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reddog

On the edge of a financial crash?

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Maybe a little dramatic, but....

 

Oil went down more than 7% today on demand concerns, I don't remember a drop like that.

 

Apple the darling of recent years went down 5% yesterday on demand concerns (admittedly recovered a bit today)

 

Former absolute rock solid blue chip bell weather stock GE seams to be in a bad way (admittedly more due to years of mismanagement)

 

Could things be coming together to make markets totally lose confidence / look reality in the mirror?

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I wouldn’t complain...recently got me a load of FNGD 3X FANG inverse ETFs. I’m usually spectacularly bad at investment choices though, so expect the markets will actually double by Christmas.

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Let's see, I was mainly inspired to start the thread because of the oil price drop, which seems absolutely unprecedented.  I am sure I have never heard of a 7% in one day drop, must mean something?

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I think it means we are back where we were about a year ago.  But agreed, lots of volatility, lots of money to be lost / made.

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1 hour ago, reddog said:

Let's see, I was mainly inspired to start the thread because of the oil price drop, which seems absolutely unprecedented.  I am sure I have never heard of a 7% in one day drop, must mean something?

It relates to the recent OPEC comments and the rising dollar.

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As probably one of the more cynical people around when it comes to so called "inevitable crashes" over the last decade I 100% feel we are now on the edge of something, cannot quite put my finger on it, but it feels like the party which I think has been going on for 20 years for some is coming to an end.

The financial crisis of 2008 was never addressed and somehow UK governments thought they could though it with many having no pain at all, we are now at a point where keeping the plates spinning is just too hard, we are in for political and financial turmoil in the coming years, maybe even decades.

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There has been billions of all sorts of currency QE created and pumped into the world financial systems to spend.......where is it all?......who is holding it all?😉

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58 minutes ago, localhero1983 said:

As probably one of the more cynical people around when it comes to so called "inevitable crashes" over the last decade I 100% feel we are now on the edge of something, cannot quite put my finger on it, but it feels like the party which I think has been going on for 20 years for some is coming to an end.

The financial crisis of 2008 was never addressed and somehow UK governments thought they could though it with many having no pain at all, we are now at a point where keeping the plates spinning is just too hard, we are in for political and financial turmoil in the coming years, maybe even decades.

We are indeed on the edge of a something: but it's just a "normal" recession.  There's one pretty much every decade or so.

We're not on the edge of "the big one" though because already we had it in 2008, and will feel the ramifications of that for decades, maybe for the rest of our lives (hence why interest rates are still so low).

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1 hour ago, scottbeard said:

We are indeed on the edge of a something: but it's just a "normal" recession.  There's one pretty much every decade or so.

We're not on the edge of "the big one" though because already we had it in 2008, and will feel the ramifications of that for decades, maybe for the rest of our lives (hence why interest rates are still so low).

Are you for real? What was a banking crisis was shored up by the central banks and became a sovereign debt crisis. Losses were socialised and gains privatised. The Central Banks are the lender of last resort, once the Central Banks become the only buyers of government debt, who backstops the Central Banks? Who is the lender of last resort to the lender of last resort? The 2008 crisis was never dealt with and this was a manifestation of the .dot come crash and ultimately it can be traced all the way back to the Nixon Shock. The reality is the Western world is facing a bond market crisis and that undermines the backbone of the whole financial system. Interest rates are going to rise spectacularly and that will hit everything... It starts now.

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1 hour ago, warpig said:

Are you for real? What was a banking crisis was shored up by the central banks and became a sovereign debt crisis. Losses were socialised and gains privatised. The Central Banks are the lender of last resort, once the Central Banks become the only buyers of government debt, who backstops the Central Banks? Who is the lender of last resort to the lender of last resort? The 2008 crisis was never dealt with and this was a manifestation of the .dot come crash and ultimately it can be traced all the way back to the Nixon Shock. The reality is the Western world is facing a bond market crisis and that undermines the backbone of the whole financial system. Interest rates are going to rise spectacularly and that will hit everything... It starts now.

I tend to agree with you on that. I'm not sure a great crisis was averted but merely postponed. A small downturn is going to cause a lot of pain for the debt junkies in the UK. The spinning plates are definitely wobbling.

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One spectacular possibility during the next few years which would collapse the price of oil would be the public disclosure of ‘free energy’ or ‘zero point energy’ technology. Ridiculous science fiction or suppressed science fact?

The forensic examination of 9/11 by Dr Judy Woods in her book “Where Did The Towers Go?” strongly suggests the use of such technology on that fateful day. Mind rotting conspiracy theory or mind wrenching revelation?

 

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2 hours ago, warpig said:

Are you for real? What was a banking crisis was shored up by the central banks and became a sovereign debt crisis. Losses were socialised and gains privatised. The Central Banks are the lender of last resort, once the Central Banks become the only buyers of government debt, who backstops the Central Banks? Who is the lender of last resort to the lender of last resort? The 2008 crisis was never dealt with and this was a manifestation of the .dot come crash and ultimately it can be traced all the way back to the Nixon Shock. The reality is the Western world is facing a bond market crisis and that undermines the backbone of the whole financial system. Interest rates are going to rise spectacularly and that will hit everything... It starts now.

Wow, are you @durhamborn 😮! Lots of people saying this now...

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14 hours ago, reddog said:

Maybe a little dramatic, but....

 

Oil went down more than 7% today on demand concerns, I don't remember a drop like that.

 

Apple the darling of recent years went down 5% yesterday on demand concerns (admittedly recovered a bit today)

 

Former absolute rock solid blue chip bell weather stock GE seams to be in a bad way (admittedly more due to years of mismanagement)

 

Could things be coming together to make markets totally lose confidence / look reality in the mirror?

Don't know much about stock markets but early on radio today they were talking about a LOT of volatility on the Japanese stock market on Monday then US yesterday. I'm buried in work at the moment so don't know whether it's being covered widely. Radio (msm) said that it might be about fears of the end of the rise of the tech giants. Whatever. Sounds like the kind of 'excuse' they make up about the housing market, too - taking a relatively small contributing factor and making it The Reason, instead of facing up to the fact that prices have long been disconnected from reality and need to come down. Stock markets have been insanely high and rising for ages, aren't we just looking at the inevitable? Crashy crashy crashola. Who cares?

Edit: I don't mean 'who cares'! I think I mean something more like 'bring it on'.

Edited by North London Rent Girl

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13 minutes ago, fru-gal said:

Wow, are you @durhamborn 😮! Lots of people saying this now...

I've been banging this drum since 2005. We've just clicked into the next business cycle and BREXIT will likely be seen as the catalyst, but the reality is this storm has been brewing for a long time. It's more a case it's just going to collapse under its own weight, it just needs a trigger. The West has been spending for decades and is at the height of decadence, whilst the East has been working hard and saving. There is going to be a tidal shift to the East and it's going to be unpalatable for many in the West.

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11 minutes ago, warpig said:

I've been banging this drum since 2005. We've just clicked into the next business cycle and BREXIT will likely be seen as the catalyst, but the reality is this storm has been brewing for a long time. It's more a case it's just going to collapse under its own weight, it just needs a trigger. The West has been spending for decades and is at the height of decadence, whilst the East has been working hard and saving. There is going to be a tidal shift to the East and it's going to be unpalatable for many in the West.

You should take a look at Durhamborn's thread if you haven't already. He says exactly the same. 

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3 hours ago, warpig said:

Are you for real? ... The reality is the Western world is facing a bond market crisis and that undermines the backbone of the whole financial system. Interest rates are going to rise spectacularly and that will hit everything... It starts now.

Absolutely the 2008 crisis isn't "over" and won't be until interest rates go back to normal.  Which they will.  But I don't see it undermining the whole financial system, but rather what I see happening is your other point below:

11 minutes ago, warpig said:

The West has been spending for decades and is at the height of decadence, whilst the East has been working hard and saving. There is going to be a tidal shift to the East and it's going to be unpalatable for many in the West.

Now on this point I 100% agree with you, and most people in the West don't get it yet.  There will be a transition of global wealth and power from the USA (who have pretty much led the world since 1945) to the Far East. 

In summary, what I see is the build up of debt in the West causing the shift in power to the East, rather than causing a meltdown.

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OK so we largely agree, but who buys the government bonds? Pension funds? They have their own crisis because of this... The bond market is where the money supply is created and a lot of what we do in life is taking future earnings and spending it today. If the availability of finance is severely impeded by 1) Rising IR's 2) Reduced creditworthiness 3) Reduced appetite for risk then it will feed in on itself. It's a snake eating it's own tail and the pace of this process is exponential in nature. The next 2-5-10 years are going to be grim for lots of reasons.

Edited by warpig

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25 minutes ago, warpig said:

OK so we largely agree, but who buys the government bonds? Pension funds? They have their own crisis because of this...

Most DB pension funds are now so mature that as long as the bonds don't actually default they don't really care if they fall in value as long as they pay out - their liability is just to pay a pension of £Xpa to everyone and have generally hedged the value of their assets to inflation and interest rate movements.  In fact, to the extent they're not hedged, a big rise in inflation and interest rates would actually improve their funding substantially - what would really hurt them is deflation, since pensions can't be reduced.

The other issue is that deaths are increasing, and life expectancy improvements have stalled, which is also helping pension funds (even though it's bad for people of course!)

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5 hours ago, scottbeard said:

We are indeed on the edge of a something: but it's just a "normal" recession.  There's one pretty much every decade or so.

We're not on the edge of "the big one" though because already we had it in 2008, and will feel the ramifications of that for decades, maybe for the rest of our lives (hence why interest rates are still so low).

Really? The EZ was much more stable back then than it is now, not to mention China, Saudi Arabia etc. etc. and central banks were acting together to keep the system afloat (bail out debt holders) we are in a much more tricky place now, no matter how scary (for the bankers) the little slip of 2008 was. Popcorn time for sure.

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Genuine question, can anyone give a short and simple answer... in the event of any future economic downturn (or even just the suggestion of one) what's to stop them firing up the printing presses once again? 

Especially given the £750bn that Hammond has already pre-approved Carney to go ahead with.

Edited by nome

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7 hours ago, winkie said:

There has been billions of all sorts of currency QE created and pumped into the world financial systems to spend.......where is it all?......who is holding it all?😉

It's like giving free drinks to an alcoholic, they just keep coming and pissing it away.

Getting the money back will be impossible. All that remands is a stink in an alley way.

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43 minutes ago, dances with sheeple said:

Really? The EZ was much more stable back then than it is now, not to mention China, Saudi Arabia etc. etc. and central banks were acting together to keep the system afloat (bail out debt holders) we are in a much more tricky place now, no matter how scary (for the bankers) the little slip of 2008 was. Popcorn time for sure.

https://asia.nikkei.com/Politics/International-Relations/India-and-Japan-seal-75bn-currency-swap-deal

japan has just done a $75b currency swap with India 

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1 hour ago, scottbeard said:

Most DB pension funds are now so mature that as long as the bonds don't actually default they don't really care if they fall in value as long as they pay out - their liability is just to pay a pension of £Xpa to everyone and have generally hedged the value of their assets to inflation and interest rate movements.  In fact, to the extent they're not hedged, a big rise in inflation and interest rates would actually improve their funding substantially - what would really hurt them is deflation, since pensions can't be reduced.

The other issue is that deaths are increasing, and life expectancy improvements have stalled, which is also helping pension funds (even though it's bad for people of course!)

They're already struggling to pay out and default is a genuine concern. The World Economic Forum stated the pension deficit grows by 28 billion dollars every 24 hours and will be 5 times global production by 2050.

saupload_VC-Pension-Crisis-042318.png

 

Unfunded liabilities, QE and the gilt market, along with the erosion of trust in the government, unaccounted inflation, Brexit and a falling stock market will bring this to a head in the next couple of years. It has been likened to the cataclysmic effect of a financial global warming.

There's lots to read on the subject -

https://www.forbes.com/sites/johnmauldin/2017/10/03/the-pension-storm-is-coming-to-europe-it-may-be-the-end-of-europe-as-we-know-it/#571528be1a5c

https://seekingalpha.com/article/4166196-pension-crisis-worse-think

 

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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