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They're all gonna laugh at you

South of Wall Street's picture




 

US Equity markets continue to make the sky is black crowd look foolish.  However ridiculous the 'reasons' are getting for the continued momentum (LTRO, QE, multiple expansion, fund flows, generational opportunity, etc), there are a few things the economist in me would like to point out.

  1. Spain is the new Greece.   Portugal is going to debate this, as they're banged up, but Spain is a unique disaster.  The major issue is that no one cares about them. Sans development and tourism, which are in soliatry for a decade or so, you've got a paper bag full of water.  Take a look thru the headlines in April of 2010, things were contained.  We got confirmation Spain is a bag of .... water ...today.
  2. Europe is in trouble Recession, solvency, currency wars - don't be surprised if it happens (in that order) when 'risk' appears out of nowhere.  Again.
  3. China.  You saw this, right?  So the US story in 2005-2007 was, housing is going to collapse - but until it does ride that pig.  China is the same story today.  Look, this isn't very difficult.  First, their banks are raising equity capital (the same path our banks went down) after reporting massive loan losses.  Will this issue suddenly vaporize? No. This is not unique to one bank.  Why? 

    Chinese banks have been on a lending spree since November 2008 when Beijing unveiled its 4 trillion yuan ($630 billion) stimulus package to rescue the economy from the financial crisis that began that year. The stimulus package led to an explosion in credit to local governments and property developers.

    However, as the credit boom ended, defaults began to rise. Bad loans at China's five largest banks advanced to 299.6 billion yuan as of Dec. 31, 2011, compared with 287.9 billion yuan at the end of September, data from China Banking Regulatory Commission showed. Link

  4. Generational Opportunities. Finally.  Please - run, hide, and bring a taser when you hear about a generational opportunity to do anything.  This one wasn't.  This one isn't.  These risk-less calls get a lot of attention when they work out - but there are hundreds of them made by people who don't offer any edge into what will develop - just the power to make things wiggle when they report the news.  Don't flatter yourself, there are people far smarter than you taking the other side or passing.  Use the analogy of a gorgeous woman in Vegas walking up to you (and your Reebok track suit) at 3 AM.  Run. Muppet.  Guess what? The NASDAQ will get back to 4,500 - but it won't be on the time frame you'd anticipate.  Probably not the generation you expect either.  It certainly won't happen when a guy on mutual fund TV tells you about a guy - who made a call - that stocks might go up - more.
 

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Tue, 03/27/2012 - 07:35 | 2293748 Paul451
Paul451's picture

The Chinese will get old before they get rich. The Japanese are headed off the cliff first. If you want to base your society on an anthill, it's best to have more people at the bottom holding things up than having more at the top sucking you dry.  If it werent for immigration, the USA would be staring down the barrel of the same problem: but it's still a 'when' not an 'if'. Demographics is destiny. Just about the only difference between Europe, Asia, and the West is the particular order in which they will default. Cough - they have already - cough. Right now we're watching a game of 'pretend' on a global basis.

Tue, 03/27/2012 - 06:23 | 2293703 mogul rider
mogul rider's picture

You all yap about buying and hoarding gold and silver becuase the system is rigged.

Does it occur to you that you buying PM's is part of the rigging?

 

Muppets come in all forms

 

Tue, 03/27/2012 - 04:36 | 2293650 Arthur
Arthur's picture

She was beautiful but expensive.

Tue, 03/27/2012 - 03:43 | 2293622 Tao 4 the Show
Tao 4 the Show's picture

Vaat do you mean?  Dis is DE Generational opportunity!

Tue, 03/27/2012 - 03:07 | 2293591 Madrid2020
Madrid2020's picture

If Spain goes,so does the rest of Europe.M.Rajoy knows this and it's precisely the reason he has Merkozy by the balls. Keep that ECB cash coming,because if you attempt to force Greek style austerity on Spain,Madrid will likely abandon the euro and it won't be pretty. Italy,France,Belgium and probably the Netherlands will crash within a year.

 

 

 

Tue, 03/27/2012 - 02:26 | 2293566 dark pools of soros
dark pools of soros's picture

what's her name?

Tue, 03/27/2012 - 02:19 | 2293559 q99x2
q99x2's picture

Heck thats nothing. Look up gamma ray burst.

Or, how'd you like to wake up as a caterpiller? You never know for sure what is around the corner.

Tue, 03/27/2012 - 01:54 | 2293536 FXPortent
FXPortent's picture

Try telling someone about the economic problems in china and there's a good chance you'll see a giant question mark form above their heads.

 

Many people always arrive late to the game.

Tue, 03/27/2012 - 01:49 | 2293535 Dr Bob
Dr Bob's picture

TPTB buy and buy and buy to drive up the values, with money they have printed of course. you feel like youre missing out on a great rally. so you jump in. once they get everyone in, they drop the hammer and sell like crazy. they made a killing, avg. joe didnt. thats how i sum up the market.

 

Tue, 03/27/2012 - 04:31 | 2293645 The Navigator
The Navigator's picture

I remember reading about this circa 1929 or 28? - anyway, ponzi goes way back; dutch tulip scam is remembered because we had pencil and paper, before that it was word-of-mouth and not much remembered. Was the 1st "I'll trade you 2 square wheels for 1 of your round ones"? Humans been scamming for a long long time.

Tue, 03/27/2012 - 00:21 | 2293422 tempo
tempo's picture

Two black swans that are landing...Worldwide labor glut w good jobs paying $1.25/hr w/o benefits in most of the world and Japan's massive debt/gdp in the face of a slowing economy and an inability to contain the dangerous 4 nuclear plants and related radioactivity throughout the country (www.ENENews.com)

Tue, 03/27/2012 - 02:26 | 2293386 alexwest
alexwest's picture

funny to read from someone w/out INVESTING record bragging endlessly about HUGE PROBLEMS IN China/Europe/Spain and not word about USA..

take for example Europe... yes things are bad in Europe, but not in WHOLE EUROPE, there's bunch of good economically countries ... Germany/ Holland/Finalnd/Swiss/etc.. small or not all budget deficit, positive trading balance

for god sake GERMANY deficit will be $ 30 bln this year.. yes, $30 bln..
its what USA issues in what period, 1 week..?

my point,, THERE ARE GOOD PARTS IN EUROPE.. but none is here.. EACH AND EVERY PART OF USA is broken : fed goverment, local gov, consumer, students, housing..

mostly problems in Europe are goverment induced.. consumer/population is pretty fine.. not much housing debt, huge savings.. in Italy people dont even use credit cards...

Europe, for example, dont have problmes w/ housing because there was no bubble (excl Brits/Ireland/etc)

gray/balck economy is huge.. from goverment standpoint its bad, but is it ?
why people must pay taxes to support bankers/wars/etc..?

huge local markets, small hotels, small food joints.. Germany's middle tier firms are envy of whole world..

so pick your choice

alx

Tue, 03/27/2012 - 19:13 | 2295945 Irelevant
Irelevant's picture

More transparency in the us, its just the illusion Europe is better, due to .gov secrecy.

Tue, 03/27/2012 - 07:54 | 2293772 Puppet Hegemon
Puppet Hegemon's picture

> mostly problems in Europe are goverment induced.. consumer/population is pretty fine.. not much housing debt, huge savings.. in Italy people dont even use credit cards...

Oh man, are you serious about it? I should send your passage to my Italian friend who dosn't even consider to go back to Italy.

Europe, for example, dont have problmes w/ housing because there was no bubble (excl Brits/Ireland/etc)

Haha, this etc thing might roll out in a pretty long list. Housing debt in Denmark is 238% of GDP at the moment and the housing buuble is bursting there at the moment. And the only thing the country produces is pigs and "services".

Sweden is on its way with the housing bubble - low rate mortgages and 10-15% downpayments has done its job and it's a matter of time before muppets realize there that a rat hole in Malmö is not worth of 100k+ EUR. And you know that youth unemployment in Sweden is 20%, don't you?

 

Tue, 03/27/2012 - 08:00 | 2293780 Ghordius
Ghordius's picture

you don't seem to get his point: every european country has some problems - but they are diverse. Denmark housing debt? yes - though it does not apply this way to the rest. etc. etc. Italy has no jobs? yes, though it has not the credit card problem. and so on.

Tue, 03/27/2012 - 08:30 | 2293817 Solarman
Solarman's picture

What happens to the population when the government no longer cansubsidize your living costs?  Those high savings, and annual vacations go out the window.  Europe is not fine by any stretch of the imagination.

Tue, 03/27/2012 - 08:21 | 2293801 GeneMarchbanks
GeneMarchbanks's picture

It doesn't matter, the Yanks only see the outside world as an extension of its self and its own economic failure. This is why you see the corporate media providing 'in depth' context for the masses.

Beyond that, they cannot see.

Tue, 03/27/2012 - 02:51 | 2293582 Manolo
Manolo's picture

Well Alex, about time to realise that ZH is just any other place on the net that has been taken over to spread misinformation to the benefit of the very system Zh was supposedly exposing. Sign of times. But entertaining anyway. Stay sharp, keep smiling.

Tue, 03/27/2012 - 06:16 | 2293697 Ghordius
Ghordius's picture

how true... useful tips there, stay sharp, keep smiling

Mon, 03/26/2012 - 23:45 | 2293360 rocker
rocker's picture

Did anybody notice how some Coal stocks hit the 52 week low list again.  Yes, today.  Many more commodites are chasing them down too.

And they want to debate if homebuilding stocks are over done.......LOL    What the hell are "they" looking at anyway.

And we were just told the Baltic Dry Index low did not matter either.......LOL again.   Eh...

Mon, 03/26/2012 - 23:33 | 2293332 El
El's picture

I cannot comprehend how anyone is still playing at this point, because this game is seriously rigged. It is like trying to win at a carnival game.

Tue, 03/27/2012 - 04:20 | 2293638 The Navigator
The Navigator's picture

+1,000

Best analogy I've read on ZH - "like trying to win at a carnival game"

Mon, 03/26/2012 - 23:25 | 2293315 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Delusion can last for quite a while evan as the house is burning to the ground. In the end, leave the house or die in the fire.

Tue, 03/27/2012 - 05:13 | 2293667 philipat
philipat's picture

Agree with some but not China. I have lived in Asia for over 30 years and you Americans don't understand. It's not like California. China is just fine because it;s corruption is directed towards getting things done, unlike US corruption which is directed towrads getting NOTHING done. The Chinese Government still does not have to worry about any supposedly democratic processes like, apparently, in the US so can move quickly and adjust very quickly. I'll bring forward your post 6 months and let's then review again.

Tue, 03/27/2012 - 06:12 | 2293694 Bubble
Bubble's picture

What nonsense man. Yeah, in Asia corruption isn't used to line pockets. How naive?!! Getting things done like thousands of empty 'luxury' apartments all over China that are all good investments.
The Chinese don't have to worry about democracy, a brilliant model we unfortunately seem to want to follow currently here... Just like in the 80s when we should've all been following the Japanese model for success.
Or were you being sarcastic?

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