zugzwang

Correct. The exponential credit explosion started around 1980 with the so-called fiscal 'conservatives' Reagan and Thatcher.

Another Morgan Stanley report, this time on megabank litigation fines/costs. Probably doesn't warrant a separate thread so I'll link to it here. $260bn down, only $65bn to go! http://www.valuewalk.com/2015/08/big-banks-260-billion-down-only-65-billion-to-go-says-morgan-stanley/

The swillers are hoping for more QE from SuperMario today. The $1 trillion he promised six months ago apparently being insufficient. Personally, I think he should heed my advice and throw himself off a bridge. But that's just me.

Unsustainable asset price bubbles.

The news isn't all bad: £455m Broadgate Quarter deal collapses as Chinese 'investor' scrambles to cover domestic margin call. http://www.theguardian.com/business/2015/sep/02/broadgate-quarter-sale-collapses-as-chinese-investor-pulls-out

Info came from a link in the Telegraph comments section, sorry. Looked genuine to me. Yup. May sure looks like the top from here. Took over a year to complete (held up indirectly by QE from the BoJ and ECB) but once China started to fall apart it was game over. Seven years of central bankers papering over live termites to quote Rick Santelli. And if/when the Fed puts up rates, look out below!

Time for more Eurozone QE? $1 trillion not enough? Keynesian hoons at the Torygraph call for a top up. http://www.telegraph.co.uk/finance/economics/11836915/Five-charts-you-need-to-see-before-the-ECB-could-unleash-more-firepower-to-Europe.html

The original 'Right to Buy' was instrumental in setting us on the present course i.e. national bankruptcy via debt servitude and supranational embezzlement but the neoliberal assault on the welfare state had begun long before Thatch arrived at No. 10. She was just another recruit to the cause. Fatally, first the Tory Party, drunk with power, and then much of the Labour Party, stung by generational defeat, followed in her footsteps.

This douchebag, Adam Parker. Two months ago he said he didn't see a major market correction coming any time soon and was loathe to call a top when he didn't see one forming.

The only hope against that eventuality is physical gold.

There been a LOT of hpi/rental inflation in the US. An Osborne-Carney style echo housing bubble in the larger metropolitan areas caused by ZIRP and QE.

The obvious question: If their stock timing model is a good as advertised, why didn't Morgan Stanley issue a 'crash' call last year similar to the one they made in 2007?

They must have an absolute boatload of crap to get rid of.

Morgan Stanley issues 'full house' buy alert for stocks. http://www.telegraph.co.uk/finance/11837853/morgan-stanley-capitulation-MSCI-Europe-equities-China-bank-stocks-1998-bonds.html How underwater are these guys right now?

As if! Nothing comes close to the UK for regulatory laxity and accommodation.

Interesting observation about Gidiot's motives. I simpy assumed he was looking for fast cash to keep his extravagant spending up.

Luck or judgement? That's a difficult call. Luck is always a factor, of course. As the great Fischer Black pointed out, we're all noise traders to some degree, for without noise there can be no market! Black was the smartest guy in the room for most of his life, as an academic economist at MIT and head quant at Goldman Sachs; but even he let off a few duds. His sometime collaborator Myron Scholes fared much worse at LTCM. History teaches us that the Efficient Market Hypothesis is trivially true - liquid markets are difficult to beat but not impossible if you have access to information that others don't. Traders who utilised the new fangled Black-Scholes options pricing model in the seventies had a practical advantage over those who didn't and were rewarded accordingly. None more so than Ed Thorp who discovered the B-S equation independently in 1966 and used it to establish the first of his many fortunes. My own belief is that Keen's nonlinear disequilibrium macroeconomics is infinitely superior to the Neoclassical/New Keynesian alternatives and can be used to obtain information about markets that is inaccessible otherwise. It's worked out better than I could have hoped thus far, why change a winning approach? Naturally, if the central planners come back with more QE I'll close out my short positions and consider my options.

Of the 30,000 or so professional economists worldwide perhaps a dozen or so predicted a full-on economic depression in 2008, Steve Keen pre-eminent among them. More interestingly, Keen's model also qualitatively describes the Great Moderation which preceded the Crash. No-one is suggesting that 'Minsky' is infallible, or can't be improved, least of all SK himself! Even so, as a macro model I consider it to be manifestly superior to anything else in the published literature that I'm aware of. The DSGE models employed by the central banks are charicatures by comparison. The concept of 'equilibrium' should have no place in the study of economics and markets.

Exactly as we saw in October 2008! China and the other BRICS saved the world then - they're the material threat this time. Steve Keen's disequilibrium model ('Minsky') is the only one I have any faith in. It predicted the events of 2007/8, the huge Chinese crash we're seeing now, and is predicting the impact of a US rate rise will be far greater than the Fed imagines. As I see it, the only way we get to new highs on the SPX and FTSE in the near term is if they add more QE in a panic reaction to a rate rise or a further breakdown in China. SK interviewed by FNN on 27th July, 2015:

European/Asian stocks set for worst monthly performance in three years. https://uk.finance.yahoo.com/news/asia-stocks-sag-fed-rate-021938184.html

Jack the rates, or People's QE? Which way will the Keynesian moron move?

The world is drowning in cheap oil + gas so Gidiot follows his Keynesian instincts and encourages the production of even more...

Worst recession for three decades? Oo-fah! Another epic fail for the Keynesian hoons.

Not if you divide the economy into two sets of prices: assets prices and current prices (including wages). QE has helped inflate the former but generally suppressed the latter. Helicopter drops would target the latter, driving up interest rates and collapsing asset prices in the process. Naturally, a hyperinflationary reset would leave the country vastly poorer than before but the debt at least could be put back on a sustainable trajectory relative to incomes.