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TEOTWAWKI ( or the great depression 2.0 ? ) Coming this fall...
Submitted by Lou629 on 06/29/2009 16:01 -0400
A request for more information from a FNG:
We all saw the world nearly come to an end last september, and it'll be a long time (if ever)
before i'll forget last fall.
Recently I have seen more than a few replies to posts here that seem to indicate
that this coming fall will be a time when we see the end of the world as we know it.
The timeframe given for this event(s)varies a bit, but the replies seemed to be mostly concerned with this coming september or october.
I am curious if one or two of those posters could explain to this noob what it is that's supposed to happen and
why in september or october and not sooner or later?
Thanks
L629
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Markets are not acting rationally, so trying to precisely predict events is impracticable. Should there be an FDR-style bank holiday event, you are not going to have any advance notice. You will wake up one Monday morning and say to yourself, "My family is fucked.". Look up "Corralito" and Argentina and you will see what happens to a sovereign government and it's subjects when they live beyond their means and meet their creditor. I don't subscribe to survivalist literature, however, like the bible, it does have some redeeming qualities. I'm not saying that the end of the world is near, but having potable water, canned goods, and cash(real money like gold and silver included) at the ready is not a bad idea. Seriously, look up "Corralito", it's coming to America. Be liquid.
Lou,
First, there is an historic yearly pattern that the markets tend to follow. September and October are very bad months. This goes back a very long time. (pre-depression 1) Farmers would harvest their crops in late summer and sell the crops in the Fall. The shift of goods to the city for cash (from the city) would often lead to the collapse of some weak banks. This doesn't happen any more, but we kept the ghosts of the past. Plus, the third quarter for most companies ends in September. (and is reported about a month later) This is a large cause of the modern-day weakness in these months. You see, by the time a company reports its third quarter, you should have a very good idea of how much the company will earn that year. (total and per share) If the earnings disappoint, the stock will decline. (as there is practically no doubt it is overvalued) While one could argue that this should happen at any quarter, it doesn't. Q1 can suck and they can give good guidance; Q2 can suck and they can say that "orders are indicating a rebound in the third quarter"; or our favorite: "there appear to be green shoots. By the time Q3 is reported, there isn't much time left for hope.
Many people sell in advance of this situation.
Another possibility that could be specific to this year is the requirement of banks to pull some of their off-balance sheet assets back on the balance sheet. (effective Jan 1 2010)
An internal audit person where I work was telling me about this one. It would be the kiss of death for at least a couple banks that are "too big to fail". The media has not covered this one at all of course.
That's my take on it.
P. Prophet
Hi,
1. The Harry things is a no-go. He heard that diplomats over seas were told to stash a year's worth of local currency. He assumed that would mean some sort of bank holiday. He's wrong. They do that every year anyway.
2. Read http://market-ticker.org/archives/689-Where-We-Are,-Where-Were-Heading-2...
Karl Denninger has a darn good track record and he is an every day must read. In fact, if you don't take what he says into consideration, you're an idiot.
3. For amusement with a smidgen of tin foil hat and maybe with a little alotment of reality, watch some recent Gerald Celente.
Now as for what I think? We have a lot of clowns juggling chainsaws hoping nothing bad happens. It could be 2 days, 2 weks or 2 years, but we're looking at some sort of meltdown. Not TEOTWAKI though (I hope)
I think it is Harry Schultz that has made the call for a bank holiday. Perhaps very Tinfoil, but who would believe that we'd be in the place we're in today just a couple of years ago?
I think that people are pointing to the fact that the problem that got us into this problem (Shitty assets that became illiquid, almost worthless, that counterparts said "put up more money bitch!") hasn't really gone away. The flood of problems may have receded, but we fundamentally haven't built appropriate retaining walls from keeping these problems from occurring again.
It is the pretend and extend philosophy that market pros are concerned with. Pretend that the problem doesn't exist (and it may go away) and extend the timeframe in which we have to deal with the onslaught of the problems (and we'll have a solution by then). If that day comes, America's congress doesn't have the political will to get the backing to solve the problem. That would cause GD v2.0
Well that and the 40 week cycle rolling up in that time frame.
Well, there's a rumor flying around that there will be an FDR-style bank holiday around then. It's completely unsubstantiated, and I personally don't believe it, but it's one of the things that may be feeding the "end of the world" talk.
That would be BS. Bank holidays are not planned months in advance. Whilst bank holidays are a possibility if we return to Oct 08, I would urge conversation to stick to probable or at least slightly substantiated rumors.