That didn’t take much. After a three-day rally, the media is back into “bullish” mode suggesting the bottom is likely in and by the end of this year, it’s all going to be just fine. Unfortunately, history suggests that after such a long unabated expansion risks are substantially higher than it has been previously. Furthermore, as I have repeated often in these missives, in an economy that is driven primarily based on consumption, and such consumption is already weak, it doesn’t take much to “flip the switch.”
After making a strong case over the past 3 months that Texas-based REIT United Development Funding IV is nothing but a Ponzi scheme - a name he has been short - the stock tumbled, jumped, and then tumbled again. However, after its most recent plunge moments ago which led to its being halted, we doubt it will rebound again. The reason for today's most recent, and surely final crash: an FBI raid of UDF's Texas office.
As the eyes of the financial world shift towards what may be some very serious problems in China's mammoth banking system, one analysts says fears about an imminent meltdown are overblown. Meanwhile, NPLs just hit their highest level since Q3 of 2006.
People come to believe whatever they need to believe when they need to believe it. Recent studies of voting patterns confirm the obvious. Zombies vote for higher taxes. Cronies vote for lower taxes. All believe they are voting for matters of principle.
"The global financial markets have suffered sharp declines lately, with stocks plunging across Europe, Japan and the United States last week. Some players once again tried to link the global rout with China. However, such claims are unwarranted and playing the blame game in the face of challenges is useless."
What we see happening today is the last gasps of a broken system ravished by the very much cancer-like progress of debt. Yes, it took longer than it should have, and than we thought. But that’s pretty much irrelevant, unless you were trying to get rich off of the downfall of your own world. Always a noble goal. There’s one reason for the delay only: central bank hubris. And now the entire shebang is falling to bits. That this would proceed in chaotic ways was always a given. People don’t know where to look first or last, neither central bankers nor investors nor anyone else.
"I spend most of my time, while looking at current prices, thinking about and trying to live six months to one year in the future.... What I can see now is that US growth is slowing, and that the market is likely to price in reduced monetary tightening." ... but... " The future for me is now more uncertain than at any time I can remember"
"We believe the epicenter of the problem is the Chinese banking system and its coming losses. Once analysts, politicians, and investors alike realize the sheer size of the impending losses and how they compare to the current levels of reserves, all focus will swing to the banking system."
“If some fund manager in Texas is saying that your currency is dramatically overvalued, you shouldn’t care on a $10 trillion economy with $34 trillion in your banks. I have, call it a billion - it’s so small it should be irrelevant and yet somehow it’s really relevant.”
Who are the brave souls who have decided to very openly fight the People's Bank of China? Here is a sample: Soros, Bass, Ackman, Druckenmiller, Tepper, Schreiber, Einhorn, Scogging, and Carlyle, Nexus and many more.
Many believed that the NOK was backed by oil, not requiring a gold reserve. However, oil is no longer a scarce resource but an abundant commodity. Switzerland, Germany, America and other first world nations have gold reserves. Norway should have one too.
"If I don’t issue more loans, then my salary isn’t enough to repay the mortgage, and car loan. It’s not difficult to issue more loans, but lets say in a years time when the loan is due, if the borrower defaults, then I wont just see a pay cut, I’ll be fired, and still be responsible for loan recovery."
What’s a Keynesian monetary quack to do when the economy and markets fail to remain “on message” within a few weeks of grandiose declarations that this time, printing truckloads of money has somehow “worked”, in defiance of centuries of experience, and in blatant violation of sound theory? In the weeks since the largely meaningless December rate hike, numerous armchair central planners, many of whom seem to be pining for even more monetary insanity than the actual planners, have begun to berate the Fed for inadvertently summoning that great bugaboo of modern-day money cranks, the “ghost of 1937”.