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Bob Janjuah: "This Is An Uber Bear Early Warning Alert...Major Risk Asset Sell Off Will See S&P Into 800s...The Fed Will Start New $5Tr QE Program"

Tyler Durden's picture


From Bob Janjuah of RBS

Bob's World: Maybe Not Such An Idiot

Dear All
I am deeply troubled by the world and markets. THIS IS AN UBER BEAR EARLY WARNING ALERT:...I know its not what folks in general want to hear but hopefully you'll understand that I am trying to do my little bit to help....
First please refer back to my last comment, dd 26th April (Bob's World: What an idiot!)....2 takeaways from this note in particular - 1) my bearish trading call on risk assets, looking for a 10%/10%+ S&P selloff over late Apr and May from the 1220 level, driven by sovereign concerns, was spot on - maybe not bearish enough!, and 2) the point of market and taxpayer revulsion with the horrendous Keynesian/monetarist nightmare forced upon us by policymakers has come to bear. Sovereign limits and sovereign credibility concerns are not now a future risk - they are HERE. The enormous failure here is that the private sector has barely had time to catch a breath, let alone develop any form of self sustaining private sector recovery, before these limits have already begun to hit home.
Before reading on the other item that needs to be highlighted upfront is the whole Inflation/Deflation debate. As I have been saying for many months, the TRUE underlying private sector trend is one of DEFLATION (balance sheet repair thru reduction of nominal debt levels). In my comment of the 26th, I capitulated in that I gave up on the idea of policymakers worldwide shifting to voluntary/pre-emptive tightening, and went with Kevin's long held view - that policymakers would keep pumping and dumping in order to try and create inflation until the point of bond market and/or taxpayer revulsion, or until the point that inflation fears themselves become the major problem. As you will read below we now seem, at the global level, to be at or close to the point of bond market (Europe) and/or taxpayer revulsion (US). Alongside which the UK and China seem to be 'voluntarily'/pre-emptively tightening, although in both these zones one could easily argue that INFLATION concerns are causing this tightening. Either way, the point here is that for now and for the next 6 months or so it looks like deflation will have the Upper Hand in the battle vs. inflation.
I still expect policymakers to come back - not yet, more likely in  6/9 months time - with NEW even more aggressive attempts to INFLATE likely thru fiscal policy (NEW China stimulus package by y/e?) and/or via a massive new Fed QE programme (see below). Thus - and whilst I have admittedly been wavering a little here - the outlook for govvies over the next 6 months IS bullish (USTs in the low 2s), but it is also clear that the Western world is NOT yet ready for multi-yr deflation and therefore the next huge attempt to reflate (around y/e?) could end up in a disastrous outcome for inflation and bond yields. But we can worry about this later - for now the winner seems to be deflation. Now, in no particular order:
A -  Quite a few important global markets are now deep in official Bear territory - China is the obvious big bad one, but many other are there/nearly there.

B - Global Growth IS slowing and will slow hard into Y/E as stimuli impacts fade/are reversed...the street/market consensus is 4.5% globally, the reality is that the annualised run rate will be 2.5%ish into next yr and beyond...developed growth will be 1%ish, developing will be 4%ish (too many officials keep talking to me about a target of around 5%ish growth rates for China over the next few yrs but the street/market seems to ignore this)...Btw, China reval? R U joking??? Even a 1%/2% token would be a huge surprise to me.

C - We have policy tightening all over  the world - fiscal (UK, Europe), monetary/credit/currency (China, US),  regulatory (EVERYWHERE)...the market and taxpayer revulsion with Government recklessness is HERE! Europe in particular has signed off from the growth path and is now firmly placing itself in the Japan style multi-decade deflation/despair path.

D - For the EURO and Europe to regain ANY credibility and hopes for growth, Greece should be put into restructuring asap, maybe others too. The alternative is a black hole whereby wealth is destroyed in Northern Europe as it is sent to bailout unviable countries in the South. This grotesque misallocation of capital is a disastrous move for Europe/European growth. My HOPE is that the error of these ways is addressed asap. My FEAR - as seemingly supported by the political noises out of  Europe over the last few days - is that when, come Sept/Oct, once we all realise Greece is badly failing its budget austerity targets, the politicians in Europe again usurp the sane eco based voices and keep pumping money/wealth into a bottomless pit. The UTTER NONSENSE that is now consensus is that the EURO fails if its weakest leg is allowed to fail. I'm sorry but this is RUBBISH. The EURO and Eurozone will fail if the ECB is made a tool of politicians (maybe already too late on this front - all ECB credibility & independence is seemingly LOST). And the EURO and Eurozone will fail if ECB and Eurozone policy is dictated by the weakest link (Greece) rather than the strongest link (Germany). Again, maybe its too late on this front too. Lets see what happens when Greece is seen to be running an annualised deficit/GDP ratio closer to 20% than 10% come Sept/Oct, once we all see little progress on cuts and huge shortfalls of (tourist based) revenues. For now, the Eurozone has joined the club currently only occupied by Japan since the late 80s/early 90s.

E - The political situation in the US is turning/will turn deeply RIGHT - the Tea Party folks will have a huge say on how  the US is run post AND into mid-terms. These folks are NOT elitist Republicans,  they genuinely want smaller deficits, a weaker Washington, smaller govt. overall, and they want to attack the Fed....

F - Policymakers are (nearly) all in, some have lost all credibility (clearly Europe currently dominates this loss of credibility right now), others are close...

G - Technically, the set up of markets looks VERY BLEAK
Dear All - its seems to me that:
A - Risk markets can stabilise/rally a tad this week, perhaps a little into the week after, but overall there is a decent chance of a VERY SERIOUS risk asset sell-off late May/early June into late June/early Jul....I am talking ANOTHER 10%/10%+ off S&P from here....


B - After more weakness into late May/early Jun, we can then see some stability over JUNE, before a MAJOR 10%/15% PUKE begins in/into Jul
Sorry I can't be more precise, but net net it seems clear to me that the key risk here is of major risk asset sell off, with (eventually) S&P into the 800s, iTraxx Crossover up at 750/750+, a 5/10 big figure EURO Puke vs the USD, a broad USD rally, and 10yr USTs down at mid/low 2% levels. Whether we see a small bounce next week before the big selloff, or whether we see another week of weakness, followed by a month of 'strength' and then the big puke is not I think particularly crucial - the overall trend is the key. And in this respect, whilst following either of the above routes would then lead to a brief multi-month period of consolidation, the overall trend for the rest of 2010 will be weaker with respect to growth & risk assets/markets, and higher with respect to volatility. Key levels are (S&P cash) 1180 to the upside (and then 1220) and, to the downside, the 1020/1040 area. If we close below 1020 S&P, it would be very negative, implying that a mid-to-high 800s S&P is right around the corner...
How can we fix/avoid the nasty double dip in both the global economy and in markets? Well, it seems very difficult and there is no easy route:

A - Globally, the corporate sector would need to go on a huge spending/leverage/capex/hiring binge - this seems extremely unlikely...

B - China goes on a huge fiscal/Credit binge - again this also seems VERY unlikely, at least for now...

C - The US  goes on a huge new fiscal binge (Hmmmm....if its going to happen it has to happen NOW, before the Tea Party hijacks Washington), and/or the FED moves to a 3/5trn QE programme... credibility destruction would be huge, the Fed would then be a MAJOR target for the Tea Party folks, and for me this IS the last bullet in the gun. I reckon the Fed would know this and would only use this bullet once we are in serious pain, i.e., the Fed would only go down this route AFTER  the USD has rallied another 20%+ vs. the EURO/Others from current levels, AFTER 10yr notes are at low 2% levels and AFTER the S&P has already gotten down to the 800 level (maybe lower...)
SO, the asset allocation decision remains unch'd: QUALITY (driven by balance sheet strength, market position, and the ability to be a PRICE SETTER and NOT a price-taker) should drive all investment (as opposed to pure short-term trading) decisions.
Quality is now key in any investment (as opposed to 'trading') decision. Lets see if Europe sees sense come Sept/Oct. And lets see re the Fed, but please don't forget you heard it here 1st - policymakers will NOT like deflation, and the last real roll of  the dice will be (I think) late this yr/early next, when (I think) the Fed goes to a new QE programme in the order of $5trn. But because this IS the last roll, it will happen LATER, rather than sooner, and only when the pain in markets  (equities, credit) and the economy is already excruciating. At which point we had better all hope that bond markets don't react BADLY, because by then we will be ALL IN. If bond markets do revolt/react badly (as I fear) we will then very quickly be ALL OUT!!
Cheers, Bob


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Mon, 05/24/2010 - 07:42 | 369705 George the baby...
George the baby crusher's picture

Roll up, roll up everyones a winner.

Mon, 05/24/2010 - 08:49 | 369785 etrader
etrader's picture

Zero Hedge whips the other blogs again by getting Bob's full note....

Mon, 05/24/2010 - 09:33 | 369847 MrTrader
MrTrader's picture

Too funny, RBS's former chief credit strategist is back as the doom and gloom prophet. How comes he has not foreseen his bank's own mess coming ?
 With other words : strong buy. :=)

Mon, 05/24/2010 - 09:57 | 369894 Gully Foyle
Gully Foyle's picture


Emerson Lake And Palmer

Come On See The Show

Welcome back my friends
to the show that never ends
We're so glad could attend,
come inside, come inside
There behind a glass
stands a real blade of grass
Be careful as you pass,
move along, move along

Come inside,
the show's about to start
to blow your head apart
Rest assured
you'll get your money's worth
The greatest show
in Heaven, Hell or Earth
You've got to see the show,
it's a dynamo
You've got to see the show,
it's rock and roll, oh

Right before your eyes
see the laughter from the skies
And he laughs until he cries,
then he dies, then he dies

Come inside,
the show's about to start
to blow your head apart
You've got to see the show,
it's a dynamo
You've got to see the show,
it's rock and roll, oh

Soon the Gypsy Queen
in a glaze of vaseline
Will perform on guillotine,
what a scene, what a scene
Next upon the stand
will you please extend a hand
To Alexander's Ragtime Band,
Dixieland, Dixieland

Roll up, roll up, roll up
See the show

Performing on a stool
we've a sight to make you drool
Seven virgins and a mule,
keep it cool, keep it cool
We would like it to be known
the exhibits that were shown
Were exclusively our own,
all our own, all our own

Come and see the show,
come and see the show
Come and see the show
See the show


Send "Come On See The Show" Ringtone to your Cell

Mon, 05/24/2010 - 07:46 | 369708 Noah Vail
Noah Vail's picture

Dear Son:

Your Mother just died.

Cheers, Dad

Mon, 05/24/2010 - 07:59 | 369719 Tart
Tart's picture

What a retard. When calls have "Uber" totally fantastic, know they're bs.

Mon, 05/24/2010 - 08:04 | 369725 Tyler Durden
Tyler Durden's picture

Janjuah called both the 2007 and 2008 crashes to within weeks of the actual occurrence. Pretty much every trading desk in the world reads him.

Mon, 05/24/2010 - 08:10 | 369727 Christobevii3
Christobevii3's picture

Marc Faber has been riding his 1987 call all these years.  He's now been pushing chinese stocks all the way through its market fall and on par with Schiff on gold $5000 calls rambling for the last two years now.  Their theory on inflation may work one day but as long as credit destruction is outpacing QE, they are wrong.


I'm not saying that they are wrong, but usually after the initial perfect call everyones timing becomes quote premature or off enough that is not useful as a trade.

Mon, 05/24/2010 - 08:28 | 369758 Wynn
Wynn's picture

"credit destruction is outpacing QE"

nice succinct sentence to describe the last two years


Mon, 05/24/2010 - 12:07 | 370169 Double down
Double down's picture

My thinking this is not working is because the FED also have to finance the cost of credibility. 

Money is a poor store of value for purchasing credibility, it is deeply and increasingly inefficient.

Also, the  QE "leaks", goes into hard assets and PM.  Even the "help" is gamed. 


Mon, 05/24/2010 - 08:43 | 369774 chumbawamba
chumbawamba's picture

Yeah, this article is written by Bob Janjuah, and clearly he didn't call for inflation but in fact says deflation is the name of the game.

Read the article again.

I am Chumbawamba.

Mon, 05/24/2010 - 09:08 | 369822 SWRichmond
SWRichmond's picture

Politics: the Fed's game may be to keep things going until November, when the fiscal conservatives take over.  Fiscal conservatism will end the bubble, and that's for sure.  We all know the bubble is ended anyway, but if it can appear to be extended into November, then the collapse can be publicly blamed on the fiscal conservatives.  It seems this is what Bob expects to happen, IF we can make it to November.  Or maybe the looming takeover of the fiscal conservatives will be used by the media as the reason markets are crashing into October, so as to try to minimize the takeover.  Both plans are probably in place, to be played as the situation warrants.

Bob might be expecting deflation, but he also says the Fed will come with more QE, and he also raises the issue of sovereign solvency.  It seems to me he isn't ready to make the call yet.

Mon, 05/24/2010 - 10:41 | 369967 B9K9
B9K9's picture

Ironically, the final crash will be due to fiscal conservatives, in the sense that it will be they who will precipitate & force a final resolution of the Fed(ish) question.

Reference some of Travis777 (snowball777?) or Mako's posts: the day QE ends is the day public sector credit expansion ends and thus is the day the entire shell game finally ends.

If you look at some of my earliest posts at ZH (even on the old blog), my interest has always been in identifying the "tell" as to when the Fed comes down. I believe Brown's election was the first tip; November of course will be the final nail.

Hussein, Goldman & the Fed had two years. They pulled off a nice little feint with the whole hope & change song & dance, which gave them access to the complete financial, economic, governmental & legal core of the world's most important country.

Six more months is all they have left. My primary interest is to not only participate in reforming the USA, but to make sure Hussein and the other criminals don't get a chance to enjoy their ill gotten loot.

When this fucker crashes, the long knives are coming out.

Mon, 05/24/2010 - 10:42 | 369972 SWRichmond
SWRichmond's picture

my interest has always been in identifying the "tell" as to when the Fed comes down.

For me, the "tell" has been the overtness of the looting.  And it's been ringing loud and clear.

Mon, 05/24/2010 - 14:28 | 370577 hound dog vigilante
hound dog vigilante's picture


We have a winner!

The bankster bonus payouts last year were THE tell. 

If the banksters thought there were any hope beyond 2012, then they would never have invited the PR nightmare that was triggered by massive bonus payouts (less than 12 months removed from taxpayer bailouts, no less).

The game is over. Everything is now calculated around "surviving" the mid-term elections, and nothing else. Wall St. will pay out one more whopper round of bonuses to their toadie employees in Q4 2010. By 2012 we will not recognize Wall St. or the big banks... Everything will change dramatically, for better or worse.


Mon, 05/24/2010 - 18:24 | 371042 Ripped Chunk
Ripped Chunk's picture

"Everything is now calculated around "surviving" the mid-term elections, and nothing else"


Mon, 05/24/2010 - 11:27 | 370072 snowball777
snowball777's picture

I am not Travis, I assure you.

Nice Nazi reference with the long knives, though.

Mon, 05/24/2010 - 11:43 | 370108 B9K9
B9K9's picture

The conceit of every generation is the unfounded belief that their experiences are unique. What has happened before will happen again, for the simple reason that history is nothing more than an illustration of human emotions writ large.

This country is riven by racial, ethnic, generational, regional & class distinctions. The reason Ben has carte blanche ability to circumvent Constitutional restrictions is the realization of what is going to happen when the party ends.

Long knives will be the least of it.

Mon, 05/24/2010 - 12:13 | 370191 SWRichmond
SWRichmond's picture

The conceit of every generation is the unfounded belief that their experiences are unique.

Amen, brother.  Even those who have studied history are doomed to repeat it if they are surrounded by those who have not.

Mon, 05/24/2010 - 13:02 | 370305 mtomato2
mtomato2's picture

Few seem to understand that:

   -borrowing more than you can pay back

   -consuming more than you are willing to produce

   -absorbing all the resources in your immediate

     environment without reinvesting in that same environment

   -considering fiscal and monetary policy to be political instruments


   -the basic, underlying greed innate in human nature,


All lead us to an unstoppable, ineveitable end:  Total cyclical destruction and renewal.  On every scale.


You say:  "yes, but it's not the end of the world..."

I say:  "it depends on what you mean by "end of the world...'"



I am NOT Chumbawumba, but sometimes wish I was.



Mon, 05/24/2010 - 13:04 | 370344 Mako
Mako's picture

B9K9, nice posts.

"We have met the enemy and he is us"

Mon, 05/24/2010 - 12:12 | 370187 Double down
Double down's picture

I think the economy handles contraction quite well.  All those monetary medicines slows down the contraction but they remain in the system.   What will get us is the side effects of these medicines at the point of recovery.

A double down

Mon, 05/24/2010 - 10:56 | 370013 20smoney
20smoney's picture

My question is how many real fiscal conservatives get elected vs. typical Republicans?  Unless we get a sweep of Rand Paul types (which I doubt), will they really clamp down on policies like QE while the market crashes?  You have to have balls of steel and insane conviction to stand by and "do nothing" while the economy deflates, which would surely be ugly (yet necessary).  I just don't see it.  Thoughts?

Mon, 05/24/2010 - 11:30 | 370071 B9K9
B9K9's picture

When people are diagnosed with lung cancer, doctors typically operate to either remove infected tissue or even complete lungs. While it usually doesn't prevent an eventual demise, the fact that patients are willing to undertake such radical procedures in a last ditch attempt at survival is a lesson all should learn.

A lot of ZH readers, and apparently writers, analysts & managers, are still operating under a post-WWII paradigm where economic growth is a normal & logical course of action. But it's all fiction - the Fed and CBs invented & perfected a credit leveraged, asset inflation game - it's their baby, and they're willing to do anything in a mad attempt at preserving the status quo. The government was co-opted and enjoyed the tremendous power, prestige & riches which were bestowed on those who allowed & enabled the game to continue uninterrupted.

But there is no way out of this trap; it really is simple mathematics. Hence, the frustation Mako and others sometimes express. Compound interest, exponents, entropy, declining marginal return, resource depletion - these are all terms everyone should learn and understand if they are to have a clear picture of where we're going.

Hence the analogy above - there isn't any choice. Slash & burn is going to be the option taken because there aren't any others.

Mon, 05/24/2010 - 11:38 | 370094 snowball777
snowball777's picture

How many doctors remove a lung without anaesthetic?

Mon, 05/24/2010 - 16:39 | 370872 ColonelCooper
ColonelCooper's picture

Yeah, but in this case, we can't live on one lung, and we're too weak to handle the anaesthetic.

Mon, 05/24/2010 - 12:10 | 370180 tony bonn
tony bonn's picture

republicans gained control of the house in 1994 and for 15 long years they spent exactly as democrats spent....fiscal conservatives my can't elect a majority of fiscal conservatives....besides democrats and republicans are the same and controlled by the same dark powers....

standing by and doing nothing would be the correct policy option....deflation is a sign of correction when followed by inflation...

Mon, 05/24/2010 - 13:46 | 370471 chet
chet's picture

There is no way enough "real fiscal conservatives" get elected to steer fiscal policy after November.  They will be a rump faction in Congress, with a Democratic President.  It's a long shot for the GOP to even regain the majority.

The Tea Party's excitement will be quickly tempered in the next few months as their candidates get onto the Big Boy stage of politics and have to appeal to the whole electorate.

Sucks, but true.

Mon, 05/24/2010 - 14:41 | 370607 hound dog vigilante
hound dog vigilante's picture

I see it.  I see it everywhere.  November is going to be an incument bloodbath.

I see "tea party"-type disgust coming from the Right and from the Left. Long-standing party apparatus at the local and state levels are being over-run by activists. This trend is gaining momentum.

Not sure how anyone could witness the primary & special election season (thus far) and 'not see' the groundswell of activism/disgust/anger/passion that is overwhelming the status quo.

Bennett - incumbant senator dumped by his own state party in a primary.

Spector - incumbant seator dumped by both state parties.

Lincoln - incumbant will soon be dumped by state party via run-off.

Mass. - "Kennedy seat" won by independant conservative, easily defeating establishment choice.

Kent. - independant conservative easily defeats establishment choice, now favorite to take senate seat.


Plenty to "see", IMO, and there's more anti-establishment upheaval coming...


Mon, 05/24/2010 - 11:05 | 370037 taraxias
taraxias's picture

Who are these "fiscal conservatives" you speak of?

All politicians are sons and daughters of the same whore mother. When the deflation realization sets in, THEY will all be begging Uncle Ben to set the printing presses to warp speed.

Fiscal conservatives my arse.

Mon, 05/24/2010 - 11:12 | 370050 SWRichmond
SWRichmond's picture

THEY will all be begging Uncle Ben to set the printing presses to warp speed.

But we all know where that leads, don't we?  It won't work because it can't work.  Nothing of value comes from the output of a printing press.  At some point, we must populate the political system with genuine fiscal conservatives.  There is no alternative.  Is there?  Tell me what it is.

Mon, 05/24/2010 - 11:36 | 370090 Raymond K Hassel
Raymond K Hassel's picture

It will work - and it will work best at precisely that point that it breaks - most likely with paper money being properly revalued.  At that point, the lumps will have to be taken and they will be taken by the dumb money, therefore, real capital will be in the hands of the smart money which is as it should be - great place for the world to move forward from.  Which side of the divide we find ourselves on, time will tell, but the broken system will eventually allocate productive means into those hands who are clearly most capable. 

Mon, 05/24/2010 - 14:05 | 370512 legerde
legerde's picture

I want to believe you.  But I guess we may differ on the definition of "most capable".   I am concerned that the people responsible know exactly what they are doing and are positioning themselves for the other side right now.

Do you mean most capable of "construction of capital" or most capable of "political control"?

Forgive me... I'm reading Atlas Shrugged.  :)

Mon, 05/24/2010 - 13:59 | 370501 chet
chet's picture

As Raymond says, the system will have to break first.  Seriously break.  Then hopefully, we still have a democracy left, and then we will elect people who are serious about doing things in a different way.

Mon, 05/24/2010 - 11:57 | 370095 Ripped Chunk
Ripped Chunk's picture

"Who are these "fiscal conservatives" you speak of?"

There are a number of them out there. They were unpopular for a long time.

You will see a conversion/emergence of candidates who (suddenly) claim to be "fiscal conservatives" because these filthy vermin WILL DO ANYTHING TO GET ELECTED OR RE-ELECTED.



Mon, 05/24/2010 - 11:18 | 370060 BobWatNorCal
BobWatNorCal's picture

"...the collapse can be publicly blamed on the fiscal conservatives.."

That plan would seem to be working in England.

Brown is took the economy into the ditch,

but Cameron will be associated with the crash.

Mon, 05/24/2010 - 11:34 | 370082 Lux Fiat
Lux Fiat's picture

Yes, I expect that the MSM will start laying the subtle groundwork to place blame for the coming debacle at the feet of the Tea Party and Co. and discredit the opposition.  Nevermind that this is a problem that has been decades in the making.

I heard Bob say deflation, and then potentially inflation, depending on what the Fed and other CBs do, and how it is received in the market.  Reminds me of iTulip's ka-poom theory.

Mon, 05/24/2010 - 12:04 | 370160 ghostfaceinvestah
ghostfaceinvestah's picture

Agreed.  Ka-poom.  my own personal forecast is for a $5T Fed balance sheet sometime in 2012.  There is no other way.

Mon, 05/24/2010 - 12:55 | 370316 Lux Fiat
Lux Fiat's picture

"Thereis no other way."   Interesting comment.  Would you care to elaborate on that, and hopefully educate myself and other ZHers in the process?

Mon, 05/24/2010 - 14:56 | 370636 ThreeTrees
ThreeTrees's picture

If QE stops one of the biggest sources of demand for financial products disappears and the market dies (faster).  If the asset side of the bank's balance sheets starts imploding again in earnest, faster than they can raise capital prop trading,  then it's 2008 all over again except the reserve chute has already been pulled.

They will print until they can't.

Mon, 05/24/2010 - 09:12 | 369827 Hulk
Hulk's picture

Faber called the march 09 low exactly....

Mon, 05/24/2010 - 09:57 | 369892 FEDbuster
FEDbuster's picture

Faber "called" the March 09 low, too.  Faber contends (confirmed by Euro Zones recent trillion dollar bailout) that central banksters led by Benron, will continue to print when any perceived crisis pops up.  The "Bernanke Put" is still in play against the credit collapse.

Mon, 05/24/2010 - 10:11 | 369919 financeguru500
financeguru500's picture

I don't believe Faber as well as Schiff had realized the extent to which the U.S. could manipulate the system (i.e. purchasing their own treasury bonds through mystery direct bidders to keep the dollar valuable as well as allow for endless spending)


I think we should all be concerned by the fact that weekly treasury sales are now over $100 billion but I don't believe there will be anything that can cause a drop in the dollar because the mystery bidders now control the majority of the bonds. At this point, playing the stock market as well as making predictions on the dollar are complete guesses because TPTB control the system. Expect that when the sytem does start to come crashing down the Rothschild owned World Bank will be right there to issue a new world currency.

Mon, 05/24/2010 - 10:52 | 370001 Spitzer
Spitzer's picture

You are right but Schiff doesn't claim to be a trader, niether does Eric Sprott. Look at these guys 10 year calls. That is where they make their hay.

Faber is both, he runs that Fundmymutualfund blog where he tries to make trade calls but I don't follow it.

Mon, 05/24/2010 - 11:18 | 370061 gmrpeabody
gmrpeabody's picture

What...Faber and TraderMark are the same guy?

That IS news.

Mon, 05/24/2010 - 12:03 | 370155 Spitzer
Spitzer's picture

I don't know, I just assumed that the author of the daily market wrap on Europac was Marc because Faber and Schiff are buddies. Maybe your right, I don't fuckin know.


side from being a daily contributor to Euro Pacific Capital, Mark also maintains the website Fund My Mutual Fund.

Mon, 05/24/2010 - 14:33 | 370592 Il Duce
Il Duce's picture

" Pretty much every trading desk in the world reads him."


Computers don't read.

Mon, 05/24/2010 - 08:14 | 369731 TonyV
TonyV's picture

And how many calls has he made where he actually missed?

Mon, 05/24/2010 - 08:20 | 369739 mogul rider
mogul rider's picture

very few

Mon, 05/24/2010 - 09:11 | 369825 Hulk
Hulk's picture

One missed call and that nullifies everything he has ever said?

Mon, 05/24/2010 - 11:20 | 370022 seventree
seventree's picture

It is pointless to seek an infallible oracle, by tallying up how often someone's predictions have come true in the past. This is the behavior of primitive tribes blindly following a mystical shaman.  Instead we must to think for ourselves, and that means examining the arguments (and checking claimed facts) of anyone making predictions. It is fine to listen to experts and rate their credibility but in the end each of us has got to make our own call.

Mon, 05/24/2010 - 11:36 | 370089 Lux Fiat
Lux Fiat's picture

+10, even if I am paying a portion of your SS.

Mon, 05/24/2010 - 12:13 | 370193 seventree
seventree's picture

Oops, was that you I wised off to last week? If so, apologies for being so snarky about it.

If I really lived up to my beliefs I would refuse to accept it. I wonder if Buffet has done so?

Mon, 05/24/2010 - 12:34 | 370259 Lux Fiat
Lux Fiat's picture

No worries.  I took it as humorous, not snarky.  Besides, my spouse and I have been operating under the assumption for the last 15+ years that SS won't be there for us when we "retire".  Enjoy it while you can. 

Mon, 05/24/2010 - 09:37 | 369854 MrTrader
MrTrader's picture

Every trading desk reads him ? Too funny, how did he not foresee his own banks mess ? Legitimate question, or ?

Mon, 05/24/2010 - 10:40 | 369969 spekulatn
spekulatn's picture

If the answer isn't obvious MrT, let me don't shit where you sleep.

Play on please.

Mon, 05/24/2010 - 11:03 | 370030 Oso
Oso's picture

he is a macro-economist.  At ANY point in these notes do you see him making stock selection calls? No.


Too many of you get stuck on the "who" of the call.  All that ever matters is the logic of what is being said.  Forget who is saying it.


If someone speaks intelligently, focus on the rationale.  Then decide to agree or disagree.

Mon, 05/24/2010 - 12:19 | 370218 Double down
Double down's picture


I do not care if he has been right or not, same with Rosie.  Being right is so difficult it is akin to luck.  

In my books someone is "right" if he makes me think, or raise my awareness of risk, teaches me something new or shows me how to see things from a new angle.  

I think that is why ZHrs are here

Mon, 05/24/2010 - 13:32 | 370434 Pedro
Pedro's picture

I think so too.  The only thing I didn't understand is "Tea Partiers hijacking Washington".  Correction:  The Tea Party is taking back Washington. 

Mon, 05/24/2010 - 14:47 | 370616 hound dog vigilante
hound dog vigilante's picture

"The Tea Party is taking back Washington."




Bloodbath in November.  Good riddance to career politician hacks.

Mon, 05/24/2010 - 13:24 | 370406 Miles Kendig
Miles Kendig's picture

Too much common sense Oso since window dressing is a primary focus for some.

Mon, 05/24/2010 - 15:00 | 370648 ThreeTrees
ThreeTrees's picture

This type of sentiment is sorely lacking in, well, everywhere.  Especially academia.


Mon, 05/24/2010 - 10:46 | 369984 Spitzer
Spitzer's picture

He is good at covering his own ass. All through the article he is implying to go into US bonds and get out of so called " risk assets ". But at the end he says to watch out for black swans in the bond market.

So he is a bear like anyone else with a half a brain but he has no answers in the cash, gold or bonds argument.

Mon, 05/24/2010 - 12:13 | 370196 Il Duce
Il Duce's picture

Yes, and let's not forget that he called the May 2010 drop since....JULY 2009.  That might qualify as within decades.

Tue, 05/25/2010 - 02:49 | 371467 aus_punter
aus_punter's picture

Janjuah started calling the 07 crash in 2002 -

Mon, 05/24/2010 - 08:18 | 369737 mogul rider
mogul rider's picture

Let's see half the investment world reads his work and you - tart - so far have 4 people reading you. Credibility is key here.

You have little, but hopefully you will learn that MSM is the true horse shit and you are gobbling it up.

Let me guess in July 2008 when the world was rosy you were pumping for a 20K DOW. Well listen up. you would be wise to questionb everything even god forbid your own notions of reality.

This will not end pretty and caution is key. If you aren;t scared from an investment and social upheaval perspective then I feel for you when the hoards come and kill your family.

But you go ahead and hang on to your CNBC beliefs. Kudlow needs one fan..

Mon, 05/24/2010 - 08:26 | 369753 Internet Tough Guy
Internet Tough Guy's picture

So we either believe in Kudlow or your zombie apocalypse? My tv has more than two channels.

Mon, 05/24/2010 - 08:47 | 369780 chumbawamba
chumbawamba's picture

Enjoy the commercials and re-runs.

I am Chumbawamba.

Mon, 05/24/2010 - 09:02 | 369815 pan-the-ist
pan-the-ist's picture

... Until the Zombies get really hungry...

Mon, 05/24/2010 - 10:08 | 369910 woolly mammoth
woolly mammoth's picture

Chumba funny. No junk here.

Mon, 05/24/2010 - 09:57 | 369893 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Tough Guy:


You seem like a TV Guy, so lets explain this in terms you will understand. Remember Deep Impact when a huge comet hits the earth and the ocean receded, then a little while later the huges waves came and buried everything in water?


Um, we're about at the part where the water got sucked backwards into the ocean.


We're all just wondering how big that wave is gonna be, and how fast when it hits land.


If you still are confused, you better educate yourself.


Mon, 05/24/2010 - 10:38 | 369965 trav7777
trav7777's picture

Yeah, that movie was BS. 

Mon, 05/24/2010 - 11:03 | 370032 Ripped Chunk
Ripped Chunk's picture

Tart calling someone a retard?  I remain mystified.

Mon, 05/24/2010 - 08:12 | 369729 cossack55
cossack55's picture

Reminds me of the Oracle of Delphi.  Read whatever message you wish.

Mon, 05/24/2010 - 08:14 | 369730 overmedicatedun...
overmedicatedundersexed's picture

He did not mention the Nov elections as a destabilizer here in USA..IMO this election cycle will be as close as USA gets to civil war.

the markets (GS) will not like what they see and hear from those running to replace the DC

kleptocrats..I could see a very bearish market for some time to come..dow 2000, S&P 300..

before it ends..or not. LOL


Mon, 05/24/2010 - 08:25 | 369749 Caviar Emptor
Caviar Emptor's picture

Agree. IMO we'll have a long, hot summer of pre-election fear and anger fed by anti-incumbent politicians. Every coalition breaks down. Regions start to look like different countries. Angry crowds take it to the streets.

Mon, 05/24/2010 - 10:01 | 369898 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

If by Civil War you mean ANGRY PEOPLE TYPING IN CAPS then I agree, but true violence, NAH.


We might see some violence in detroit where unemployment is over 50%, but you aren't going to see that at all or we would have already had some serious outbreaks all ready.


People are going to vote and take out the trash. Hopefully this leads to a modicum of sanity. (I'm not very hopeful however)

Mon, 05/24/2010 - 10:45 | 369978 overmedicatedun...
overmedicatedundersexed's picture

If history is a guide, Germany of 1930's and the rise of National socialism and herr hitler could lend some insight..Who will be the Jew's this time? And who's Poland will be annexed by spring?

Perhaps the W street Bankers and Iran,N Korea or Pakistan for item 2? will fit the bill.

Power elites are so predictable until their not.

Mon, 05/24/2010 - 10:19 | 369933 Assetman
Assetman's picture

I don't quite get how this upcoming midterm election will be "destabilizing", or to Janjuah's point-- a time where the Tea Party makes significant political gains.

Not that I see things heading that way-- I do.  What I see for the upcoming elections in November is a huge anti-incumbent surge.  For this election, I see (R)'s replacing (D)'s-- and vice versa.  Tea Party candidates aren't likely to make a huge dent.

Watch out for the 2012 elections, though.  That's beginning to look like the powder keg.

I think Bob's read on deflation is already taking hold; tightening actions elsewhere support it.  And I also agree with Fed QE scenario as well... we will need to face major pain before it happens, but a larger QE is probably already in the plans.  I'm not sure whether it will be the "last bullet" for the Fed in terms of fianncial capacity, but it could well be politically.

Mon, 05/24/2010 - 15:06 | 370660 ThreeTrees
ThreeTrees's picture

I think the political incentives are there for endless QE but I'm not sure if Westerners are as willing to tolerate it as the Japanese have been.  Vastly different cultures.  We don't defer to our leaders to nearly the same extent.

I think one more, bigger QE and then overt printing.

Tue, 05/25/2010 - 01:12 | 371435 Assetman
Assetman's picture

This round of QE is proving to already be politically unpopular, simply because many people see the moral hazard and the windfall given to the big (anti-productive) banks.

A potentially better use of capital would be to expand fiscal policy to counteract private sector deleveraging.  But our Congress is getting more pressure about fiscal discipline and recent spending patterns have been wasteful, anyway.

When we get to the point of overt printing, we're pretty much toast.

Mon, 05/24/2010 - 12:28 | 370240 DosZap
DosZap's picture



Assuming he is right, ( I think he's giving WAY to much credibilty, and power to 28% of the voting bloc.

If anything, if the Tea Party continues to tear down the GOP, we will get the same folks back for a 2nd Term............including Big "O".

They are pulling a "Perot"...right now.The GOP is STUPID, for ignoring these folks..............stupid.

Screw the economy for now, I am WAY more concerned for saving the Republic.

As for Civil War, WHO the hell can the current regime bring to bear, that would have a chance to even put up a skirmish, much less a war.

These morons have no CLUE what end of the tube a round comes from, and the Right, is damned well prepared, and stocked to the gills, and they are not like the Colonial Militias of old( Farmers)...........they can use weapons, and damned well.( trust me on this, I know).

I fully expect the Military (what's here), if the occasion arose, to STAND DOWN.............their main duty is to Protect the Const, and defend against enemies foreign, and domestic........their Oaths to obey the POTUS, is secondary to the primary.You think they are going to disobey/ignore the Oath?.

No way Jose'............there just as interested in keeping our form of goverance as any conservative.

They have their plates full elsewhere, and fighting their own families is not in the cards.

On your point, IF the Military DID get involved......kiss this country goodbye.

Anarchy reigns.

Mon, 05/24/2010 - 12:55 | 370313 pan-the-ist
pan-the-ist's picture

The GOP cannot support the TEA candidates just as the GOP cannot support Dr. Paul.  The GOP's platform attracts specific businesses that gain from government handouts, the TEA candidates 'fiscal conservatives' are kryptonite to the GOP.  Both parties spend tax money to support private businesses, farmers, defense and welfare.

That is the true base. Any candidate that truly wants to limit spending is uninvited in the GOP.

Mon, 05/24/2010 - 15:03 | 370651 hound dog vigilante
hound dog vigilante's picture

Excellent explanation.

Tea Party & GOP are mutually exclusive.  This is where Ron Paul limits himself by remaining a member of a party THAT DOES NOT WANT HIM OR THE CONSTITUTION.

I would also add that the Tea Party phenomenon is not limited to the Right. Personally, I see more Lefty Tea Party folks than anything else... the typical rank-and-file democrat voter is turning against Obama/Pelosi/DNC in a BIG way...

The liberal Obama voter has been rewarded with the following:

Guantanamo... still open.

Wall St. ... bailed out w/ no strings attached.

Toothless, pathetic financial reform.

Expansion of the for-profit, private medical insurance industry.

Escalation in two active war theaters, and ready to start a third... more citizens on active duty in theater than the day W. left office.

Trillions added to public debt.

Economy STILL shedding jobs (that will never come back).

Expansion of offshore drilling & pro-nuclear policy.


Obama is a better neo-con president than W. ever was...


You think the Right is pissed-off???  The Left is BOILING with rage!!!

Mon, 05/24/2010 - 08:16 | 369732 37FullHedge
37FullHedge's picture

What do the elite want?

The Globalist agenda to control the world use a crises well, To grab more power and instigate global tax systems, Transaction taxes, cap and trade and whatever else is in the works, The next phaze looks like a United states of Europe is top of the globalist agenda and a severe european collapse is just doctors orders and deflation would be just the ticket, My investments are gold silver and platinum, Cash scares me even Tbills because all cash is just credits to bankrupt states and as this blog suggests QE fraud 5trn is locked and loaded and it could be fired this week or next year but this depends on what the elite want, I expect the details on this post are probably a fair guide.

Mon, 05/24/2010 - 08:18 | 369738 Caviar Emptor
Caviar Emptor's picture

Recent weeks have uped the stakes. If nothing else by forcing clueless politicians and some in the public to actually examine the numbers. What they saw spooked them: debt levels throughout the Developed World are not so far apart from one another. So even though each great big pot is calling the little kettle black, there's existential angst. 

Mon, 05/24/2010 - 08:21 | 369740 bigdog
bigdog's picture

Bob.. how do you see physical gold premiums holding up as paper margin calls come in.Could gold and silver disappear in this deflation cycle.


Mon, 05/24/2010 - 10:34 | 369953 dumpster
dumpster's picture

what is this deflation cycle thingo ... and your personal experience ,, things going down in price

gold works in either case

Mon, 05/24/2010 - 08:22 | 369742 Matto
Matto's picture

"but please don't forget you heard it here 1st - policymakers will NOT like deflation, and the last real roll of  the dice will be (I think) late this yr/early next"


totally dig whats being said, but i did not here it here first

Mon, 05/24/2010 - 12:10 | 370179 dumpster
dumpster's picture

but please don't forget you heard it here 1st -

please this lol is the first time to hear this

heck no, let me count all the times

Mon, 05/24/2010 - 08:24 | 369747 taineasy
taineasy's picture

Have a look at the recent youtube video from Tony Cherniawski (thepracticalinvestor) and you will find support for your analysis. There are several analysts I respect coming to the same conclusion albeit by different methods. Tony sees June at the fall into the abyss. Its worth the 5 minute look

Mon, 05/24/2010 - 08:26 | 369751 Mako
Mako's picture

"little bit to help"

Sorry buddy, you are not helping anything.  Unless you are the Wizard of OZ with unlimited power, your little bit help is turning into a nightmare.

Mon, 05/24/2010 - 08:28 | 369754 SWRichmond
SWRichmond's picture

One of my major concerns is that the Fed has managed to delay the inevitable this long; if the fiscal conservatives (me) take over in November, the crash Bob predicts, and probably correctly, will be blamed on us.  WE have to be ready to dismantle the Fed in the two years we will have to do so.  Unless, that is, if the crash comes before November. 

See?  I know how this game is played.

Mon, 05/24/2010 - 08:33 | 369761 Internet Tough Guy
Internet Tough Guy's picture

What fiscal conservatives? Other than the Pauls, even the repubs are budget busters. Eight years of Bush taught us that.

'Deficits don't matter' - dick cheney

Mon, 05/24/2010 - 08:39 | 369771 Mako
Mako's picture

The federal government could pass a true balanced budget... the financial system would turn into an instant mushroom cloud.  Eventually that will happen anyway but thinking pulling in government spending is going to save the system is true fool's gold.

Mon, 05/24/2010 - 08:51 | 369790 chumbawamba
chumbawamba's picture

We had to destroy the village in order to save it.

However it crashes does not matter, as long as it does.

I am Chumbawamba.

Mon, 05/24/2010 - 08:53 | 369793 Internet Tough Guy
Internet Tough Guy's picture

Doesn't matter if you are right or wrong, there are no fiscal conservatives. Are the repubs going to cut defense spending and social security? Will Obama sign a bill to cut medicare? None of this will ever happen.

Mon, 05/24/2010 - 09:38 | 369855 SWRichmond
SWRichmond's picture

there are no fiscal conservatives

Are you a fiscal conservative?  If so, then there are some.  I am one.  If you are one, and are not trying to do something about it, then your apathy is enabling the profligate spending. 

Mon, 05/24/2010 - 09:58 | 369891 Jim in MN
Jim in MN's picture

I am an independent thinking Dem for the most part and I think the game is busted.  I would look to 1980 budget levels as the first target, examine entire functions that can be lost, hopefully two Cabinet departments, cut Pres/WH staffing in half.  How's that for an ante? 

Very few yet grasp how serious this is.  The state budgets will make it clear soon.

On further thought: Base cuts on the cumulative total lobbying of interested groups since 1980.  That would further tilt the incentives in the right direction while putting a useful 'autopilot' on the specifics of the cuts.

Mon, 05/24/2010 - 10:11 | 369918 FEDbuster
FEDbuster's picture

If you don't cut or drastically reform the big three (social security, medicare/medicaid and military), you are just scraping the icing off the cake.  Since it is political suicide to make cuts to the big three, it won't happen.  Inflation is their only hope, and hyperinflation will be their demise.

Mon, 05/24/2010 - 10:38 | 369963 dumpster
dumpster's picture

an oxmoron  .. independent thinking dem

either dem or republican are feasting at the plate of the keynesian alter .. this idea to cut to 1980 budget levels and more political gobbleduke is wasted thinking ,

neither a dem or rep be .. be free .

Mon, 05/24/2010 - 11:44 | 370110 Jim in MN
Jim in MN's picture

Well if labels are more important to you than fixing things, enjoy your basement.

Mon, 05/24/2010 - 14:26 | 370572 legerde
legerde's picture

And the system put in place just worked.   Everything devolved into name calling.   Jim brought up he was a Dem.  It was pointed out that Jim's self imposed label was an artificial label.   Next thing you know Jim's calling people basement dwellers...

The Simpsons are awesome...  They summed it up nicely with "Don't blame me—I voted for Kodos"

Mon, 05/24/2010 - 13:06 | 370350 Apostate
Apostate's picture

The main problem is all the indefinite pension programs.

Even the defense department budget is tough to cut. The VA and other veteran's benefit programs makes up a huge portion of the ongoing (and growing) costs. You could end the wars, dismantle the Navy, the Air Force, and sell off all the equipment, but you'd still have to support all those vets.

Mon, 05/24/2010 - 13:09 | 370359 Mako
Mako's picture

There are virtually no fiscal conservatives that exist, how do I know... there is a global financial credit system... which only operates by more and more people becoming less and less fiscal conservative.

If everyone was a fiscal conservative, the global credit system would crease to exist this second.


Mon, 05/24/2010 - 09:36 | 369852 SWRichmond
SWRichmond's picture

...thinking pulling in government spending is going to save the system is true fool's gold.

I for one don't think that, but government spending has to be slashed anyway, doesn't it?  Might as well start as soon as we can.

Mon, 05/24/2010 - 10:41 | 369970 trav7777
trav7777's picture

It cannot be cut.

Gov't is the only source of credit growth at present.  Without it, the entire monetary system will self-implode.

Mon, 05/24/2010 - 11:03 | 370031 dumpster
dumpster's picture

with it ,, the entire monetery system will explode

Mon, 05/24/2010 - 11:47 | 370119 Lux Fiat
Lux Fiat's picture

Congressman Lamar Smith today introduced legislation to stop runaway government spending and rising deficits that threaten economic growth. HR 5323, the SAFE (Saving America’s Future Economy) Act, will limit annual increases in federal spending to the sum of percentage increases in population growth and inflation. Smith’s bill currently has 34 co-sponsors.


“Our national debt has reached a crisis level, yet government spending continues without any meaningful limits in place,” said Smith. “We cannot afford to wait any longer and need to put a stop to runaway spending in Washington. Our debt threatens our economy and our national security. We must take the necessary steps today to ensure the economic future of our nation. Putting spending limits in place will reduce deficits and lead us towards a balanced budget.”


Given this guy's background, I think that it is more than a publicity stunt from his standpoint.  I certainly hope so.

Mon, 05/24/2010 - 12:12 | 370188 dumpster
dumpster's picture

one of two out of 500 .. watch out lol

Mon, 05/24/2010 - 12:42 | 370284 Lux Fiat
Lux Fiat's picture

Yeah, I know.  Much as I would like to see a "turn the bums out" moment this Nov, I agree with a previous poster, and think the real denouement will have to wait until 2012, when, hopefully, most voters will realize that both major political parties are just flip sides of the same bad penny.

Mon, 05/24/2010 - 13:40 | 370455 DosZap
DosZap's picture


"Deficits don't matter' - dick cheney"

They do now.................

Think this thru, I am not a wild Bush fan, but compared where this ship has been steered since he left, I will take him back any day.

Bush ran up the deficit, w/9-11, and two wars.

Obama has spent MORE $$$ than all 43 previous Presidents.................

Can't touch dat.

What matter if the conservatives get blamed, Obama is already after Bush, trying to push ALL this off onto him.

Time to drop the manical Ego, and Thin Skinned BS Mr.POTUS........

YOU own this...............after nearly two full years?.

Blame Bush......

Time for another BEER SUMMIT.

Tue, 05/25/2010 - 21:20 | 373360 Crisismode
Crisismode's picture

Sorry, just a math correction.


Lemme see, O took office on January 20, 2009.


Today is May 25, 2010.


He has been in office for 14 months and 5 days.


Hmm, since when is 14 months "nearly two full years"


Learn to do math, dipshit.




Mon, 05/24/2010 - 09:24 | 369824 pan-the-ist
pan-the-ist's picture

It will take the election of a 'beneficent dictator' to steer this ship straight.  Maybe that's what 'they' want me to believe, but it seems to be the truth.  This person will need to suspend the constitution and dismantle the socialism.  I don't think it will be as subtle as last time (FDR) because this person will need to scramble more eggs (defense, social security, medicare, unfunded pensions, home values, the Fed... ) to get it fixed.  You can elect all the fiscal conservatives you want and it won't be enough...

This is why my vote is that the ship will sink, which could be the better of the two options.

Mon, 05/24/2010 - 10:01 | 369899 Gully Foyle
Gully Foyle's picture


Yep. 2012 election brings the tough guy Republican whi will make things better. 2013 inauguration day starts the shitstorm.

We had a lively discussion about this in the futures topic.

Mon, 05/24/2010 - 10:32 | 369950 Assetman
Assetman's picture

Saw the discussion.

We're dealing in probabilities here, and I'll give yours credit for being better than average.  I know a lot of crazies here out west that will only part witht their guns if you pry it from their cold dead hands.  Texas alone would probably sucede first if you took away their 2nd amendment rights.

Interestingly enough, though, it's turning into an "anything goes" scenario into and through 2012.  I can't see a Momma Socialism government after what Obama has (hasn't) done-- but I don't know either how hard the country will turn to the right by Nov 2012.

Maybe we get a tough guy Republican... but unfortunately, a whole lot of people (including unions) like their entitlements. 

Mon, 05/24/2010 - 13:33 | 370437 Thoreau
Thoreau's picture

Dubya was your "tough guy Republican." How'd that work out for us? Just like our Peace Prize Democrat.


Mon, 05/24/2010 - 14:09 | 370522 pan-the-ist
pan-the-ist's picture

No, Dubya was a crony capitalist and wasn't a fiscal conservative.  He allowed Medicare part D for God's sake!  We're suggesting General Pinochet.

I am not suggesting this is the best solution, but I am convinced it is General Pinochet or goodbye USA.  The people won't accept Austerity.

Keep in mind that I don't think it will happen (and I don't want it to happen), which is why I think a collapse would be preferable.

I'd like the Unicorns to descend and convince everyone to live within their means and to redistibute wealth fairly, but I don't put too much faith in that for some reason.

Tue, 05/25/2010 - 21:24 | 373369 Crisismode
Crisismode's picture

Please tell us exactly how many of our Social Security recipients well gladly give up the government paychecks that they paid out of their salaries for 30-40 years?




My guess. About zero.



Mon, 05/24/2010 - 08:29 | 369757 Brett in Manhattan
Brett in Manhattan's picture

I've still yet to see anyone CONSISTANTLY call tops and bottoms.


Published: 8:26PM BST 12 Aug 2009

"I expect this risk rally to continue into – and maybe through – a large part of August. What happens after that? The next ugly leg of the bear market begins as we get into the July through September 'tipping zone', driven by the failure of the data to validate the V (shaped recovery) that is now fully priced into markets."

The key indicators to watch are business spending on equipment (Capex), incomes, jobs, and profits. Only a "surge higher" in these gauges can justify current asset prices. Results that are merely "less bad" will not suffice.

He (Janjuah) expects global stock markets to test their March lows, and probably worse. The slide could last three months. "A move to new lows is highly likely," he said.

Mon, 05/24/2010 - 09:05 | 369819 VogonPoet
VogonPoet's picture


Mon, 05/24/2010 - 08:31 | 369760 saulysw
saulysw's picture

Bob is clearly a financial terrorist.

Mon, 05/24/2010 - 09:38 | 369856 Bitch Tits
Bitch Tits's picture

I agree, saulysw.

This guy is working against us all.

Mon, 05/24/2010 - 08:37 | 369766 Caviar Emptor
Caviar Emptor's picture

Don't forget not everything has to deflate simultaneously. So even as real assets, market caps, incomes, anticipated retirement assets and employment deflate there is the real possibility that key raw materials stay where they are in "Relative Inflation" (my "Double Whammy" theory). Strategic raw materials and food are in a precarious state having just come out of recessionary production cutbacks. Global competition may not diminish. The Double Whammy is more devastating than deflation alone.

Mon, 05/24/2010 - 08:39 | 369770 monopoly
monopoly's picture

I think Bob is right on. It is already beginning here but with Europe, most notably Spain as of this morning beginning the slow imploding, we do not pay attention to what is going on here. It is just a matter of time. The house of cards is falling and we are at the bottom holding up this entire layer of spin, deceit and lies.

And gold so far in this correction is less than 10%. Notice how the corrections have been shorter and of less amount. Crap post, I think not. I own 0 equites outside of gold and it has been that way for months. I trade around my position but core position says with me as it has for years.

This is just one big bankrupt Casino. And I am not on the inside. So I stay away.

Mon, 05/24/2010 - 08:46 | 369779 Caviar Emptor
Caviar Emptor's picture

Agree. The Double Whammy theory suggests that although assets backed by paper will deflate, hard assets will not. Even during a deep crisis there is demand for food and key raw materials. Gold will become the trusted medium of exchange: hard will want to be backed by hard, not paper.

Mon, 05/24/2010 - 10:07 | 369909 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Dude, in Bosnia when things were really in the shit, this was not useful. Initially barter was way preferable to gold. A person was way better off with smokes, ammo and sometimes even non military boots, than gold. You might find yourself trying to make a tasty sandwich with bread, ketchup and gold to eat, sprinkled with some weeds, if you keep that mentality. Eventually you could use it, but it wasn't easy to do, for some time.


Anyway, you better research how the real world if and check out Ferfal too, but I'm just telling you, gold is not going to be a security blanket if you can't trade it until things settle a bit. I guess you have to "be there" to understand. I hope its not a lesson you have to learn.

Mon, 05/24/2010 - 10:48 | 369989 trav7777
trav7777's picture

Agree...smokes, TP, lipstick, perfume, playing cards, clothespins.

But that's a Bosnia scenario.  We're not going to be under attack from Martians.  We should study Argentina for where to live and what might happen.

Remember, even if the oil imports ex-Canada and Mexico were shut off, our electricity comes from NG and coal and nuke and hydro.  The lights will stay on.  Our water supply is secure.  Our NG is mostly domestic and we're in a supply glut.

So we might not be able to drive much, but we'd still have climate control.  The hippies with the electric cars in Oregon would OWN THE ROAD.

Don't expect the fiat paper to evaporate.  Seriously.  WTF good would the stuff be if you weren't allowed to trade gold for it?  The government would NEED people who were hoarding to bring the hoard out and circulate the paper around.  There's no backup hard currency in circulation like in the other failed fiat systems (the dollar there).

It would be in the government's interest to let all assets trade against fiat paper, otherwise they lose all power.

Mon, 05/24/2010 - 11:16 | 370057 SWRichmond
SWRichmond's picture

The hippies with the electric cars in Oregon would OWN THE ROAD.

Mon, 05/24/2010 - 11:50 | 370128 ColonelCooper
ColonelCooper's picture

Cindy in her above comment, much more ably summed up what I was so ineptly trying to write on Saturday. 

I'm glad you enjoyed your salad.  You must live considerably South of me, because it's only been two weeks that we haven't been watching the weather for frost.  My greens are up, but no garden salads for a few weeks.  :)

Mon, 05/24/2010 - 12:19 | 370215 SWRichmond
SWRichmond's picture

Did I mention, I've got blossoms on my beans, snow peas and tomatoes?  I should have planted a larger area, but I am a noob and just learning.  Thinking about planting another crop of radishes, but it might be too late (heat).

I understand the sentiment Cindy writes, and understood yours as well.  Gold is capital, and while there might be some period where it is not useful as such it will always be money.  If nothing else, under extreme circumstances (not out of the question) it will form the basis for a new currency. 

Mon, 05/24/2010 - 13:08 | 370358 Apostate
Apostate's picture

Iraqis continued to trade the old dinar after the invasion, and actually preferred it to the new currency or even the dollar.

If the Federal Reserve stops printing and the banking system stops lending, the dollar will at least be a nominally fixed-reserve unit of exchange.

Mon, 05/24/2010 - 15:43 | 370724 hound dog vigilante
hound dog vigilante's picture

Good luck with buying an electric car... in Oregon or anywhere else.

Electric cars are expensive, and we/they will not have an opportunity to scale production to the point of retail affordability.

If you want to use the road after the oil/gas dwindles, then you'll need to build your own vehicle or ride a horse.

As for fiat currency surviving - it may survive, but barely, and only as a transitional currency. It will devalue too much and too quickly to be of use for more than a few years after the collapse...

Tue, 05/25/2010 - 00:22 | 371409 Juan Venti
Juan Venti's picture

Martians... f*ing love it.

Tue, 05/25/2010 - 21:40 | 373386 Crisismode
Crisismode's picture

There is one question, and only one question:


Got gold, Bitches?


If you think you will survive the next few years with GLD in your portfolio, and with FRNs in your mattress, think again.


Buy and hold physical only. Nothing less.


Or, drink Bennies Kool-Aid and swim to the great beyond.



Mon, 05/24/2010 - 11:07 | 370033 dumpster
dumpster's picture

learn this

Jealous paperbugs have drunk the official Kool-Aid and believe the apparatchiks will not let Gold bulls profit from their wise decision to buy physical metal held outside the financial system. This is sour grapes at its finest, but they concoct stories of confiscation, excessive taxation and Gold price collapses that will wipe out the Gold bulls.

I have news for this crowd (Prechter, Roubini and Denninger: WAKE UP!): no one with any form of money is safe when things get bad. How about property taxes and stock market taxes? How about a VAT tax? How about 401k confiscation? How about the score board after the first two big deflationary waves? Why does it take so many more paper debt tickets to buy Gold if King Dollar is getting set to win the clash of the titans contest? When will you all admit defeat and stop giving people bad advice on Gold?

Gold savers will have the last laugh as the asset price deflation in Gold terms continues essentially unabated other than the needed corrections that characterize every healthy and sustainable trend. The Dow to Gold ratio will hit 2 and we may well go below one this cycle. As a parting thought, never forget that the people and organizations who hold the most Gold in the world are the same ones who will get to decide how much to devalue paper against it!

"You have a choice between the natural stability of [G]old and the honesty and intelligence of the members of government. And with all due respect for those gentlemen, I advise you, as long as the capitalist system lasts, vote for [G]old."
George Bernard Shaw (1856-1950)


gold seek  Brochert

Mon, 05/24/2010 - 12:34 | 370263 pan-the-ist
pan-the-ist's picture

401k confiscations? Isn't Wall Street doing that already?

Mon, 05/24/2010 - 12:40 | 370276 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1180.

Gold will indeed see its ups and downs, but I think it is STILL a gift at under $1500.

Moi?  When money comes in, I take some of it and buy some gold.  I don't even care what the price is.  If gold has a BIG HIT DOWN (say $900), that's OK.  I will buy MORE.

When would I sell?  Maybe never, although the bearing reserves the right to give it away (I think ZH contributor merehuman already has been giving it away).  Well, maybe I will sell a little bit if gold gets to fofoa's $55,000.

That is after our party (Chumba, Gordon, dumpster, Hulk, Rocky, etc.) though!

Mon, 05/24/2010 - 12:54 | 370314 Hulk
Hulk's picture

I forgot to ask DCRB, where's the party going to be?

Mon, 05/24/2010 - 11:05 | 370035 Spitzer
Spitzer's picture

Gold is for saving money that you don't plan on spending. If you need to spend all the gold you bought in 6 months then you where never rich enough to own any in the first place.

Mon, 05/24/2010 - 12:56 | 370320 Hulk
Hulk's picture

Au could have a nice appreciation in 6 months, making it quite worthwhile..

Mon, 05/24/2010 - 08:44 | 369776 Cognitive Dissonance
Cognitive Dissonance's picture

For those who don't believe we're headed into trouble and for those that do I have one simple question. Where does all this money printing, bailout cubed and various economic stimulations of whatever name you wish to use end? Where does it all end?

Todd Harrison likes to explain the mess this way. They sold the car crash and bought the cancer. While not perfect, it does it damn good job of explaining the mess we're in. So where does it end?

Please leave magical thinking and ideology at the doorway before answering. This is a reasonable question that deserves a reasoned answer. Anyone?

Mon, 05/24/2010 - 08:55 | 369798 john_connor
john_connor's picture

I'll keep this short Cog as I don't have time to write a dissertation.  It ends badly of course, with sovereign bankruptcies of some form (debt restructuring?), riots/general civil disorder, political upheaval, and possible war.  Also, look for officials to use a natural disaster as an excuse to exert additional control over the public.  As it relates to the markets, I see a deflationary debt trap (we are in it right now) first where all markets crash over the next 2-5 years.  This will be excaberated by increased gov't intervention and regulation in markets.  After this, I think you will see some sort of stagflation or hyperinflation, whichever is your fancy.  And one last thing, I think we will have World War III before we have a one world currency.  In other words, I don't think it will happen, and if it does, it will done by force, and this includes force to stem civil wars within nations, not just amongst nations.

Mon, 05/24/2010 - 08:59 | 369806 chumbawamba
chumbawamba's picture

CD, I've been asking this question for a couple years now and no one seems able to answer.  The reason is because no one has an answer, or at least they all know where it ends, which is not well, and to such an extent that they don't even want to consider it, because before they reach the natural conclusion they are already inside the liquor cabinet and the first shot is halfway down their throat and they are focusing on making the bad go away until the 40 proof kicks in and they avoid having to confront reality by virtue of one more fluid ounce.  It's like a personal QE for the mind...until the bottle runs dry.

I am Chumbawamba.

Mon, 05/24/2010 - 09:54 | 369884 Cognitive Dissonance
Cognitive Dissonance's picture


Nicely described. I'm just finishing up an extremely long treatment on our insanity and the way out of this mess. It will be published within a week and will probably be in 4 to 6 parts so people can actually consume it.

For some it will be rewarding and eye opening and for others, who can only see disaster and no way out, the essay will probably be seen as unrealistic pie in the sky trash. Unfortunately we have a choice to make. If we keep using the tools we currently have in the back of the truck, all we will get is more of the same insanity.

If however we wish real sustainable change we need to grab onto a new and different set of tools. Or more accurately we need to recognize that the tools are already there and we simply need to use them.

Change is coming. Many of the dynamics I will talk about are already in play and I'll simply explain how they can be used in a more productive manner. But the vast majority of people, even those who are aware of what's coming, honestly don't want change, they want to go back to when things "worked".

And that is the insanity, because it never did actually work, at least not in the way the public myth tells us it did. It worked for a small minority. Even one else had their standard of living temporarily raised.

Mon, 05/24/2010 - 10:07 | 369907 Jim in MN
Jim in MN's picture

I believe that while evolution granted us the tools, we are in a totally new environment so the specific adaptations are not survival-enhancing.  We need new adaptations.  Strife will likely be involved; the question is when everyone believes their own view of human nature and the future, how do we decide which path to take?

Those who understand freedom, cooperative organization and markets should not make the mistake of thinking that getting along in good times necessarily means that 'mean people' will dominate in bad times. 

This is the story of High Noon.

This is High Noon.  It just lasts a long time because it is evolutionary High Noon for homo sapiens sapiens at a relatively high global population density.

Only ten generations get the privilege and responsibility of living in the transition from low to high population (1750-2100).  It is a ONE TIME spike in the growth rate that has not happened before in our entire evolutionary history and will never happen again.  Unfortunately no one has explained it to us.  Oh well---cue the entirely predictable chaos....

Mon, 05/24/2010 - 10:22 | 369936 john_connor
john_connor's picture

For some it will be rewarding and eye opening and for others, who can only see disaster and no way out, the essay will probably be seen as unrealistic pie in the sky trash. Unfortunately we have a choice to make. If we keep using the tools we currently have in the back of the truck, all we will get is more of the same insanity.

Please define "disaster".  If disaster means that markets crash because all of the fraud is removed from the system, then I will accept that.  Also, if you intend on writing some kind of expose on productive change, please provide practical details as to how you envision this happening.  I find it odd that you are already definding your article when it hasn't even been presented.

Mon, 05/24/2010 - 10:43 | 369974 Cognitive Dissonance
Cognitive Dissonance's picture


I wasn't directing my comments towards you. I don't think you're only seeing disaster. You are seeing realty as it seems to be playing out. There are many permutations that can play out but one general direction unless we stop passively accepting that we have no control or power, that we are powerless to do anything about "this".

What I meant by "disaster" is the apathetic acceptance that whatever is happening must happen because "we" have no power. And I never write specifically about the economic or political environment. I write about our psychological environment and the various manipulations used to influence you and I.

Our problems begin within. Even a casual reading of history shows the same cycle repeating endlessly. The reason this happens is because we never grow. I explore why that is. Which is why I know that some will have difficulty with my article. For those who believe the solutions are strictly technological or political, my articles make no sense and are unrealistic and fantasy.

From their point of view they are correct. I constantly posit that those very tools have never worked and will never work. For someone who wants to believe I'm wrong, I will be threatening to their belief system. I see it all the time in the comment section under my articles.

Mon, 05/24/2010 - 10:47 | 369982 john_connor
john_connor's picture

I agree and look forward to your new article series. 

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