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What if Charts?
By thetrader.se
Three charts to review on the topic of what if, while the ES future has started the Labor Day with 10 handles in negative territory;
….and while everybody seems to think we are done with the Black Swan for the year, we hate to break it, the Black Swan has not occurred as of yet. First two weeks of August was merely a small warm up. Black Swans are unpredictable…For a recap of Black Swan definition by Taleb, click here.
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Simple solution: since banks do not have to mark-to-market, give home-owners same dispensations. No f'in appraisals. Original home value as basis for re-fi. No one's "under water."
Everyone's "happy." Consumers get extra cash to spend and bolster economy. Banks can make consumer loans and issue credit cards to re-fiers.
Les Bon Temps Roulez!"
Why should Ben, Tim and their buddies have all the fun?
if the bernank is so obsessed with the 1930's depression, would it not be a lifelong dream to actually live it?
Good.Very good....
Overlay a chart of the U.S. deficit vs. the 10-yr. yield and you will see a chart never to be repeated in economic history.
The Bond sell-off might happen among individual/institutional buyers but this will not cause yields to rise or cause a black swan (unless it fuels the ultimate violent collapse of the U.S.). More likely, the FED will rip the face off of anyone who tries to short UST. The FED will print to infinity in order to purchase bonds and keep yields low.
Corporations hoarded cash during the Great Depression too.
The Bernank is a funny little clown isn't he? He claims to be such an expert on the Great Depression, his whole adult life has been given over to it's study. From such an academic I would have expected books that tell us about the flaws of that time in layman terms, but instead he seems hell bent on just showing us all first hand.
I remember the warnings and lamentations of those that lived through it as adults and late teens, all gone now, the one thing they all said was that NOBODY had any money. There were goods available, and at prices that had dropped to near give away levels, but there was no work and no money to buy anything with.
Fast forward to today, the banks and corporations we are told are rolling in (mostly taxpayer) money even if a lot of it is accounting frauds, but competition for wages is extreme, if you are not young, bright, handsome, and willing to utterly subjugate your life to your job then you need to face it, someone else is going to beat you at the race for gainful employment. And, those employed are losing ground, not just nominally but in real terms to undocumented inflation in the double digits.
Prices of some things are falling, just as in the 1930's, but whether a given good or service is rising or falling in price matters not, the vast majority have no money to spend for these. We have lower household income, lower net household wealth, fewer jobs, and mostly rising prices for necessities (those inelastic items we must buy). And I think the reason our good Dr. B has not written any books on the subject for general consumption is that he is clueless and he knows it. He is a shining example of the Peter Principal, remember that? "...in a hierarchy every employee tends to rise to his level of incompetence." The difference between the good and the bad here being that some know they have risen to past their level of competence while others still believe that they are competent when they are not. Benny boy did not believe in his own good fortune when he was named and confirmed to the post of Fed Chairman, you could see it for the first couple of years, the dude was shaking every time he had to speak, but he has since been convinced of his prowess by the sycophants he has around him, as well as being relatively better suited for the job than anyone else in power with the exception of Ron Paul who is biting his ankles at every opportunity.
Doomed to repeat the past we are, depression and world war, but this is not 1930 something, this time there may well be no survivors. One thing is certain, if there are survivors they will not be a bunch of happy campers, though they will probably be campers.
Your comment reminds me of something a good friend of mine said on the eve of the Chuck and Di wedding way back when: Love has nothing to do with it. She was chosen for the role - looks and fertility.
So was the Bernank. The only question is - who chose him, really, and what is he meant to bring forth? We know it won't be called William or Harry.
You know that Greenspan chose him. Greenspan built the Reactor of a Recession that we've been going through. Bernanke was selected to keep the recession from a Melt Down into a depression.
And we all want things the way they were, except we're out of fucking oil. Or at least we're out of oil after the Pentagon takes its share.
My advice to everybody is to go with the flow.
Bumbling Ben is no expert on the Great Depression. The man is pained to even consider "animal spirits", i.e., flawed human nature, as a source of historical cycles. For Ben and his crew, it's all about shaping the policies of "central planners", but this fails to recognize that such planning is in and of itself part of the cycles.
As for Black Swans, they're no so uncertain as Taleb maintains IMHO since typically financial panics occur during the "Fall":
http://thespiritoftruth.blogspot.com/2011/08/fall-is-approaching.html
What's most amazing is how Bernanke and like academicians utterly fail to recognize the historical pattern of our species bipolar insanity:
http://www.spiritoftruth.org/Thesis/Intro
Yet....here we go again...
What government needs to address is the fact that corporations are not investing, not expanding and instead keep hoarding cash, see Apple for example. That is the money that is needed to stimulate growth and the economy.
The question for government is, how can this be achieved. It commonly occurs in the cyclical environment of economies.
Government elected by the people and for the people is supposed to address that. Part of the plan is government restructuring, spending cuts and outsourcing to the private sector. Here is huge opportunity for private investment and the cycle begins until government can afford to grow from increasing tax receipts.
The world won't end. I'm calling PEAK ARMAGEDDON and I'm optimistic about the future when the current crop of politicians gets flushed and real leadership emerges.
Sorry. Your solution is backwards. So-called "privatization" would be compounding disaster.
Corporations do not need to expand or invest as long as they can continue to act as monopolies or oligopolies which is what most of them are/belong to.
Profits are generated more efficiently for them by not expanding by hiring, investing and producing but instead by firing, disinvesting and shipping whatever production they do have overseas and by raising prices as they have been - anyone here bought a 48 oz "half gallon" of ice cream or 13 oz "pound" of coffee recently? - for years now.
It is national insanity, mercantilism in reverse. Screw your own for fun and profit.
Please. If I never heard another word about what government needs to do or anything else, I'd be happy.
Ah, the old 'hoarding' canard.
So what's the difference between 'hoarding'... and capital?
Hording is just deferred spending... presumably, Apple's money is not stashed under a football-field sized mattress somewhere, but is acting as the base capital for bank lending.
And even if it is stashed under a mattress somewhere - so what? That just pushes up the price of money, making YOUR dollar go further.
Apple's money is not stashed under a football-field sized mattress somewhere, but is acting as the base capital for bank lending.
Excellent, excellent point. Applied to all checking accounts/short-term instruments worldwide. If corporations had good investment opportunities and started investing accordingly, the drawdown on banks reserves would drive up interest rates. "Capital" is faced with a major conundrum - deflationary demographics, inflationary monetary policies, topped off with Bozo the clown politics.
agree with your comments.
The top politicians need to go, but the party may need to go as well or some other prick takes their place and Nothing changes. Business may no be investing, they may be hoarding and maybe their spending Is key to a recovery........For sure, the govt is backed into a corner where they give in on every little cry-baby request from the corporations for lenient treatment in return for Money.....compounded by the same politicians that have set un an unworkable entitlement structure.....and insult to injury there have been no real economic consequences for this behavior up to this point. We are not just in a rough patch of the business cycle. Its an unprecedented situation where the world cannot pay back its own debt, the entire show is being exposed as a silly game. In a sick way, maybe its actually the path of least resistance for the Fed and govt if the mkt trades back down to 500 in the S&P.........this way than maintain the illusion that a 'mkt' still exists and more will actually have to fail this time, but primarily, the ENTIRE STRUCTURE THAT GOT US HERE TO BEGIN WITH WILL NOT CHANGE, ALLOWING FOR ANOTHER EVENTUAL RUN UP IN PATHETIC STUPID DEBT AT SOME POINT.
Corporations were able to maximize profits due to a) insane amounts of leverage and b) global outsourcing or a combination of the two.
There are no WINNERS. There are millions of slobs and schmucks who got sucked into consumerism of the grandest scale, aided by a ruthless financial sector that reaped profits when the taking was good. Plenty resources got destroyed in the process, houses filled with trash, landfills bursting at their seams.
There will be a reset of some sort. It will affect everyone and there is no hedge or shelter or any investment including gold or silver that will protect anyone. It's an illusion that gold and silver would somehow offer an escape from a debt jubilee, currency reform or general restructuring. In theory that might work and historical evidence more or less proves it, but for every example where gold and silver are cited to have stood their ground I can find the opposite example where gold and silver were millstones around someone's neck who thought they were smarter than the rest. The people that stormed the Bastille during the French Revolution couldn't afford to buy bread. They came after the elite that had stored riches over centuries and neither their gold nor silver holdings could put their heads back on after the chop chop.
If Apple for example is better capitalized than most banks these days, maybe Apple should open a lending arm and BE a bank. It's the evolution of corporatism. No need to employ the middle man. Apple's employees like to enjoy driving on nice roads and bridges. Then maybe Apple should develop the infrastructure and build it!
My point is that Apple and other corps. had a pretty sweet ride over the last decade. They maximized their profits by putting Americans out of jobs and importing cheaper made goods into the US where the leveraged American consumer could buy their stuff.
Everything is on the table and we're looking at countries like Greece defaulting on their debt. There is NO shortage of money in the system but the money is misallocated and nobody wants to make the first move, putting their cards on the table.
Goldman et al profited hansomly from Greek debt and Greek accounting fraud. There's money at Goldman to either gobble up Greek debt or work towards a restructuring of Greek debt. Nothing is sacred in an asset reset!
If Obama pulls the union card, America better watch out. It may be the only card the country has left to fight the banks and corporates. Something has to give. Literally.
If Apple for example is better capitalized than most banks these days, maybe Apple should open a lending arm and BE a bank.
Start up the bandwagon. AppleBank. Just think, a bank with no brick and mortar overhead, no legacy mortgage crap, and the technology to turn bits into value. Talk about creative destruction. With fractional reserve banking, Apple could offer 5% on deposits, lend out at 2% and still make a profit.
Can anyone think of a better and quicker way to bring down the banksters?
Hope & Change begins when the peons roll out the guillotines. Until then, expect more of the same.
in other words: hope
Despite DC, Wall street and the MSM 'touting' the "recovery" the US economy is heading for a deeper down turn. There was no recovery from the 2008-2009 crash. Only fraudulent balance sheet repair by way of smoke and mirrors for Wall street, while Main street continues to suffer.
History does not repeat - but this current time looks suspiciously like the "depression within a depression" that took place in the 1930's. The big questions being; How deep this new down turn will be and what nature it will take.
1/ Inflation
2/ Stagflation
3/ Hyperinflation
4/ Deflation
My guess is we have more than one at the same time, as is occuring now with asset deflation (housing) and devalued currency induced cost/push inflation. If the devaluation is carried too far with QE III then I would not be surprised to see a hyperinflationary event occuring. Which ever scenario surfaces, it will be very bullish for gold and silver, as wealth will seek ownership of the physical.
it isn't a black swan if the event is expected.
edit: I see this horse was beat to death, above. Carry-on.
As the saying goes, when you discover that you are riding a dead horse, dismount. Good advice in many sectors these days, from finance to political institutions and dogma.
The solution looks pretty clear to me. The Fed needs to fix the long term rate, as they did during WWII, and the government needs to return to the same tax model that they had after WWII.
The only other options I see is WWIII, which will just bring the resource shortage on even faster.
Maybe we should change the term to purple swan, or orange swan, there are so many black swans already it has become meaningless.
The financial world is like a slope of scree built up at too sharp an angle to stay stable. You don't know which pebble at the top will be the Black Swan pebble to bring the whole hillside rumbling down. Indeed when it is sufficiently unstable and poised to go almost any one of them would do if it comes loose. It doesn't take much to figure out what will happen without any need or benefit to knowing the exact pebble that will trigger it.
Are you trying to imply that black swans have something to do with timing?
They are omnipresent my friend.
I cant believe the graphic with black swans on the bell curve... think you missed the point...
It's like when Taleb laments how the guy doing the illustrations kept drawing dice... Totally missed the point!
lol, indeed, the black swans are lurking nameless outside the graph currently, if you can predict it on a graph, it's off-white at best, not black.
yep it is not a black swan if it is easily recognizable/predictable...although calling the "financial (wealth (stealing) transfer) crisis" a black swan is a misnomer
we build a home to raise our kids
because that's what we do
but it'll be an empty shell
when the future comes a knockin'
when the future comes a knockin'
when tomorrow's at our door
what today is what we dream of
will tomorrow be no more
http://thepeakoilpoet.blogspot.com/2011/08/when-future-comes-knockin.htm...
Let me simplify that for you - finite universe bitches. Use your resources and firepower wisely. Even if we are to slip into another dimension, there isn't enough energy for all to do so. Hedge accordingly (there really is nothing else you can do)
LoP
If you decide to leave and slip into another dimension, remember:
"If you wanna leave, take good care
I hope you make a lot of nice friends out there
But just remember there's a lot of bad and beware"
I can watch your back.