Financial topics

[vincecate]

The market can stay irrational longer than you can stay solvent comes to mind.

I am a bit worried but can 3 markets stay irrational longer than I can stay solvent?

1) Stock market is up by about a factor of 3 in about 6 years. It could crash for any number of reasons.

2) Fed has increased the money supply by about a factor of 4 and yet silver is about the same price.

3) The Japanese central bank is printing money like crazy and yet the Yen is not going down.

With options I am leveraged on all 3 bets, so if I win even one of these I am fine. Still think I can win, but this is going on years longer than I thought it would.

[Higgenbotham]

I guess that's what "going parabolic" means.

Dow up 150 points.

This just has to be in the crazy "going parabolic", "melt up", or "blow off". I just can't imagine this going too much longer, but I never thought it would go this long, so I just don't know.

I think we are due for a crash.

On this chart there are 4 things:

The gold line is the 251 day (approximately 1 year) moving average.
The blue line shows the area of the bubble where the year over year growth rate is steady (or a straight line).
The red bracketed areas show where the year over year growth rate accelerates into an unsustainable trajectory and is "going parabolic".
The purple dots show where, once the bubble is going parabolic, it gets bumpy.

251DMA.gif (48.1 KiB) Viewed 3709 times

On the above chart, let's measure some data points. The numerical values will be recorded for each of the bubbles (2000, 2007, 2014).

Once the year over year moving average started going parabolic, how far did the bubble move over that point? (Example - Bubble starts going parabolic in 1999 with the moving average at 1230, bubble gets to 1550.) 320, 210, 390.

How far did the bubble move from the low of the first bump? 320, 210, 250.

How long did it take for the bubble to reach its maximum once it went parabolic? 7 months, 4 months, 8 months.

How far did the moving average rise (blue section) during the steady year over year growth phase of the bubble? 180, 110, 160.

How far did the bubble move from the start of the steady year over year growth rate of the bubble (beginning of the blue line)? 480, 310, 560.

[Higgenbotham]

I think the authorities let this bubble get away to the point where there can't be a landing. There can't be a normal generational crash that is recoverable. There will be no reboot from the next crash. Therefore, there is no incentive to let it crash now, only incentive to find a scapegoat. Who will they set up to blame?

[John]

The market can stay irrational longer than you can stay solvent comes to mind.

> I am a bit worried but can 3 markets stay irrational longer than I
> can stay solvent?

> 1) Stock market is up by about a factor of 3 in about 6 years. It
> could crash for any number of reasons.

> 2) Fed has increased the money supply by about a factor of 4 and
> yet silver is about the same price.

> 3) The Japanese central bank is printing money like crazy and yet
> the Yen is not going down.

> With options I am leveraged on all 3 bets, so if I win even one of
> these I am fine. Still think I can win, but this is going on
> years longer than I thought it would.

Gold and silver prices are far above their long-term trend values.
They are going to crash.

Japan has already had its financial crisis, starting in 1990, and the
survivors are still in a "deflationary" mood. A relevant comparison
would be America 1950s. The yen will not lose its value.

[Higgenbotham]

I think everything will go to zero in the next crash. It will go back to a barter system. Gold and silver may be worth something in a few local areas that are doing relatively well, if there are some surpluses.

I don't think Japan (or any other country) can any longer isolate itself from the malady of the global system (as Tainter and others have said, but I think Tainter was the first).

[John]

> I think everything will go to zero in the next crash. It will go
> back to a barter system. Gold and silver may be worth something in
> a few local areas that are doing relatively well, if there are
> some surpluses.

Is that what happened in the 1340s-50s? That would shed light on
what would happen today.

[Higgenbotham]

> I think everything will go to zero in the next crash. It will go
> back to a barter system. Gold and silver may be worth something in
> a few local areas that are doing relatively well, if there are
> some surpluses.

Is that what happened in the 1340s-50s? That would shed light on
what would happen today.

I think money for the most part survived the collapse of the 1340s-50s but it didn't for the most part survive the collapse into the Dark Ages. I think the difference is that in the 1340s-50s some of the city states protected their bond markets whereas this time no core country has; they have all pledged their sovereignty and their financial assets to holding up bankrupt countries, bankrupt unions like the EU, or bankrupt corporations. In the 1340s the bankrupt banks were allowed to go bankrupt.

[Higgenbotham]

This is a quote from Paul Craig Roberts, former US Treaury official under Reagan. In the 1340s the large banks also became gambling casinos and the City of Florence tried to prop them up for awhile, but that's as far as it went.

The Derivatives Tsunami is the result of the handful of fools and corrupt public officials who deregulated the US financial system. Today merely four US banks have derivative exposure equal to 3.3 times world Gross Domestic Product. When I was a US Treasury official, such a possibility would have been considered beyond science fiction.

Hopefully, much of the derivative exposure somehow nets out so that the net exposure, while still larger than many countries’ GDPs, is not in the hundreds of trillions of dollars. Still, the situation is so worrying to the Federal Reserve that after announcing a third round of quantitative easing, that is, printing money to buy bonds–both US Treasuries and the banks’ bad assets–the Fed has just announced that it is doubling its QE 3 purchases.

In other words, the entire economic policy of the United States is dedicated to saving four banks that are too large to fail.

http://www.paulcraigroberts.org/2012/12 ... ar-bubble/

[Higgenbotham]

Some interesting discussion about Christine Lagarde

7/2/14 The Sound of Music
http://kliguy38depression2news.blogspot ... music.html
5/24/14 Occult Message in Speech by Christine Lagarde of IMF
http://www.youtube.com/watch?v=QYmViPTndxw

7/1/14 Steve Quayle: We Are Headed for a Crisis of Biblical Proportions-IMF Christine Lagarde's Warning!
http://www.youtube.com/watch?v=9ldfokBbhb8

As I also documented, the IMF is thoroughly supportive of this plan to remove Russia, and announced on May 1st, just a day prior to our massacre of independence-supporters in the south Ukrainian city of Odessa on May 2nd, that unless all of the independence supporters in south and eastern Ukraine can be defeated and/or killed, the IMF will pull the plug on Ukraine and force it into receivership.

http://www.washingtonsblog.com/2014/06/ ... ussia.html

This also explains why the U.S. is encircling Russia with NATO members and weapons and U.S. military bases. Things like this are probably major factors of concern at secret private meetings of U.S. and EU aristocrats and their top agents, at the annual Bilderberg conferences; but, since those meetings are secret, one cannot know. Among the attendees at both the 2013 and the 2014 meetings were not only Martin Feldstein and Lawrence Summers, but Robert Rubin, Eric Schmidt, Peter Sutherland, Peter Thiel, James Wolfensohn, Robert Zoellick, David Petraeus, Richard Perl, George Osborne, Mario Monti, John Mickelthwait, Peter Mandelson, Christine Lagarde, Henry Kissinger, Klaus Kleinfeld, Alex Karp, James Johnson, Kenneth Jacobs, Carl Bildt, John Kerr, and Roger Altman.

http://www.washingtonsblog.com/2014/06/ ... l-war.html

http://matveychev-oleg.livejournal.com/1224806.html

[Higgenbotham]

And clearly, somebody in Washington thinks that a nuclear war can be won, because otherwise, why would they change the war doctrine so that nuclear weapons cease to be a retaliatory force and become a first-strike weapon? Why would they build antiballistic missiles and put them on Russia’s border and on ships in the Black Sea and South China Sea.

It is clear that some people in Washington believe that the US can win a nuclear war. In fact, there was an article published several years ago in Foreign Affairs, which is the principle journal of the Council on Foreign Relations – an influential collection of strategic analysts and former government officials. And they said the US is so far ahead of Russia in nuclear weaponry, that we can very easily attack Russia and suffer no retaliation. So, you have people that think that way.

Supports what GD has said all along.

http://www.paulcraigroberts.org/2014/07 ... ce-russia/