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Chris Martenson Warns "Market Risks Today Are Higher than Ever"

Tyler Durden's picture





 

Submitted by Chris Martenson of Peak Prosperity,

After the shot across the bow in 2008, you might have expected that regulators and market participants would use the experience to change for the better, to become more prudent, and to reduce the sorts of risky behaviors that almost crashed the entire system.

Unfortunately, you'd be wrong.

LTCM and Moral Hazard

In 1998, there was a firm called Long-Term Capital Management (LTCM, as it is commonly referred to today), staffed by the best of the best, including one of the very top bond traders that Wall Street ever produced as well as two future Nobel laureates.

LTCM boasted of its use of complex models that were supposed to generate outsized returns while operating with a risk-minimizing profile that, mathematically, was only supposed to experience severe losses so infrequently that the periods between them would be measured in the thousands of years.

Unfortunately for LTCM, their models badly underestimated real risks, and their leverage was such that their original $1 billion in capital turned into total losses of $4.6 billion in a little over four years, nearly dragging down the entire financial system in the process.

While this experience has much to teach us in the way of market risk, hubris, and the dangers of leverage, it really needs to be understood in terms of the rise of moral hazard on Wall Street.  The main lesson that Wall Street seems to have learned from the LTCM disaster is that if the wipe-out was big enough, the Federal Reserve would swoop in and rescue things. 

Message received: Go big or go home.  Take on as much risk as possible, secure in the knowledge that if things got bad enough, the Fed would simply print up what was necessary to make all the players whole again, with perhaps one core player or institution thrown under the bus for the sake of appearances. 

Fast forward to 2008, and that exact experience was replicated perfectly, thereby reinforcing Wall Street's perception that it is best rewarded by chasing big risks and big returns. And if things didn't go as hoped, the good ol' Fed would always be there to push the Reset button.

Since nobody of consequence went to prison after the overt fraud and excesses of the housing bubble were revealed, and no bank had to give back a single penny of their ill-gotten and outlandish profits related to such behaviors, one does not have to be a genius to guess what happened next.

Banks took the taxpayer funds, paid themselves gigantic bonuses, and immediately began taking on huge new risks. I mean, why not?  If you had a rich uncle that promised to let you keep any gains from your trading portfolio but would absorb any losses you might incur, you'd soon be swinging for the fences like a pro.

Back to the Future

This is why today, instead of having been reduced, financial risks loom larger than ever. It's why the next downturn will be just as bad if not worse than the last one. Nothing has been learned, and nothing has been changed. The most basic of human behaviors, the tendency towards moral hazard (so well understood by the insurance industry) has been completely overlooked by the Fed.  Once again, that institution, entrusted with so much, has been exposed as being rather intellectually shallow, or at least devoid of common sense.

I'll leave you with this:  The very same Fed that could not and did not see that a housing bubble was forming is now equally complacent about corporate bond yields touching all-time record lows across the entire spectrum, right down to CCC junk that sits one skinny notch above default.  Stocks are for show, but bonds are for dough and with bonds now priced for perfection if not for something even better, there's no room for error. 

Even the slightest hiccup say, one brought about by a renewed global slump as is already underway in Europe and Japan will cause massive losses to bond portfolios, and we will, yet one more time, be reminded that indeed there is nothing new under the sun.  Central banks cannot print us all back to prosperity, and insolvency cannot be cured with liquidity. 

All that remains is to assign the losses to someone. And right now there are plenty of very well-connected and powerful individuals working feverishly to assure that those losses do not fall upon them.

That leaves you and me, otherwise known as 'taxpayers'. And 'bank account holders'. Oh, yeah and 'Muppets.'

Big Trouble Brewing

What the Fed, in cahoots with other central banks, has managed to engineer is a spectacular rise in the price of financial assets.  Stocks, bonds, and all of their associated brethren such as options, futures, and derivatives have all been magically elevated.

To put this into context, not only are stocks at nominal all-time highs, but bonds are too.  Bonds, however, are very different from stocks, and the fact that they are also at all-time highs should really be viewed with much more concern.

The bond market is enormous and dwarfs the equity markets by over 2 to 1, or 3 to 1 if you include non-securitized loans in the mix:

(Source)

But just looking at traditional bonds, what we have here is a situation where over $100 trillion in bonds are now historically badly overpriced.  That's what “record territory” means to me, at any rate.  For every 1% loss on that portfolio, more than a trillion dollars will be lost.

While the value of stocks has to be carefully adjusted for inflation to determine if all-time highs have been reached (not yet, by the way), bonds are priced according to the yield they offer.  The higher the price, the lower the yield.  The yield of a bond is supposed to compensate you for the risks involved, which include inflation, default, and time.  

The worse the prospect, the higher inflation, and the longer the time to maturity the higher the yield will be.  So how important is it that bonds are now yielding record lows?  This is perhaps the single most important factor in the financial landscape right now, because it means either one of two things:  (1) the risks of default and inflation are at all time lows, or (2) bond buyers are not being adequately compensated for risk.

Here's the data for corporate bonds, but sovereign bonds are just as lofty, and the lack of yield in those securities explains the grasping for yield in corporate bonds:

Yield-to-worst in junk bond market hits record low

Mar 13, 2013

 

March 13 (IFR) - The yield-to-worst in the US high-yield bond market has fallen to a record low average of 5.56% this week, as investors flock to higher-yielding but riskier products.

 

With interest rates hovering around record lows, investors have found themselves rushing down the credit ladder in search of bonds offering more return - and more risk.

 

CCC rated bonds - the riskiest investments at the very bottom of the credit spectrum, just one notch above default level - have rallied the most.

 

"It's definitely risk-on behavior, where you are trying to get exposure to the most yield possible," said Drew Mogavero, head of US high-yield trading at Barclays.

 

"The safer segments of the market, BBs, have rallied to pretty low-yielding levels," he said. "So people are looking out to CCCs and other higher-yielding names."

 

Bond yields and prices move in opposite directions. As investor demand has driven up prices, yields have tumbled. Yield-to-worst indicates the lowest potential yield on a bond without the issuer defaulting.

 

Lower All Over

 

Broken down by ratings, the yield-to-worst on the Barclays Double B index is also at its lowest ever (4.24%), as is the level on the Triple C index (7.43%).

 

The only segment of the market that didn't close at a record low on Tuesday was the Single B index, which is 5.46% versus the record low of 5.39% set on January 24

Again, these are record lows as in never-before-in-all-of-time records.  To think that the Fed has all of this under control, that it can steer the consequences of an entire world of investment and speculation decisions to a normal and graceful ending, requires far more faith than I can muster.

The very idea that the worst-of-the-worst credit risks in the corporate world are now yielding less than 6% is even more absurd than anything that I observed during the height of the housing bubbles.  Even the tiniest hiccup will wipe out the holders of those bonds, leaving them with, at best, pennies on the dollar.

Let me be very clear here: What I see now in the bond market is at least an order of magnitude riskier than anything I saw in the housing bubble, and if/when it pops, the effects will be far, far worse.

In Part II: How to Survive the Mother of All Bubble Burstings: A Collapse of the Bond Market, we'll identify the most significant warning signals of market instability, including the growth in derivatives, the reemergence of synthetic CDOs, and the widespread overpricing of debt ranging from sovereign to junk securities. With these risks come huge implications for those with money in the financial markets.  What should we be doing to protect ourselves?  How do we avoid the next downturn?  What strategies make sense given what we know and where we are in this story?

 


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Fri, 03/22/2013 - 18:00 | Link to Comment Irelevant
Irelevant's picture

Slovenia, next chip to fall.

Fri, 03/22/2013 - 18:24 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

I always make sure I keep at least 30% of my portfolio in US treasuries. That way, if the market falls I have a reliable hedge, and I collect a risk free return every six months.

Fri, 03/22/2013 - 20:00 | Link to Comment Abraxas
Abraxas's picture

I always make sure not to be one of the momentum crowd and to try to think long term.

Fri, 03/22/2013 - 18:29 | Link to Comment THECOMINGDEPRESSION
THECOMINGDEPRESSION's picture

Also you should get into Housing, Northern Telecom, Enron, Cyprus Banks, Some Greek bonds, Japanese Yen, The Euro..

Milliondollarmoran

 

Fri, 03/22/2013 - 21:52 | Link to Comment in4mayshun
in4mayshun's picture

FYI: when you're trying to insult someone by calling them a "moran," ...best not to misspell moron.

Sat, 03/23/2013 - 00:40 | Link to Comment q99x2
q99x2's picture

If he intended to spell it  ...moron then then he would have written it as Milliondollarmoran_

I think he meant what he wrote.

Sat, 03/23/2013 - 19:47 | Link to Comment Tapeworm
Tapeworm's picture

WE ALWAYS NEED MOAR SPELLING EXSPURTS.

 sorry, I am programming machine tools. One must always shout at them.

Sat, 03/23/2013 - 01:33 | Link to Comment Demonoid
Demonoid's picture

Look up "moran" on Urban Dictionary, and you'll realize why you look pretty dumb here.

http://www.urbandictionary.com/define.php?term=moran

Sat, 03/23/2013 - 11:14 | Link to Comment gmrpeabody
gmrpeabody's picture

You're all a bunch of maroons....

Fri, 03/22/2013 - 18:30 | Link to Comment Irelevant
Irelevant's picture

Cyprus bonds are selling at a discount, maybe you are interested.

Fri, 03/22/2013 - 18:30 | Link to Comment kliguy38
Fri, 03/22/2013 - 18:32 | Link to Comment Rainman
Rainman's picture

Fucking chimps could figure out the future better than you humans. No wonder you're all doomed.

Fri, 03/22/2013 - 18:47 | Link to Comment Gromit
Gromit's picture

Yes - and the discount on a 4 week million dollar T Bill will buy lunch at Subway!

Edit - just checked http://www.treasurydirect.gov

Discount is up to .11%!

A miliion dollars now returns $85 per month!

Sat, 03/23/2013 - 19:49 | Link to Comment Tapeworm
Tapeworm's picture

That is a lot more than gold pays.

Fri, 03/22/2013 - 19:27 | Link to Comment Monedas
Monedas's picture

I always pay my taxes as early as I can .... and I always pay a little more than I owe .... that way I feel I am helping out .... and I sleep much better at night !       MillionDollarMonedas     1929         Comedy Jihad How'm I Driving 1 (800) FUCKYOU World Tour

Fri, 03/22/2013 - 19:39 | Link to Comment Town Crier
Town Crier's picture

Only 30% in Treasuries? Shouldn't you double down on that? If only to show your allegiance to Dr Bernanke, your American hero? No? What's he gonna think?!

Fri, 03/22/2013 - 18:32 | Link to Comment Wile-E-Coyote
Wile-E-Coyote's picture

Burn it down, burn it to the ground.

Fri, 03/22/2013 - 18:49 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

"Slovenia, next chip to fall."

I think you're out on the limb with this one.  They, more than most EU contries, have decades of experience of being the only productive part of an otherwise socialist state (Yugoslavia).  If you know your history, the very reason they fought for and got independence, was to secede from the rest.  It took them 6 days, the Croats 2 years, and the Bosnians how many years and outside help?

While there was indeed some shooting going on, and the gun-folks here (I'm one) would love to hear that they got the Serbs out in some clever and ferocious battle, do you know how they did it?  They used their brains:  They turned off all the utilities to the militaty garrison (no water, no gas, no sewage and no electricity!), and told them to stay as long as you like.  They left (very quietly) a few days later.

So... Got facts & stats, or voicing opinion, hopes or fears?

Fri, 03/22/2013 - 20:04 | Link to Comment Abraxas
Abraxas's picture

Your history consists of what the media spoon-fed you. Where are your facts and/or stats coming from? Looks like MSM to me.

Sat, 03/23/2013 - 03:06 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Sorry, ROTFL. Nothing could be further from the truth. Was only few hrs car drive away (where I worked at the time), and had business contacts (that developed into friendships), to get a broad swath of info. So, no, no MSM was needed.

But back to the Real issue: Who's next in the EU? Yo no se, pero...

Sat, 03/23/2013 - 05:58 | Link to Comment UK debt marsh
UK debt marsh's picture

Slovenia's debt:GDP is about 60%, but rises to 80% when State guarantees to State-owned companies and banks are included, so it's definitely on the list of possibles.

However a post-(next)-election Italy is a good bet, Spain is going backwards at pace, and then there is the dark horse, France.

French debt:GDP is 91%, their economic fundamentals and confidence is falling badly (PMIs below 45), and the government is a cross between a donkey and an ostrich.

 

Fri, 03/22/2013 - 18:03 | Link to Comment The Invisible Foot
The Invisible Foot's picture

Don't worry it's different this time. Fundamentals are sound, profits are soaring, and housing. DON'T FORGET ABOUT FUCKING HOUSING!!!   /sarc

Fri, 03/22/2013 - 18:21 | Link to Comment localsavage
localsavage's picture

My Realtor said it is a good time to buy.

Fri, 03/22/2013 - 19:52 | Link to Comment NoDebt
NoDebt's picture

Mine too!  Hey, that can't be coincidence.  I think we got a legitimate trend here. 

Only problem is if I sell my house then I gotta go buy somebody else's overpriced pile of sticks.

Hey, wait a minute!......

Fri, 03/22/2013 - 19:58 | Link to Comment Stuck on Zero
Stuck on Zero's picture

We've got the same realtor.  He works for: Shaftem, Swindl, Conn, & Fleecem Ltd.

 

Sun, 03/24/2013 - 11:41 | Link to Comment dark pools of soros
dark pools of soros's picture

I heard the same at the car dealership. Must be good times!

Fri, 03/22/2013 - 19:15 | Link to Comment ebworthen
ebworthen's picture

Gawd what a recovery! 

Just ask around, everyone says things are as good as they were in 2005!

Party on! 

They can take 5% or 10% of our savings and retirement, it won't stop this juggernaut of an economy!

Sat, 03/23/2013 - 14:13 | Link to Comment Go Tribe
Go Tribe's picture

Itsss...smokin!

Fri, 03/22/2013 - 18:07 | Link to Comment resurger
resurger's picture

What I see now in the bond market is at least an order of magnitude riskier than anything I saw in the housing bubble, and if/when it pops, the effects will be far, far worse.

Good luck in popping that cherry.

wake me up when the internet is offline, then we can talk about this bubble bursting

Fri, 03/22/2013 - 18:12 | Link to Comment francis_sawyer
francis_sawyer's picture

Captain Obvious hour should come AFTER the 2nd or 3rd drink on a Friday...

Fri, 03/22/2013 - 18:16 | Link to Comment Dr. Engali
Dr. Engali's picture

Give the guy a break. There's only some much screwed up crap you can write about. After you've been here for a while it's hard to touch on something new. I just hope we aren't talking about Cyprus for 3+ years like we were/are Greece. And I certainly hope we aren't Japan and talking this same crap 25 years from now.

Fri, 03/22/2013 - 18:32 | Link to Comment Irelevant
Irelevant's picture

Well, we were just pushing the curve further in time. When it comes, the Seneca effect will be a bitch.

Fri, 03/22/2013 - 18:58 | Link to Comment The Abstraction...
The Abstraction of Justice's picture

6 years of getting the end of times wrong teaches me not to cry wolf. 

Fri, 03/22/2013 - 19:50 | Link to Comment Professorlocknload
Professorlocknload's picture

The secrete is behind Part II.

Fri, 03/22/2013 - 19:57 | Link to Comment NoDebt
NoDebt's picture

"I just hope we aren't talking about Cyprus for 3+ years like we were/are Greece."

Oh, crap.  You're........ probably right.  Up arrow for the comment's undeniable truthiness, down arrow for killing my Friday evening buzz.

Fri, 03/22/2013 - 18:15 | Link to Comment jeebus
jeebus's picture

One Bitcoin feeds 40 homeless people: 

 

https://www.smore.com/e36w

 

Fri, 03/22/2013 - 18:25 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

Wow....Bitcoins are versatile

Fri, 03/22/2013 - 19:23 | Link to Comment francis_sawyer
Fri, 03/22/2013 - 18:33 | Link to Comment icanhasbailout
icanhasbailout's picture

Let them eat 10010101 10110010

Fri, 03/22/2013 - 18:40 | Link to Comment El Viejo
El Viejo's picture

Are they made from soy??

Fri, 03/22/2013 - 18:51 | Link to Comment The Abstraction...
The Abstraction of Justice's picture

I never donate to charties in which the employees earn more money than I do. Since I have retired this has given a great excuse never to donate to anything again. My next sacrifice will be in flesh in blood. Hopefully not my own. Oligarch hearts are what my God demands.

Fri, 03/22/2013 - 20:26 | Link to Comment tbd108
tbd108's picture

"Charity's fine, subscribe to mine, You've got to pick a pocket or two." Oliver.

Fri, 03/22/2013 - 19:10 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Do 'Pros' accept bitcoin?  If it's not legal tender, then you just have some fun between consenting adults, right?  And all you're doing is, is swapping digital contact info, right?

"Hey there, wanna have some fun... play a video game together, get a private chat room?  I have a high rating from other Gamers.  I know a place nearby that's ideal for Gamers.  Collect tokens, use them to extend your... lifeforce."  You get the idea. 

Everything is 'clean' and on the up & up, it seems.  Just two people with a mutual interest in Gaming.  Nothing to see here Vice, move along.

Fri, 03/22/2013 - 20:25 | Link to Comment aphlaque_duck
aphlaque_duck's picture

http://www.reddit.com/r/girlsgonebitcoin

Give a tip and they will pm you.

Fri, 03/22/2013 - 18:58 | Link to Comment EHM
EHM's picture

I didn't think you could eat bitcoins.

Fri, 03/22/2013 - 19:11 | Link to Comment jeebus
jeebus's picture

I didn't know you could eat gold or dollars either. Zerohedgers want a return to the barter system/ stone age. We can get rid of banks and still have the internet. That is bitcoin.

Fri, 03/22/2013 - 19:25 | Link to Comment Eternal Complainer
Eternal Complainer's picture

" Zerohedgers want a return to the barter system/ stone age"

Nonsense!
ZH'ers just want to see central planners and all their criminal ilk fail horribly.
Then swift merciless justice meted out!

Fri, 03/22/2013 - 19:25 | Link to Comment ebworthen
ebworthen's picture

Did you miss the ZH report earlier today about the U.S. Government going after BitCoin because it competes with the FED run Central Banking Ponzi?

Place your chips.

Fri, 03/22/2013 - 21:22 | Link to Comment jeebus
jeebus's picture

If you knew anything about bitcoin, you would know that the US government is powerless against bitcoin unless they want to turn the entire internet off. Considering that the internet is vital for banking, the stock market, basically the world at this point, I don't see it. But hey, I love all the skeptics. It's giving me more time to accumulate at this absurdly discounted price point. Paypal was worth $2 billion. Bitcoin is wayyy more useful than that. Most of you bitcoin skeptics are total clowns.

Sat, 03/23/2013 - 03:58 | Link to Comment ebworthen
ebworthen's picture

Ummm-kay.

I'm all for alternatives to Central Bank Ponzi's, I'm just throwing you a caution bone.

All they have to do is shut down some exchange servers and track the transactions (remember, the Internet started as a military network owned by the government).  I wouldn't put it past them to hack a few transactions and introduce enough doubt to debase the value.

I mean, some of the servers recently were running different versions and there were duplicated keys and invalid transactions amongst the supposedly "infallible" Bitcoin inftrastructure servers themselves.

I've heard all the religious zealotry about Bitcoin I can stomach - and the more I hear the frenetic diatribes about it's absolute and complete infallibility because it involves math (never mind electricity, completely monitored Internets, and someone somewhere running the exchange) the more I doubt it's longevity and validity.

If you want to put your faith in something on the Internet that could be turned off like a light switch go ahead, I wish you luck.

Sat, 03/23/2013 - 06:37 | Link to Comment e-recep
e-recep's picture

i decided to skip posts and comments on bitcoin for some time. it has become tiresome. yes, i would use bitcoin as an alternative to paypal but no, i wouldn't trust my lifetime savings with it. i've read quite a lot about it and i am getting more and more rigid on my decision.

Fri, 03/22/2013 - 19:30 | Link to Comment francis_sawyer
francis_sawyer's picture

I want the world to collapse, but only if my fucking PLAYSTATION still works...

~~~

Question: I'm channeling through my recollection, but for the life of me, I can't remember any of THE MATRIX characters scarfing down on a pizza... [oh wait ~ there were 'cookies' in there somewhere]... There IS NO SPOON because there are no 'Chinese takeouts' & because you can eat your fucking hotpockets with your fingers...

Fri, 03/22/2013 - 18:27 | Link to Comment venturen
venturen's picture

What me worry? ...they can just print another trillion of 5 to paper over the fraud!

Fri, 03/22/2013 - 18:32 | Link to Comment edwardo1
edwardo1's picture

Here's a corrective to the following idea from Chris M:

Message received: Go big or go home.

Being very very big didn't save Lehman from not just having to go home but becoming homeless.

Someone (see depositors in Cypriot banks) or something (see the public sector in a host of nation's where austerity has been and is being implemented) always winds up going homeless. It's just a matter of where one stands in line at the political trough.

In the meantime, this shitty denoument has gone on for so long that onlookers and participants alike have grown weary waiting for the inevtable to play out. As the Wicked Witch of the West was fond of cooing, "All in good time."

Sat, 03/23/2013 - 03:34 | Link to Comment Doña K
Doña K's picture

Lehman was let go down because it failed to participate in the LTCM rescue. They also needed to have at least one go down for show.

Chris mentioned that.

Sat, 03/23/2013 - 06:02 | Link to Comment UK debt marsh
UK debt marsh's picture

Wasn't that was Bear Stearns, not Lehman?

Fri, 03/22/2013 - 18:36 | Link to Comment Water Is Wet
Water Is Wet's picture

What this chode says matters for exactly what reason?  At least a few chodes on ZeroHedge have been saying some iteration of "ZOMG!" for 5+ years.  Actually, I believe that was the credo of the founders of ZeroHedge.

Fri, 03/22/2013 - 18:43 | Link to Comment Rainman
Rainman's picture

Nobody knows nuthin about the future....cept these devils are going to keep on PRINTING. That is an absolute certainty. 

Fri, 03/22/2013 - 19:04 | Link to Comment HD
HD's picture

One could smoke two packs a day, eat a diet based on pork rinds and whiskey for a few years and function quite well - but it's not sustainable. The underlying disease and rot will take its toll. The longer it goes the worse it gets.

Sun, 03/24/2013 - 11:51 | Link to Comment dark pools of soros
dark pools of soros's picture

Fuck you Bloomberg and your faggy diet!

Fri, 03/22/2013 - 18:46 | Link to Comment debtor of last ...
debtor of last resort's picture

There is no market. Not for workers, traders, mothers, whatever. Mr. M., lives are being destroyed, everywhere. Today it's just a wrong bet, tomorrow, it's the wrong place, wrong time.

Sun, 03/24/2013 - 11:54 | Link to Comment dark pools of soros
dark pools of soros's picture

Ohh there's a market for mothers... Single young pole spinning and sucking moms

Fri, 03/22/2013 - 18:55 | Link to Comment buzzsaw99
buzzsaw99's picture

Anything that jeopardizes the big banks will be bought by the fed. Problem solved.

Sun, 03/24/2013 - 11:58 | Link to Comment dark pools of soros
dark pools of soros's picture

They'll demonize it and keep attacking the exchanges. Would be nice tactic to have a p2p exchange in place too

Also don't forget p2p lending as an attack on the banks too. That could emerge with bitcoins too

Fri, 03/22/2013 - 19:00 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Chris, I'm a huge fan and have all your DVD's, but... I'm so skeptical on the current monetary & fiscal situation on the indebted Western countries and the Crony Capitalism that is totally beholden to the Fed and The City, that...

I'm not concerned about Return ON Capital, but Return OF Capital.  And how to tough out the era ahead in a Resilient Community Near Me (Zip '12345').

Fri, 03/22/2013 - 19:09 | Link to Comment mind_imminst
mind_imminst's picture

I am not a troll like milliondollarbonus, but I don't see much (nominal) trouble. The coordinated actions of central planners/bankers around the world are so massive that almost all large liquid markets are now captured. Sit back, get on board with the FED, and wait for the wheelbarrow ending.

Fri, 03/22/2013 - 19:35 | Link to Comment francis_sawyer
francis_sawyer's picture

I am not a troll like milliondollarbonus, but I am equally capable of making sychophant comments [only ~ I'm being SERIOUS]

~~~

There ~ fixed it...

Fri, 03/22/2013 - 20:13 | Link to Comment NoDebt
NoDebt's picture

Son, there is never any "nominal" trouble when central banks just print like crazy to cover insolvency.  They can always make the "nominal" square up.  The problem is that the "real" can't move as fast as the "nominal".  Otherwise hyperinflation wouldn't be a problem at all and none of us would care much about about monetary policy or price stability.  When the "nominal" starts moving at a pace too fast for the "real" to keep up with you start to break things at a very deep level in society.  When you start to break things at a deep level in society people start dying in very uncool ways in very large numbers.  One of those people could be you or me, although I doubt you could see how that's possible or believe it.

Not everything can be "who gives a shit?"  Some things matter.  Some things are worth trying to fix no matter how late the hour or how broken they may have become.

Fri, 03/22/2013 - 19:43 | Link to Comment Monedas
Monedas's picture

I never take deductions .... I feel like it's cheating the government .... they have important, good works to do .... they need all of us pulling in the right direction !       MillionDollarMonedas_     1929      Comedy Jihad World Tour 

Fri, 03/22/2013 - 22:25 | Link to Comment angel_of_joy
angel_of_joy's picture

You're a moron !

Keep going...

Fri, 03/22/2013 - 19:43 | Link to Comment Monedas
Monedas's picture

When I pay my taxes .... early .... I always round up to the nearest $100 .... I don't want the decent, hard working citizens at the IRS to think I don't care !     MillionDollarMonedas_     1929     ComedyJihadWorldTour

Fri, 03/22/2013 - 22:33 | Link to Comment angel_of_joy
angel_of_joy's picture

Troll invasion ?

Fri, 03/22/2013 - 20:26 | Link to Comment stlouistrader
stlouistrader's picture

Martenson, Biderman, Faber, Durden---the more bearish they get, the higher stocks go....eventually they will be right of course...they will all be singing glory when the dow corrects from 17000 to 15000.  This from guys who have been bearish since dow 8000.  Its not that hard foks....don't fight the fed and dont fight the tape.  

Its truly a shame because all of these guys are brilliant and very logical. But logical usually doesnt win in predicting markets over the short term.  They are all working their way towards being the ass clowns of the last five years.

Fri, 03/22/2013 - 20:40 | Link to Comment waterwitch
waterwitch's picture

So, DOW 36,000?

Fri, 03/22/2013 - 20:55 | Link to Comment gnomon
gnomon's picture

This is an "insiders" market, no more no less.  If you are one of those insiders who only has to look out for the blackest of black swans, you are good to go.   If you are not an insider, you are flying blind despite what your ego-fueled brain might tell you.

The "ass clowns" are the ones who are not insiders who think they will not get burned to a crisp one of these days.

I am going to rope-a-dope these bastards and stay on the sidelines and keep investing in tangibles.   

Sat, 03/23/2013 - 05:58 | Link to Comment Notarocketscientist
Notarocketscientist's picture

I would assume all of them are holding at least some of their wealth in gold.

So who will be laughing at the end of this?

The fools with their worthless stocks, bonds and cash - of the wise men who foretold the future?

I hope those of you who have made money in the market are enjoying it - because you will be eating dog food soon enough.

 

Sat, 03/23/2013 - 00:42 | Link to Comment q99x2
q99x2's picture

Mr. Martenson writes very good articles. Very clear writing.

Sat, 03/23/2013 - 12:55 | Link to Comment kurt
kurt's picture

Me like plenty much.

Sat, 03/23/2013 - 01:01 | Link to Comment luna_man
luna_man's picture

 

 

MY MAIN MAN...Just keep on keepin on!!

 

my daily fix

Sat, 03/23/2013 - 17:28 | Link to Comment zipit
zipit's picture

RE" "LTCM boasted of its use of complex models that were supposed to generate outsized returns while operating with a risk-minimizing profile that, mathematically, was only supposed to experience severe losses so infrequently that the periods between them would be measured in the thousands of years.":

Today we call that "Picking up pennies [ok, a lot of them] in front of a steamroller."

Thu, 03/28/2013 - 08:15 | Link to Comment profit confidential
profit confidential's picture

You can’t avoid risks if you are into investment but there are methods following which you can cover much of your investment from various types of risks and dangers. It is difficult for a novice to determine the different types of risks and make necessary arrangements for evading them. Investment risks comes in different forms and by understanding their types you can safeguard your investment effectively. For instance there are market risks where market drops abruptly because of various unfavorable circumstances. Another common kind of risk is called inflation risk which effects by gradually reducing investment returns. And again there are company risks in which your investment is hampered when the firm you invested in starts underperforming.

Sat, 03/30/2013 - 02:38 | Link to Comment profit confidential
profit confidential's picture

When movements in the stock market prices result in loss/ fall out of stock positions, the risk involved therein is referred to as market risk. There are a number of market risks, like Equity risk, Commodity risk, Currency risk and Interest rate risk.

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