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We're Rapidly Approaching the Crisis to Which 2008 Was a Warm Up
Stocks broke
down in a big way this week, falling below the trendline that has supported
them since late August. Indeed, it looks as though we not only broke below this
line but have since rallied to retest it: a classic pattern during corrections.
The question
now is if this is just a minor correction or the start of something more. The
S&P 500 appears to have formed a rising bearish wedge pattern (see above),
which usually is a termination pattern that results in the underlying security
falling to retest its base (in this case 1050 or so on the S&P 500).
However,
with Government intervention in the markets being what it is, we could also
simply see a minor correction here followed by yet another ramp job. Indeed,
this is exactly what happened in 2009 when stocks broke a near perfect rising
bearish pattern only to bounce back and begin yet another ramp job:
Thus, the
BIG question for US stocks is whether the market has already digested all the
QE hype to the point that threats of additional liquidity does nothing, OR if
the Bernanke “Put” is still in play.
While this
might not seem like a big deal, I can assure it is THE most significant issue
the financial markets face right now. The reason for this is that IF the
Bernanke “Put” is no longer relevant, that is additional liquidity and
bailouts, doesn’t actually induce a rally anymore… then the entire financial
system will collapse in one form or another.
Remember,
the only thing that pulled us from the brink in 2008 was Bernanke printing like
a lunatic. It’s the ONLY thing that has held the market together. And while it
may have kicked off a major rally in stocks… it FAILED to address the underlying
issues that caused the Crisis in the first place: namely excessive debt and
leverage.
In fact,
Bernanke has made the financial system even MORE leveraged than it was in 2008.
So if the Fed’s moves no longer have an effect on the markets, then it’s time
for the REAL Crisis… the Crisis to which 2008 was a warm up.
Why?
Because when
the stuff hits the fan this time around, the Fed will be powerless to do
anything. Bernanke’s already shot every bullet he’s got. So when he loses
control this time around, not only will the market crater, but the belief that
has kept the financial system afloat through every Crisis of the last 30 years
(namely that the Fed can always save the day) will shatter.
And when
that happens it will be the US financial system, NOT just stocks that goes
down.
Prepare Now!
Graham
Summers
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covential forces in a coventional war: or what the conflicts in Iraq and Afganistan are not.
We have been in Afganistan for almost 10 years.
That's the way the banksters like it. Plenty money to be made with perpetual war.
perpetual war is profitable, but I know you know this.
spoken like the average arrogant ignorant yank.
nobody will "win" WW3 except the flies and rats, and how you have the gall to call full-blown state sponsored Military murder and terrorism "peace-keeping" ..
let's see how funny it is when they turn their weapons on the people at home, Gadaffi's not the only one capable of that.
so apologies if you were being sarcastic, but it doesnt come across in your post. If you were being serious, then you deserve all thats coming your way.
There's this new stuff on the market. It's called sarcasm. People who aren't tuned in to its existence often mistake it for bluster. Sometimes they even call other people ignorant when they mistake this new sarcasm product for bluster. The irony is that it's their own ignorance which is betrayed when they go off in high dudgeon.
doubt the regular enlisted US solider would be cpapble of this,
which is why the government uses private mercenary "armies" earl, have done for years, right here at "home". . .
Kent State
The author forgets that Bernanke is not, in fact, out of bullets. Financial and economic ones, perhaps, but the real ones still await a major conflict that of course will require financing.
The test of faith is coming, for the US citizenry in Bernanke and the Federal Gov't system in general, and otherwise. Prepare indeed, for attempts at misdirection and fear inducement of scale. The prelude is concluded, the intermission almost ended, the audience verily returns to station for the main spectacle soon to be commenced momentarily.
Excessive debt and leverage aren't the core problems.
Joblessness and debt are.
Both of these are still growing, the underemployment rate is rising even more dramatically, the true inflation rate is rising, the delinquency and foreclosure rate are about to explode again, and the labor participation rate is falling, which make for an extremely dangerous combination.
But jobs are the key to the kingdom and the pillars that support the foundation. The higher the wage (another soft point in this 'recovery-less recovery') the better; the lower the wage, the worse.
It's all about jobs. It always has been and always will be.
J-O-B-S.
All Bernanke has done is saddle the U.S. taxpayers, jobseekers, businesses and other the current and next generation with ridiculous amounts of debt service, that will hamper and impede their abilities to achieve lower taxes (let alone be spared from higher taxes), gain employment, be profitable (for mid and small size domestic businesses, especially) or be free of legacy debt and have any chance at the social safety net benefits in retirement their parents had.
He's done this to purchase a temporary rally in equity markets, largely, as he's admitted time and time again.
Bernanke = fail.
Bankers would have us believe it is their sole right to conjure into existence our money supply, and they tell government that it should not be in the banking business, and that money creation is best left to banks.
Government should tell the bankers that money creation is the greatest sovereign authority of government, and banks should get out the government business of money creation. This should be a policy referendum to be voted on. Long live the State Bank of North Dakota, and the others that are soon to follow.
You will soon have a job for every able American-= peace keeping forces.
Or one of these
http://www.goarmy.com/careers-and-jobs/browse-career-and-job-categories/...
Precisely, and LIbya has WMDs too!! Darn those low lives... we can save them just like Iraq and then we are OPEC. Lucky US.
I think the story will be the US dollar collapsing this year.
Interest rates will have to rise to defend the dollar.
The Bernanke put WILL come to an end.
The stock market will see it coming.
A bounce today in the stocks. A weak bounce.
Silver still strong. The hedge funds are stocking up for the dollar collapse.
Bummer. Nobody that I know understands this crap. I try to give them a clue, even spell it out and they just look at me funny. That is the real disconcerting thing. Maybe we're wrong, but i don't think so. Anymore it is just like I can see things getting ready to happen. Always trade like I don't, But....
MGB anyone??
gh
I'll take the other side of your bet that the dollar will collapse. If Obama really ran this country, then I would say "yes" your position is correct. Hyperinflation is usually a political event that happens when the bankers don't run a country. But as we all know, the banks run the U.S. And if given a choice between the value of the dollar or unemployment and misery for the unwashed masses, the bankers will choose the dollar every time. I look for the dollar to strengthen throughout the year.
You make the [false?] presumption that the banks which "run the U.S." are somehow loyal to this country and fail to see their international ownership. I don't know why you'd suppose that they have any loyalty to the dollar, when a newly invented and introduced fiat currency would help enable them to extend and pretend. All while siphoning off more wealth in the form of a new international funny money.
He also makes the erroneous but implicit assumption that the central banksters are omnipotent, and could save the US dollar even if they wanted to --- in other words, the fatal conceit best personified by the ivory-tower arrogance (and cluelessness) of the Bernankster himself. In reality, they are ultimately as much hostage to the rampantly growing governmental overspending and already-fatal levels of public debt as the rest of us.
it just happened that way is a weak argument; the crisis is / was / and will be planned and controlled, so loot can be kept by kleptocracy in casino capitalism
Yup. Bankster scum like Legs Dimon and Lord Blankfein will hesitate to ditch the dollar for SDR's for about a nanosecond.
problem reaction solution, SDR's one step closer to global governance
Sellstop,
You are absolutely right. But I shall take the contrarion position that the commodities market will collapse Gold & Silver will drop 50% and China falls apart. I just love people like you, so technical, so predictable. The black swan is China not the Middle East, and when China goes so goes the commodities-and bang!! -back is the almighty US dollar. In God we trust but in dollars we hold.
Not a puppet, not a sheep, a marionette a software managed personality. I am seeing more and more groups of commenters using similar strategies to steer conversations. Paranoia will destroy ya, but then paranoics have enemies too.
I thought your specialty was a well stocked bar with vodka on the rocks. Are you also into futures fortune telling when you've tanked up on Stolichnaya (or whatever you prefer)?
Ah yes, classic American flag waving blind sheep.
China has largest manufacturing base and exports on the planet, and China will collpse?
We've gutted our manufacturing base, exports falling rapidly, 70% of our economy is consumerism with unemployment approching all-time highs, largest debtor nation on the planet, and we won't collapse because US dollar is world reserve currency?
It won't be world reserve currency much longer. That's when America collapses, and China becomes the new superpower.
Yup and Bernanke is destroying the status of the dollar as the world's reserve currency. How much of the present value of the dollar is this remaining vestige of legitimacy? If the dollar was not the reserve currency no one would touch it. And it's not written in stone anywhere that it must be.
[It won't be world reserve currency much longer. That's when America collapses, and China becomes the new superpower.]---cranky-old-geezer
Up at 3am posting, good sir? No wonder you're cranky. (Assuming you live in the US/Canada.)
IMO, China is as bad off as the western world. China's problems are unique to China, but no less calamitous. China over-reached, they hold hundreds of billions of worthless dollars, and they must commit enormous resources to feed and suppress a hungry populated nation.
No nation will go unpunished.
"China is as bad off as the western world."
But China is improving rapidly as they pick up more trading partner nations.
China's economy is expanding. America's economy is shrinking.
China is gaining friends around the world. America is creating enemies around the world.
America will be far worse off than China as time goes along.
"No nation will go unpunished."
Exactly how will China be punished? Because they hold a trillion dollars of devaluing American government debt?
Not much longer.
too true, and the trends will not reverse; usa living standard going down, china living standard going up
A view counter to most on ZH, refreshing, probably worng, but refreshing
True, perhaps, but also irrelevant. The US was in the same position in the 1920s. It did not save the US then; it will not save China now. For that mfg to be useful, there have to be customers both willing and able to consume what you produce. In a credit collapse, both factors disappear.
"For that mfg to be useful, there have to be customers both willing and able to consume what you produce."
There are. And more turning away from America toward China as we go along.
Why? A big reason is other nations' growing hatred of American imperialism around the world. China isn't meddling in other nations' affairs like we are. China isn't using military threats to keep nations using its currency like we are.
"In a credit collapse, both factors disappear."
There isn't a worldwide credit collapse. Just an American credit collapse plus the PIIGS.
Russia and China are building new trade ties ...without the dollar. India and China are building new trade ties ...without the dollar. Other nations are coming on board with China ...without the dollar. It's happening quietly, not reported by our Wall Street controlled media.
yes, and china has had to implement a reactive banking policy to sponge up the capital flows into china, the capital parasite's next victim. That's why they are zooming around the world buying up assets
That's why WWIII is inevitable. After all, we went to war with Iraq when Saddam decided to price his oil in euros.
Big difference between Iraq and the developing China-Russia-India-Iran alliance. America won't touch it. It would be instant death.
All America can do now is go around terrorizing small nations.
When the China-Russia-India-Iran-(etc, etc) alliance is firmed up, that's when the dollar will be rejected, fall from WRC status, and America collapses.
China will have the honor (and fun) of setting off the bomb under America's financial system by dumping their trillion dollar US government debt holdings.
That's why elite are asset-stripping America fast as they can. They know they don't have much time left.
There will be no WWIII. Dollar collapses. Economy collapses. ME shuts off oil. Elite and govt leaders flee to pre-planned safe havens. America goes down without a fight. Military overseas are left stranded overseas.
They do have a HUGE local market, a regional asian market, a BRIC inter-trade market outside $ denominated commodities/ reserve currency restraints. They are also doing side deals in Africa to access RM and buying massively into EURO bonds to hedge their $ bets.
So for finding clients and markets there may be more than just a possibility that their exports to USA, having fallen from 50-25% to less than 20%, may allow them to resist the USD dollar melt down.
Just crystal ball gazing, I'm not a wizard. But I would be less categoric if I were you, which I'm not.
Also, the 1920 analogy does not apply to them directly. The main culprit then was the US Wall Street plutocrat as today, not the virtuous (in economic terms) central govt. of capitalistic China. They may be right in stocking up on RM, PM commodities. It's a better bet than the USD!
Interesting comment. The Chinese seem to have a more strategic long-term plan in place, whereas the US is simply allowing the rich to plunder what remains of its moribund middle class. Actually, that's a long-term plan, too. But the contrast is pretty striking, nevertheless. It is as if the rich have given-up, thrown in the towel. Grab the silver off the tables before the Titanic sinks and head for the lifeboats. I have it on good authority that "this sucker's going down."
Interesting comment. The Chinese seem to have a more strategic long-term plan in place, whereas the US is simply allowing the rich to plunder what remains of its moribund middle class. Actually, that's a long-term plan, too. But the contrast is pretty striking, nevertheless. It is as if the rich have given-up, thrown in the towel. Grab the silver off the tables before the Titanic sinks and head for the lifeboats. I have it on good authority that "this sucker's going down."
China can float along for quite a while yet. The Dollar will go first, although a short bounce is likely before she dies. China has been gearing up for the Dollar to die. All of China's 'excess' capacity will be useful once America inc. shuts down.
Why do you think the dollar will 'DIE'? Currency devaluation down to .50 of a Yuan will create tremendous pain as it is. The dollar has a brand far larger than one generation of bankers. No worries about this event of China becoming the peg waking the people up. It will even if it works like a charm according to bankers. I am hedging for the worst and hoping for the best.
"China has been gearing up for the Dollar to die."
Exactly right. They see what Bernokio is doing, they're not fooled by his lies. Once they get things set up to come off the dollar they'll start quietly getting rid of their dollar-based holdings ...and it won't be reported.
"All of China's 'excess' capacity will be useful once America inc. shuts down."
Exactly.
You are correct old COG , it is often seen here that some are overconfident in the USA - and that is their weakness (Yoda voice).
China has dropped steadily in exports to the USA so that now 15% of its exports are to the usa. you decide whether u think thats a lot
i think thats not a big percentage to be betting on the usa's place in the world order.
Complacency is what started all this and it looks like it will finish it.
"Bernokio"
I love it. What a bunch of stand up comics.
Friday night the only crisis I had was sobering up before the drive home. A couple of games of pool and a cool waiting policy saved the night. I drove home much less than 0.08 and then had my Chopin vodka shots while browsing here. Well like all crisis this to will pass rest assured friends; you just got to be cool enough till the BAC drops below 0.08- by 2016 it will - till then be careful. Let the chips fall where they may......Wait...good things come to those who wait and no longer read zero hedge. LOL. The only piece of advice I followed is saving on commodities- The only hedge I believe in is a well stocked bar. Guaranteed ROI.
silver bitches....
Patron silver that is
1.5 shots patron
.5 shot grand marnier
.5 shot cointreau
3 shot sour mix
shake
rim glass with orange bar sugar
sidecar shot of Disarrono
ROI indeed
side note is the ingredients to this recipe is gonna set you back three silver eagles or 30 gallons of gas
I believe thats why they call it a Cadillac Margarita but really how they are supposed to be. I perfer it with just Grand Mariner as two Trip secs are not needed.Heck with enough coin in the tequila even the orange liquers utility becomes suspect. HA Worth every penny. Dang that post sure makes me miss Baja. Wish those mofos would calm it down a notch.
I'm pretty sure Bernanke has a bunch more bullets where those came from.
Blake
At a poker table, I will bet against a quivering lip any day.
It matters not one bit whether FASB and the Bernank let the criminal bankers mark their "assets" on a balance sheet up, down or sideways.
If the "assets" do not generate cash earnings to support them nor are saleable at their "paper" value, then the loss is there regardless.
ZIRP has resulted in further malinvestment, speculating, churning and skimming.
This country has burned out it's engine.
Bonuses all around gentlemen, Bonuses all around !
You are right, of course. However, those so-called assets do allow them to show a "strong" balance sheet and, thereby, continue to wreak havoc upon the financial markets. Getting those "assets" priced right will take away that bludgeon.
Why right down the losses when we are just a crises away from the fed buying them for full face value