I've Got A Bad Feeling About This Week

[Trampa501]

I know a lot of posters are willing on a crash, and I can see that the sooner we get this current stagnant mess out of the way, the better. But it isn't going to be pretty, and when the SHTF we're going to see major panic from those who thought things could hold together and recover slowly.

Yet the alternative is that extreme measures are taken by the authorities in charge. Extra QE, big loans from the Middle East or China, more subsidies for failed industries.

Maybe I should just ignore it all and watch Corrie instead.

[The Masked Tulip]

It’s not really the end of the world, but to read some of the analysis and data over the past week, it’s hard not to wonder if it’s not the beginning of the Endgame at the very least.

There is more to cover than I can really do justice to, but we will just start.

We HAVE to look at the US data first (briefly) and then on to Europe, where it will may be the end of the euro experiment, depending on two voting populations. Can you spell “Banking Crisis,” gentle reader? A nod to Bernanke’s finger-pointing speech, some links on the scourge of high-frequency trading, and we end on a positive note about the Boomer generation growing older.

And, I answer the question that is burning in your brain: “How many years of US corn production will China’s dollar reserves buy?” Write your answer down now. This letter may print out longer than usual, as there are plenty of charts. Let’s skip the “but firsts” and jump right in.

What Is the CBO Seeing (or Smoking?)

Last week I finally stopped being wishy-washy (with my 50-50% chance of a recession call) and said the US would be in recession within 12 months. And suggested that you consider moving to the sidelines your longer-term equity investments, except your conviction stocks. (I have some of those in the biotech space and simply intend to buy more if the prices go down. But remember, I am looking out ten years and expect an eventual bubble, so I don’t care if I am early for some of my high-risk money.) Stocks typically go down about 40% or more in a recession. David Rosenberg estimates that we have seen 27% of a typical bear-market move, so that would suggest the possibility of another 30% downdraft (give or take).

Read more: http://www.businessinsider.com/its-the-end-of-the-world-part-1-2011-8#ixzz1WJTJQ45H

[nohpc]

Monday bank holiday then a sustained optimism and rise in the stock markets as people realise things aren't as bad as they thought if further QE not needed.

Also, if things become worse then QE3 guaranteed.

[winkie]

No worries...'we are all in this together' even if you think you are not, even if you think you are safe....go with the flow, you can't fight or fear it.

[Pytyr]

Monday bank holiday then a sustained optimism and rise in the stock markets as people realise things aren't as bad as they thought if further QE not needed.

Also, if things become worse then QE3 guaranteed.

I don't think that's what Uncle Ben said. He said "We've done everything we can and it hasn't gotten us very far. Over to you." Not needed and not working are not the same thing.

edit for spelling

Edited August 28, 2011 by Pytyr

[Democorruptcy]

If the German courts refused to "do the right thing" the 7th September would be an interesting day.

Germany's top court will give its verdict early next month on whether the government broke the law with last year's bailouts of debt-stricken euro zone countries -- a ruling which could limit Berlin's room to manage the region's debt crisis.

The Karlsruhe-based Federal Constitutional Court will announce its verdict on Sept. 7 at 0800 GMT, it said in a statement on Tuesday.

The court is considering three lawsuits brought by six eurosceptic plaintiffs -- five academics and a lawmaker from the Bavarian sister party to Chancellor Angela Merkel's Christian Democrats -- against German-backed international bailout schemes for Greece, Ireland and Portugal.

The plaintiffs argue that the bailouts, which total 273 billion euros ($393 billion), violate property rights and other protections in the German and European constitutions, and break the "no-bailout" clause in the European Union's treaty, which says neither the EU nor member states should take on other governments' liabilities.

NOT EXPECTED TO BLOCK BAILOUTS

Legal experts believe the court is extremely unlikely to block Germany's participation in the multi-year bailouts, or in an additional 109 billion euro package of official aid for Greece that euro zone leaders announced last month.

Five of the plaintiffs tried unsuccessfully in the 1990s to have the constitutional court prevent the introduction of the euro currency.

The German government insists it has not broken any laws, which Finance Minister Wolfgang Schaeuble reiterated on Saturday.

"I am confident that the constitutional court's decision will confirm again that we violated neither the European treaties nor the (German) constitution," he said.

However, many legal experts and some government sources say they expect the court to set conditions for German participation in future bailouts, perhaps giving the German parliament a bigger say in approving it. That makes the court's verdict key for the whole euro zone.

For example, the eight judges could require German contributions to the European Stability Mechanism, the planned regional bailout fund which will start operating in 2013, to be subject to a vote by Germany's parliament. Currently, this is not formally mandated

http://www.guardian.co.uk/business/feedarticle/9810870

[Redcellar]

Monday bank holiday then a sustained optimism and rise in the stock markets as people realise things aren't as bad as they thought if further QE not needed.

Also, if things become worse then QE3 guaranteed.

How will QE3 achieve the turnaround that QE2 didn't?

What magical paper are they going to use to do that, which wasn't used before. All the worlds figures for growth and profits are being reduced from the predictions, and not by small margins. It just shows that the approach so far hasn't worked and it's all pie in the sky to believe it suddenly will.

The world needs a short sharp severe shock to correct all the bubbles, rather than a long drawn out recovery (which we all know is in fact a recession). Let people and companies go bust, then they'll all grow again. Where there's pain there's gain, and there hasn't been any real pain so far.

[24gray24]

How will QE3 achieve the turnaround that QE2 didn't?

What magical paper are they going to use to do that, which wasn't used before. All the worlds figures for growth and profits are being reduced from the predictions, and not by small margins. It just shows that the approach so far hasn't worked and it's all pie in the sky to believe it suddenly will.

The world needs a short sharp severe shock to correct all the bubbles, rather than a long drawn out recovery (which we all know is in fact a recession). Let people and companies go bust, then they'll all grow again. Where there's pain there's gain, and there hasn't been any real pain so far.

I don't see what the problem is, once you realise the powers that be are there to help the top 1% only, and don't give a damn about the bottom 99% (apart from revolution).

When this bubble burst, it took the top 1% by surprise in the sense they were still exposed to the markets, rather than being all in gold. So some duff assets were bought by the taxpayer directly, and QE was used to prop up the markets while the 1% sold the rest of their investments and bought gold.

Once the rich have finished selling , QE stops, gold skyrockets and shares collapse. This allows the 1% to get everything, but the price is the 99% lose everything.

The whole point of a bubble and then it's deflation is to redistribute wealth from the middle class to the 1% class. A bubble induces the middle class into a bad situation, but for whose benefit? The answer is a bubble is created deliberately ( not an accident) to benefit those who end up in gold at the end ie the top 1% who know what's going on and a very few others who work it out.

I assume the 1% are now in gold, so it's about time for the wipe out phase, where the artificially high prices are allowed to collapse, with the middle class holding them.

The only reason for the delay, why prices were not allowed to collapse in 2008, is that in 2008 the top 1% were still holding the cards rather than gold.

[200p]

VIX is still above 30, no reason to be in the market.

[culvers]

keep calm, carry on

[dothemaths]

The whole point of a bubble and then it's deflation is to redistribute wealth from the middle class to the 1% class. A bubble induces the middle class into a bad situation, but for whose benefit?

So you are saying the middle class are greedy and stupid .....

[goldbug9999]

Nigerian coal miners in a cave eating licorice at midnight, type black.

[_w_]

So you are saying the middle class are greedy and stupid .....

Is it anything else???

I'm talking of the majority of course: the over indebted / trample the Joneses and everyone else in my way / brand slaves, not everyone.

[The Masked Tulip]

I don't see what the problem is, once you realise the powers that be are there to help the top 1% only, and don't give a damn about the bottom 99% (apart from revolution).

When this bubble burst, it took the top 1% by surprise in the sense they were still exposed to the markets, rather than being all in gold. So some duff assets were bought by the taxpayer directly, and QE was used to prop up the markets while the 1% sold the rest of their investments and bought gold.

Once the rich have finished selling , QE stops, gold skyrockets and shares collapse. This allows the 1% to get everything, but the price is the 99% lose everything.

The whole point of a bubble and then it's deflation is to redistribute wealth from the middle class to the 1% class. A bubble induces the middle class into a bad situation, but for whose benefit? The answer is a bubble is created deliberately ( not an accident) to benefit those who end up in gold at the end ie the top 1% who know what's going on and a very few others who work it out.

I assume the 1% are now in gold, so it's about time for the wipe out phase, where the artificially high prices are allowed to collapse, with the middle class holding them.

The only reason for the delay, why prices were not allowed to collapse in 2008, is that in 2008 the top 1% were still holding the cards rather than gold.

I am not convinced by the gold conspiracy, but I am convinced by the moves of the past few years being simply to protect the super-rich and actually to enrichen them.

[Redcellar]

Is it anything else???

I'm talking of the majority of course: the over indebted / trample the Joneses and everyone else in my way / brand slaves, not everyone.

I can't hear you. I have my ipod on full volume and am busy downloading apps for my ipad about how to beat the markets and get rich quick in spanish timeshares.

[dothemaths]

Is it anything else???

I'm talking of the majority of course: the over indebted / trample the Joneses and everyone else in my way / brand slaves, not everyone.

In that case, aren't they getting what they deserve....?

[24gray24]

I am not convinced by the gold conspiracy, but I am convinced by the moves of the past few years being simply to protect the super-rich and actually to enrichen them.

It's a game of musical chairs, where the 1% are in charge of the music. Until the rich are ready, you have QE. Once the rich are ready, QE ends and collapse proceeds.

On the gold front, the rich had to get out of inflated assets. What else is there? They knew they were blowing up fiat currencies in order to recoup some of their losses. That only leaves a few things, gold and land and commodities being 3.

[_w_]

I can't hear you. I have my ipod on full volume and am busy downloading apps for my ipad about how to beat the markets and get rich quick in spanish timeshares.

Have you got a tip for me?

[rantnrave]

Nigerian coal miners in a cave eating licorice at midnight, type black.

You are Erranta and I claim my £5...

Not that it will buy me much these days.

[Redcellar]

Have you got a tip for me?

Yes, actually I do. Someone told me buy in the area called Costa Lot.

Can't seem to find it on google maps though.

[_w_]

Yes, actually I do. Someone told me buy in the area called Costa Lot.

Can't seem to find it on google maps though.

Oh yes. I've heard about it, the full name is Costa del Dump que Costa Lot.

Very up and coming, highly desirable.

[Butthead]

Monday bank holiday then a sustained optimism and rise in the stock markets as people realise things aren't as bad as they thought if further QE not needed.

Also, if things become worse then QE3 guaranteed.

It won't be popular on HPC, but this is my prediction too. Irene hasn't torn NYC to bits, Lagarde has spoken about "co-ordinated policy action" (dare I say - printy printy), and market participants returning from holiday make next week a 'whatevertheoppositeofblackisinthiscontext' week in my book.

[Trampa501]

It won't be popular on HPC, but this is my prediction too. Irene hasn't torn NYC to bits, Lagarde has spoken about "co-ordinated policy action" (dare I say - printy printy), and market participants returning from holiday make next week a 'whatevertheoppositeofblackisinthiscontext' week in my book.

Never thought Irene would make any difference - we're in normal hurricane season, and generally countries survive it every year.

"Co-ordinated policy action" will surely mean hyper-inflation edges so much closer?

[Butthead]

Never thought Irene would make any difference - we're in normal hurricane season, and generally countries survive it every year.

"Co-ordinated policy action" will surely mean hyper-inflation edges so much closer?

Certainly higher inflation than we've been used to or have now.

"Monetary policy also should remain highly accommodative, as the risk of recession outweighs the risk of inflation," she added.

From: http://www.bbc.co.uk/news/business-14699093

[Trampa501]

Certainly higher inflation than we've been used to or have now.

From: http://www.bbc.co.uk/news/business-14699093

Depends on how high the inflation is, and whether wages can rise to (nearly) keep up. I suppose it may be a way out, and allow internal and external demand to remain. But working people are going to get absolutely plummeled by inflation if wage levels continue to stagnate.