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Marc Faber: "We Are In A Gigantic Speculative Bubble"
"We have to be careful of these kind of exponentially rising markets," chides Marc Faber, adding that he "sees no value in stocks." Fearful of shorting, however, because "the bubble in all asset prices" can keep going due to the printing of money by world central banks, Faber explains to a blind Steve Liesman the difference between over-valuation and bubbles (as we noted here), warning that "future return expectations from stocks are now very low."
Nope no bubble here...
Along with this pattern...
which has emerged with striking fidelity since 2010, we observe a variety of other features typically associated with dangerous extremes:
- unusually rich valuations on a wide variety of metrics that actually have a reliable correlation with subsequent market returns; margin debt at the highest level in history and representing 2.2% of GDP (eclipsed only briefly at the 2000 and 2007 market extremes);
- a blistering pace of initial public offerings - back to volumes last seen at the 2000 peak - featuring “shooters” that double on the first day of issue;
- confidence in the narrative that “this time is different” (in this case, the presumption of a fail-safe speculative backstop or “put option” from the Federal Reserve); lopsided bullish sentiment as the number of bearish advisors has plunged to just 15% and bulls rush to one side of the boat;
- record issuance of covenant-lite debt in the leveraged loan market (which is now spreading to Europe);
- and a well-defined syndrome of “overvalued, overbought, overbullish, rising-yield” conditions that has appeared exclusively at speculative market peaks – including (exhaustively) 1929, 1972, 1987, 2000, 2007, 2011 (before a market loss of nearly 20% that was truncated by investor faith in a new round of monetary easing), and at three points in 2013: February, May, and today (see A Textbook Pre-Crash Bubble).
Many of us in the financial world know these to be classic features of speculative peaks, but there is career risk in responding to them, so even those who view the situation with revulsion can't seem to tear themselves away.
While I have no belief that markets follow any mathematical trajectory, the log-periodic pattern is interesting because it coincides with a kind of “signature” of increasing speculative urgency, seen in other market bubbles across history. The chart above spans the period from 2010 to the present. What’s equally unsettling is that this speculative behavior is beginning to appear “fractal” – that is, self-similar at diminishing time-scales. The chart below spans from April 2013 to the present. On this shorter time-scale, Sornette’s “finite time singularity” pulls a bit closer – to December 2013 rather than January 2014, but the fidelity to this pattern is almost creepy. The point of this exercise is emphatically not to lay out an explicit time path for prices, but rather to demonstrate the pattern of increasingly urgent speculation – the willingness to aggressively buy every dip in prices – that the Federal Reserve has provoked.
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I'll take "What do you get when too much currency is chasing too few goods?" for $500 Alex
sorry...using such generalizations as "stocks" are overvalued is more trashonomic newsletter garbage......fail
just as bad as "metals" are undervalued.
The bubbles (in stocks, real estate, and bonds) are now so obvious that their existence is really not even open for debate. The only question is "when will they pop?"
Sadly, bubbles always end tragically ... and yet this is exactly the path that the Fed is intentionally pursuing.
I'll take Steve Liesman is a _____ for $1000, Alex
ding ding ding
You've hit the Daily Double, Knukles! How much do you wish to wager?
Everything under the sun, Alex!
"I'll take Steve Liesman is a(n) __________ ..." would be more inclusive...
A conversation with Steven Liesman on valuations.
HA! Some of my dog's fleas are smarter than Steve Liesman.
With over 31.6 tons of gold standing for delivery at the COMEX (not to mention beaucoup silver) , December2013 may indeed be a very interesting month.
Harvey pointed out that the dealers combined only have 18.37 tons on hand. Ouch!
playing the market at this point is like driving blindfolded.
Driving blindfolded is easy when you're drunk on punch.
Faber mentions Bitcoin as "hyperbolic" ... which I think is not quite accurate. It's probably more than that.
Me thinks your spastic colon let loose through your mouth (fingers).
Spastic colon...you sir, are an idiot; actually that is an insult to the card carrying idiots out there.
What is happening is the exact opposite of what you're saying. The inflation we're experiencing is due to devaluation not demand.
Look at the velocity of money. (it's pathetic)
Capital aka fiats becomes worth less as more of it is printed. In order to get the return on those fiats you have to chase yield, which by proxy is risk.
What the Fed. is doing is essentially closing out 90% of the public from exploiting all of the extra fiat injections because of credit restrictions and reserve requirements. The banks know they can borrow at ZIRP and park their cash overnight at the Fed. for 10-25 basis points for doing nothing.
The toxic outcome of this is inflation from money supply expansion. Intrest rates and price discovery/risk are suppressed, and the value of the currency deteriorates because velocity/demand doesn't support the supply.
Don't even get me started on off balance sheet cash and what banks do with that. The Fed. backstops the banks on bonds and pays them a premium for it! The European banks have larger POMO balance sheets then all the U.S. banks combined and aren't subject to U.S. capital reserve requirements, and get paid interest by the Fed. for their BORROWED excess reserves.
this would be a perfectly apt explanation for dynamic before the advent of derivatives and shadow banking.
what your inflation-around the corner analysis hasn't caught up with is that this time around, there are hundreds of billions of dollars of collateral required per year to offset trillions in derivative implosions
deflation remains as much a risk as inflation and the $85 billion per month injection keeps us in an eerie equilibrium as the rubber band stretches in both directions
it'll snap back, - but from what direction?
Does it really matter from which direction, all that really matters is the time? No
I'm not sure I understand you correctly Prains. Every contract has an expiration, but I'm a bit confused as to how you're applying that rule.
Yen, I was speaking to Squids defaltion-side arguement. I don't think the questionn is whether or not it is an inflation or defaltion risk, either one results in the same ultimate reset, so the real question is when
ultimately i think you're both right. QE printed inflation to ward off deflation is their game but the Maff's say it's a finite game
I respectfully apologize prains. Keep kicking the Queens ass! :-D
Too much sober "Bond Movies" during the last 24 hours...
always read your thoughts and ideas, if too many Bond movies is the issue, time to break out some Beasty Boys and a dram of Dalmore!
Yen & Squid, good back-and-forth here. We really cannot say what will happen because we don't control things.
I'd have to state that the money velocity issue is HUGE. I'm not an economics scholar, in which case I can't speak whether there's any similar historical set of circumstances: that this is global in nature is the big kicker.
I've said from day one that growth is done. This, I believe, is the real monkey-wrench. I think that this is the end of one big cycle (going back at least one hundred years, if not even more; and, not because of the formation of the Fed, though that certainly did influence the rate at which we shot ourselves toward the cliff that we're approaching). If there is no growth then that means, pretty much by default, that there will be contraction (stasis is only a brief moment when passing through the two polars). The System WILL get squeezed. And, because economies of scale plays such a critical role in the System I see the buckling at the seams taking place with a reversal of economies of scale. Initially everything possible will be done to hang on to margins (that's been the case up to now). As margins get compressed entities will try and ramp up volume in order to beat out the remaining competition (big flury of activity in consolidations and closures). Pushing on the accelerator will also likely come with reduced prices to consumers, but this can ONLY be for a short period of time (until shareholders start really making noises [though they'll find that there's little elsewhere to go]) because consumers are tapped out. When it becomes apparent that volume cannot be sustained and that the costs for production start to creep up due to increases in material costs is the signal for the start of the big scambles to unload/vastly trim size or risk total collapse.
Eventually all the non-essential crap will drop by the wayside as discretionary income dries up (more and more of it to shift toward essentials like food and energy). This will place more of a strain on economies of scale for the more essential items: think what junk mail means to the USPS- junk mail subsidizes the real stuff; a decrease in this subsidy means that the cost for first class HAS to increase. This is economies of scale in reverse. It all becomes a self-reinforcing downward spiral.
Regarding the $85 billion/month, I figure that it'll dry up, not because of taper, but because there won't be any ability to absorb it: when corporations have done all their buy-backs (many going back to private) and when banks cannot loan any more because there's just no one left who can justify taking out loans when there's no future demand to increase any fuction, well... we then all see it for what it is- total pretend, a huge Ponzi that is folding.
so long as we have zirp, corporations will find a use for the $85b - especially with govt bonds paying more than the rate to borrow
loans to main st barely factor even now when it comes to their motivation to take the QE and run with it.
"The European banks have larger POMO balance sheets then all the U.S. banks combined and aren't subject to U.S. capital reserve requirements, and get paid interest by the Fed. for their BORROWED excess reserves."
correct. yet this is in their USD subsidiaries, for US based assets, incluning boatloads of Treasuries
megabanks can't be weighted according to the jurisdiction they happen to be based. they are still at peak transnationality
in short, yes, as far as US national interest is served
In their U.S. subsidiaries. I guarantee you that cash isn't buying U.S. Treasuries. (Spanish, French, Italian, Greek ect...)
"Mega Banks", just like their corporate counterparts that { produce tangible value} are subject to even more stringent requirements? International co-ops have been around for ever in banking. Your argument that some sort of large outstanding obligation being overweight and not rebalancing sovereign agreements or fx reserves and terms of trade( for preferrential treatment) is obsurd and just exlemplifies why we're in this fiscal global quagmire...
sarc Ghordo/ Friday humor...
A fool and his ______________ are soon ____________.
Obamaphone, united.
THE NEW AMERICA: 3 Million Overlords, 300 Million Serfs
Read more: http://www.businessinsider.com/wealth-and-income-inequality-in-america-2013-4#ixzz2m4Sllxpp
Re: THE NEW AMERICA: 3 Million Overlords, 300 Million Serfs
"Survival of the fittest" end game. It always ends this way.
The post game shows after the game are always really violent. It's too bad the Libertarians can't figure out some way to have a "season" start over again without all the violence.
Why can't Spring arrive, w/o leaves falling, followed by Winter?
Could it be that it's a zero-sum game?
I'm guessing that this is just a post out of frustration.
At some point, regardless of how we "see" it, we'll have to adjust to a signficantly different way of life (sorry, Dick Cheney). This has NOTHING to do with any political/social ideology- it has to do with the fact that we have limited resources on this planet.
I think that you're mistaken if you believe that we don't have a lot of violence occurring now. To better understand it substitute "violence" with "oppression." The wealth centers have oppressed billions in order to perpetuate a system that is not sustainable. The ability for the wealth centers to continue is fading (they've managed to do it via the "middle class").
Calling out for a "re-start" fails to understand what the real problem is: I assure you the problem isn't that all humans can't have a U.S. middle class lifestyle, rather, it's that we cannot grow in perpetuity.
Many elder folks and many folks suffering from significant medical conditions just won't make it in the future. Not my call, it's just what it will be: and if not, then we sacrifice the younger population; w/o a younger population who will be there to attend to the increased needs of the elder and sick?
Believe it our not, you left out a really thick slice.
As Mac Faber said the Federal Reserve can keep printing. As Zimbabwe did.
If China and Russia want to defeat the US they need to do it economically. Make the US dollar worthless.
Help the US Federal Reserve in destroying the dollar to the point where nobody around the world accepts it.
BUT... have you read the last chapter?
China and Russia cannot magically assume control over a reserve currency, well, not likely for very long (we're still on the path laid by the exponential growth function- time between currency collapse intervals will shrink).
The largest consumer markets are drying up. China cannot ramp things fast enough to build a middle class that can support their production surpluses. I think that Russia is smart enough to know how to play it (more likely the SDR approach)- they have actual resources, surplus.
Everyone's currencies are becoming worthless. The USD has only held on this long because of this. Had this been happening when Zimbabwe was smoking then their currency probably wouldn't have burned up quote so fast.
There's so much riding on any global currency reshuffling that I figure that there's not going to be any breakthrough (and, as I've stated before, it would only also eventually suffer a fate at the hands of no/negative growth).
Bernanke/Yelllen and the Federal Resevre will print to infinity to support the United States of Freebies.
- Disability/Welfare
- Section 8
- Obama Phone
- Food Stamps
The US now looks like:
http://www.youtube.com/watch?v=lwEGSe_upuQ
American's favorite past times shopping and eating. Big time Pig time.
Carlin on the United States:
http://www.youtube.com/watch?v=nLRQvK2-iqQ
Bernanke/Yelllen and the Federal Reserve will print to infinity to support the United States of Corporations:
- Banks
- Insurers
- Corporate Hospital/Lawyer/Big Pharma leech machine
- Cronyism
The Section 8'ers/Food Stamps/Welfare free-shit army is the sideshow which simply keeps the riots from breaking out; the main attraction is the asset sucking mammon lusting monster of collusion between elites and the .gov mandarins.
And what happens when all the assets are gone, when good collateral is all spoken for, when made-up "derivative collateral" is no longer accepted?
Perhaps it got to this point because of all the "freebies" to corporations? (think defense industry, for example)
Also, TPTB are the ones who decided this, as this is what maintains the buffer for them. Again, one has to look to the punch line to get the real "joke."
Things are totally out of alignment. A friend in Australia pointed out to me that up until a few years ago one would always be able to sell real estate and be able to get a better return by putting the money in the bank. This is no longer the case given that the Reserve Bank of Australia has followed the world lead into lowering interest rates.
From what I see this is what has happened everywhere and simply represents a dangerous mispricing of money.
Faber sees no value in stocks, whereas I see no value in anything that carries humungous debt.
The temptation of course is not to miss out on the levitation that is taking place, hence everything is rising as more and more pile in.
Speaking from experience, I feel that the preoccupation with capital appreciation has eclipsed the value of cash flow to a dangerous extent and in the end the system will have no choice but to impose a haircut of savage proportions on the borrower as well as the lender.
This is why it is imperative to think in terms of comparative value rather than prices in attempting to protect oneself against future meltdowns.
For this reason gold has a number of endearing qualities due to its portability, universal acceptance and generally no leverage.
Thank you. It's very educational to see things in/from a non-U.S. perspective, as this helps see the Bigger Picture.
It's all been about creating growth when it's long past possible. We've been fudging Book numbers for so long now that we can't get ourselves to scribble in red ink. While we all may have lost the red ink pen, Mother Nature has not.
Lean times ahead (for good).
So Seer, you need to rethink the role that inflation plays in economic policy. How would you propose we create a global "Hair Cut" if not through inflation?
How about all of the gamblers take their losses?
That haircut is what is needed...as your post would suggest. And the typical means to create the haircut is INFLATION. We need some inflation...in the 7-8% for a few years to correct the imbalances.
Face it folks, the low inflation policy is the biggest of the problem we face and we won't move forward without the devaluation and reset inflation brings. The up side is that inflation will lower unemployment and spur REAL growth.
I'd think that I'd rather see a deflationary implosion lead to a reset than an inflationary one. I think that a deflationary collapse would mean that the current system of trying trying to "inflate our way out" by TPTB was REJECTED.
There is no "typical" because the FED never had software to determine what the stock market values were before the end of 2011. You schmuck. You are not looking at what you were before then. Idiot.
The Fed cares less about the values. All they care about is getting the stock market up so people feel good about being wealthier and spend more money.
They could care less about it having a PE of 20,000 or 30.
We are in a gigantic bubble UNLESS we move to a COMMAND ECONOMY and we are moving that way.
The so called "free world" is NOW MOVING TO A COMMAND economy basically modelled on China command economy.
In such an economy, assets and debts are equivalent and prices and interest rates are ALL CONTROLLED CENTRALLY. There will be no market mechanisms and populist mechanisms like BITCOIN will be shot down. The banks are already there, including the PDs and CBs, part of SAME MATRIX.
Given the current huge triple conundrum : energy, monetary/financial and ecological/population, the Oligarchy has no other solution OTHER than moving to a DE FACTO command economy where natural resources and MIC/surveillance will be controlled by an ELITE.
THAT ELITE IS NOW IN PLACE ON ALL CONTINENTS AND THE GAME OF CONSOLIDATION CAN BEGIN PROVIDED THE OLD OLIGARCHS OF NATION STATES BOW TO THE NEW MANTRA AND THOSE WHO CONTROL IT. DAVOS CALLING....
So think OUT of the BOX to understand whats up ahead.
There will be no revolution as the OLIgarchy has it under control, via unlimited money printing that will debase salaries and living standards for the 99%; its automatic; while protecting oligarchy assets; UNLESSS the Oligarchs fall out amongst themselves and the FED lynch pin of this financial construct LOSES IT....then all bets are OFF and we move bigtime towards POPULIST 1930s type scenario. We've been there...and these guys won't want to end up like Mussolini.
Tipping times indeed. But the Oligarchy has the upper hand unless they do something STUPID.
Will they? They are so full of hubris and they will panic.
History says ALWAYS !
Remember the last lines of the COunt of Monte Cristo : WAIT AND HOPE. IT WAS HIS MOTTTO...
And, don't forget what got us here; those US oligarchy shills of Reaganista Thatcherism concoction thought they had the world by the BALLS post Berlin Wall collapse and they went the whole hog in NWO hubris. And they gave the KEYS of the world to their own enemies...The China SYNDROME which is now their own SELF MADE PRISON...the IRONY of it.
Having to now resemble to the likes of MAo's sons and Putin skunks to SAVE your own Oligarchy fortunes, which have no home in any first world country as their economies have been killed by your own kind; these guys are condemned to live and die like the Russian princes of the Riviera and end up like the Flying dutchman alone on their oligarchy boats in the end...poetic justice; for the TOO rich to live with the peasants of tomorrow's world.
There will always be CONSEQUENCE. One day.
Signed Edmond Dantes.
Entertaining! But falak, could you work into this Global Warming and collapse of food production??
The environment is a wild card no one has fulling considered...food riots lead to unstoppable revolutions.
Remember, true power flows fromt he barrell of a gun!
hey edmund, f n hyper down there dude
It's called Fascism, nothing to be worried about ;)
signed Theodore Tenpole, II
falak,
I believe that this is all just a normal progression of standardization. (PBS did "Command Heights" [http://www.pbs.org/wgbh/commandingheights/lo/story/index.html] several years ago, pretty decent overview of the process)
Those used to my posts know that I believe that BIG = FAIL. While "BIG" may happen, it cannot persist.
I still figure that the NWO won't really get off the ground, that there's enough localized interests that will fight for their right to protect fundamentals (Food, Shelter and Water). Here's an encouraging anecdotal:
Australia surprises with rejection of $2.55 billion GrainCorp takeover by ADMhttp://finance.yahoo.com/news/australia-surprises-rejection-2-55-2259202...
My hat's off to the Aussies (despite all the other things they're fucking up this one is a big plus).
This time down, we'll see if they really got it. Is it confidence, or is it not? Is it wish or is it hope? Confidence in plan B? Belief in the ultimate lack of inspiration? I'll be back, I promise.
What kind of tree flowers a fruit like Liesman?
Can he possibly believe any of what he says?
Is he an actor or just a guy with no insight?
Has he ever heard of Zimbabwe? The Weimar?
I would pay good money to see Steve Liesman and Rick Santelli in a caged death match, like Thunder Dome. Two men enter, one man leaves.
I'd pay a lot more for the Mandy Drury and Kelly Evans caged jello match, but that's just the kind of pig I am.
This tree is called Anus and you know the fruit...
One more thing...it seems we are 25 basis points away from the 10 year hitting 3% and all hell breaks loose!
Last time this happened Bernacke had to call off tapering. Already they begin to hint at tapering again. It cannot happen. We are very close (again) to the derivative market (interest rate bets) imploding (again).
In a chess game one wold adopt a different strategy but in this game there is no other plan that can be deployed.
We are very close to collapse I fear. There are several sign: this one, GLD losing gold and being forced to halt gold derivative trading due to lack of physical, and the risk of hyperinflation now seen as a benign rise in stock prices but coming soon to aretailer near you.
My bet is a derivative market crack up first, with gold depletion second....I don't think we have time for wheelbarrows full of cash and the whole Weimar thingy to play out.
If we see the holidays before this happens I'll be grateful.
No argument from me about this thing being on the edge of a total crack-up.
I wonder, though, what govt is going to do when the smell of this gets too strong. What's folks' stories for what govt might do? State of emergency declared? And then?
Ok, you can't short, but I assume you are out of the market? So what if you miss the next 10-15%? You are already wealthy enough, no?
Wealthy enough for what?
Even the ubber-wealthy (as we declare them to be) cannot be assured that their future is secure: hard to defend against black swans.
For myself, not a participant in the Wall Street circus, I'm wealthy enough, enough to be happy today... and I've been chaining quite a few of these days; and in the future it'll be all about making every day count (and that depends on how you keep score).
.
we are in a bubble of people talking about bubbles
Lol I sure hope that is true.
Richard Russell once said a few years ago it was "inflate or die."
Austrians say there is no way out. "Inflate and die or deflate and die"
Only Mr. Bernanke and Mr. Yellen believe they can thread the needle with a big fat QE elephant.
But if you are expected tp die anyway might as well die trying
"Only Mr. Bernanke and Mr. Yellen believe they can thread the needle with a big fat QE elephant."
I'd have to disagree. I think that they DO know that the end of the game is neigh. Their "job" is to hold things together for as long as possible. Figure this: their actions have given us time- and if one isn't using one's time well then that's not the fault of someone else.
The reality is that the System has been one of "grow or die." As long as the aim is growth then that guarantees bubbles (until the perpetual growth Ponzi meets finite world, which is the case we're now discovering).
Bubblenomics. The new normal.
I can always identify the crazies and ill-informed when I hear talk of the "Gold Standard", buying gold as a panacea, and when I hear fear-mongering about impending "hyperinflation".
The real worries concern deflation and the loss of consumer purchasing power with a glut of products unable to be sold.
If you are unaware that we are in a Consumer-Crisis then you have my sympathy. This world must be a complete mystery to you.
"If you are unaware that we are in a Consumer-Crisis then you have my sympathy. This world must be a complete mystery to you."
You still pushing dropping money on to the citizens?
The realities of finiteness in physical resources seems to be a complete mystery to you.
Do you have children? (just curious)
Well, Seer, dropping money on consumers from a HUEY would certainly beat dropping money on Wall Street and Goldman Sachs/JPMorgan.
But I'm for jobs and a lower SS retirement age through purely fiscal policies...that is the common sense path out of this mess. I mean GEE WIZ...what genius does it require to see that we have high unemployment and untapped production capacity and that the solution is JOBS JOBS JOBS.
I keep reading posts here where folks can't see the problem for what it is: Too few jobs at too low pay! Makes me doubt humanity for sure.
And regarding scarce resources...why are we blowing $85billion per month on Wall Street when we should be building a green energy grid and rebuilding bridges and roads???? INSANE! And OBVIOUS!
And if resources are scarce why the Fuck would we be inviting further immigration???
What is wrong with you people!
...and where the hell are the people who should be screaming for TARIFFS on imports???
BTW: Inflation rates of 7-9 percent would do wonders for lowering unemployment/raising wages, prompting global investments in manufacture and services and would help to lower the effects of indebtedness with repayment being made much easier for many many folks.
But, alas...we see only inflation rates in the 2% range for the forceable future. Too bad the bankers are running the Fed and Treasury.
+1 for the argument above about gold and hyperinflation fear mongering. So many people all over the place who think the path is linear and who will get shook out of thier positions only to make more mistakes. There is a time to buy and a time to sell - for everything. There are investments and there are insurances and there are lottery tickets. What is different now is buy and hold is DOA.
-1 though for the inflation argument as cure.
First, the system can only expand so far on organic growth. It is wealth transfer mechanism - you even allude to this. Same as it always has been throughout history. A mechanism to allow for the few to live on the backs of the many. Owners and slaves. All designed around the behaviors (passions) of men. Ponzi after ponzi, and this one being the biggest of all to date. Is about who you know and not what you know... something that become more apparent in the end days but has always been true. Today, business men and bankers rule the world. Not engineers, doctors, scientists, etc. Advancement of the human condition on the basis of profit? Sound plausible to you?
We are in stagflation, btw. Combined with macroeconomic debt saturation after two decades of consumer credit cram down. The proverbial horse has been rode until it dropped dead. The Bretton Woods era is over. Leverage and financial engineering (thanks to modern banking and computers) have kept the party going. It is now time to pay up.
The days of modern banking are numbered. As are the days of the Fed. Hyperinflation will be begged for by the time this the "ugly lights" for this party have been thrown on.
We are NOT in stagflation. This is not the 1970s with cost-push inflation due to oil embargoes.
(Stagflation - Inflation) = Liquidity trap. Centerline, it is a liquidity trap that we are facing right now. Inflation is the cure for this.
But I don't propose inflation as being a fix-everything solution...let's get that out in the open...but you, yourself, should be enraged and treat with great skepticism the inverse idea: That Low INflation is Always Better than High INflation.
The Fed has the job of controlling inflation rates and keeping unemployment low. Well, INflation is quite low...and they have ignored unemployment. Get angry at this please. What is the funciton of an economy if not to serve the people??
Had we someone with balls in the White House and a neoKeynesian running the Fed then we would have seen little of the monetary policy that in blowing up the financial bubbles/housing bubbles and we would have instead had Fiscal policy emphasising jobs and increased wages.
Check out:
http://krugman.blogs.nytimes.com/2010/10/30/the-moral-equivalent-of-stagflation/?_r=0
ha ha. Krugman. What a tool. Towing the line there buddy.
Centerline, looks like you have a devoted following of 6 morons willing to down grade anyone who actually knows what they are talking about.
Seriously, this VERY FASHIONABLE bashing of Krugman on Zerohedge almost NEVER seems to be accompanied by a reasoned argument or even a solid statement by the poster that can undergo its own critique.
Really, what we have here is just another bunch of ad hominems delivered by intellectual cowards.
+1 well said @Centreline. Stagflation. Wages are stagnant at best if you are lucky enough to have a job. No one has the money for i-shit or asian trinkets no more. People need to eat and so food prices go up. No money velocity courtesy of NIRP and the FED = less tax, more borrowing, mother of all bubbles as the elites chase yield. It ends when the masses lose the faith. Sit back and watch from the sidelines with your home grown veges.
Chubs, this is a serious discussion and it is NOT a popularity contest. Please keep your ignorance to yourself, k?
Kindly outline that which I have said is ignorant. No one has any money except for the elites. Therefore people are not buying things, hence deflation of consumer goods such as TV's. The masses need food, and it is getting expensive to produce it, hence food prices are inflating. The banks, courtesy of nirp are not lending, there goes both your money creation and money velocity in the economy. The FED prints to replace that money creation and it ends up in the stock market. Those with wealth are piling into luxury assets, massively inflating luxury asset classes. All the while those with jobs are seeing no increase in wages, hence STAGFLATION mutha fucka. What in the Fuck is ignorant about those statements. Commenting on threads is what this site is all about, and BTW Go fuck yourself. You make ridiculous comments like that and you've been a member for how long?
Edit.. and it wasn't even me who junked you BTW lolz
Congratulations!
Oh, Chubs...do you not have one original thought you'r willing to put on the line?? Just one????
It amazes me that even in anonymity we find cowardice in the intellectual give and take here.
Dude.. There is no cowardice in any of my comments. I merely +1'd a fellow Zh'er, gave a few following comments.. and you ripped me a new asshole. I hadn't even read your posts!!! What do you want me to say.. friggin aliens took over the FED??
The cowardice I refer to is the intellectual kind where people assert support for a position without then also stating WHY they hold that belief!
Yes. It is liquidity trap. Manifesting itself as stagflation. The money printed by the FED is going straight into the banks reserves which then is used to goose the markets. It isn't going into loans (traditional money creation per se) because the world is saturated with debt. Money velocity has been painting a massive bear flag since 2008.
This is economic cannabalism NV. The system can no longer derive yield - organically or synthetically. Hence ZIRP, about to be NIRP in the EU maybe. And, the wave of HELOC resets is beginning to roll in. lol.
Ok, so now we have something to agree on. Thanks.
Yes, there is a liquidity trap!. And yes, there is a large debt heald by the industrial world. The US alone holds $16 trillion in debt.
But here is the thing, Center. That money is not in the economy and there is little inflation. That money is locked up in asset bubbles and in bank vaults. Estimates that I heard say >$32 trillion dollars are held in off shore tax havens around the world by the ultra wealthy.
Consider the concept of "misallocation" of resources here. That money is locked up and so we have low inflation. Low inflation is a disincentive to unlock that money. Money is capital and we need that capital to MOVE the world right now toward green energy alternatives...but again, we have low inflation and low motivation for the money bags to participate.
maybe you can see this perspective?
Meanwhile, Stagflation really requires there to exist inflation on the demand side...and that requires consumers to have money in hand to the point that prices are driven up. That is NOT what we see today so we can put the idea of Stagflation to rest now, ok?
I think you're right on line.
How do you see the end game being for the Fed? Do you believe that the govt survives the death of the Fed? (I had some joker on here trying to tell me that I was insane for believing that the Fed was going to take the fall.)
Not sure how it all goes down. Wish I knew. But, there are several things in my mind that are certain...
1. We don't have politicians. We have a political class. And they aren't going down without a fight. They will do everything they can to stay in power and keep the party going for themselves. None different than the truly wealthy who pull the strings.
2. The FED is just a symbol. A facade. Same as the TBTF banks and most other corporations. Vehicles for power and wealth that shield the owners.
3. The political class will be the scapegoats for what is coming. They will in turn blame the people of the country. And there will be truth in all of it which will fuel the divide and conquer.
My guess is that the banks blow themselves up again at some point. No bail out though. Will be a bail in. Deposits, pensions, etc. all flipped into IOUs or something... which we know will mean vaporized, but will buy more time. The TBTF banks will be dismantled to the joy of the citizens - which will also help ease the shock of the money grab which will likely be sold as some patriotic thing with dividends for all down the road (cue some false flags along the way).
The role of the FED will suddenly change once the TBTF banks are busted up. At that point I would believe the political class will be flipped on it's ear and when the subsequent crisis emerges (most likely sovereign in nature), they will be set up against the FED (Uncle Remus, "please don't throw me in the briar patch," comes to mind on behalf of the FED). They will usurp the FED, grab the power of the printing press, the system as we know it goes up in smoke.
Where does it all lead... I suppose war is the most likely outcome at this point.
The problem here is evident in "novictims" posts. He thinks this is closed system. It is not. It is global.
Big Government + Central Bank = what else is there besides bubbles?
It took me a long time to get it. By it I'm talking about the fact that right now, never have so many had so much money. This is thanks to the central banks printing unprecendented sums of money. This money has to go somewhere and stocks and real estate are the only games in town. Bonds, not a chance. Gold, not as a bad as bonds, but it's dead money. As long as the money is being printed every single month, this will not end. Sure you may get a 5% correction at some point, but that dip will be bought and then we will rally to new highs. For a while, I thought this year was like 2007/2008. The "smartest" guys are getting killed going short or are dramatically underperforming because they are failing to understand the real driver of the market, the Fed. Just wait until some of those bank reserves come into the economy. Recently, I changed my mind and figure this is more like 1997. This shit will probably keep going until the year of the next presidential election. That's how the last 2 ended. When this market does a Bitcoin, that will be the signal.
"As long as the money is being printed every single month, this will not end."
At least not for several years, but how can you know if and when another crash will be perpetrated on purpose? The Fed could suddenly declare an end to QE, and then 6-12 months later suddenly resume QE. Those who knew about such Fed actions ahead of time could profit enormously - like those who profited 30-1 on credit default swaps in 2008.
If I only had a penny for everytime I've heard Marc Faber say we are in a bubble.
Not that he's wrong though...
We've been in a bubble since we embarked on grow-or-die (on a finite planet). Have 7+ billion of us to prove how well we've done bubbling...
Hey Faber you Doomer Boomer Douche, go back to inhaling your daily quota of Girlyboi. Hope you choke on the cum you dirtball!
Say it enough times...?
IMF Frank Discussion of Bail In, aka "We just take your assets"
http://oahutrading.blogspot.com/2013/11/imf-frank-discussion-of-bail-in-...
It's only a bubble if the fed says it's a bubble. Faber's opinion is irrelevant.
Faber is an idiot. Stocks are at an all time low. Well they are at the current high but in the future this will be low.
- Talking Heads from CNBS
As the island slowly sank
The loser finally broke the bank in the gambling room
The dealer said "It's too late now
You can take you money, but I don't know how
You'll spend it in the tomb"
The tiny man bit the soldier's ear
As the floor caved in and the boiler in the basemen blew
While she's out on the balcony where a stranger tell her
"My darling je vous aime beacoup"
She sheds a tear and then begins to pray
As the fire burns on and the smoke drifts away
From Black Diamond Bay.
Bob Dylan - Black Diamond Bay
Fuckyoushima bitches
Hey Faber, fess up dog! What's is the name of the Nitro/Viagra shit you been doing in BangKok?
My fellow Zero Hedge posters,
It is with great sadness that I must inform you that... -at least-... 9 out of 10 members here have no clue as to how an economy works. Mostly, you spout back tired old lines about inflation being bad and austerity being good...real caveman grasps at understanding what makes up the dynamics of an economic system.
Most of you cloth yourselves in some snark or other or some inane meme to cover your ingorance while remaining comfortable in your pee brained notions of the world.
And as always, Buy Gold! LOL
Excuse me, but that's "PEA brained" genius.
No, its pee brained. As in shit for brains, genius.
But we have guru you going for us.
Gary Tanashian: S&P 500 & Gold Stocks, Mirror Manias GLD, MUX, TNR.v, GDX
Gary Tanashian provides very good technical big picture overview of the S&P 500 and Gold stocks. With NYSE margin debt making another peak ahead of equities his observations could be very close to materialising in the market place. There are NO Bears left in S&P 500 and NO Bulls left in the Gold Stocks. Nothing is growing straight up to the sky, it never does. http://sufiy.blogspot.co.uk/2013/11/gary-tanashian-s-500-gold-stocks-mir...
Gary North: Bitcoins - The Second Biggest Ponzi Scheme in History
Gary North presents a very good explanation of the Bitcoin Bubble from the Austrian Economics point of view on the Money. We decided to present this RT video as well so that you can hear Bitcoin advocates as well. Unfortunately Bitcoin's parabolic rise is the most dangerous event for its future. It supposed to challenge the System - at least the FED power in the U.S. How serious is it for the System? It is Everything. All markets are at the mercy of the Fed now. Can we be certain that after 100 Year War Against Gold, FED will find resources to Crash Bitcoin and any idea about viable Currency Alternatives with it? We have a feeling that this recent exorbitant rise in Bitcoin is purely manipulated. One thing if it is the Insiders - holders of largest number of Bitcoin amounts are gaming the rest of the market with OTC Pump and Dump style. They are trading "the restricted" amount of Bitcoin by driving the price up and will start the distribution to the crowd once liquidity will allow it. Quite another thing if the System is already defending itself. With Bitcoin's "market cap" of 13 Billion even after recent parabolic rise to $1200, FED can easily accumulate enough amount of Bitcoin to drive the price up and then Crash it into the ground. We do hope that it is not the case and Bitcoin will be able to stabilise somehow to preserve the brilliant idea, but with every parabolic move up in the price we are getting closer to the crash now.
http://sufiy.blogspot.co.uk/2013/11/gary-north-bitcoins-second-biggest.h...