It's Never Different This Time - 1987 or 2014?

Tyler Durden's picture




 

While the price analogs of the last few year's exuberance in US equity markets are enough to worry all but the most systemically bullish "believer"; we suspect the following article from the LA Times In the Spring of 1987 will raise a few hairs on the back of the neck of perpetually optimistic extrapolator...

 

 

It's never different this time..

"One of the largest bullish factors is burgeoning worldwide liquidity, thanks to expansive monetary policies by central banks. That has helped fuel a surge of foreign investing that could propel US stocks higher, regardless of what happens to the American economy, some analysts say...

 

Low interest rates also help stocks by making Treasury securities, certificates of deposit and other interest-paying investments less attractive. The sluggish economy, meanwhile, keeps the Federal Reserve from driving up interest rates and prevents inflation from overheating...

 

Also, the sluggish economy--by keeping manufacturing rates low--discourages money from flowing out of financial assets into such investments as factories and machinery."

     - LA Times, March 8, 1987; a few months before the October 1987 crash

Read that again!!

Never different.

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Fri, 06/20/2014 - 12:58 | 4878364 firstdivision
firstdivision's picture

It is different as before the crash in '87, there was no PPT.  Also I'm pretty sure global CB's were not selling Vol and buying ES through their Belgium proxy. 

Fri, 06/20/2014 - 13:00 | 4878380 Winston Churchill
Winston Churchill's picture

I think the PPT was created in Rayguns first term,so there was indeed one.

Fri, 06/20/2014 - 13:03 | 4878394 kliguy38
kliguy38's picture

ITS DIFFERENT THIS TIME.......This fall will make that fall look like a "trip".......There is no bottom for this mess thats been created

Fri, 06/20/2014 - 13:25 | 4878474 bag holder
bag holder's picture

Market goes up before it goes down, film at 11.

Fri, 06/20/2014 - 14:31 | 4878742 Pladizow
Pladizow's picture

But isn't liquidity 50% of where it was in 2007?

Fri, 06/20/2014 - 15:27 | 4878972 Obchelli
Obchelli's picture

According to this chart if correlation is right S&P has good 200 points in it before crashing and in 1987 stimulation of economy was nowhere near current criminal levels. So I think FED has ability to bring this to even more ABSURD valuations - according to granma look like Yellen (who I suspect knows very little about real economy) all is well 

Fri, 06/20/2014 - 16:12 | 4879128 saveandsound
saveandsound's picture

Adjusted chart-over-chart don't tell you anything.

Those are at best accidently misleading.

Fri, 06/20/2014 - 22:03 | 4879777 PT
PT's picture

This time it is different.
Last time, interest rates were 17%.  This time, interest rates are low but principal is 1000% of what anyone can afford.

Fri, 06/20/2014 - 22:05 | 4879778 PT
PT's picture

It's a little bit like if the principal had stayed the same but now interest rates were 128%.

Fri, 06/20/2014 - 13:25 | 4878476 max2205
max2205's picture

A ten bagger in less than 30 years. ...that's shocking

Fri, 06/20/2014 - 13:34 | 4878504 Oh regional Indian
Oh regional Indian's picture

Everytime my eyes read Bullish my mind says Bullshit....

Fri, 06/20/2014 - 14:17 | 4878679 Old Earth Chaos
Old Earth Chaos's picture

So, I know everyone is a big fan of gold here, but how do you know that gold will hold up during a crash like this?

Fri, 06/20/2014 - 14:23 | 4878703 centerline
centerline's picture

It might not.  Depends on the severity of what is coming.

Fri, 06/20/2014 - 19:35 | 4879513 Okienomics
Okienomics's picture

Old Earth asks a great question.  There is plenty of evidence that gold drops with the broader market as margin calls sink all ships.  A big drop in equities often has spillover effects causing liquidation effects in other markets and metals are no exception.  Thus many consider gold a lousy hedge against an overall bear market.  Gold also has proven a poor inflation hedge, except over very long periods of time.  Consider that for several years ('08-'10) everytime inflation was lower than expected gold surged.  Why?  Because everyone knows the Fed wants inflation and if it doesn't get it, monetary easing was next.  But when inflation started picking up a bit, gold hit the skids.  Again, why?  Because with inflation 'back to Fed targets' we got tapering.  I believe QE-Eternity was in large part a move against gold.  During the prior QE rounds, announced with limitations, gold surged and surged again.  It surged also with QE-Eternity, but once commenced, the Fed didn't have to "announce" another round of QE - it just kept open the spigots, thus staying out of the news.  Now look at what's happened this week - inflation up, Fed supposedly tapering but holy hell, gold surged!  Why?  ZH posits it is because of the hypothecation revelations and unwind of massive bad debt in China having potential spilover effects across the financial world.

Many hold gold as a hedge not against market declines or inflation, but rather as a hedge against currency failure.  That's why we talk about "paper gold" as being next to worthless and physical as the only way to go - you've heard it here many times, "physical gold has no counter-party risk."

THAT'S why gold surged in '08, why gold has slid in the last few years (well, that and central bank covert activity) and why many here maintain some portion of their financial wealth in metals - we believe that another, larger monetary crisis is coming.  We don't know when, and many (foolishly I think) are hoping for it soon.  Those who have lived or studied history are not "rooting" for a systemic failure, but we see it coming or at least lack confidence in the altruism of our so-called leaders to use the reigns of power judiciously.

The trick is, i think, to balance the rationale fear of a systemic crisis with having to live in the real world while waiting/expecting it to happen.  Some go all-in with gold, guns and preparation.  Some stay more in the current 'real world' but quietly add to their stacks while also contributing to 401k and IRA or just socking away cash.  Some play the market and take jabs at those who wring their hands, saying we've missed out on the great bull market of the last few years.

Like all things in life, stay balanced and stay awake.  It doesn't hurt to put some coins away and forget about them.  Their value will rise and fall but that's not why you stashed them away.  They are insurance against other insurances failng.

Fri, 06/20/2014 - 20:14 | 4879579 Aussiekiwi
Aussiekiwi's picture

Excellent reply Oki, you should write an article for zerohedge. makes a change to see some common sense analysis.

Sun, 06/22/2014 - 00:40 | 4882018 TheReplacement
TheReplacement's picture

If you are competely convinced the system will collapse sooner or later under its own weight then you should recognize that the longer it stays standing the worse the collapse will be.  Hence, wishing for it sooner is the more optimistic way about this.  Nobody wants it to happen but if it must, the sooner the better.

Fri, 06/20/2014 - 14:29 | 4878724 walküre
walküre's picture

Nobody can say for sure but I'd have hard time believing that "weak" hands would dump physical gold massively into the market. Paper price may drop a bit but there won't be sellers of physical if prices collapse. There will be buyers on the other hand looking for the real stuff as this is 2014 and we had 10+ years of globalized communication via the web.

The web has pulled the curtain and exposed the lies and propaganda for many. Too many to try and pull a Volcker interest rate shock and subsequent sell off.

Any rise in rates can only be absorbed by defaults or haircuts or of course MORE DEBT.

Whatever happens, it's all favorable for physical currency.

Energy costs are a major factor as well. No drop here.

Fri, 06/20/2014 - 14:55 | 4878866 daveO
daveO's picture

That which falls least, and is still available, wins. 

Fri, 06/20/2014 - 16:17 | 4879142 SuperRay
SuperRay's picture

Seems like gold (paper gold) will crash too as players try to meet margin called and sell everything they can. That will be a great time to add physical, if any is available and the premium isn't already through the roof. But no one can predict anything if the crash is as huge as it appears it will be. It'll be chaos and a very dangerous period worldwide...

Fri, 06/20/2014 - 17:55 | 4879326 Four chan
Four chan's picture

gold has no counter party risk, paper gold has all of it. take your pick.

Fri, 06/20/2014 - 17:08 | 4879241 RadioactiveRant
RadioactiveRant's picture

You can still out perform by holding what falls the least.

Fri, 06/20/2014 - 18:49 | 4879417 NachoLiebor
NachoLiebor's picture

No, but I know what you'll be able to do with your paper contracts.

Fri, 06/20/2014 - 15:01 | 4878883 Manthong
Manthong's picture

Bullshit.. maybe better than squirrel shit?

Fri, 06/20/2014 - 14:00 | 4878595 WSP
WSP's picture

The market will never go down again. In 1987 we still had not perfected our ability to print money out of thin air.  Back then we still had all of these old fashioned people fighting us---they believed (falsely) that in order to have a prosperous nation you had to have productive use of capital and resources.  What they failed to understand is that we can print capital out of thin air.  The other thing is back then we still had to print certificates when we wanted to print money, and that required accountability and all of the other “problems” you had trying to market the securities, debt, etc. 

Everything has changed now. In 2014 we have mastered the art of printing money, AND, we also own the media.  You see, having a prosperous economy does not require the productive use of capital, it just requires the infinite printing, and now with electronic machines, we can add and subtract zero’s anywhere at any time.  If (we believe) one sector gets out of line, doesn’t agree with us, etc., we can just shut them down.  For those that go along with our way of thinking, we reward them with more digits in their accounts.  And for those that disagree that money printing is the way to prosperity, we just label them terrorists and let our goons take care of them.

So, you see Sir, it is quite different in 2014.  The laws of economics, going all the back to beginning of mankind, have finally changed. We can print digits and move them around --- that is the production of the 21s century.  And if you don’t agree with us---you are a terrorist and will be dealt with accordingly---capeesh!

 

Sat, 06/21/2014 - 00:57 | 4879378 Alexandre Stavisky
Alexandre Stavisky's picture

Get Wise or otherwise.  Dwell on this cipher.  Most won't seek out the meaning.

RE: This dark Egyptian, babylonian art of Molech.  It was only golden calf when Big Mo came down from Sinai.  It was always "calves".

http://www.biblegateway.com/passage/?search=2%20Kings+17:16&version=KJV

And what did they symbolize?  Remember this sytem, this matrix, is modeled only upon that of other times, nations, WORLDS.

That tired excuse absolves the command and controllers, the occupiers of commanding heights which despise freedom.

What are you doing here in this garden of good and evil?  "Only that which has been done in other nations, times, worlds among the children of men".

Known only to a very few wise men.  Really post-post graduate, grasshopper.  See feast of Sukkot, or festival of booths.  And think outside the box.

How to tear creation from the creator and make mundane.  Climb out of the crab pot, "do you know how hard it is just to move UP one rung of "He who strives with God's" ladder?".  Muckety-muck with the liars, whoremongers, fallen angels.

 

Kingdoms and principalities in discussion here, friends, bots, and administrators, eavesdroppers everywhere.  Probably no one, but 10000 will never unravel this eternal riddle.  Good luck my rabbit hole friends.

Sat, 06/21/2014 - 20:43 | 4881603 it aint easy
it aint easy's picture

"Eternal" things don't interest this nihilistic muppet, but the agenda is indeed multi-millennial in scope.

Sat, 06/21/2014 - 04:39 | 4880155 The Merovingian
The Merovingian's picture

Great points and I agree with everything except the first sentence.  As we all know, on a long enough timeline all things (change and) end.  So, there will be (at least) one more crash, sooner or later.  IMHO it looks to be a long way off in coming since TPTB can print to eternity, they control the media, and they have the ability to systematically destroy and discredit anyone who gets in their way or dares to challenge them directly. 

Fri, 06/20/2014 - 13:09 | 4878399 Dr. Engali
Dr. Engali's picture

The plunge protection team was created after the crash of 87. Reagan together a task force called the working group on financial markets and a PPT was created in 1988.

Fri, 06/20/2014 - 13:10 | 4878422 Baby Eating Dingo22
Baby Eating Dingo22's picture

A shame they didn't have the foresight to create PPT before that 87 crash

DOW could be trading in the quadrillions by now

Fri, 06/20/2014 - 13:56 | 4878579 jbvtme
jbvtme's picture

and now they have an office in belgium?

Fri, 06/20/2014 - 15:21 | 4878938 IcarusOnFire
IcarusOnFire's picture

The PPT was created AS A RESULT of the crash of 1987!

Reagan didn't want the markets to ever do THAT again.....

Icarus

Fri, 06/20/2014 - 13:02 | 4878387 Bindar Dundat
Bindar Dundat's picture

Question one: What stops TPTB from using zirp to purchase all stock assets and then collapsing the currency?   The end game is to own the stock certificates regardless of the currency that will be used eventually.

 

Question two: What stops TPTB from naked selling gold futures and using the cash to scoop up the physical?  They then collapse the USD and own the gold.

 

 

Fri, 06/20/2014 - 13:08 | 4878413 maskone909
maskone909's picture

to answer q2:  tptb are more interested in proping up the dollar than owning phys. i dont think they are too concerned with owning the metal.  if they were, the price would be much higher imho.

Fri, 06/20/2014 - 13:25 | 4878472 NotApplicable
NotApplicable's picture

He's referring to after the dollar collapse. They only continue to prop up the dollar until some event occurs which allows them to escape blame (as even they know this shit isn't sustainable much longer).

Also, while the abstractions d.b.a. "institutions" are fully engaged in such machinations, the individuals who understand the fraud du jour are absolutely doing their best to obtain title to all tangible things.

As for the prices of PMs, well, that's just paper. Not to mention they use it as leverage to obtain cheap physical (while there's still an offer).

Smoke and mirrors.

(and, as always, I did not junk you)

Fri, 06/20/2014 - 13:49 | 4878548 maskone909
maskone909's picture

no prob the junks are always welcome ;) but yeah i get your pointe

Fri, 06/20/2014 - 14:42 | 4878800 walküre
walküre's picture

tptb are predominantly Jewish. Now that may be news to some newbies, but if you're reading here long enough it shouldn't be news to you.

The story about the golden calf that they built in the desert has been enshrined into their cultural and ethnical history for thousands of years. The calf wasn't built with paper mache.

They control the paper. As long as the paper gets accepted w/o shots being fired, fine. If necessary shots will get fired. If shots don't deter the world from accepting the paper, then it is up to their perogative and theirs only to crash the system, go back to the foundation of a gold standard and restart the cycle.

This has been going on for many more moons than you or I have been privy to experience.

Any attempts by outsiders to create paper w/o their blessing (involvement aka "take") is doomed to fail. Also confirmed by countless non Jewish based attempts at creating a financial system throughout more recent history.

C'est la vie.

Fri, 06/20/2014 - 15:04 | 4878890 daveO
daveO's picture

Gold is money, all else is credit. JPMorgan They will ride the paper bull until it dies of a heart attack (Hyperinflation). We're nearly there, already. See Argentina, 12 yrs ago. Mexico, almost 30 yrs. ago, is another example. 

Fri, 06/20/2014 - 19:25 | 4879493 LooseLee
LooseLee's picture

"What stops TPTB"? Those REAL (TRUE) Americans with guns that understand what they (TPTB) have done. Woe to them...

Fri, 06/20/2014 - 13:34 | 4878505 whatsinaname
whatsinaname's picture

1982 was when the 401k programs started right ? Allowing everybody into the equity markets with their savings.

Fri, 06/20/2014 - 15:21 | 4878944 Bananamerican
Bananamerican's picture

Allowing or mandating?

Fri, 06/20/2014 - 19:02 | 4879439 donsluck
donsluck's picture

Neither. Individuals have always been able to own stocks, and 401k's can be invested in assets other than stocks.

Fri, 06/20/2014 - 14:15 | 4878672 moneybots
moneybots's picture

"It is different as before the crash in '87, there was no PPT.  Also I'm pretty sure global CB's were not selling Vol and buying ES through their Belgium proxy."

 

The 1987 crash was different, as in 1929 there was not the regulation there was before 1929, yet the the DOW crashed a record 22% in one day, in 1987.

Don't make the false assumption that the market cannot crash because X isn't the same as last time.  Belgium proxy may suddenly stop buying for whatever reason, or some other event may occur.

 

 

Fri, 06/20/2014 - 17:43 | 4879303 JLee2027
JLee2027's picture

They've all collaborated so there will never be a market crash. The only solution is abandoment.

Fri, 06/20/2014 - 13:03 | 4878374 Dr. Engali
Dr. Engali's picture

It is different this time, because instead of days it will all be over in nano-seconds and, everybody will be standing around with blank stares on their faces.

Fri, 06/20/2014 - 13:04 | 4878402 Grande Tetons
Grande Tetons's picture

Agreed. 

Humpty Dumpty is just a fucking egg they will say. Shit happens, capiche. 

Fri, 06/20/2014 - 13:07 | 4878407 BKbroiler
BKbroiler's picture

That will be something.  10,000 point Dow flash crash should set off some pacemakers.

Fri, 06/20/2014 - 13:49 | 4878549 dontgoforit
dontgoforit's picture

Crap, just the thought of it....I gotta' go change my undies...

Fri, 06/20/2014 - 14:06 | 4878637 Shad_ow
Shad_ow's picture

Go long on sidewalk cleaners.

Fri, 06/20/2014 - 14:45 | 4878814 Groundhog Day
Groundhog Day's picture

then they can blame it all on the HFT firms and vow to hang them all.  Any wonder why GS got out of the game.  HFT or Cyber attacks will be the blame for the next massive rip off....i mean sell of

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