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The Teotwawki To End All Teotwawki's?

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I know this will rile a few inflationists on here WTH. Prechter thinks the super fast collapse of various credit markets, share prices (think monolines, Bear Stearns NR etc) is a precursor of what will happen with the stock market and deflation as a whole. Suppose it makes sense, with massive, superlative amount of leverage in the system IMO the whole thing can lock up and collapse in a split second, like the aforementioned examples in a macrocosm.

linky

Lately, however, markets have failed to turn quietly and slowly ahead of events, as they usually do. The sub-prime mortgage meltdown provides a case in point. The Elliott Wave Financial Forecast described the market’s change in July 2007 from fully valuing these mortgages to considering them nearly worthless as being so swift that it was as if someone “flipped a switch.” Conquer the Crash came out in March 2002. So five years before the “switch” was flipped, someone studying the situation could see the tremendous risk in weak debt. Moreover, the housing market topped in 2005, so two years before that change, anyone attuned to the implications of the end of a record housing bubble could have made the decision to bail out of sub-prime mortgages. But the market did not budge. Optimism remained entrenched. It was not until some lone, unknown seller offered up one of these mortgages for sale in July 2007 that the market suddenly acted as if the mortgages were toxic.

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We have just had another such event. Conquer the Crash covered the structural weaknesses in debt and insurance companies and expressed the utter certainty that rating services would be behind the curve. So, of all things, insurance companies that insured debt, thereby jacking up the bonds’ ratings, would have to be one of the most dangerous of all investments. Yet investors’ optimism was so persistent and blinding that they bid up shares of the two biggest debt insurers, MBIA and AMBAC, in 2003…2004…2005…2006…and even into 2007! AMBAC peaked on May 18, just shy of two years after housing prices topped nationwide. We were stunned at the complacency. Then, in a blinding fury, these two stocks fell 93 percent on average, in a matter of months….

I had long thought that the great bear market in stocks might be swift, because over the past 300 years the bigger the investment mania, the faster has been the ensuing collapse. The peaks of 1968 and 1835 led to deep bear markets of six and seven years, respectively. The wilder Roaring ’Twenties, capping an 87-year rise, led to a deeper bear market, yet it was faster, lasting less than three years. The even more dramatic South Sea Bubble, which peaked in 1720, led to a still deeper bear market, yet it was even faster, lasting only two years.

So given that the past 10 years of topping has produced the craziest overvaluation, the largest number of bubbles and the most persistent period of market-related optimism ever, by a huge margin, I am more than ever expecting a swift resolution. It would also make sense from a political perspective: The coming deflation needs to be swift enough to out-run the actions of the Fed and Congress. If it happens fast, they won’t be able to act quickly enough to turn the credit deflation into a currency inflation before the former trend has run its course.

Take a good, long look at [the chart]. This might turn out to be the profile of the stock averages when the big capitulation hits….

:ph34r::ph34r::ph34r::ph34r::ph34r::ph34r::ph34r::ph34r::ph34r::lol:

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Guest vicmac64

MMMM yeah I suppose it does on the face of it make sense - however.......

Did you ever think banks would collapse? That was unthinkable, that did not make sense to the rational.

I'm making the point only to illustrate that logic doesn't work any more....

We are dealing with irrational powerful forces that are determined to have their way, and that will ultimately fly in the face of logic.

Personally I think they will do what they know best (inflate) print money like mad to fill evey hole left by the embezzeling elite.

The moral is - go and find the story about the 'frog and the scorpion' - its in their nature you see..................

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Guest vicmac64
If logic doesn't work how can you predict anything

You can't - but what you can ask is 'who benefits?'

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So given that the past 10 years of topping has produced the craziest overvaluation

Except that the stock market is lower now than it was 10 years ago.........

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I'm making the point only to illustrate that logic doesn't work any more....

We are dealing with irrational powerful forces that are determined to have their way, and that will ultimately fly in the face of logic.

Personally I think they will do what they know best (inflate) print money like mad to fill evey hole left by the embezzeling elite.

The moral is - go and find the story about the 'frog and the scorpion' - its in their nature you see..................

From a conspirational point of view, what makes inflation more attractive than deflation?

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  • 293 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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