This page has been archived and commenting is disabled.
Dow At 8,000
Submitted by Bill Bonner via Acting-Man blog,
What If …
When we left off yesterday we were worried. What if we have seen the highs in US stocks and bonds – not just for the next five or 10 years… but for the rest of our lifetimes?
On Tuesday, the Dow fell 272 points. No big deal, of course. But what if it continues?
Just six years ago it fell 51%. It could easily do so again – back down to, say, 8,000. There would be nothing unusual about it. Fifty percent corrections are normal. You know what would happen, don’t you?
Ever since the “Black Monday” stock market crash in 1987 it has been standard procedure for the Fed to react quickly.
But what if Yellen & Co. got out the party favors… set up the booze on the counter … laid out some dishes with pretzels and olives … and nobody came? What if the stock market stayed down for 30 years, as it has in Japan?

A Special and Unusual Time
It seems almost unbelievable … Every time US stocks have gone down since World War II they’ve bounced back… and hit new highs. We take it for granted that they will always go up over the long run. But why should they?
The time between 1945 and 2007 is starting to look less and less like the “way things always are”… and more and more like the “way things were during a special and unusual time.”
It was more of an outlier than an average. The world was recovering from World War II. Populations were growing. New markets were emerging. People were starting new families and new businesses. And perhaps most important, the world was just beginning the greatest credit expansion in its history.
Gold – which had kept the US dollar honest for almost two centuries – was taken out in two steps. First, in February 1968, when President Johnson asked Congress to end the requirement that dollars be backed by gold. Second, in August 1971, when President Nixon ended the direct convertibility of dollars to gold.
Thenceforth, the flimflam began. We’ve been over the numbers before. No point in repeating them. Besides, the point we are making is obvious: When it comes to multiplying a society’s debt by a factor of 50… or increasing its debt-to-GDP ratio from 140% to 350% … we pass this way but once in a lifetime.
Credit can continue to expand for one … two … even 10 years. But not for 50 years. Not without trouble hot on its heels, at least.
Of course, the future includes a potentially infinite number of days. And we don’t know what will happen on even a single one. But if half a century goes by… and we wake up one fine day and discover that debt has risen to 1,000% of GDP … won’t we be surprised!
Total credit market debt owed as a multiple of GDP. The message is mainly that debt has grown a lot more than the economy – and much of this debt has been of the non-productive sort – click to enlarge.
Pockets Full, Head Empty
Meanwhile, look what is happening to the Treasury market … The Fed is supposed to withdraw from bond auctions this month. There goes one of the Department of the Treasury’s biggest and best customers … his pockets full and his head empty.
You’d think you’d see Treasury bond prices would fall. But no! They’re going up. This curious trend has confounded analysts all over the world. If the US economy really were recovering, it should mean higher yields (and lower bond prices, which move in the opposite direction) as interest rates rise.
So, what’s going on? Are bond buyers making a mistake? Or is the economy really weaker than the recent jobs report would make it appear? We’ll go with the bond market on this one. Low Treasury yields are consistent, after all, with sluggish growth. And who can expect the same growth rate as we had over the last 50 years?
From “bond king” Bill Gross:
“Growth in the US and elsewhere has been facilitated in the past 30 years by the expansion of credit and leverage. Once capitalists recognize that they can’t continue to accumulate leverage at the same pace, growth slows. Demographics also are contributing to diminished economic growth. The boomers aren’t booming. They are getting older and retiring.
Most boomers need health care, but they don’t need another house or a third car. The aging of our society is putting curbs on economic growth. Thirdly, technology is a boon and a wonder, but it also has eliminated jobs that aren’t being replaced at the same pace. Apple is a wonderful company, but it doesn’t hire as many people as the old General Motors.
Finally, globalization is an issue. The US has been the world leader in globalization since the end of World War II. We have benefited from mercantilistic expansion, and because the dollar has been the reserve currency. Now things are turning sour elsewhere. When you fly into headwinds, you fly at a different speed.”
We’ve spent our entire life in a credit expansion. We began life when the cork came out of the credit jug. We’ve all been pulling hard on it ever since. Credit juiced up the economy… and the stock market. Heck, we’ve lived on it. We’ve taken TVs from China. Autos from Japan. Wine from France and Italy.
“Hey, we’ll pay you later,” we said.
What if “later” were now?
Yield on the 10 year treasury note – still trending down with great gusto – click to enlarge.
- 15781 reads
- Printer-friendly version
- Send to friend
- advertisements -




Very possible, just not yet...
DOW 20000 (before 10000) is a lock
A lock eh. Just that easy. Then I assume your are balls long and levered to the hilt.
got some skin in the game as a hedge
OK, so let me get this straight. The premise is that the Fed would open the bar and start dangling free money in front of a bunch of market-manipulating speculators who LIVE for those kinds of opportunities and those vultures are going to say "no, thanks, I think I'll just go plant my garden and spend more time with the family."
Somehow, I doubt it would go down like that.
did you know usa is no longer 1st economic country on the world ?
chia just pass in front of you.
so, how do you feel to be fucked by half opened eyes dwarves ?
:D
While you two are arguing, I'm going to make a prediction. The top is Dow 1800-1850, S&P 2050-2100. Time frame is less than one year.
-1 for the decimal point challenged
You can't have a troll emoticon and be a troll.. it defeats the whole point of being a troll.
how did the US get surpassed by a chia ?
man, things really have gotten bad if that's the case
hold your stacks of phyzz and get into some mining stocks. Mining stocks are going to go crazy after the SHTF. They will lead the way after the Crimex goes bust, and then phyzz prices will follow.
Just keep accumulating phyzz at these rock-bottom, below-cost, paper prices as long as you all can. And when the market bleeds out like an ebola victim, those paper prices very well may go down to 10 bucks for silver just like they did in 2008. GREAT! If they do, have some dry powder ready to try and get some....if you can. Premiums will skyrocket and supply will dry up very fast. You may not even be able to buy more than a few ounces. Big bars will disappear.
So you take your chances...buy phyzz now while you can get it for 4 to 6 bucks under the average cost/ounce. Or wait for the crash when they'll smash it down one last time and risk not even being able to get any phyzz when the dealers shut their doors or crank premiums by 50% or higher just to try and break even.
And even after the Cimex goes bust and we find true phyzz price valuations, it's still not going to be easy to get any as prices shoot up. Why would people sell very much if it's going to keep going higher the next day or the next week???
There might eventually be a point again, probably around 50/oz again where people get jumpy and take some profits and more phyzz will be sold. But the paper bullshit will be gone, so naked shorting won't be able to crush prices like they have since 2011.
And if 50 doesn't slow phyzz prices down, then Katie bar the door...75, 100, and beyond should easily be attained until we get a reasonable GSR. The GSR is right around 70:1 right now and that's insanely high, meaning silver is insanely undervalued.
When this rocket finally takes off we should get GSR's coming down under 30:1 and probably an over-shoot as silver spikes to a GSR under 10:1.
Under 30:1 is when you should start trying to trade silver for gold...if there will be any gold left. But whatever you fucking do....do NOT sell your phyzz for shitting worthless dollars as it shoots past 50, 75, 100, or 200!!!
Do NOT do it unless it's a real fucking emergency. Resist that urge to feel like you're "profiting" with worthless dollars. Dollar values will not matter at that point as the dollar will then have lost it's reserve currency status and will be re-valued downward by 30 to 70% over a years time period or so.
At that point we won't know and won't be able to trust any dollar valuation of anything, especially silver or gold. So don't sell. The inflationary effects will skew everything like crazy.
It won't be what dollar value your phyzz is worth at that point anymore...it'll be how many ounces you hold in your stacks and what those ounces can purchase such as land, a home, etc.
Remember...phyzz is not an investment. It's insurance against the collapse of the dollar system and that's what you always need to remember and keep fresh in your minds when you think the skyrocketing dollar "value" for phyzz is making you "rich". It's not...it means everyone in dollars is more poor than ever in history.
Your ounces will be what makes you rich and will be what will help you survive the world monetary reset to whatever it becomes. And hopefully it will be something backed partiall by silver and gold.
Those who make it through to the other side with their phyzz in tact after everything gets restructured will do just fine.
Food, water, other essential supplies, hunting, fishing, camping gear, guns, ammo, etc., are also just as essential as stacking phyzz. You don't want to have to trade your phyzz away to survive because you didn't prepare accordingly by stacking as many other essentials as listed above or you'll end up with nothing.
Some moderately wild movement in silver today are a window into what we'll see as this all transpires in the next 1 to 3 years. Look at the wild little ride silver has made since 3am EDT last night and where it is again now.
We'll see swings like this in several dollar terms eventually. It'll go up 5 bucks and down 5 bucks...even more than that. They'll continue to jerk that paper bullshit around as hard as they can to scare the weak hands out of everything they've got.
Don't fall for it. Sit back and BTFD's and enjoy the show as the Crimex dies a violent ebola-style death.
I can't fucking wait to see it happen! ;-)
What if the nasty traitorous speculative miners who are ruining the economy (according to how the Kenyan guy will sell it) get their companies nationalized? I'd be all over this trade except for that risk.
there is always that risk...BUt I think that would be more possible in the foreign countries other than Canada. So mining companies in North America would probabaly/hopefully be the safest until the end. Then who knows what they heck might happen. But I still believe we're going to see some astronomical gains in the mining sector in the not too far off future. People are going to run out of all those tanking, shitty stocks, and it seems most likely they will dive into miners and phyzz.
That's why we need to accumulate now. Buy these miners now and hold. When the sheeple come running to the miners that's when we sell to them for gains and buy more phyzz. Unfortunately that's how it'll have to be.
Just wait until those hedge funds and pension funds start buying the miners...just a few percent of that big money going into the mining sector will breath life back into it and the flood gates will be open. The chasers will do whatever they can to get into the perceived saftey of the miners.
I hold about 2 dozen different types of mining stocks...and just for disclosure, I bought nearly all of them 3 years ago and they have all taken huge losses. Some have dropped nearly 90%! I just have to laugh about it...I held strong and never sold even though I wanted to many times. But at a certain point the losses were so heavy there was just no point in selling. I know how this cycle is going to play out and those who survive in my portfolio and don't go bankrupt or get M&A'ed will fly back up to record highs.
You can't really lose much as long as you don't sell, right? lol So I figure it's just a game and holding on to them will at least get me back up to even eventually or maybe some will really take off and turn a nice profit. Once the sheeple start chasing them near the tops then I'll sell and hopefully convert that fiat into more phyzz.
If not and they all tank, I really don't care at this point...I'm just waiting with my popcorn for the show to start and we'll see how it turns out in the end!
"Food, water, other essential supplies, hunting, fishing, camping gear, guns, ammo, etc., are also just as essential as stacking phyzz. You don't want to have to trade your phyzz away to survive because you didn't prepare accordingly by stacking as many other essentials as listed above or you'll end up with nothing."
Good advice because I don't think these things will be available for any amount of silver or gold during the SHTF phase. I stack with two possible outcomes in mind; Precious metals will be money again someday after the GREATEST depression runs its enevitable course and civilization realizes the error of fiat money (the best outcome), or civilization will fragment, disengage, and return to communal based economies and out of that chaos will someday come order in which precious metals will be used as money again — perhaps by my son after I'm dead.
I agree; for what that's worth; (nothing).
Today we get to see how many will attend the party. Yesterday Janet laid out the hors d'oeuvres but will the party continue. From my read the S&P below 1962 at the end of the day leaves the down trend intact and reinforced, above that and we bears may need to retreat to the caves again. Lower lows and lower highs coupled with the Fed's inability to sustain a V-shaped rally off bottom has to be hard on the animal spirits. BTFD may have contracted ebola. Or maybe not.
what if people learned how to read a financial statement and figured out what "equity" really means....not the casino definition
We used to have economic cycles but the FED decided that they could control reality. Unfortunately the universe is chaotic and when you try to suppress the normal chaotic actions the chaos does not go away. We're at the edge and the fall will be great and very, very painful.
"laid out some dishes with pretzels and olives... "
add pizza and I'm in !
and maybe a bunch of juggling clowns, falling out of a tiny car?
I'm thinking more in line with jiggling strippers falling out of their bras
There is one thing that they will resort to, when they lose the grip.... : War
Agree. With High Debt & Reserve Currency USA has to exercise power in many ways to prove they are still the super power
Like going after European Banks
Like Coup in Ukraine
Like forcing Countries to decide if they are with US or Against US
Like asking for Gold Reserves as token that not going with BRICS
Like Crashing the Ruble & Forcing Argentina to honor Debts
...pandemic.
Also, unlike Japan, the US has the ability to print, print, print to make that stock number as high as they want it to be (granted, the velocity of that height is not controlled by the central planners).
They know that the number is all that the baby boomers and asset holders care about; keep that number up and the people who vote won't complain. Protesters and whistleblowers be damned.
Fyi, Baby "Bombers" borrowed their 401Ks even NOT PAYING IT BACK in record numbers.
Japan can...and has been...printing Yen like mad. They started their QE in the early 2000's, a lot of good that has done them.
What if Dow hits 28,000 due to the fact that europe and japan are screwed and if rates rise in the US, then a US dollar/US equity rise will blow the doomsayers off a high building.
What if a gallon of milk hits $10.00?
The top 20% won't give a shit, to answer my own question.
the money changers have done a wonderful job of depressing (relatively) prices via destroying the mainstream economy, destroyng jobs, etc - while keeping the free money contained within their castle walls - my bet is they can keep it up until the mob riots and tears down the castle
keeping the free money contained within their castle walls - my bet is they can keep it up until the mob riots and tears down the castle
Very well said.
I think the "plan" is to keep it up forever, managing expectations down all the while. I reckon the 22nd century is going to look a lot like the 12th.
thanks - yep - absolutely brilliant plan - the free money destroys capital which makes their job of 'managing expectations down' child's play, rinse - repeat
I think the "plan" is to keep it up forever, managing expectations down all the while. I reckon the 22nd century is going to look a lot like the 12th.
How about just getting through the next month or the next week in the 21st Century after Leon Panetta's announcement earlier in the week?
What a wonderful optimist you can make yourself with the right cocktail of Luminal, Xanax and Librium!...
I suspect we'll cut our milk consumption in half
AKA known as massive asset inflation.
The Fed is a FKING LIAR! Yellen is using currency swaps to Belgium and buying Treasuries I bet.
when it gets serious, you have to lie
What if they had a war; and nobody showed up. Just foolin around. No really; fuck me, I don't know. it 's an interesting question. I would say it 's too early for that reaction; maybe in 2018, for instance. It takes a while for people to get tired of the bullshit sandwiches.
as sure as there will always always always be arguments/fights between 2 people - the smallest manifestation of war - there will always be war - conflict is the natural state of humans - it takes work & restraint to be nice to each other
that's why they're developing soldier robots and drones.
The natural constituency, those who would fight for their country, are already considered enemies.
Thats why we are hiring mercs and training 15000 muslims to fight. I understand 75%-90% of the US military is on to these sociopaths.
Don't expect negative speculation like this from the network nightly shows. NBC Nightly News lately has taken a turn for the much worse. If anyone here watches NBC Nightly News, notice how they now flash a one second video of orange man Chuck Todd at the end of their first block of commercials? According to the FCC, subliminal advertising on TV commercials ia a no-no. But with Todd's rating on "Meet The Press" crashing, anything goes.
The new president of NBC News, itv's Deborah Mary Turness, has saturated the news shows with "Making A Difference" segments, canned cheaply made feature stories that act as filler to compensate for staff reductions to cover real news. Some of these segments are not labeled, so you have two canned "human interest" stories during the 20 minute show (content minus commercials). Worst of all, many of these "sob sister" stories feature young boys, to attract the pedophile crowd among the dwindling viewership. Maybe Ms.Turness hung around too much with British lords in politics, many of whom were hardcore pedophiles, protected by the Metropolitan police, according to the Exaro news site.
Its no surprise John Stewart wanted nothing to do with NBC News, an organizational news wreck ruined by budget cuts and pablum news stories.
After what happened to CBS's Dan Rather, fired for reporting on Bush jumping the list to get in the Texas Air National Guard, NBC News now provides propaganda, not news. Mustn't get the peasants riled up, don't get Obummer angry, right?
When NBC reported on three 9/11 firefights who died hours apart a few days ago from exposure to World Trade Center toxins, NBC didn't mention that the Fire Commissioner in 2001, Thomas Von Essen, ordered firefighters to "suck it in" and work at the smoldering WTC pit to check the debris being taken out, equipped with near worthless breathing gear ineffective at filtering out nanoparticles of
smoldering aireborne toxins. The WTC steel and aluminum scrap metal was sold to a Chinese recycler, to prevent criminalists from checking it for RDX explosive residue, shipped in sealed China Shipping trucks.
Note to Ms. Turness:
Happy talk doesn't cut it these days, especially from a news show afraid to even identify the date of the newscast.
There was enough dust collected from fallout all over lower Man. to confirm the presence of Nano-Thermite.
The real issue surrounding the Cancer picking up steam is confirming the locations of those who were there, how long and when and correlate the proximity to the pile and their form of cancer. 2000+ degrees recorded way below ground - Temp at that level not from the crash of materials or combustion nor Themite. There were other ignition systems.
check the flash point / temp required: of diesel fuel, kerosene, minor deformation of steel, major deformation of steel, solution state of steel - so what would cause 2000' plus degrees recorded - to allow solution state to occur?
The City has recently disqualified massive number of petition signatures of registered voters(more than 50%) for ballot initiative for November even though in prior review disqualification was less than 15%. Ballot initiative was for analysis of #7 for building code revisions.
Interesting point - The volunteers for the recount at the board of elections in brooklyn were largely technical oriented types: engineers, architects, building inspectors - very stable people - no nut jobs present
why would DeBlasio et al / anyone appose that?
Answer: Sealed orders. Disobey them at your risk. Accidents happen: Ask Alaskan Senator Ted Smith. Political careers get destroyed: Ask former Congressman Curt Weldon of Able Danger fame.
the stock market is guaranteed by the fed to never go down
until it does
Yesterday should have shown everyone that they still can put it where they want it at any time.
full (market) spectrum dominance
What If -Capital is saved production and fiat money is detrimental to a free society ?
What if - NYSE is not a product of free market capitalism and is in fact a product of Old English Aristocracy ?
What if - The Constituion actually restrained government ?
If Dow crashes to 8,000 I'll buy hands over fist. America is not Japan. America has a larger population than Japan and abundant natural resources to rebuild infrastructure and do a lot of export, including energy now. It probably wouldnt be a meteoric rise like after 2008 and a decade to get to Dow 17,000 but it would.
But I don think we will see Dow 8,000.
I wait until DOW marks 2000. Then I shall start to think about the game. Not earlier. 8000 is still a hype.
2000 corresponds to industry, 8000 corresponds to money speculation and derivatives.
That infrastructure isn't going to be built at 8.00/hr though. Without the will to change that, it doesn't matter how many resources we have, they will sit, fallow, unused. Decaying.
Just as in Japan, what is more important for the government's survival----artificially inflated equity prices or artifically inflated government debt prices?
Of course, both would be ideal. But if one of these bubbles can't be sustained, then surely collapsing government bond prices will hurt the government more than collapsing equity prices.......especially as government debt continues to explode higher. And the government's (and that includes the Fed) ability to manage government debt prices is far more explicit and direct and effective than its ability to manage US equity prices.
Again, think Japan.
Just another reason to continue to bet on lower (and certain not higher) US Treasury prices.
the future includes a potentially infinite number of days
Something doesn't sound right.
There's absolutely not an infinite numbers of days, because astronomers have discovered the Andromeda constellation will collide with our constellation eventually. Finite, bitchez.
So, that will be the end? Of everything? Forever? Was there a beginning?
In that future all your troubles will go away: you'll be dead.
Between now and then, however. .. Plan for various scenarios.
In that future all your troubles will go away: you'll be dead.
Between now and then, however. .. Plan for various scenarios.
I shouldn't be laughing Kirk. But...
Yes, we are following in Japan's footsteps. All the developed economies are. The abrogation of the gold standard, zirp, QE...it's all being done to hide the fact that we have adopted an unsustainable social welfare model, doubly so in light of the fact that we have over regulated and taxed our productive citizens to the point where they have begun saying "fuck it." Now what? Who knows? Maybe we can go on like this for decades like Japan. Or maybe not. Better buckle your seatbelts, it's going to be a bumpy ride...
I've been watching this puppy since '72 and have noticed that virtually everytime prior to the market's taking a good waterfall crash and flatline, there are violent large upward moves followed by violent equally large downward moves. So pay attention folks.
It seems to be the nature of instability. To increase greatly right before the ultimate toppling. The huge gyrations are a sign that such toppling is imminent.
Iran Says It’s Under Attack by ISIS - The Daily Beast
What could the FED even propose that it hasn't already been doing for a few years? Promise blowjobs if you buy and hold sum stawks?
how about pull a japan and openly buy stawk.... instead of covertly doing it.
OK so same thing but different name....then what after that fails?
Can someone tell me how the VIX moves before the MArket? Maybe slaming the VIX is the how it moves?
i still think there is a chance march 2009 low taken out.
i have zero doubt we're heading for another financial crisis ... which for political purposes ... means 1 or 2 TBTFs will have to be taken down.
but if we make it there, wouldn't expect it to be for long
MS will the one that'll be let go during the next crisis. Maybe Citi.
GS, JPM, BAC, and WF are shielded.
To put things mildly?
Gravity's a bitch!...
I would not think we will see 8,000 again, but 12,000 maybe.
But probably not even that. The money spent by the Fed has inflated the dollar permanently, and there is just too much cash sloshing around the world looking for someplace to stay, and so far the US remains that.
Of course if ebola deaths go up to nine or ten digits all bets are off.
I would not think we will see 8,000 again, but 12,000 maybe.
What does it matter what the high or the low is when you have insane lunatics like the ex-Secretary of the CIA and DoD telling us that we will be at war for the next 30 years..., And oh by the way I haven't a clue where the money and bodies will come from to start all the new ones?... Just forget the last 13 years that has bankrupted us fighting them and keep slogging forward with collateral we no longer possess!
When you are truly out of your mind as Washington D.C. is and has been since 2001 as well as the voting public at large that provides the tacit approval of what we're doing around the globe you can always come up with the noble cliche
When there's a will, There's a way!
Right, well what if the fed and Belgium just buy everything with their FRN's? Ever thought of that, Bill?
Expect QE4 in 2015
http://diagonalviews.com/2014/10/08/expect-more-quantitative-by-the-federal-reserve-in-2015/
I hope the stock market dies. This whole method of "investing" is a joke...since when did 'living off your investment income' become the career of choice for young, able-bodied people?
It used to be that your investments were for creating a nest-egg for retirement, you socked it away over the years, and the markets helped by giving you the extra 'lift'...then you retired (from WORK) and used the money to enjoy your older age.
Now, you have twenty-somethings who think it is perfectly normal to sit around and have money just roll in. And they put it into markets that seem to have become one-way roads to riches. That whole "work" thing? Archaic...just like gold.
Wealth isn't something you earn from a life of hard work, it's something you skim from some other poor slob who works.
Fuck the stock market. Fuck it till it dies.
Work and retirement investing have ALWAYS been for suckers and poor people in general.
Work ethic, when applied to a job by a poor person working for anyone else, only gets you stuck the rest of your life in a dead end near slave like job.
Wealth is definitely not something one can acquire just working your whole life, no matter how much you save. In that regard our young people are very savvy. Why pay social security when it won't be there for you to collect? Why takng low paying job when the owner is just going to send your job oversease, or give it to a stinking foreigner who will work for less?
No you can't blame the young people for not wanting to pay back the debt we have loaded them up with.
What an excellent, "lets put it into perspective" article. Nice ZH
What is a reasonable price-to-earnings ration for companies in economic times where people spend less and less?
I doubt that we'll ever get back to the place where stocks are based on company valuations. As long as the FED is giving away free money anyway.
Will it ever revert from speculation to real valuations? I doubt it. The quickest, most powerful, trading algorithm computer wins. Just get in before the majority do and get out before they get out.