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Albert Edwards: Don't Buy This Dip
Albert Edwards is back to discussing the now conventionally accepted schism between the European core and its periphery, which he now sees as having passed the point of no return: "My own view of developments, for what it is worth, is that any ?help? given to Greece merely delays the inevitable break-up of the eurozone." What is more troubling is his insight into the psychology of Europeans, which unlike apathetic Japanese or US citizens, actually know when to say enough, and how to manifest their displeasure: "Unlike Japan or the US, Europe has an unfortunate tendency towards civil unrest when subjected to extreme economic pain. Consigning the PIGS to a prolonged period of deflation is most likely to impose too severe a test on these nations. And the political "consensus" within the PIGS to remain in the eurozone could falter in the face of another of Europe's unfortunate tendencies - the emergence of small extreme parties to take advantage of any unrest. My own view is that there is little "help" that can be offered by the other eurozone nations other than temporary confidence-giving "sticking plasters" before the ultimate denouement: the break-up of the eurozone." We are not sure if the emergency of another Hitler for Gen Z is more concerning than the imminent end of the euro, so we'll leave it at that for now. However, for immediate trading purposes, daytraders may want to take warning in the following A.E. words of caution: "Investors should therefore be far more wary of buying on the dip this time."
From Edwards latest piece, first with a focus on geopolitics:
The recent slide in the equity markets continues to be mainly driven by ‘events’ out of the eurozone. The markets were also disturbed by the introduction of a mining super-tax in Australia and a slide in April’s PMI for China, coming hard on the heels of similar lower readings in India and Brazil. Yet the simple fact is that the equity markets were technically vulnerable to any bad news. We review some of these technical indicators and suggest why this correction may be different from that seen in January.
I am being asked regularly about my views of events in the eurozone and how they will develop. This is too important an issue to duck, so I repeat here my thoughts recently offered in the weekly of 12 February (Note: these are my own thoughts and not the SG House view).
My own view of developments, for what it is worth, is that any ?help? given to Greece merely delays the inevitable break-up of the eurozone. But, for me, the problem is not the size of the government deficits or solvency or otherwise of the governments in Portugal, Ireland, Greece and Spain (so-called PIGS, but deliberately excluding Italy). The problem is rather that years of inappropriately low interest rates resulted in overheating and rapid inflation in the PIGS, even though rates might well have been appropriate for the eurozone as a whole.
Rapid inflation has led to overvalued bilateral real exchange rates (they do still notionally exist) for the PIGS and in most cases yawning double-digit current account deficits. With most trade done with other eurozone countries, the root problem for the PIGS is lack of competitiveness within the eurozone – an inevitable consequence of the one size fits all interest rate policy. Even if the PIGS governments could slash their fiscal deficits, as Ireland is attempting, to maintain credibility with the markets in the short term, their lack of competitiveness within the eurozone can only be addressed through years of relative (and probably given the outlook elsewhere, absolute) deflation. Hence the PIGS public sector deficit will inevitably remain large as a direct consequence of this weak growth.
In my opinion this will not be tolerated by the electorates in these countries. Unlike Japan or the US, Europe has an unfortunate tendency towards civil unrest when subjected to extreme economic pain. Consigning the PIGS to a prolonged period of deflation is most likely to impose too severe a test on these nations. And the political ?"consensus?" within the PIGS to remain in the eurozone could falter in the face of another of Europe?s unfortunate tendencies ? the emergence of small extreme parties to take advantage of any unrest. My own view is that there is little "?help?" that can be offered by the other eurozone nations other than temporary confidence-giving ?"sticking plasters?" before the ultimate denouement: the break-up of the eurozone.
And next on markets:
Much as we like to think that markets are driven by fundamentals, in the short run there is often very little connection. A general medium-term directional move will be punctuated by sharp contra-trend moves. In the case of the current cyclical rally in equities, it has become clear that the markets were very ripe for a correction. Keeping an eye on the technical indicators helps us determine how imminent these moves are. We always look at a variety of technical indicators. One notable event recently was the S&P struggling to get above the key 61.8% Fibonacci resistance (see chart below ? also note the rally failed at the 200-week moving average). And with the weekly MACD oscillators set to go negative, this could signal that a deep correction is unfolding.
We also look at Bull/Bear indicators closely. Recently investors seem to be getting really "?bulled up?", classically a good indication that a correction is imminent (see chart below).
We tend to monitor a couple of very useful websites quite regularly to keep track of what is going on. One is the Market Harmonics website which allows us to view the Bull/Bear ratios shown above, Put/Call ratios and many other tools ? see www.market-harmonics.com.One of the most stretched technical indicators at the moment is the Put/Call ratio on stocks (again a good contrary indicator). Even within a cyclical bull market where the trend for this ratio is to decline, this looks very, very stretched indeed at present (see chart below).
I also regularly monitor the extremely useful www.indexindicators.com website. This allows us to look closely at various breadth measures on the market as well as put/call ratios. So, for example, the chart below shows that when 90% of stocks in the S&P are above the 50 day moving average a correction is typically imminent (see chart below).
So is this correction a buying opportunity like it was in January? One key difference is that the leading indicators have now topped out quite decisively (as we showed last week -? link). Investors should therefore be far more wary of buying on the dip this time.
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I was on CNBC in February. Fat Old Haynes asked why Greece even matters. He mentioned that Kudlow thinks that, since Greek civilization collapsed thousands of years ago, why should they matter now. I must admit that I was so stunned by Kudlow's lack of understanding that I mostly fumbled the question.
I wish I could send this piece to Larry. Maybe he'd get a clue.
Larry Kudlow's professed ignorance is about as genuine as Hairy Canker's strident bullishness. There are other games being played within the game, but they won't be visible if one is focused on surface level oneupmanship.
Think big picture - really big picture: The credit-money system needs to constantly expand - it cannot contract, otherwise it dies. This is all anyone really needs to understand. The power-elite clearly understand this, which is why constitutional restrictions, legal precedents and the rule of law have been completely discarded. Cynics may carp "national security", but justification for these actions really does boil down to national survival.
Since private credit-demand peaked backed in 2008, public sector (deficit) spending has attempted to pick up the slack. To date, it has failed, which implies a re-doubling of effort. Smart players understand that currencies are going to be nuked - public sector debt saturation is the only way out, other than straight default. (By out, I am of course referring to temporary short-term political solutions, not real or meaningful economic stabilization.)
That's why the power-elite will stay long until political opposition finally gels to the point where money-printing is halted. Once that happens, look out below. As the debt-deflation implosion gains momentum, everything will come down - we're talking 75-90% price collapse.
Watch the MSM news - it will provide the tell of tells. If they ever start discussing the "bail outs were never going to work - in fact, they're weren't supposed to work - they're all frauds & crooks" meme, that means the trap door has been sprung.
Up until that point, it's full bore ahead with money-printing. Right now, they'll take anything for collateral, but when the full flight/panic emotion sets in, they may opt for un-backed printing.
Well put. Thanks.
It's all pretty clear for those who understand what is occurring & why it's happening. Yet, for some who are otherwise reasonably intelligent, repeated reminders of the necessity of credit-money to constantly expand or face certain death seems to depress and/or enrage them.
If anyone is interested in learning more about this topic, here's an absolute must read version written by a retired finance professor. He articulates in more detail what Mako, Travis & myself continue to address regarding the inherent instability of our credit-money system. (Tyler, you should really consider re-posting the article.)
http://www.marketoracle.co.uk/Article19206.html
So far, the big guys, the U.S. and Britain and Japan and probably China, have gone for inflating. They're trying not to default outright. Why? The outright default basically ends the government's ability to pay pensioners, poor people, and keep government spending up. So it revolutionizes the government itself. It ends government as we know it for awhile, and as far as politicians are concerned who have only one life to live, that's too long.
Quantitative easing to infinity is the slogan of James Sinclair, and he is right. The fiat money-big debt-big government system cannot go on without QE to infinity. That's what the system is all about. It has to run its course on this racetrack. It's not about to jump the fence and run on some other course. But before it reaches the finish line, we are liable to see some changes in the way the race is run.
Nice post.
People just don't get it, the system is designed to collapse. I can't figure out why everyone is so upset. The time to be upset was a long time ago when all the humans started lying to one another.
It's too late to complain now, there is only collapse.
"I can't figure out why everyone is so upset."
Mako,
The reason why everyone is so upset is simple. Nearly everyone willingly bought into the lie, if for no other reason than to avoid and evade responsibility for doing anything other than what they wanted to do, which was consume.
"Daddy said I needed to be a good consumer to make America strong and now that I've done my part and consumed up the wazoo, Daddy's now telling me the credit cards are maxed out and there isn't a new one in the mail? What the hell is going on?"
I have been talking to clients since the late 80's about the insanity of the system, that you can't have a fractional reserve banking system as it is constructed in the world today without the system eventually coming apart in an explosion. While my argument was based upon common sense and my clients felt I was probably right, they were also being told exactly what they wanted to hear, that I was wrong. And it appeared I was wrong because credit was easy, the stock market and home prices were going up etc etc.
So the average Joe put aside their doubts and partied with the rest of the animal house. Now that the punch bowl has been taken away and it looks like the warnings they received over the past 2 decades might actually be correct, rather than recognize that they fell for the Ponzi hook, line and sinker, they will externalize their anger and scream bloody hell with righteous indignation at those bastards who screwed the pooch.
Essentially we have a world suffering from buyers remorse.
Yeah and you are the guy who hasn't had any fun, sitting around calling for the end of the world for 30 years.
I knew about peak oil in 2003. My last car purchase was a VW Phaeton. People asked me, look if you know about coming oil scarcity, why'd you buy a big V8 car.
My answer: I want to live some while I have the option to. There's plenty of time for austerity when it's forced upon you, which it will be.
It's better to burn out than fade away anyhow.
The fact is that I was having plenty of fun because I understood what was going on and was able to both plan for the eventuality as well as play. And I also managed my clients money in the same way. They didn't take a beating during down years because I didn't keep them invested on the down side like most professionally managed dumb money.
I thought those cars had a W8
and if you want to burn fuel/oil, how about cruising out 60 miles in the ocean to fish all day and return home...week after week when weather permits....those DD 8V92s love some fuel
CD:
Great, great stuff. I'm only 43. But when I was an idiot teen-ager, mowing lawns for
video-game money, I sensed that something wasn't quite right even way back then.
Replay Morpheus' admonition to Neo... how there was that certain something you just couldn't put your finger on... Something that was wrong...
I figured the folks in charge, who were much smarter than I, had it all under control.
Not to worry. Still... ...people... using more than they... ...produced... doesn't quite...
...compute...
I think my high score at Pac-Man was around 120,000, though...
"Nearly everyone willingly bought into the lie..."
The NEED to BELIEVE
The masses NEED the Myth Narrative almost as much as the Oligarchy NEED the Myth Narrative to own them...
Nobody wants things back to normal more than Joe Fourpack (Was a Sixpack, before the VAT...).
Myth: It is a merit based society. We have more because we are smarter than you. Just one of many US myths...
Reality: Our wealth fixed the rules. You pay. Rules for you. You pay. No rules for us. You pay. Either way... you pay.
Or as Jesse says: "I drink your milkshake. I drink it up."
PI
You always have good comments. Thanks.
As disturbing as this sounds, many people would find it very difficult to actually take control of their lives and their minds after a life time of conditioning and indoctrination. I'm not saying that people should thus be "kept ignorant" for their own good, just that if and when the SHTF, do not be surprised at all how many people demand the machine be turned back on at whatever cost.
Once the hive mentality is assimilated, the hive member knows only the hive and anything outside of the hive is simply incomprehensible and unfathomable. Given the choice between the know oppression they suffer under and the unknown freedom of making real and significant choices for the first time in their lives, many people will demand a return to ignorance and bliss.
I'm not saying all people will be this way and I'm not being insulting. But many people, and not just the uneducated, would face a cognitive dissonance of such immensity that they would demand the return of the myth (represented by the blue pill in the Matrix) before it was even offered.
I'm heartened by the recent underground trending towards local economic sustainability, but this behavior would need to get substantially less rare to make much of a dent.
When people thought the earth was flat and had an edge you could fall off of, they didn't venture far from the shores in their ships, for fear. Fear protected them from something that wasn't there. Once the earth became round, they didn't know what to think and invented sea monsters. We keep the monsters alive in story and entertainment, and shock ourselves silly with terrorists behind every tree.
We keep building cages to hide in. We ask people to lock us in. We thank them for throwing away the keys.
All this when the world and reality are actually beautiful and fascinating things.
Should never have come down from the trees. Monkeys not smart.
There are actually very logical reasons for wishing the machine to continue operating as it's currently perceived.
Imagine being a doctor in your early 30s. All your life you've played by the rules, studied hard, gone into (student) debt, worked murderous hours as an intern, and now, just when you are about to assume the mantle of upper-middle class respectability, the whole freakin' thing comes apart at the seams.
In a certain way, people like us who understand the issues are cheats in their eyes. In essence, there's three kinds of people: the clueless partiers, the savvy players, and the deligent believers.
My wife is in the 3rd group - she made all the right moves, attended all the right colleges, is great at her job, is well known & respected by many in her profession and is a recognized subject matter expert in a very critical part of the real estate-financing cycle.
This is her moment to shine, when it all comes together to live it up and enjoy the fruits of her labor. And it's all going to shit?! I don't think so, not as long as I can deny reality.
But I can tell she's hedging, which is why we've been together so long. I've always been the resourceful one, the one who can get actual things done & hold things together. She knows if this thing does go to shit, her best chance is with me.
And judging from your avatar, you're a good looking dog to boot. :>)
Most of you guys are too young for this but here, "Thick as a Brick"
http://www.youtube.com/watch?v=Pzze87ZilQk
"Really don't mind if you sit this one out.
My words but a whisper -- your deafness a SHOUT.
I may make you feel but I can't make you think."
"Your mind's in the gutter..."
Agree with you up until you said that the electorate will stop the printing.
The electorate will DEMAND IT.
The USG cannot exist in deflation, nobody levered can, not the banks, not the States, nobody.
Deflation kills ALL levered parties.
Remember the GD1...devaluation. Remember Weimar...devaluation. The singular lesson from history is that monetary debasement is ALWAYS the recourse for excessive indebtedness.
They are actually suggesting Greece exit the EU and reissue then debase the drachma. It's the Plan A to avoid default.
Political opposition may gel, but its first act will be to repudiate the debt. What this does to the national currency is drive it to the grave.
" If they ever start discussing the "bail outs were never going to work - in fact, they're weren't supposed to work - they're all frauds & crooks" meme, that means the trap door has been sprung."
B9K9: You Ought to Guest Post
That was some logical, righteously thought out analysis...
PI
At some point, the Ponzi will begin to co-opt the truth in order to control it. It's actually already begun but will accelerate as things begin to really get out of hand and more and more people begin to search for alternative explanations for the coming shit storm.
I see the day in a few years where 60 minutes and Nightline and other new "investigatory" news shows will regain some of their bite. Of course, only the truth they wish to expose will be revealed, carefully mixed with new lies to deflect blame to the scapegoat of the week/month/year.
They co-opt the truth until it gets away from them, then it burns everything to ashes.
There is a reason why we don't learn from our mistakes. You know what that reason is? It's because mistakes of a certain size become event horizons in themselves, and everything then enters the singularity and no information escapes the gravitational pull of forgetfulness and destruction.
There's a reason why the period from 470-900AD in the West is called "The Dark Ages".
Everything fell. Everyone forgot. Everything burned.
This from toying with the truth. You can face it and perhaps win -- or it may eat you -- but in no case may you hide.
I just got a really bad mental picture when I read "shit storm". Pewww.
I used to listen to Kudlow when he filled in for Brinker, pre-collapse. Even then I was stunned at his cavalier attitude toward national debt. Kudlow is just a happy talking grinning fool..
Remember - he managed to get fired from Bear Stearns for doing too much blow. What does that tell you?
Didn't know he was into blow...explains alot
And to get fired from Bear Sterns for drugs, gotta be a real problem...BS was a pot culture..
I didn't know that about Bear (other than Jimmy Cayne) but it makes sense - that seems to be the case at most of the hedge funds and prop shops, both the ones I have worked at and that I am familiar with through friends.
It tells you that Kudlow should make "This is your economic logic on coke" commercials for Sleepy's - promoting mattresses with zippers and lock boxes.
Haines is a nimrod. That is obvious.
But, I am also stunned that Kudlow doesn't understand the Euro and the significance of these matters.
Definition of 'nimrod' is mighty hunter; also in the Bible, he was the grandson of Ham.
I know, I was dissappointed when I found this out too. Sorry.
Point taken. I suggest, that instead of nimrod, Haynes be referred to as " Fat, old, arrogant douchebag".
" Fat, old, arrogant douchebag".
Nice. I now have a new addition to my glossary of asshats:
'Foad': a toad-like asshat once employed to brazenly spritz the pus and caked scabs out of raw, infected, virulent axe-wounds.
Many thanks.
'Foad': a toad-like asshat once employed to brazenly spritz the pus and caked scabs out of raw, infected, virulent axe-wounds.
My computer screen curses you straight to hell.
:>)
Dude...your almost gointoofawr with that!
Among my peeps, it also means "Fuck Off And Die"
Oh shit! Of course. Noted and cited.
Regards
"also in the Bible, he was the grandson of Ham."
There Was Ham in the Old Testament?
What's up with that?
That's not what Harry told me to do?
Hey Harry, give me your phone number so I can call you for investment advice.
Harry's currently working undercover Mako...
Probably won't be back for a while.
We traded our Weimar for your Depression. The next Hitler will be an American.
i doubt it.. you need a country with a unified agenda.. USA is a totally unorganized mess..by design
Sure. But one-third of the mess might get it's act together and murder the other two-thirds in their sleep.
No more mess. Some people really like that kind of thinking.
two wolves and a lamb voting on what's for dinner.
Jefferson was a smart guy. Democracy isn't exactly what we've wanted it to be; perverted by selling the (dumbed down) masses a bill of goods to benefit the few at the expense of many.
dbl post. Deleted.
the difference between the Weimar and the U.S. is right now, we have an armed populace that will resist. It may give some pause to any sort of takeover. Of course, everyday American move to the dark side of Fascism. Most people think that it is ok to tase a 17 year old who runs on the field during a baseball game.
All it would really take is a crash that hurts most Americans, then a messiah figure who will promise the good all days of easy credit and bigger TV's to rope in most Americans. We have grown accustomed to being really comfortable and don't have the coping skills to deal when the shit hits the fan.
It's all about the food supply; better yet, cut the water supply. Sorry folks! Most with guns will just die, sitting at home. Fat and dead; armed to the teeth.
Put on your tinfoil hats: decimate the population with a two-hit punch: supervirus and poisoned vaccine = much more orderly collapse. Dropping like flies after rushing to the distribution centers - the irony.
Either way only the hardcore will choose starvation over redeeming gunz, etc 4 food. The bankers have America by the balls.
The typical liars are talking in Europe right now. The wise are silent.
Look at Belgium news! There might be a extreme right regime being elected in june because of the fall of the government!
And as Brussels is the capital of Europe, that's a mighty fine example of where Europe is heading!
Funny remark. Prospect of jobs for anyone silver-tongued enough to hide the connection.
the land where wearing a burhka is a crime. yay for tolerant europe!
They are buying retailers with a vengeance.
Dammit Leo.
I still have a few drachmas from my last trip to Greece in 1956. I wonder if that hooker I spent the night with is still in business.
:) :) :)
Well done.
This thread is on fire.
Yeah she is, she had to un-retire. Opa!
I.m not sure I agree. I look at treasuries. they have had a good run, which means primary dealers can sell and turn the profits back to stocks. the uup is right on upport trend, saying we should drop to fall again. I think currencies dollr index gives clues and treasuries. then leads to stocks
Thanks. The troubling part of the Eurozone crisis is the role of the international participants and their diabolical plans for an IMF takeover of the weaker members.
The incestuous relationship of big banks, university economists carrying passports of more than one country, heads of government, the IMF and the Federal Reserve is striking; frightening.
The Greek “cross currency swap” engineered by Goldman Sachs just after Greece was admitted to Europe’s monetary union, for example, involved:
Greek Prime Minister Contantine Simitis, leader of the Panhellenic Socialist Movement,
Lucas Papademos (now vice president of the European Central Bank) then governor of the Bank of Greece and Greece’s representative on the IMF,
and Christoforos Sardelis, head of Greece’s Public Debt Management Agency at the time, who held Swedish citizenship for a number of years and came to his public post from the Bank of America, and is now with Banca IMI, the investment banking unit of Italy’s Intesa Sanpaolo.
Papademos, educated at MIT, had been at Columbia University and in 1980 was senior economist with the Federal Reserve Bank of Boston. He formed his Fed connections when he was a top research assistant to the late Nobel Prize-winning economist Franco Modigliani, who was born in Italy but left Rome in 1938 when Mussolini announced new laws against the Italian Jews. Modigliani had close contacts with the Federal Reserve and his students, along with Papademos, have included Charlie Bean, Deputy Governor of the Bank of England, and Stanley Fischer, Governor of the Bank of Israel.
Papademos now serves as European Central Bank vp with its president, Jean-Claude Trichet, former alternate governor of IMF, governor of the World Bank and member of the Washington-based financial Group of Thirty. He’s also former chairman of the Paris Club, a financial group of officials of 19 countries that can provide debt cancellations, for restructuring for indebted companies and creditors referred by the IMF.
Fischer, before becoming an Israeli citizen to head Israel’s central bank, had been vice president and chief economist at the World Bank, first deputy managing director of IMF, vice chairman of Citigroup, president of Citigroup International, head of the Public Sector Client Group, a member of the Washington-based financial Group of Thirty, and Fed Chairman Ben Bernanke’s Ph.D. thesis advisor at MIT.
At MIT, Modigliani worked closely with Nobel laureate Paul Samuelson, uncle of National Economic Council Director Lawrence Summers (Summers’ family name earlier had been changed from Samuelson to Summers).
The members of this closed membership insider mob…bought economists, politicians and the rest…are the foot soldiers for the financial tyrants who are strangling our beloved country and the world. And from one of the worst foot soldiers of all, the Nobel, stern, bookish professor from Princeton, Thomas Woodrow Wilson, we finally heard the truth when the damage began its relentless march…a kind of confession if you will:
“A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men… We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world—no longer, a government by conviction and the free vote of the majority, but a government by the opinion and duress of small groups of dominant men.”
Thanks for the in-depth investigative reporting. Very interesting.
They must sit around a big table and decide where they want things to go, and then basically filter down their determinations into, basically, a legalized frontrunning scheme with inside information.
Naw, there's no conspiracy, just an apparent one due to concert of action of likeminded actors.
The Tribe at this level all know each other even if they don't.
Rubin said he met Richard Cohen for the first time and was hearing his father's voice.
It's clan nepotism and it must be stopped.
I think this fantastic post can be summed up in two words: circle jerk.
And we're all stuck in the middle of the ring. Don't forget your golden umbrella!
BlackSwan, you rock. Why are you still bothering to post over at Mish?
I love to read all the high quality posts and the inspired and often humeruous comments and I learn a lot about economics and markets functionning. I read a lot about the painful meltup of the stockmarket on little volume driven by the TPTB/TBTF and that the ordinary investor stays on the sideline. Now, if almost nobody has bought this market up, doesn't that mean that any fall can only be shallow, allowing those sidelined investors to finally enter the market? Let me add that I agree to a large extend with the general pessimistic tone of this site, although I don't expect it to ever go to the guns and ammo stage. I'm sure I will get many good reasons from you not to buy this dip. Thanks.
But Goldbugs are taking it up the ass today? Isn't lots of bad stuff good for Gold? LMFAO!!!
A little bit of a turnaround since you wrote this. LMFAO2.
If you're selling any gold, I'll gladly buy it from you.
Not any more they're not. GDXJ and all my juniors are hoppin'. They're going to lead the next leg.
GDXJ is up 6 cents. LMFAO!! You Go Girl.
Bounce off the bottom of its channel - you'll see in a month.
Post a stupid comment, show your ignorance.
Gold heading north -- $1174 as I post.
Got a great chance to by some Silver on this morning's dip.
Physical silver was practically giving itself away < $18!
< $100 is still a gift considering it takes more and more and more and more FRNs to buy it, decade after decade. Save it for your kids!
I'm curious to see what happens when we get a "better than expected" unemployment report vs. meltdown in Europe. A down day down week, could mean that the lies are just garble now, and the screw is turning down the next course of the thread. We'll see. I can't for the life of me understand why someone would invest in, even trade in...anything except wealth preservers at this point; whatever you believe them to be. It's like fishing in a nice calm sunny spot in front of a hurricane. Maybe you smelled the rally, and you're feeling flush. Get the fuck out. There's a time to be in, and a time to be out. Pick up fish in front of the tsunami if you want, I'm head'n up the hill for a spell; financially speak'n.
I think if the system fails, and the city starts to look hairy, I'm going to go on up to the lake to grow chickens, potatos, tomatoes, cannabais, go fishing, barbecue, and hang with my family, dogs, and guns awhile. Got trailer, and get out of town plans? Athens coming to a city near you, except their road raged half starved consumption junkies armed to the teeth.
Ditto
See, there are two problems with the "I'm going to head for the hills and live off the land". (1) How can you possibly take enough stuff with you to live for any length of time (i.e. many months). Living off the land is really, really hard. There is a reason that there weren't many humans in the hunter-gatherer era and that they traveled over large distances in search of food. (2) If you are well set up in the woods somewhere, the hungry mob will find you and you will be a delicious target for them. You've got a gun? Big deal, they've got more. You going to go to sleep anytime out there while you're guarding your stuff. The "head for the hills" solution is fantasy.
Argentina's experience suggests you are much better off in the city.
Few reasons...the power will stay on there to quell unrest. They have roads. Cities have the most voters. Environmental catastrophes affect one or two villages, who gives a shit?
Don't wanna be downwind of anything out in the country nor on the receiving end of the armed forces.
To the guns & ammo crowd who think SHTF and they can hole up...um, what happens when the local SWAT team decides it's going to do home invasions? There are groups of guys gonna be around who did tours in shitholes together and faced live fire and did dynamic entries in Fallujah and shit.
Think about it: if a group of say half a dozen combat vet marines decided today to go apeshit, even the entire city police force couldn't stop them. Wonder wtf some guy with an AR15 is gonna do.
One nutty army guy with an Iraq infantry tour or two a year ago killed 2 cops and was a handful for even a large group of them. You get SHTF and small units of these people? Guns or not you do not wanna be in the middle of this shit.
I agree with that trav. The problem with holing up in the country is that is makes you an easy target for snipers (or any hillbilly with a deer rifle) and that 44 on your side isn't going to be able to do shit. At least in the city, your neighbors will react to the sound of gunfire (and if they are the target it will give you a chance to get into your safe room or whatever.)
I am the hillbilly with a deer rifle...
We are a combination of Marines and hillbillies! Double fucking trouble. (remember, the military is the only way up and out for a lot of poor folks) Local Sheriff loves to come out and shoot our weapons!
Its about community,sustainability and family friendly farming. No lone wolf McQuades here, although I spend a lot of time alone so that the relatives don't drive me nuts!
agreed, anything material can be taken from you if you are alone/few, only hope is connections and organization...personally, I'd rather go down loving and helping than shooting, but if people are harming me or others...
I can't wait to meet Trav's SWAT teams that decided to leave their families unprotected in an economic collapse. The ones that drive for hours on a gas tank that fills itself because the pumps don't pump anymore.
Argentina collapsed but the rest of the world chugged away - there was no large loss of life because food was still available; imports came in after banking deals were made. This won't be a partial collapse - 90% of the population gone in 30 days no problem here in JunkfoodSA. How do you get food to every grocery store? YOU DON'T. We are going to see everymanforhimselfism in a big way.
You're right pan, and so is Trav, to the degree that you will always be under the threat of getting sniped and farmhouse invaded. But how long will these elite commandos last - roaming in the wilderness? They will be far and few between; nomads don't last long.
Only sustainable communities focused on mutual protection will make it. Bunker types will last as long as they have MREs if they don't have goats and a garden. People don't get this is long-term.
I can agree with that. JIT delivery will be the end of us city dwellers. I think location is the key, and remember that there is a large spread of difference between NYC and Wyoming.
I see your point, to a point... The U.S. is no Argentina and this slow but certain trainwreck of a crisis is unlike any that has ever preceeded it.
I assure you, those of us who live in rural, self sufficient pockets, surrounded by like-minded citizens will be MUCH better off than deluded city-dwellers in the very near future.
Answers:
1) Easy-ish, this ain't the 13th century. With the tech around today I can heat the home on my quarter section of arable land with dog shit, if I really need to. And a few months is all that is required for my non-terminator gene seeds to restock my food supplies. Yah, my kids' ipods will only talk to one another, but hey, you've got to break a few eggs (thank you chickens) if you wanna make a souffle.
2) My dogs couldn't give a rat'z ass if the 'mob' has guns. And my neighbours have just as many dogs and guns as I do. Need to be a pretty damn big mob to take us all on, as we actually give a shit about each other. Starving people are generally weak and sickly too, whereas we'll be well-fed as well as well-armed.
Bonne Chance!
Right, and see that would be the key - joining up with a group of like-minded people and helping each other out. The lone survivalist doesn't stand a chance. The independent, self-sufficient community would.
Ok, so your point was that its better to have more friends than enemies? Seems a bit moot, regardless of what state the economy is in...but sure, I can get behind that.
See above. The hillbilly would wait for you to go out and get your chicken eggs and then remove your head. Then your dog's head. Then he'd take your chickens and your gold and move on to your neighbors house.
The hillbilly is your neighbor. You guys drink homemade wine together and help each other out. Hillbillies are the shit! They can fix your car, and hook up your cable illegally.
A small, well armed group increases the chances of survival for most in the group. Commune living if shtf is the way to go.
Learn to garden. I recommend Square foot Gardening, good yield in a little space.
Learn to Shoot. Long guns, shotguns, and pistols. Practice practice practice.
Meet your neighbors. Have a block party and feel out the ones that seem responsible and thinks like you.
Privacy is key. Tell no one about the amount of guns, pm, ammo, and stored food. Your family should know where this stuff is, but it is no one else's business.
Fo' real. Meet the neighbors, unless you live in a condo. That's a lot of mouths to feed - they're to busy gazing at their iPads to worry about where their next meal will come from.
I grew up out there, believe me I know what I am talking about. You'll die, your neighbors won't even know what happened. I hope I haven't soured too many grapes.
One is better off to stay in the city and become a mean mo'fo with a huge family and a garden.
Like Patton is said to have remarked: Let that other bastard die for his country.
Parents live out in the country on the ICW/Atlantic Ocean
Neighbors have horses and gardens
Always have fuel on hand, whether in the 8 jerry jugs or the 3 boats in the driveway/dock
Freshwater pond in neighborhood with bass/bream stocked
I hope it never comes to MadMax, but we are as ready as anyone could be, I guess.
Yeehaw?
If your plan is to sit it out until the worst of the conflagration cools, you are not ready.
It never cools.
The race is to the swift. Prepare to move.
Buy this dip, mass hysteria over contagion madness is creating another opportunity for Goldman and their big hedge fund clients to profit as everyone fears the end of the world.
Yep, buy the dip, Dow is down 470 points.
Helluva Dip.
Well, by my guesstimate, the masses started to buy the dip at around 11:15
Didn't last long. No conviction left. Will be flat until 3:55, then down.
[Opps, there it goes early. Say goodbye.]
When the Titanic hit an iceberg, nothing in the world could have saved it at that time, not even all of the world's money or military might. Why? Because of the circumstances at that time. There were structural faults in the bolts used and it was in the middle of the Atlantic with not enough lifeboats to save the people. So slowly, but surely, one after another, the bulkheads started to fail and despite the orchestra's dulcet tones trying to soothe the night, the leviathan was doomed, it had no place to go but down, to the very bottom of the cold sea.
Well, Greece is the first bulkhead on the good ship, EU-Titanic. And unfortunately for the ship, the structural problems are systemic involving bulkheads that are soon to fail for Spain, Portugal, Italy, Eastern Europe and the U.K. Massive credit inflation can ONLY be corrected through austerity measures, hence a deflationary spiral. They can riot all they want against it, but EU-Titanic is sinking, and will go all the way down.
The politicians can make all their fancy speeches just as the Titanic's orchestra played on. but it is futile. The waves of the bond market are lapping higher and higher; there is no stopping the icy grip of the yawning sea.
Dunno if this is a metaphor or an analogy...but I like it.
I'm sick of analogies--ships sinking, deck chairs on Titanic, cars/trains off of cliffs. Give it a rest!
Don't worry. It'll come to rest. Just wait for a few thousand feet or an equivalent few thousand DOW points!
I'm not going to try to catch the falling knife after the market finishes bouncing like a dead cat. However, I may get thrown under the bus for being dumb as a box of rocks.
-= head explodes =-
Actually, Cougar, if you were on the Titanic as it plunged down, your head would not explode but implode, technically speaking...
Oh well that's okay then. Don't know what I was worried about.
Good stuff...
+1 Priceless.
Analogies are for people who do not know what they are talking about so they can they may change the subject matter and yet still appear to be on the original topic.
The market's been pinned deep in its own end all day and can't seem to get past mid-field.
Visiting team racking up safeties.
What about people who make an analytical analysis about analogies?
That's a triple anal hat trick, which--i think--makes you as gay as Elton John at a Halloween party.
This is black belt level.
Damn analogies.
"...as gay as Elton John at a Halloween party?!" What the hell does that mean?
Now my head is exploding..., er... imploding, er... getting bushwhacked by a blackswan and sinking.
Please explain. I ain't no black belt, just a poor dirt-sweeping disciple of the Shaolin Priest.
hey I resemble that :) --- I think analogies help those not in know in certain area/expertise grasp better what is going on, such as having CDSs explained to me as like life insurance on a company's demise/default but without the rules that regulate insurance industry...etc...
Unfortunately, there are more than just one Titanics - US, Japan, China(?)
When some ships start going down fast, everybody jumps onto the slow-sinking ones, but that doesn't make it any easier to plug their holes. In my opinion, the end game looks like this, but who knows how long it will take to materialize.
Bond vigilantes reappear in the US and Treasury yields spike up.
Massive cracks appears in the big bank facade due to cash flow problems from bad assets and the declining value of their Treasury holdings.
A Lehman-style event hits one of the big six.
US Gov is left with 3 ugly choices:
1. Bailout the ailing bank with borrowed $, or close down the behemoth and let the FDIC cover its losses with borrowed $, in either case throwing a few hundred basis points onto the bond-fire and worsening the condition of the remaining banks (bond market collapse option).
2. Close down the behemoth and announce that the FDIC will not be covering depositor losses, potentially setting off widespread bank runs (deflationary spiral option).
3. Let the Fed bailout the beast by exchanging its assets for printed dollars, just like the Fed created the money to buy up MBS (QE to infinity option).
Which one will they choose? If the bond market is not in full revolt, they will choose #1. Once the vigilantes get the upper hand, they will go with #3. When food and energy prices start doubling every 6 months, they will finally fall back to #2, with the addition of some type of “corralito” to keep the runs under control.
They´ll choose #3, of course. Always the easiest way ;p
Doc:
this is 'beggar thy neighbor economic warfare'; don't forget the gamesmanship going on here.
1) euro's saw total cost of bailout and stonewalled until IMF got involved.
2) IMF bailout package makes US/taxpayer funded portion subordinate to big banks who get another payday. IMF portion about 25% of total ($120B). 40% of that guaranteed by US taxpayers.
3) euros (Germany) can live with trashed currency because it makes their exports more competitive and vacations in the sunny south that much cheaper.
4) US loses cheap $ export subsidy but gains flight to quality cash flows for bond markets propping up fed ponzi. for US, exit strategy is collapse of euro, return to $ domination of global currency markets.
5) anyone holding euros as end game consummated (Russia, China, Opec) is clearly f***ee who must now join buying panic to acquire king $.
6) unexpected (for WSCC) outcome: China, Russia, Opec put commodity backed currency in play raising geopolitcal stakes even further.
annnd ... the dollar is up.
BB must be royally pissed about now.
He must just sit at his desk all day long staring at the charts of the M1 and the MZM, and repeatedly yelling "WHAT THE FUCK!?" while randomly slamming his mouse.
You mean like this guy?
http://www.youtube.com/watch?v=sN37Fn3Hw8E&NR=1
Strictly speaking, the Titanic's bulkheads didn't fail. For some reason, the tops of the bulkheads weren't built up all the way to the ceiling of the compartments. When the forward compartments filled with water, the water went over the tops of the bulkheads and started filling the adjacent compartment. It was more like a cascading design failure. Don't know how this fact affects your analogy....
It doesn't really change it much: failure to function is failure.
But it is interesting that the bulkheads were never intended to guard against the kind of frontal failure that ship suffered, where it tilted forward and the compartments could fail one at a time in turn.
In this regard the Titanic is a good model for this global failure; it will happen one at a time, each filling up and failing over, until the entire thing slips under the waves.
An entire global economy, sinking. The damage is done, it cannot recover, many will perish and never understand why.
Actually the bow of the ship was designed to take a massive head on with an iceberg. After all, it was designed to sail the North Atlantic where there were icebergs.
Among the outliers, it was the slow response of the lookouts without binoculars (nobody could have seen this massive recession coming) then the slow response to the order to reverse engines and turn the rudder (court testimony showed the engine room missed to order to reverse the screws for 30 or more seconds, just like the Fed didn't start pumping liquidity until very late in the game and let Lehman collapse haphazardly on purpose) and finally the iceberg was that rare bird that tapered down quickly rather than flaring out. 90% of the iceberg is under water and the top 10% is usually just the peak and it gets much wider as you go deeper.
If it had flared out, the keel (very strong and robust) would have ridden up the flared undersea ice instead of the side plates taking a hard dragging glancing blow that disrupted plates for well over 150 feet, breaking rivets and creating a gash much longer than it was designed to take.
The Titantic was a good ship for it's time. If they had hit the iceberg head on they would not have sunk that quickly if at all. The sideways glancing blow it took was never considered when it was designed. They had designed for a head on worse case iceberg scenario, not the least case scenario.
So you're saying the Titanic was sunk by a black swan.
[That statement only makes sense post-2007.]
Death by a thousand punctures.
---
Seen this already, CD?
http://www.youtube.com/watch?v=FEx7HL4H5yk
Notice it's smoke, not fog.
No I had not seen this but I'm not surprised. I've always felt there were too many things unexplained and coincidental with this whole stinking affair.
Once the eyes are opened and seeing, it's surprising how much there is to be seen.
Kaiten, Hangemhigh: I agree with both of you.
Kaiten: Yes, you're right, many more ships and many more icebergs aplenty. If the EU-Titanic sinks, so will the US-Titanic and the Nippon-Titanic. But if you look at the indexes, Greece, Spain, and Portugal's stock markets are already advanced in their correction or restart of their bear market. The ShangHei index topped a while back. So it looks like the EU is tanking first, then China, the U.S. and all the other too-big-to-sink ships.
Hangem: Of course, the Germans waited. Who wouldn't, especially as they saw the unrepentent Greeks each day in the news. Everyone waits until the very last minute to take the painful steps of providing more liquidity and of tightening belts. Can't blame the Germans since they know that the U.S. won't allow all Titanics to fail like dominoes. They knew that the U.S. and the IMF would come galloping to throw more good money after bad. But the deflationary spiral has started. It's going to get very ugly before it ends.
And the banks and the politicians can't afford it to end. Banks don't want to go broke (even though if we went by the previous standard of 'marked-to-market' most of them already are insolvent) and no politician wants to suffer through a 'double-dip' recession or depression since that would mean all the ruling parties would get thrown out by the disgruntled, credit-spoiled, 'please-keep-the-band-playiing' masses. So they will try to inject more liquidity, massage gov. statistics, cajole the media to tell good news, all in the vain attempt to keep the doomed flotilla afloat.
Two things are quite foreboding and augur even more pain ahead: 1) the dollar-carry and the yen-carry trade have a long way to go to unwind and 2) if you listen to the quixotic but always brave Prechter, should this be the start of major Wave 3, then we are in for some breath-taking descents.
Could PIIGS destabilize the globe? That's the burning issue.
It depends, is of course the answer. Attention is gradually shifting from economic to political factors. Americans routinely get blindsided to this. If the dictator index goes up, the Dow will go down.
Americans are not familiar with how economic issues morph into political ones, often in a flash.
But we will learn. Oh yes we will.
I hope you're right, I need my shorts to start working!
roll one of those for me will you, you must be tripping.
$5 down from yesterday and going from high to high in Eur, GBP and CHF.
i hope every shafting we get is as good as this.
Quit panicking. TPTB have this thing under control. We'll be positive by the end of the day then all these "problems" will have dissappeared.
Who is Albert Edwards and is he credible?
He has a 50/50 chance of becoming the next Roubini :-)
bear - welcome back. i always enjoyed your comments on the blogspot site
thx jdoo!
Don't buy the dip. Sell the spikes.
Vegas is a whole lot more fun and at least you know the odds.
PIGS = Bear Stearns, Lehman, Wamu, Merrill, Wachovia....
The shorts and bond vigilantes are doing the exact same thing. Pile onto the weakest, expose their inability to fund short term, squeeze the life out of them.
This is 2007 all over again. It takes a few weeks and months, but this is same movie being replayed. So, yes Europe does matter, this can cause a double dip recession
well, we're going to need to see some shortable trend off of this other than forex...
The bond vigilante game is run by people like Sorass
Gold and silver are going vertical....it will probably be batted down because we shant have anyone know about REAL money!
http://www.kitco.com/charts/livesilver.html
I bought SPY and AAPL right out of the gate this morning. This was a gimme dip to buy. A close above 1175 would confirm our short term correction has ended.
You're on the wrong site. People here think it is unethical to try make money on the side. These guys rather spend their day worrying about the end of the world.
The end of one world signals the beginning of the next one.
Plan on being there. But not to make money.
Ooops...
that "rock solid support" appears to need some Viagra. Take 2 blue pills and call your margin fairy in the morning.
I doubt you will see 1175 maybe 1165.
good guess
Once the nervous shorts, who lack conviction and and are relieved by a smaller loss than that incurred above S&P 1200 cover and the bullish crew are finished buying the dip the pros are going to take this down (at least below where every bull and bear expects). I mean come on, we can't have everyone getting rich off this market.
The FED does not need an audit and it should NEVER BE AUDITED.
Do you want to completely collapse your economy and have a blood bath? Or would you rather preserve this fragile recovery?
I do not want Mushroom clouds around the globe.
I'll go with STAYING ALIVE!
Keep the FED secret= Keep people alive!
There is no recovery. There are no jobs. It is bad, it will get worse...EITHER WAY.
Do not be selfish. Free yourself with truth.
Besides, death is inevitable, why are you scared?
+10,000 invisibens
simple truths are the hardest to comprehend and digest for those obsessed with their money..
Man, it's like on a long enough timeline our chances of surviving are like ... zero or something.
More coffee as the stocks mockery implodes ...