a steep decline if there is a world war, which is probably what the PTB want in order to control everything.

[vincecate]

Higg - Although the doomer in me at times agrees with your analysis of rapid collapse, and the parallels with the '29 market collapse, I still have to stick my head in the sand also, and disagree that a societal collapse will occur that rapidly. I believe that the world will experience a moderate decline because of the infrastructure in place. With one caveat - I can see a steep decline if there is a world war, which is probably what the PTB want in order to control everything.

Can you see Japan getting hyperinflation like Venezuela and Argentina? They are printing at amazing speeds. About half the budget is funded by new money.

If Japan gets hyperinflation, can you see USA, UK, and Eruo getting hyperinflation?

If all the reserve currencies get hyperinflation, then central bank reserves all over become worthless, and paper money everywhere fails.

Seems like world wide currency collapse is a possibility, right?

[aedens]

Level I - pathological defences (i.e. psychotic denial, delusional projection)
Level II - immature defences (i.e. fantasy, projection, passive aggression, acting out)
Level III - neurotic defences (i.e. intellectualization, reaction formation, dissociation, displacement, repression)
Level IV - mature defences (i.e. humour, sublimation, suppression, altruism, anticipation)

Pick one since you have no choice they convey.

They'll sacrifice equities to Mithridatic Bull Cult to drive yields lower for the Molech Fabian Cult.
The womb of the nation states silent war.
http://www.zerohedge.com/news/2014-02-0 ... 0-year-ago

https://www.youtube.com/watch?v=KHPR4Lia15A noise of the 44 guns

[Higgenbotham]

Higg - Although the doomer in me at times agrees with your analysis of rapid collapse, and the parallels with the '29 market collapse, I still have to stick my head in the sand also, and disagree that a societal collapse will occur that rapidly.

If things were structured like they were 80 years ago with the small Main Street businesses I would say yes, it is possible and likely that things hold together, for that reason alone. But the size of the mega corporations and their high fixed costs preclude a middle of the road outcome in my opinion. Their profit margins are high now but a lot of that is due to government aid in many forms as well as corruption that is unsustainable. That translates back to why the need for $1 trillion per year in QE and deficits. The corporations need that because they don't operate at a profit without it. For example, I heard one aspect of that today in an interview on King World News where they were talking about the fact that a 5% reduction in food stamps caused Wal-Mart's sales to go down significantly enough to warrant mentioning. I would say (as you know) that a 1/3 to 1/2 retrace or corrective move is a normal outcome of natural systems, including economics. When sales contracted 1/3 in the 1930s everything was basically OK. The sales of the mega corporations haven't grown much in a decade. Anything that retraces those sales by 1/3, be it a collapse in US bond prices, a pandemic, a cutoff in oil supplies from overseas, a collapse of the Japanese govenment or other likely events would I think bankrupt every Dow 30 company because their profit margins in normal times over the past 30 years average in single digits as a percentage of sales. If every Dow 30 company goes bankrupt it's not the end of the world but things will be significantly harder than they were in the 1930s. How people take it from there will determine the further outcome but I am not optimistic about that either. But it starts with the fact (I'm 95% sure it's a fact) that the Dow 30 US based mega corporations cannot survive without government aid and their actions (lobbying, price fixing, political system control, media control, etc.) show that. That would include the gold and bond price fixing by the Fed which is done solely for their benefit.

[aedens]

http://finance.yahoo.com/q/bc?s=ZIV&t=1 ... X%2C%5EDJI

pockets and bees

===============================
http://www.zerohedge.com/news/2014-02-0 ... tting-base
context http://gdxforum.com/forum/search.php?ke ... sf=msgonly jan21

Time to think a few patterns out...

[Higgenbotham]

So here's a conversation I was listening to.

The discussion was about oil and what the results of the escalating cost of oil extraction are likely to be. And the question was how will that affect Boeing? One opinion offered was that the new Boeing planes can deliver 20% better fuel efficiency and there is economic incentive to buy a new Boeing plane based on that. That was followed by the comment that, due to the Internet, it is now possible to fill every seat on every plane at some price and that gives the airlines the money to be able to afford to buy more Boeing planes.

On a micro scale that all sounds very good and plausible.

But at bottom the source of the money that buys Boeing planes does not in fact come from the US private sector as the commenter supposes, or not enough of it. The money that puts Boeing "over the top" and into the plus column profit wise comes from deficit spending, money printing, and wage arbitrage from Chinese slave labor that goes to the US based companies and the elites that buy the airline tickets. One thing I should have put in the list above is if the Chinese peasants revolt and refuse to any longer work 16 hours per day at substandard wages there's no longer a major source of wage arbitrage and profit for the US mega corporations or a source of money for the purchase of US government bonds by the Chinese government.

That gets back to the subject of robots. If manufacturing is automated, that puts the US government or the system in general further into debt because it is more expensive overall to produce a robot, displace a worker, and then put the worker on government aid than it is to not produce the robot and employ the worker in the first place. Though again on a micro scale it sounds very good and plausible that the robot can be operated for less per hour than the worker can be paid. If the worker that is displaced can be productively employed, then it is fine but that doesn't appear to be what is happening (as energy limits bite down, getting back to the original topic).

[Higgenbotham]

http://www.foxnews.com/us/2014/02/08/ir ... s-borders/