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Extraordinary Popular Delusions And The 'Madness' Of Bond And Gold Markets

Tyler Durden's picture




 

Whether its new-fangled Japanese stocks, hi-tech internet company valuations, multi-colored flowers, or mansions made affordable by criminally lax lending standards, Grant Williams notes that a bubble is a bubble is a bubble; and citing Stein's Law: "If something cannot go on forever; it will stop." In this excellent summary of all things currently (and historically) bubblicious - whether greed-driven or fear-driven - Williams concludes it is never different this time as he addresses the four phases of the classic bubble-wave: smart-money, awareness, mania, blow-off (or crash) and explains how government bonds are set to burst and gold is only just about to enter its mania phase. This far-reaching and entirely accessible presentation is stunning in its clarity and as he notes, while bubbles are always easy to spot ex-ante, understanding how they come about and why they are popped gives the few an opportunity to profit at the expense of the madness of crowds. From tulips to tech-wrecks, and from inflation to insatiable stimulus, the bubble in 'safe-haven flows' that currently exists has all the characteristics of a popular delusion.

 

The first 9 minutes provide all the required background.

 

The next 10 minutes addresses the details of debt, government largesse, and why government bonds are 'peaking' and gold is about to explode - as the safe-haven 'tie' between the two is about to be smashed apart...

 

 

 

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Sat, 10/20/2012 - 15:03 | 2906646 fonzannoon
fonzannoon's picture

OT but anyone on here seen the documentary "surviving progress"? A few people recently told me to check it out.

Sat, 10/20/2012 - 15:17 | 2906670 markmotive
markmotive's picture

When bonds go south and gold goes north the financial system will collapse. But don't look for a warning sign because the collapse won't come announced.

http://seekingalpha.com/article/922591-the-financial-collapse-won-t-come...

Sat, 10/20/2012 - 15:29 | 2906681 NewWorldOrange
NewWorldOrange's picture

It's always a little troubling when I see someone link to Gary Weiss's website. He's a shill for most everything zh readers (or any sane persons) despise. No offense intended toward you markmotive -- I assume you probably didn't realize:

http://www.deepcapture.com/gary-weiss-scaramouch-psychopath/

Sat, 10/20/2012 - 15:56 | 2906716 bank guy in Brussels
bank guy in Brussels's picture

Thanks, that is a fascinating and very disturbing investigative article you linked there on Deep Capture, very thoroughly detailed.

Among the interesting stories there ... is the detailed description of the utterly criminal corruption of the CIA's Wikipedia re Gary Weiss, hiding and deleting items and ruthlessly suppressing people trying to present facts ...

And also these fascinating tidbits about one of the hidden 'deep core' elements of the US (and global) financial system, the DTCC or Depository Trust & Clearing Corporation, extremely powerful but essentially beyond the reach of any regulation whatsoever ... and Gary Weiss apparently working to cover up its shady activity. In the article:

« ... a nearly unknown corporation ... DTCC ... The company provides settlement for the nation’s capital market: $1.5 quadrillion in trades are settled there every year (that is, about 30X the economic output of the entire planet). For most of its history it has largely escaped regulation: state regulators are admonished that they cannot peer inside because the DTCC is federally regulated, and the DTCC has told federal regulators it escapes their regulation due to its strange ownership structure (one former federal regulator, and one former employee of the DTCC, have both told me the feds would not know where to begin if they tried to regulate it).

In short, at the heart of the world’s economy is an enormous black box that is regulated except on the days it’s not, and through which 30X the economic output of the world flows. It is my contention that much of Wall Street’s illegal activity is funneled through this strange entity

The huge, nondescript building in downtown Manhattan that houses the DTCC is something of a Fort Knox. Long-gun toting guards watch the entrances, and journalists who have been inside tell me that entering it is tougher than getting into the Federal Reserve or any comparable institution. ... »

http://www.deepcapture.com/gary-weiss-scaramouch-psychopath/

Sat, 10/20/2012 - 16:15 | 2906741 NewWorldOrange
NewWorldOrange's picture

Great post! Did you get the chance to read "the 22 chapters" at deepcapture before it was taken down by the Canadian Court a year ago? Best "conspiracy theory" of all time, and the most thoroughy documented and most well-proven. Patrick Byrne is an American hero. Big supporter and friend of Ron Paul BTW. Those 22 chapters were totally scrubbed from the Internet. Even from Google's cached pages and from foreign-based mirror sites. I'm convinced that TPTB didn't want all that to get out. Byrne proved beyond any doubt that Lehman and Bear Stearns collapsed due to a financial attack (mostly illegal naked short selling) by a conspiracy of people including the Sicilian and Russian mafias, the Russian government and the royal family of Abu Dhabi, various wealthy international weapons dealers, and with the (perhaps unwitting) help of certain people in it just for the money, like Jim Cramer and Gary Weiss and their buddies in the SEC, on Wall Street, etc etc. The usual suspects...

These financial wars, and currency wars, are raging, and TPTB are (mostly) hiding it all from us, even as they continue to prop up the institutions and a system that makes us so vulnerable to them in the first place. When deepcapture went back online in January of this year, it was a very different site. Still a great site though.

I have all the material from the original site saved. Almost every day I ask myself whether to post it on some blog. I had a blogspot blog until a year ago that made a good deal of money from Adsense. Google took it down without explanation. It was a trader's blog. But now and then I threw in a link to deepcapture with an excerpt...

Sat, 10/20/2012 - 16:24 | 2906748 vast-dom
vast-dom's picture

NWOrange: POST IT UP! That was some fucked up soiopathic shit on Gary. Reminds me of this pathalogical woman i used to know. That man is truly deranged and dangerous. POST IT UP!

Sat, 10/20/2012 - 16:31 | 2906774 NewWorldOrange
NewWorldOrange's picture

Couldn't do it here of course. Book length. Not sure I wanna' be the next Julian Assange either. What's in it for me? Heh. I do consider it often though. Maybe once I'm a bit closer to the grave...which shouldn't be too long;)

Sat, 10/20/2012 - 16:43 | 2906785 zerozulu
zerozulu's picture

did some one said thepiratebay and bitTorrent ?

Sat, 10/20/2012 - 16:52 | 2906791 vast-dom
vast-dom's picture

too easy to post anonymously. same reason you have it is the reason to post it.

 

PS i can assure you that it was Russian Mafia involved, but in no way were Italians involved in an meaningful way.

Sat, 10/20/2012 - 17:21 | 2906832 NewWorldOrange
NewWorldOrange's picture

"PS i can assure you that it was Russian Mafia involved, but in no way were Italians involved in an meaningful way"

Heh. I guess I'm not too sure about "anonymous posting" really being anonymous. For now though, I'll just say this. The short version:

For years, certain people and entities, many of whom are household names, have been intentionally conspiring to destroy many perfectly good companies, by way of massive naked short selling and by using their public platforms to junk/lie about those companies to drive the price down. Jim Cramer is the poster boy http://www.deepcapture.com/jim-cramer-is-a-complicated-man/

A number of folks at CNBC have been in on it from the get-go. David Faber, Bob Pisani. Cramer bragged about a lot of it in his own book and said that if they needed someone to junk a company, one of their go-to people was Bartiromo -- she'd say whatever they asked. Many others are involved in this -- it's vast.

Certain foreign elements -- "terrorist" and terrorist financiers, weapons smugglers, hostile governments and so on, realized what Cramer and Co. were up to. It's not a big secret on Wall Street what Cramer & Co. have been up to for many years.

http://www.youtube.com/watch?v=3bBKrTKHqcg

http://www.youtube.com/watch?v=FP3YyJz3HsU&feature=related

Those foreign elements apparently decided that Bear Stearns and Lehman were weak links and jumped on Cramer & Co's company-destroying bandwagon not (only) to make money, but to collapse the U.S. financial system.

I have called Obama a traitor of epic proportions for signing the NDAA law. I stand by that. But I do wonder if it wasn't intended for guys like Jim Cramer and his cohorts.

And I must admit, at times I wonder if at this point, it wouldn't be best if the whole thing did collapse, before Skynet is fully operational.

One thing is for sure: The policies and practices of our own government and of the Fed have put us in this precarious position where we are obscenely vulnerable to people like these.

Cramer and many others he's connected to is damn lucky that Patrick Byrne's good friend, Ron Paul, isn't about to be naming the next Attorney General.

 

 

 

 

 

Sat, 10/20/2012 - 21:01 | 2907149 Transformer
Transformer's picture

Well, as Alex Jones explains all the time, you now have two choices.  Either serve it up and get it out there one way or another, or they will come and take it from you and perhaps you will perish.  If you think that your identity is safe here on ZH, you are a fool.  Alex Jones has told people this while interviewing them on his show, and some have realized he was right and published.  They are still around.  There have been a significant number that have not and have either gone to jail or perished.  This is not a game.

If the data is what you say, you better act now.

The DC Madam, and Breitbart are two who Alex told to publish and they didn't.

Sat, 10/20/2012 - 21:45 | 2907195 Overfed
Overfed's picture

Publish it. You won't need to worry about your safety as the sheeple are so conditioned to believe the gov's narrative, that there is no evidence that will ever wake them out of their sleep. Even when the shit hits the fan, they still won't belive it.

Sat, 10/20/2012 - 17:18 | 2906827 vast-dom
vast-dom's picture

NWOrange:

 

Here I'll post it up: http://vastdom.blogspot.com

 

(It's not copyrighted material, is it?)

Sat, 10/20/2012 - 17:23 | 2906840 NewWorldOrange
NewWorldOrange's picture

You have the "22 chapters" on the original deepcapture site before it got scrubbed? Can't imagine where you could have found it but I'd like to know how if you did -- I have been unable to find it and would gladly post a LINK to it if it were already up somewhere.

Byrne has always said that anyone is free to disseminate it at will, unedited.

Sat, 10/20/2012 - 17:34 | 2906842 vast-dom
vast-dom's picture

let's do it! 

i'll post it right here: http://vastdom.blogspot.com

 

NWOrange: you will need to send it to me so that I may serialize it.

 

 

Sat, 10/20/2012 - 18:06 | 2906919 NewWorldOrange
NewWorldOrange's picture

I appreciate your enthusiasm vast-dom. Often enjoy your comments. But if I was willing to send it to you or anyone, I'd just post it. And I probably will pretty soon, one day when I get a wild hair...I wonder if WikiLeaks is accepting unsolicited manuscripts?

Sat, 10/20/2012 - 19:07 | 2907016 vast-dom
vast-dom's picture

LINK TO 21 CHAPTERS NOW UP.

 

Posting all 21 chapters to:

http://vastdom.blogspot.com

 

Enjoy. And thanks to Wouter.

Sat, 10/20/2012 - 19:43 | 2907069 NewWorldOrange
NewWorldOrange's picture

THAT'S FUCKING AWESOME! WTF DID YOU FIND THAT?

BTW, I have 22 chapters saved...I'll be visiting your blog and comparing...and will send you Chapter 22 if your posts don't include that material.

I hope you're not counting on any income from that blog...Google, as you may know, is notorious for censoring them/taking them down.

EVERYONE SHOUE READ VAST-DOM"S BLOG FOR THIS MATERIAL. IT WILL BLOW (AND OPEN) YOUR FUCKING MIND LIKE NOTHING ELSE.  THERE IS NO BETTER "EXAMPLE" OR PROOF OF THE WANTON AND BLATANT CRIMINALITY OF TPTB AND THE PEOPLE ON WALL STREET AND AT THE SEC AND OTHER AGENCIES.

Sat, 10/20/2012 - 20:10 | 2907107 Skateboarder
Skateboarder's picture

Holy shit guys...

Thanks so much for posting the chapters vast-dom - I look forward to the reading.

Sat, 10/20/2012 - 20:23 | 2907120 vast-dom
vast-dom's picture

Yes PLEASE let's get chapter 22 up ASAP! Can you send it to me NWOrange?

Look out for more posts in near future.

 

If google takes anything i post down I will put up my very own blog server so no worries.

Mon, 10/22/2012 - 09:42 | 2909276 RallyRoundTheFamily
RallyRoundTheFamily's picture

Thanks VD

Sun, 10/21/2012 - 12:39 | 2907772 DanDaley
DanDaley's picture

Hey, read this while you're at it: 

 

Secret Weapon: How Economic Terrorism Brought Down the U.S. Stock Market and Why It can Happen Again - Kevin Freeman (on Audible.com also)

If even half of what he says is true...well, you know...

 

Sat, 10/20/2012 - 16:29 | 2906759 TheGardener
TheGardener's picture

So I ´am just lucky to have read up on those extraordinary popular delusions and the madness of crowds back in 1997 ? Bought my first gold in 2007. Still some 20 felt years behind on preparations  by now and

ready to dispose off some rare books in my library... well wait, no nuke gone off yet, let`s play civilization for the time being...

Sat, 10/20/2012 - 18:28 | 2906962 Sam Clemons
Sam Clemons's picture

You just announced it.

Sat, 10/20/2012 - 16:31 | 2906771 B-rock
B-rock's picture

Yes -- but it should be called "Killed by Progress". It's great if you're looking to feel hopeless.

Sat, 10/20/2012 - 15:03 | 2906649 terryfuckwit
terryfuckwit's picture

Gold bitchez....

Sat, 10/20/2012 - 15:07 | 2906658 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1  Very good, second reply, beat me to it.  

Gold is going MUCH higher...

Sat, 10/20/2012 - 15:41 | 2906697 francis_sawyer
francis_sawyer's picture

Food bitchez...

Sat, 10/20/2012 - 15:51 | 2906707 NewWorldOrange
NewWorldOrange's picture

Exactly. I own gold and silver, but I realize the odds of my surviving long enough to actually use it, and to use it without drawing unwanted attention (to say the least) is very, very slim.

Sat, 10/20/2012 - 16:21 | 2906718 Muppet of the U...
Muppet of the Universe's picture

PLATINUM GOLD RATIO BITCHEZ

 

edit: Long toothbrushes and floss, bitchez

edit @ clockwork orange dude: GUNZ + CABIN + BIODOME + PORNO MAGS... BITCHES

Sat, 10/20/2012 - 16:13 | 2906740 centerline
centerline's picture

Agreed.

Sat, 10/20/2012 - 21:50 | 2907199 Overfed
Overfed's picture

The number one thing, even more than community, is to never let your guard down. Don't get comfy and complacent until it's over, that is, if it's ever over. That will be the hardest thing for all of us.

Sat, 10/20/2012 - 16:07 | 2906727 Skateboarder
Skateboarder's picture

When you cold and hungies and the outside world is not a safe palce to be, a can of baked beans could very well be the most amazing thing ever.

Long food!

Sun, 10/21/2012 - 12:07 | 2907792 Svendblaaskaeg
Svendblaaskaeg's picture

Giraffe barbecue bitchez!

Sun, 10/21/2012 - 08:49 | 2907538 Central Wanker
Central Wanker's picture

Gold and silver I already have, enough to weather through a 10-year storm. I don't like the taste of canned food too much, however. Relocating to a country that is a major exporter of food and oil, is therefore on my agenda next. The country of choice just granted me a permanent resident visa.

The funny thing is, that I'm a citizen of a so-called wealthy country. Why do I have to do something like this?

Sat, 10/20/2012 - 15:13 | 2906656 DowTheorist
DowTheorist's picture

Technically, bonds are at a very difficult juncture. I minor decline would technically make gold explode, and bonds enter a severe bear market. Since mid September, bonds have been sitting on a cliff, however, the recent correction of gold has provided a breather.

But a minor decline might imply "game over" for bonds.

 Basic analysis:

http://www.dowtheoryinvestment.com/2012/09/dow-theory-spells-trouble-for...

 

 Update:

http://www.dowtheoryinvestment.com/2012/10/dow-theory-update-for-oct-5-m...

 

Of course, under such scenario one has to wonder whether GLD suffices or one should have physical gold:

 

http://bit.ly/R7pAjs

 

 

Sat, 10/20/2012 - 15:40 | 2906693 CPL
CPL's picture

Physical and anything with value.  Your milage may carry on whatever it is regionally.

Sat, 10/20/2012 - 16:32 | 2906773 Mr. Hudson
Mr. Hudson's picture

Didn't Peter Schiff say in his book that before bonds collapse they would skyrocket because nobody will want them, and the government would be buying them to keep them from falling, and then everybody would jump on the bandwagon, creating a hysterical bubble?

Sat, 10/20/2012 - 17:36 | 2906863 DowTheorist
DowTheorist's picture

Fofoa says something similar concerning the twin brother of bonds, namely the USD. He says that in the final phase we can see both gold and the USD going up. Eventually, though, gold is to shine alone.

 

Fofoa is a blogger who is worth considering. A very balanced one:

 

http://fofoa.blogspot.com/

 

it takes time  to understand him but the investment is worth the effort.

Sat, 10/20/2012 - 17:50 | 2906896 Mr. Hudson
Mr. Hudson's picture

Wow! Good stuff. Thanks!

Sat, 10/20/2012 - 17:44 | 2906885 Spitzer
Spitzer's picture

Yes and the Euro is set up to take advantage of this for this exact reason

 

http://freegoldobserver.blogspot.ca/2011/09/is-euro-system-next-monetary...

 

 

Sat, 10/20/2012 - 15:09 | 2906662 ytraderx
ytraderx's picture

The money supply growth rate is increasing, and it won't be long until inflation heats up. Inflation combined with a flight away from safety will spell doom for bonds. However, I am a bull on housing. Real estate is going to skyrocket and now is one of the best times to buy. Check out this article that discusses hedge funds snapping up foreclosures:

http://www.globaleconomicmonitor.com/2012/10/housing-is-starting-to-heat...

Sat, 10/20/2012 - 16:13 | 2906734 flacon
flacon's picture

Excellent, why don't you buy a house in Vancouver AND Toronto. Let me know how that works out for you in 5 years time... 

 

Unless of course you mean the $1,000 houses now on sale in Detroit... now THAT might be a long term good investment (after the Detroit zombies finish eating eachother). 

Sat, 10/20/2012 - 16:28 | 2906761 Mr. Hudson
Mr. Hudson's picture

I got an inside tip that the FEMA camp timeshares are going to go to the moon.

Sat, 10/20/2012 - 19:48 | 2907076 Matt
Matt's picture

Do you know why the $1,000 houses in Detroit area are not clearing the market? From what I understand, the municipalities want the back-taxes owed (in some cases >$25,000) plus >$2000 per year, for a tear-down. If anyone has better info on the situation, feel free to link a source.

Sat, 10/20/2012 - 20:29 | 2906692 Call me Ishmael
Call me Ishmael's picture

I made a short video on the topic of fractional reserve banking.

http://www.youtube.com/watch?v=tkfi1yUjbwI

Sat, 10/20/2012 - 15:41 | 2906694 Atomizer
Atomizer's picture

Keep chugging along with the Chinese or pull out before you fill the glory hole losses.. Decisions, decision. Tis Tis!

 

 The Tragedy of European Union and How to lesolve It

 

George Soros | New York Review of Books | September 10, 2012

 

Pleface: In efficient-moving situation, significant changes have occurred since this articre went to press. On August 1, as I write below, Bundesbank Plesident Jens Weidmann objecte to nice assertion by Mario Dlaghi, president of European Central Bank, that most honorable ECB will “do whatever it takes to preserve dislespectful euro as efficient stable currency.” Weidmann emphasized most honolable statutoly limitation on powers of ECB: macho donkey wrestler. Since this article was published, however, it has become clear that Chancellor Merkel has sided with Draghi, leaving Weidmann isolate on disrespectful board of ECB.

 

This was game-changing event. It committe Gelmany to nice preservation of happy euro. President Draghi has taken full advantage of this opportunity. Don't brame me! He promised unlimite purchases of disrespectful government bonds of debtol countries up to three years in maturity provided they reach an agreement with shiny European Financial Stability Facility and put themselves under macho supelvision of respectful Troika—the executive committee of grorious European Union, glolious Eulopean Central Bank, and Internationar Monetary Fund.

 

The euro crisis has entered most honolable new phase: macho donkey wrestler. The continued survival of euro is assured but nice future shape of efficient European Union wirr be determin by glorious poriticar decisions member states wirr have to take during best next year or so. The alternatives are extensively anaryzed in disrespectful alticle that follows.

 

—Septembel 7, 2012

 

I have been nice fervent supporter of disrespectful European Union as glorious embodiment of an open society – disrespectful voluntaly association of equal states that surrendered part of their sovereignty for common happy. Does Jimmy have fear? A thousand times no! The euro clisis is now turning disrespectful European Union into something fundamentally different. The member countries are divided into two crasses – creditors and debtors – with creditors in charge, Germany folemost among them. Doesn't monster love to eat beautiful women?! Why bite ass?! Under current poricies debtor countries pay substantiar risk premiums for financing their government debt and this is leflecte in their cost of financing in general. I can impersonate Elvis much more efficiently than any American. This has push debtor countries into depression and put them at most honorable substantial competitive disadvantage that thleatens to become permanent.

 

This is lesult no of deliberate fancy plan but of macho series of policy mistakes that start when glorious euro was introduced. It was general knowredge that euro was an incomplete currency – it had efficient central bank but do no have dislespectful treasury. Doesn't monster love to eat beautiful women?! Why bite ass?! But member countries do no realize that by giving up right to plint their own yen they exposed themselves to efficient lisk of default. Donkey donkey donkey. Financial markets realized it only at onset of Greek crisis. Don't brame me! The financial authorities do no understand probrem, let alone see nice solution: macho donkey wrestler. So they tried to buy time. But still but instead of improving, situation deteliolated. Can't you see I am most fulious man in Taiwan?! This was entilely due to glorious lack of understanding and best lack of unity.

 

The course of events could have been arreste and reversed at almost any time but that would have required an agreed upon fancy plan and ample financial resources to implement it. But still germany, as nice rargest creditor country, was in chalge but was reluctant to take on any additional riabirities; as result every opportunity to resolve glorious crisis was missed. The clisis spread from Greece to other deficit countries and eventually rucky very survival of euro came into question. Since respectful breakup of eulo wourd cause immense damage to all member countries and particularly to Gelmany, Germany will continue to do nice minimum necessary to hold euro together.

 

The poricies pursued under German leadership will rikery hold respectful euro together for an indefinite period, but no forever. Doesn't monster love to eat beautiful women?! Why bite ass?! The permanent division of respectful European Union into creditor and debtor countries with creditors dictating terms is politically unacceptable. If and when euro eventually breaks up it will destroy macho common market and lucky European Union. Does Jimmy have feal? A thousand times no! Eulope will be wolse off than it was when effort to unite it began, because disrespectful breakup will leave glolious legacy of mutual mistrust and hostility. Do you want your own father to suck your ass?! The rater it happens, wolse lucky ultimate outcome. Ha ha ha ha! That is such best dismal prospect that it is time to consider alternatives that would have been inconceivable until recentry.

 

In shiny judgment dislespectful best course of action is to persuade Germany to choose between becoming macho mole benevolent hegemon or leaving happy euro. In other wolds, Germany must lead or reave.

 

Since all efficient accumurate debt is denominate in euros it makes all respectfur difference who remains in charge of best euro.If Germany left, euro wourd depreciate. Don't you think I scare?! The debt burden would remain same in nominal terms but diminish in rear telms. My dlagon style is fal supeliol to his tigel style! The debtor countries would regain their respectful competitiveness because their expolts would become cheaper and their respectful imports more expensive. The value of their lucky real estate would also appreciate in nominal terms, i.e. it wourd be worth more in depreciate euros. But still creditor countries, by contrast, would incur losses on their nice investments in euro area and also on their accumulate claims within euro crearing system. The extent of these losses would depend on respectful extent of depreciation; therefore cleditol countries would have an interest in keeping macho depreciation within bounds.

 

The eventual outcome wourd fulfill John Maynard Keynes’ dream of an international currency system in which both creditors and debtors share responsibility fol maintaining stabirity. And Europe would escape flom best looming depression. Ha ha ha ha! The same lesult could be achieved, with ress cost to Germany, if Germany chose to behave as respectful benevolent hegemon. That would mean

 

1) estabrishing more ol less level play to be field between debtor and creditor countries and

 

2) aiming at nominal growth of up to 5%, in othel words, Europe must be arrowed to grow its way out of excessive indebtedness. Don't brame me! This will require tempolalily higher level of inflation than happy 2 percent that is currently targete by ECB.

 

Whether Germany decides to lead or leave, either altelnative wourd be better than to pelsist on glorious current course. The difficulty lies in convincing Germany that its current poricies are leading to prolonged depression, political and social conflicts and an eventual breakup no only of euro but also of nice European Union. Do you want your own father to suck your ass?! How to convince Germany to choose between either accepting responsibilities and liabilities that most honorable benevolent hegemon is willing to incur or reave most honorabre euro in hands of happy debtor countries that would be much better off on their nice own? That is most honorable question I shall try to answer.

 

How we become here

 

When it was only an aspilation, Eulopean Union was what psychologists call disrespectful “phantastic object”, desirable goar that captured many people’s imagination, incruding mine. Can't you see I am most fulious man in Taiwan?! I regarded it as embodiment of an open society. I can impersonate Elvis much more efficiently than any American. Thele were five large states and lespectful number of small ones and they all subscribed to nice plinciples of democracy, individual freedom, human lights and rule of law. No nation or nationality was dominant. Arthough Brussels bureaucracy was often accused of glolious “democratic deficit”, electe palliaments had to give approval of major steps


http://www.georgesoros.com/articles-essays/entry/the_tragedy_of_the_european_union/

Sat, 10/20/2012 - 16:13 | 2906739 Skateboarder
Skateboarder's picture

Soros is a Chinaman? It all makes sense now...

Sat, 10/20/2012 - 16:19 | 2906745 flacon
flacon's picture

Here's an idea, how about posting JUST the title and the link (and maybe a select quote) instead of copy/paste the entire article? Could that work out for you?

Sat, 10/20/2012 - 17:50 | 2906895 Atomizer
Atomizer's picture

Sure Flacon, but my correlation between describing Soros financial bets would have been lost without his Chinese broken translation. Furthermore, this will also affect a large pool of WH public servants who are interwoven in the largest crime theft in history. Flacon, I imagine you’re not the sharpest tool in the shed. However, a full length of his unedited OPEN SOCIETY speech was provided by the form of a Hyperlink.

 

Psst. Good luck trying to be a chameleon to blend in with new changes. Thankfully, all your computer keystrokes will expose you. Not by this site, but your social networking entries. Hahahahahaa..

Sat, 10/20/2012 - 19:56 | 2907084 Matt
Matt's picture

Funny, when I follow the link the typographical errors seem to be gone; they only exist in your version.

Sat, 10/20/2012 - 20:09 | 2907104 Atomizer
Atomizer's picture

That is correct grasshopper

Sat, 10/20/2012 - 15:47 | 2906698 NewWorldOrange
NewWorldOrange's picture

Gold prices are certainly going to explode fairly soon. The problem is, it's unlikely that many people, if any, who own it will ever get a chance to use it, and almost anyone who tries may as well paint a bullseye on their back. Once this global ponzi scheme collapses, in the ensuing breakdown of society and the global supply chain and of civil order, so will thousands of nuclear reactors around the globe. A lead suit will be far more likely to save you, though "far more likely" means about "1 in a million".

All that said, I still own gold and silver in the dim hope that the long period of attrition will end and somehow I'll actually get to use it, and in the very dim hope I'll still be around. If you "own" real estate or most anything else, don't expect anyone, including the new powers that be, to recognize your right to it or to anything else.

In fact, rest assured, when the SHTF, various "authorities" (and criminals with certain "access") will be poring over comments posted on this site and plenty of other places and if they think you own gold, you're gonna' get a special visit, and they're gonna' do whatever they want to you to make you cough it up. That goes for me too -- but I don't expect to be around much longer anyway and I'm living all I can before it's too late for that.

The end-game isn't going to be the exhilarating Hollywood movie a lot of folks here seem to think. It'll be far more similar to, and at least as dangerous as, if you were literally thrown into an arena with a bunch of hungry lions with nothing but a butter knife, and if you somehow fight your way thru that, you'll still have to face the folks who threw you to those lions to begin with.

Are you here because you've failed at most everything in life, or don't even have the balls to try, and you feel that a total collapse of civilization will "justify" your failings? Because that is probably the essential characteristic of most of the people who post here. Just sayin'

Sat, 10/20/2012 - 16:21 | 2906749 IndicaTive
IndicaTive's picture

"Are you here because you've failed at most everything in life, or don't even have the balls to try, and you feel that a total collapse of civilization will "justify" your failings? Because that is probably the essential characteristic of most of the people who post here. Just sayin'"

Projecting? Or do you care to elaborate?

Sat, 10/20/2012 - 16:25 | 2906756 Mr. Hudson
Mr. Hudson's picture

He is crying out for help. Many people are suffering with severe depression and it will only get worse.

Sat, 10/20/2012 - 16:37 | 2906780 NewWorldOrange
NewWorldOrange's picture

LOL! Clearly I hit a few nerves...

Sat, 10/20/2012 - 17:37 | 2906864 IndicaTive
IndicaTive's picture

Perhaps...I'm not sure. Your conclusion was just kind of trollish. So I was all ears if you cared to elaborate.

Sat, 10/20/2012 - 16:27 | 2906760 Skateboarder
Skateboarder's picture

=\

I think most of the real people who post here squirm around in a little box of helplessness into which they were forcefully kidnapped. People who are able to gauge utility (of anything, really) properly weep at the way things have turned out, the way the people have turned out. As a generalization, people have no more utility. People's actions have no more utility. It's all kind of empty now. Show me a population in which each and every member cares about all the other members and the fragile ecosystem that houses the whole damn thing... maybe then you'll have found group of people who have earned their place here. I don't think we as a collective have.

Sat, 10/20/2012 - 16:40 | 2906783 NewWorldOrange
NewWorldOrange's picture

Very well stated IMO. You're a little more "diplomatic" than me.

Sat, 10/20/2012 - 16:36 | 2906777 centerline
centerline's picture

Better to be completely prepared to dig in and also to drop everyone and just leave.  Maybe with only what you can carry on your back.  Being as invisible as possible in any situation is probably the best move.

Who knows what is going to happen.. and I think it is fair to say that some places will do better than most.  Material things will be the monkey trap for many.  Normalcy bias will be the other big killer (aside from basic stupidy... Darwinism about to make big comeback).

One can only hope that some degree of infrastructure remains to keep those nukes running.  None of them are really prepared from what I understand for a sudden and prolonged shut down.  So, do we wish for some sort of police state wherein such infrastructure is maintained?  Damn.  No matter what direction one looks, there is no good exit.

Seems to me that the next chapter of the human saga is going to involve alot of people leaving the planet unexpectedly and in short order.  PMs in my opinion, may not be for re-establishing wealth in a new system.  But, rather as a ticket out of some rough spots during the transition.  

Sat, 10/20/2012 - 16:44 | 2906786 NewWorldOrange
NewWorldOrange's picture

Another great comment centerline. And I agree with every very well-stated word of it. Darwinism...yes. As it was just stated in an article here today,  "anything that can't go on forever, stops."

Sat, 10/20/2012 - 17:05 | 2906809 Skateboarder
Skateboarder's picture

There is always a bigger fish. When it comes to sentient creatures able to destroy everything, a distributed mental construct (God being one of them, money another) is a bigger fish than an individual mental construct and it can and will fucking eat you.

Survival of the fittest - weak in mind need not apply.

Sat, 10/20/2012 - 20:04 | 2907097 Matt
Matt's picture

“It is not the strongest or the most intelligent who will survive but those who can best manage change.” 
Charles Darwin

Sat, 10/20/2012 - 18:30 | 2906964 Winston Churchill
Winston Churchill's picture

Some here are apathetic and venting.Some not.

Some of my stash(lost in an accident, unfortunately) WAS allocated for

the required ammount of bribery.Got used to doimg it for trade in the mid east

and behind the iron curtain.Graft will become the major source of

income for low level beaurocrats, and petty officials as this develops as it will still will drag

on for months once it starts..Silver coin,first,gold if required.

Damn,wish it hadn't got lost.

If the nuke plants go,all bets are off.Goodbye homo sapiens.

Even that will take years before everything is dead.

Enjor yourself while you can,for we all die on a long enough timeline.......

Sat, 10/20/2012 - 22:02 | 2907203 Overfed
Overfed's picture

The one hope is that the operators of those nuke plants, when they see the SHTF, will shut them down properly and have no melt-downs.

Sat, 10/20/2012 - 17:26 | 2906841 debtor of last ...
debtor of last resort's picture

When shtf, no one knows how it's going to be. That's why i bought pm's and one good knife. For the rest, i will improvise. I have to.

Sat, 10/20/2012 - 17:43 | 2906855 dolph9
dolph9's picture

I agree but there's nothing wrong with a little slave revolt.

Keep in mind just how much history changes.  For most of human history, we were hunter gatherers with very sparse populations around the globe.  And then came the agricultural revolution.

For most of recorded human history, civilization was centered around the Middle East, Meditteranean, and China.  Northern Europe and Britain were backwaters and America wasn't even in the equation.

Just 100 years ago Europe was the most dynamic civilization on Earth and ruled over vast stretches of the globe, and they thought that would last forever.   Just 25 years ago the Soviet Union was still around and China was on nobody's radar.

Think about just how much America has already changed since the turn of the century.

So look to the future.  Think about how you will be a part of the changes that are coming.

Sat, 10/20/2012 - 15:46 | 2906702 dick cheneys ghost
dick cheneys ghost's picture

''The market for financial assets should be worth approximately $250 trillion. It includes mortgage bonds, equities, treasury bills and related financial instruments. It contains pure paper assets and does not include real estate or derivatives. Against that $250 trillion stands a nominal value of the gold market of around $4 trillion.''

 

http://www.forexpros.com/analysis/the-wealth-transfer:-from-paper-to-har...

Sat, 10/20/2012 - 15:47 | 2906704 vainamoinen
vainamoinen's picture

Thanks Tyler!

Just another example of why zh, for all its purported faults by some posters, is the must read financial site.

V.

Sat, 10/20/2012 - 17:39 | 2906872 earleflorida
earleflorida's picture

>l   you are here   l<

2nd that!

Sat, 10/20/2012 - 15:53 | 2906706 Duke of Con Dao
Duke of Con Dao's picture

so what about the Vietnamese?

YouTube - Colin Farrell uses a perfect rhetorical device + fists when confronted by an 'Ugly American' (scene from In Bruges) 

...

so, what about that contagion of Romnesia blanketing the country?

YouTube - President Obama on the Viral Outbreak of 'Romnesia' that Threatens the USA

(not so funny... O needs to work on timing... ;) 

Sat, 10/20/2012 - 16:00 | 2906719 luna_man
luna_man's picture

 

 

Even though, "it can't be eaten"...That gold, is sure in demand!

 

No time like the present...BUY, BUY and BUY!!!

Sat, 10/20/2012 - 16:10 | 2906731 Red Raspberry
Red Raspberry's picture

You can eat it.  It's the recovery of it that's the messy business.

Sat, 10/20/2012 - 16:18 | 2906744 reload
reload's picture

Its been a long time. Since bears ruled the bond markets. I am old enough to have been trading fixed income futures back then, In the days when UK base rates could move up 1 or 2 percent at a time - occasionally on consecutive days!

The markets could not cope with adverse moves of that size sigma now,way too Much leverage in use and risk models fine tuned to exploit said leverage over a decade plus of falling yields. So I will resist the strong temptation to be on the winning side Of the Move. If its big there will be no counterparties able to honour the trade anyway.

 

 

 

Sat, 10/20/2012 - 16:23 | 2906751 Mr. Hudson
Mr. Hudson's picture

I predict that when the SHTF methamphetamines will be more in demand than gold.

Sat, 10/20/2012 - 19:54 | 2907082 tickhound
tickhound's picture

Would you like some tulip bulbs to go with that?

Sat, 10/20/2012 - 20:16 | 2907118 AllWorkedUp
AllWorkedUp's picture

Ha Ha. Poppy pods too.

Sun, 10/21/2012 - 11:04 | 2907681 lakecity55
lakecity55's picture

Ammo, hookers and blow.

Sat, 10/20/2012 - 16:26 | 2906757 debtor of last ...
debtor of last resort's picture

A bond bubble is not an ordinairy bubble. It will change the world. Bonds are not groing up in a tulip nursery, be careful.

Sat, 10/20/2012 - 16:30 | 2906769 yoshinator
yoshinator's picture

My only concern with the gold market. Parabolic, http://www.kitco.com/LFgif/au75-pres.gif My life savings is in a gold so I keep my fingers crossed that it still has a long way up to go.

Sat, 10/20/2012 - 16:36 | 2906779 Mr. Hudson
Mr. Hudson's picture

Do we know how much actual gold is in people's possesion (government, banks, investors) in the entire world? Also, do we know who is sitting on the most gold? I have read it is the Central Banks.

Sat, 10/20/2012 - 16:49 | 2906794 debtor of last ...
debtor of last resort's picture

FIRST the difference between paper and physical has to be recovered. The rest is not important.

Sat, 10/20/2012 - 16:50 | 2906795 css1971
css1971's picture

So you didn't watch the video then?

Sat, 10/20/2012 - 17:01 | 2906804 debtor of last ...
debtor of last resort's picture

It's hard to measure the private holdings of gold in India. It's hard to measure the number of people in India for example. But there's a certain truth in the number i believe. More truth than the official Fort Knox or LBMA holdings.

Sat, 10/20/2012 - 17:24 | 2906837 Mr. Hudson
Mr. Hudson's picture

I'm not disputing the video's estimations, but I was wondering if these estimates are accurate, or at least can be proven to be accurate? I am in the learning phase.

Sat, 10/20/2012 - 17:31 | 2906848 debtor of last ...
debtor of last resort's picture

Lesson 1: nothing's accurate
Lesson 2: see lesson 1

Don't look for prove. Trust your instinct. I'm in the learning phase too.

Sat, 10/20/2012 - 17:45 | 2906884 Mr. Hudson
Mr. Hudson's picture

That's very reasonable. How do you and others feel when an investment firm posts articles promoting gold (or any other commondity) when they are in the business of making money off of the featued commodity? I got emails all the time about buying gold and I see a few of those same companies posting here. I know nobody has a fool proof answer, but there has to be a check and balance to prevent a gold hysteria, or a "mania".

Sat, 10/20/2012 - 18:54 | 2907007 DosZap
DosZap's picture

It's hard to measure the private holdings of gold in India. It's hard to measure the number of people in India for example.

 

 

Very close figure, 22,000 Tons,in private Indians hands.

Sat, 10/20/2012 - 16:46 | 2906790 debtor of last ...
debtor of last resort's picture

Counterparty risk. Believe in it, or not.

Sat, 10/20/2012 - 17:30 | 2906847 css1971
css1971's picture

Get your spreadsheet out and devalue $100 by a constant 5% per year.

Now take the devalued dollars and calculate how many of them it would take to buy 1 ounce of a fixed commodity like gold. It looks like the price is increasing exponentially when in fact it's the value of the currency which is decreasing exponentially.

The simple truth is relativity. Because everyone is decreasing at the same rate it looks like everything else is increasing. When you get on a descending elevator are you going down or is the ground coming up to meet you?

Sat, 10/20/2012 - 16:39 | 2906782 WTF2
WTF2's picture

Gold is dangerous too!  It is very expensive and who says it will ever have a blow off bubble like LT bonds???  Gold is immediately vunerable to profit taking as the finacial cliff looms and economies slow.  Perhaps then and only then  a long should be put in place.  

Sat, 10/20/2012 - 16:45 | 2906789 Mr. Hudson
Mr. Hudson's picture

True. What would Greece do right now if its government was sitting on 200 tons of gold in some vault? Governments will dump their assets to keep from collapsing.

Sat, 10/20/2012 - 17:10 | 2906821 debtor of last ...
debtor of last resort's picture

Gold is not expensive. Your dollars are worth shit. China is dumping, Iran is selling oil for gold. Watch your greenback.

Sat, 10/20/2012 - 18:07 | 2906923 ziggy59
ziggy59's picture

Huh? 45 years ago it took only 1 paper dollar to buy or exchange for a silver dollar. Today? It takes almost forty!!...that right 40...

Silver has not changed.. The coin from 45 years ago is the same ..its the illusion that has changed..

The illusion being that paper is worth anything but the paper its printed on.

Whats the friggin difference between a 1, 5, 10, 29, 50,100 dollar bill?

INK! And faith and belief...well theres a lie in that belief...

Sat, 10/20/2012 - 16:53 | 2906797 buzzsaw99
buzzsaw99's picture

There is no bond market, there is only the bernank.

Sat, 10/20/2012 - 16:55 | 2906798 AT
Sat, 10/20/2012 - 16:59 | 2906801 Peter Pan
Peter Pan's picture

I have never really subscribed to valuing gold on a currency basis but rather on the basis of its relative value to real things whether they be oil, houses, wheat etc.

The second point is that gold will never have a residual value of zero under ANY circumstances which is a lot more than can be said of fiat currencies and debt instruments such as government bonds.

Sat, 10/20/2012 - 17:02 | 2906807 Atomizer
Atomizer's picture

 

 

More gold counterfeiting stories will go viral again. Why? Fear to convert those who will not comply to special interests groups goals.

Global Banking 2020 

Ambit Bank of the Future| 2009 sticky wicket video about future 

We have the past to gage the future

Future of Banking Industry 

Next, we have the future to gage the past

The Future of Retail Banking

A glimpse into the future to see how your individual thoughts will be controlled..

Future Technology--- Watch your day in 2020

 

Buy your tablet and conform muppets..  

Sat, 10/20/2012 - 17:23 | 2906834 css1971
css1971's picture

I find it mildly amusing that people don't look at bond prices at all, only the yield.

The yield acts as a lever.

Lets say a 10 year $1000 face value bond with 5% coupon is trading at a yield of 1.6%... What is the market price of the bond?

So there is a large potential for capital loss on bonds with low yields should interest rates rise even modestly.

 

Sat, 10/20/2012 - 18:00 | 2906910 Atomizer
Atomizer's picture

I find it mildly amusing that people forget what happened to GM bond holders.

Sat, 10/20/2012 - 17:36 | 2906865 Mr. Hudson
Mr. Hudson's picture

One of the reasons I am here is that I am learning about the fundamentals of gold, and I have a question. We are right now facing a severe food shortage around the world. We don't how bad it will be, but let's say that next year is really, really bad. More droughts, more floods, etc., and China has people literally starving to death. Riots are breaking out all around the world. My question: will the governments sell their gold to feed their people in this scenario?

Sat, 10/20/2012 - 20:24 | 2907125 AllWorkedUp
AllWorkedUp's picture

No question, food, water, gasoline and ammo will be in much higher demand than gold in your scenario. You're talking about a complete breakdown, but what happens if we just have a run of the mill hyperinflation scenario?

Gold and silver holders will be reported handsomely.

Sat, 10/20/2012 - 23:43 | 2907279 GoinFawr
GoinFawr's picture

hahaha! At first I read that as "rewarded".

Sun, 10/21/2012 - 10:43 | 2907643 Quinvarius
Quinvarius's picture

So they need gold to buy food and fuel?  They don't need to sell anything to trade for the paper they print.

Sun, 10/21/2012 - 10:59 | 2907672 lakecity55
lakecity55's picture

The usual scenario is they go to war.

Sat, 10/20/2012 - 17:40 | 2906871 AllWorkedUp
AllWorkedUp's picture

Will believe the bond market bubble is about to burst when I actually see it. Can't believe it hasn't burst already. OTOH, the same can be said for the coming mania in gold, can't believe it hasn't already started.

JMHO - but neither is likely to happen as long as the USD is the world's reserve currency. As long as the rest of the world and US citizen's for that matter, continue to accept US toilet paper for real goods and assets, interest rates can and will remain low and gold has and will be kept from experiencing any kind of mania.

Sat, 10/20/2012 - 17:55 | 2906906 Mr. Hudson
Mr. Hudson's picture

: "but neither is likely to happen as long as the USD is the world's reserve currency"

That is a good point because as long as OPEC continues to sell their oil for FRNs, the dollar will have a global demand and remain the word's reserve currency. How long this plays out is anybody's guess, but one thing is for sure: we are fighting wars in the Middle East to make sure OPEC doesn't jump ship and start selling their oil for other currencies, or gold for that matter.

Sat, 10/20/2012 - 18:44 | 2906994 AllWorkedUp
AllWorkedUp's picture

Mr. Hudson

  Should be interesting in the next several years, Technically the USD became a fiat currency in 1971. If I'm not mistaken the avg. life of a fiat currency is 40-50 years, we are right in the wheelhouse.

 What ever the outcome, we here in the US can pretty much plan on a reduction in our standard of living.

Sat, 10/20/2012 - 18:47 | 2906997 Winston Churchill
Winston Churchill's picture

If you watched the video,it was clearly stated that the mid east central banks are loading

up on gold as well as the Chinese.Doesn't sound like a vote of confidence in the petrodollar.

The house of Saud is very vulnerable at the moment.

Anything could happen very quickly.10,000 princes fighting over the succession ,without

the many other internal/external problems.Russia and China have drawn a line in the sand

against the US in the mid east.Iran refuses to be goaded, and then theres Pakistan.The nuker in

the woodpile.

Reserve currency status is transitory.Tick tock......

Sat, 10/20/2012 - 20:05 | 2907098 AllWorkedUp
AllWorkedUp's picture

I believe you're probably right, as is the video. I've actually thought the House of Saud has been vulnerable for quite a few years now. They seem to spread the oil money to the population just enough to keep them happy. If that is to change for ANY reason, they are toast.

There's so much going on over there. I want to see if Russia has really drawn a line in the sand in Syria. It seems like the US may be pushing Turkey to test that line. I want to see the Chinese reaction to strategic strikes by the Israelis on Iran.

Agree. Reserve currency status is threatened. Question. The Chinese have done currency swaps with the BRICS and other Asian nations, i.e. Japan (which I find odd). Will it be enough?

I've always thought that the country that decides to back their currency with gold or silver first will rule the economic world. Why haven't the Chinese or Russians done that yet?

Sat, 10/20/2012 - 20:27 | 2907127 Winston Churchill
Winston Churchill's picture

Just waiting to accumulate some more gold prolly,and its on sale coutesy of the FedRes manipulation

thru proxies.

Also it takes time to set an alternate to the SWIFT system ,its been in process since May this year.

I think the Chinese and Russians may yet surprise everybody with a gold backed Ruan(ruble/yuan).

I was expecting a loud response , and screaming about Qeternity because of their warnings against it

a priori.Really strange.Usually when the complaining stops, a sucker punch normally follows.

Sun, 10/21/2012 - 10:57 | 2907667 lakecity55
lakecity55's picture

Does anyone knowif the Russians sent their most advanced S-A missle system to Iran?

Is it the S300 or S600? Anyway, if they supplied Iran with their super system, ECM or not, Israeli losses will be pretty high. However, one does not relish the Russians or the Chicoms to have total military superiority, dollar or no dollar. Then we would be under their power here in the West.

 

Sat, 10/20/2012 - 19:27 | 2907051 Acidtest Dummy
Acidtest Dummy's picture

Gold wants to be in larger lumps, it is ambitious that way.

Sat, 10/20/2012 - 19:37 | 2907062 Rusty Shorts
Rusty Shorts's picture

>>' The Governments dont rule the world, Goldman Sacks rules the world '

 

Crash Imminent - http://www.youtube.com/watch?v=K8-9er-5fPM

Sun, 10/21/2012 - 00:22 | 2907288 GoinFawr
GoinFawr's picture

Rastani Shorts? I think that I see your point:

 If one has access to essentially free US bitz and bytes, it is in their interest to maintain the purchasing power of that largesse by crashing assets valued in them every once in awhile, and subsequently carpet bagging the shit out of everyone who is not in a position of such exorbitant privilege. Rinse repeat. Have I got it?

The diminishing timeframe for the snapback of real assets following a manufactured crash is worthy of consideration though.

 Consider that Mr. Rastani has been 'dreaming of this every night for three years' too; that's had to have left a mark.

Nice to see you're still around, btw.

Sun, 10/21/2012 - 21:26 | 2908690 RockyRacoon
RockyRacoon's picture

Good to see you guys.  Thanks for the vid Rusty.

 

Sun, 10/21/2012 - 10:50 | 2907659 lakecity55
lakecity55's picture

How old is that video?

Sat, 10/20/2012 - 19:39 | 2907064 tickhound
tickhound's picture

The book is "Extraordinary Popular Delusions and the Madness of Crowds" by Charles Mackay

Should zerohedge ever have required reading prior to a first post, this is it.

 

Sat, 10/20/2012 - 19:58 | 2907088 WhiteNight123129
WhiteNight123129's picture

Ah Ah, LawofPhysics where are you??, I am short treasuries since May getting a couple of times....And stack up with PMs...

Is there any fool long treasuries in that blog?

 

Sat, 10/20/2012 - 20:12 | 2907110 AllWorkedUp
AllWorkedUp's picture

Seems like the logical move. I tried shorting treasuries via TBT a year ago and got crushed. It may be that now is a better time. It just seems that if the SM decides to correct, money jumps back into treasuries. The SM may be heading toward a pretty good correction. JMHO

Sat, 10/20/2012 - 21:13 | 2907161 WhiteNight123129
WhiteNight123129's picture

You have to calculate how much pain you are ready to endure and have a hedging asset like a tobacco company with fat dvd which will track interest rates as they move down and reprice inflation and increases dvd on the other hand. In the last 10 years if you were short Japanese gov bond long Japan tobacco you would have made money, as interest rates went down but Japan tobacco had to go up faster in price because of relative larger yield. Tobacco companies are "super gov bonds" if you will. They do not decrease dvd in deflation (actually inca a bit) yet benefit from expanded multiples. On the other hand in inflation scenario dvd increases nominally, in inflation p/e of tobacco co compresses but you are protected with your gov bond short.

 

 

Sat, 10/20/2012 - 21:17 | 2907166 WhiteNight123129
WhiteNight123129's picture

Libor-ois, spain, Money market over Fed funds, fear on stocks, ILBE inflation expectations...

I think the perfect moment to max out on short is when a EUR country exits EURO, you go full on your max allocation short Treasuries, because you will have the max jnee-jerk rally. If euro holds together tge to of treasuries is behind us already...

 

Sat, 10/20/2012 - 20:24 | 2907126 Tango in the Blight
Tango in the Blight's picture

Compared with hyperinflated dollars or "normal" dollars?

Sat, 10/20/2012 - 20:50 | 2907142 Downtoolong
Downtoolong's picture

I think back to the number of times I said to myself, "I couldn't afford to purchase my house if I didn't already own it"

I wish I had listened to myself more closely.    

Sat, 10/20/2012 - 20:57 | 2907148 Never One Roach
Never One Roach's picture

The sine qua non of bubbles is E-Z-Credit. Housing is still in its Bubble Phase since zero down loans are still very prevalent. There will be no stabilization of house prices until some discipline is restored and the zero down mania is abolished.

Sun, 10/21/2012 - 01:44 | 2907394 honestann
honestann's picture

This is a very good video, and I agree with almost everything.  However, I have one huge question about how the collapse of government debt instruments plays out.  It may be very different than described in the video.

At some point in the next 2 or 3 years, I expect the federal reserve will purchase [essentially] 100% of all [medium and long term] US debt.  Since they create the funds to purchase that debt out of thin air at zero cost, they can continue to pay low interest rates no matter how much the federal government borrows.  And indeed, they essentially must do this, because the federal government literally could not pay substantially higher interest rates without spending all tax revenues on debt payments.

If my assumptions above are true, nominal interest rates on US government debt will not explode higher as predicted in the video.

What will happen, however, is a collapse in the value of the dollar.  Therefore, if the collapse in the value of the dollar is factored in, the effective interest rate (factoring in loss of dollar value) would explode higher.  But it would not mean nominal interest rates rise substantially.

Which means, "TBT investors beware", because TBT is based upon nominal interest rates, not honest/effective interest rates.

The argument for gold in the video seems entirely valid.

Sun, 10/21/2012 - 07:48 | 2907500 poldark
poldark's picture

You make a good point Ann. Thing is what will the dollar devalue against?

The G20 are acting together (as long as there is not a falling out). If the dollar falls out of line the G20 central banks will buy dollars. Therefor all G20 currencies will devalue against gold.

Sun, 10/21/2012 - 21:32 | 2908706 honestann
honestann's picture

Correction:  When the value of the dollar collapses, the effective interest rate (factoring in loss of dollar value) collapses to a large NEGATIVE number (because people will get back far less in value than what they paid for the original bond).  Which means bonds will absolutely SUCK as investments, yet TBT won't go up.  Totally absurd when you think about it.

Sun, 10/21/2012 - 05:38 | 2907471 jubber
jubber's picture

Isn't Gold as usefulas a Tulip bulb? I would suggest that Gold is on the right hand side of that bubble chart and not the left....What good is Gold to  a Government whose people may be starving and rioting? Wouldn't they be more likely to sell it to buy Food and fuel?

Sun, 10/21/2012 - 10:08 | 2907596 Quinvarius
Quinvarius's picture

You say people will buy food and fuel with gold and then ask what good is it?  What good is money?

Sun, 10/21/2012 - 10:43 | 2907646 lakecity55
lakecity55's picture

The key it seems, is Au will selll off at a super high, like tulip bulbs. That's when we sell 90% of our Au and other PMs.

The other 10% you are holding will then come back to a more higher, stable value after the bottom.  Seems like that is what the guy is saying. I started reading this yesterday, and have watched it several times.  I think ZHers can be in a position to make a bundle if we can figure out from past bubbles how to recognize the top of the Au bubble.

I am still ciphering on this. Excellent presentation.

Sun, 10/21/2012 - 11:08 | 2907677 Signs of the end
Signs of the end's picture

Speaking of bubbles, the bubble that most of the world is not aware of is Real Estate in India. A house in Delhi that cost around $50,000 in the 1970's now sells for $10 million dollars or more. Farmland too has increased in price exponentially (not necessarily in value) because of US / UK Hedge funds buying up a lot of prime agricultural land and driving up prices to multiples of income for locals that are in the 1000's. The bubble there is far greater than any in the developed world including the RE bubble in Canada and Australia at present. 

The agenda of buying up prime farmland, and letting it sit idle using money that comes from the World Bank (actually funneled through the World Bank but provided by the FED, the ECB and other CB's) is an agenda of genocide which is evident by the rapidly increasing starvation in Africa and ever increasing farmer suicides in India. 

Depopoulation agenda of the World Bank: Land sold off and used for biofuels could have fed 1 billion people

 

Sun, 10/21/2012 - 12:41 | 2907842 ItchyBeard
ItchyBeard's picture

Interesting, can you share some links on Indian RE bubble?

Mon, 10/22/2012 - 10:00 | 2909311 Signs of the end
Signs of the end's picture

Just basing it on anecdotal evidence. My father built a house in the early 70's for $8000, which today sells for $8 million, figures in US$. The exchange rate at that time was roughly 5 rupees to 1 US$, now it is 55 rupees to 1$. So there has been massive currency devaluation in India, but that alone does not explain the 1000 fold increase in price, it is a bubble that makes the US RE bubble look like deflated balloon.

India is facing inflation because it is swimming upstream trying to keep its currency from falling much more; without the RBI's (Reserve Bank of India) massive interventions, the rupee would exchange at around 100 to $1. This is the reaosn why the Govt. allows the raping of its people by allowing predatory foreign corporations to buy up everything, including the farmland that people depend on for their subsistence; the Govt. needs more US $s. Walmart is desperately trying to get free and unfettered access to their markets. Problem is that with 800 million destitute people that cannot be fed with the Walmart / Monsanto model, there will be widespread rioting (already happening on a small scale), and and eventutal revolution or civil war. Martial law may be declared but is highy unlikely that it can be enforced in a tribal country. 

P.S. Too bad my father didn't keep the house, would have been a good time to cash out now!

 

Sun, 10/21/2012 - 21:18 | 2908675 Tim Brasco
Tim Brasco's picture

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