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Three Charts Explaining the Financial Crisis
So what is going on in the markets? We had Fukushima, but that was all good for the economy, because we had to rebuild Japan (with printing money).Then those guys in MENA wanted freedom (and lower food prices). NATO started Operation bomb Libya to stone age, but that was all good, that needs rebuilding too. Greece suddenly discovered it had no money left. Ireland joined, and Spain, Italy etc are still knocking on the same door. But we will save those guys too, just bail them out, or? The Germans taxpayer is getting rather tired of the bailing out the rest of Europe, but what will happen IF Germany gets downgraded, or is that impossible in this world, where we get Black Swans every two days? Then we got the downgrade of the US credit rating, and everybody living in total denial was suddenly shocked. Obama says the US will always be AAA, irrespective of rating agencies… During the past week, some renewed fears from Soc Gen being leveraged by 50 times, to Philly Fed plunging well into recession levels, have pushed the markets lower. The HFT Machines are the only ones trading the broken market, while the short gamma bankers desperately try hedging the “unhedgable”. We still have not heard of any Derivatives blowing up, but that should be on the agenda shortly. Despite all these “fundamental” reasons for the market falling, there are 3 important charts to understand. Firstly Goldman’s fresh GDP cut, yes the Economy is falling, second chart shows many markets are in Bear territory, meaning the bull is gone despite pundits claiming the bull is intact, and lastly, Long’s chart of what actually is happening and the ultimate end result, a currency crisis. Welcome to Irrational Exuberance 2.0 and yes watch for QE3 soon, so we can get the last ones to join the long trade. Before studying the below charts, don't forget WHO sold the TOP again.
and the "kicker";
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The Super-Rich still get mega Bonuses.....
...the Hoi Poloi get massive entitlements.....
....the Middle Class gets to pay for it all.
Along with many others, I've been short these past couple months. Russel 2000 and SPXU.
But I must say, all 50,200 SMA aside ( it seems everybody is following the greater fool theory - that is a wake up call people) - that there are some good values out there.
One thing to remember is that even with our worthless fiat dollar currency, cash is expected to make nil interest for at least 18 months. Unlike other bear markets, the Fed - even with their mostly exhausted tools, are not tightening and will keep money cheap. True, these banksters portofolios are still deleveraging and in a mess with toxic debt. However, if you've ever owned a successful private company, you know you can prosper during bad economic times. And that is true with some public companies, of course.
I am going to tell us something. This market is going to be VOLATILE FOR QUITE SOME TIME TO COME. New shorts are going to get a ride both ways.
Right, and may I say we are oversold in some equities.
Example, LUV Southwest Airlines is under liquid equity value. Also, do the research and take a look at how much CASH AND SHORT TERM INVESTMENTS THEY ARE HOLDING. Jesus Christ people, some of these companies may soon be able to go private. They can do a LBO right now with their cash and equivalents on hand and carry little debt at low interest %. What a deal. Yet the sheep now are all pessimists and talk about a contrary play, LUV is one of them. Disclosure, I purchased 75,000 shares at the close yesterday - 6.91. Think I am a loony? We will see. Remember I was leveraged short two months ago. And yes, I know all about head and shoulders. and what doomsday the charts look like right now. I know, I know.
Investing is not all charts, and I have been trading since the mid 1970's. There comes a time, when you must consider you are BUYING A COMPANY and not a SMA.
In terms of our currency, it is doomed long term. But anybody who has a global perspective and experience knows most all currencies are fiat and are doomed long term. They are just paper unless backed with something relatively finite like gold and silver. But that does not mean that commercial paper is doomed. Indeed, stock can appreciate quite handsomely during times of hyperinflation,
Let me please repeat that. Strong companies can survive and prosper in an environment of degrading fiat money. Buy low, sell high. It's never easy to buy low, and you are always in the great minority.
Is right now or sometime in the next 3-6 months the next cyclical low, - I would not speculate. But I will say this, knowing the financial condition of the company you are buying instead of only SMA analysis is a way to judge when you are getting close to cover time, and buy long time. Never buy garbage, always buy quality.
Like gold, good companys over the long term hold their value and are good investments. Buying low is never easy.
Shorts beware. When it is cover time, it will be extreme. Caution to the wind.
1.The first derivative that will blow up is the Silver futures market.
Just look at the future pricing starting from May 2012.
http://www.cmegroup.com/trading/metals/precious/silver.html
2. In your lower chart, we're already pretty further down the road.
Spain, Italy are both big countries and are already death. The corps is still warm so everybody still believes they are still alive but they aint.
US: also bankrupt, and the states are following in.
Fannie and Freddy already request a constant extra funding so they AGAIN passed that mark already to.
Even the banks are already failling again, so we already did a full circle and are 1/3 down the road to make a second lap. We're doing it just a bit faster thant the first time.
SO: we'll be going full circle faster and faster untill we do it every 3 to 4 months untill the tailspin makes us all pass out.
Here's one chart central to all the others.
http://maxkeiser.com/2009/08/14/the-most-gilded-age-in-us-history/
Good chart.... history has told us that extreme inequality presages violent times... Yet, any attempt at social engineering is not desirable...
And we call ourselves a "Rational Species"???
No social engineering eh? We have one of the world's most progressive tax systems. It is so progressive that half the voters pay no taxes at all, and the top 5% pay the great majority of all taxes. This is the reason federal theft from the productive economy to give to the unproductive one has killed the economy in the blue states and to a lesser degree in the red states. The majority love getting free stuff via government coertion. So, no, the problem isnt a lack of social engineering, the problem is there has been far too much of it and it is ballooning out of control. Politicians are terrified of undoing the social engineering that got us here. Witness the fake debates over the budget between the two parties.
Care to explain why so many are not paying taxes? Reckon it has to do with no jobs, or low-pay "service economy" jobs? And where did the jobs go? And who allowed this massive transfer of production?
Umm.,. ok, it is working so well that the GINI ratio keeps rising...
For shits and giggles, break down the Federal budget outlays and estimate/lookup the number of people extracting money out for each category and get back to me...
Now, look up the ratio of Federal transfers to Federal tax collections as a function of State. You might be suprised that the Blue states are the ones the getting fucked and the Red States, as a rule, get far more than they put in.
Hate to the piss on your little parade with facts...but continue with your ideological masturbation.
BTW, the system is fucked, I don't disagree...
Three financial facts--Lies, lies and more lies
Ring-a-ring-a-roses,
A pocket full of posies;
Hush! hush! hush! hush!
We’re all tumbled down.
Like it! I only have one useful observation. We probably will be shifted off the old fiat system of swindling us to the new system to swindle us before all currencies fail. TPTB have had three years to prepare for the switch. If they don't make the switch, they lose their power, so it's really not a tough call for me to say they will make their move before the USD reaches zero.
They are buying gold. They will ramp the value of that gold as high as they need to be solvent, as well as the governments who broke themselves kicking the can. Then everybody can be happy again, as the banks slowly bleed that inflated gold into the economy and buy up all the lovely things that make their lives so much more meaningful than our own.
And they all lived happily ever after.
Not where I see.
8 asks with a stack around 2500.00 and a few dozen bids on the cheap side below spot all the way down.
I got in at 1580 and out at 1720 when the tape flattened out one fine day. Celebrated when it dropped to 1600 and then watched with astonishment as it charged at 2000. All that in a few days.
Yes, I was speaking about when the current game of kicking the can and suppressing gold comes to an end. When the central banks can't get cheap gold anymore, that's when they will ramp the value of their gold, not before.
I haven't timed the drops so much as gradually accumulated. I think the drops are going to be of lesser duration and intensity from here on out but we'll see. They used two precious margin hikes to no avail. They could unleash everything they have, but my bet is they will keep their powder dry to halt panic buying. You can only hike margins so many times.
Congrats on some great trading, you must be proud (I would be).
Fukashima baby
glowing in the night
please baby don't say maybe
'cause i love that you're so bright
http://thepeakoilpoet.blogspot.com/2011/08/fukashima-baby.html
pretty damn good!
Fukushima will be the death of us all if they don't cap or nuke the goddamn thing. I have said that from the beginning and will never abandon that solution.
Me thinks they prefer the population to simply die off. In a few years the Nation will be solvent again.
Agreed. What they are doing is immoral. No, it's evil.
!allout @thetrader