This page has been archived and commenting is disabled.

"Now That's What I Call A Bubble"

Tyler Durden's picture




 

"But the truth remains that few ever recognise the early stages of exuberance as attention is typically being diverted the other way."

Some food for thought from history...

At its peak Japan’s equity market constituted 42 per cent of global market capitalisation and Toyota was making more money from trading derivatives than selling cars.

 

 

Shares in the elite Industrial Bank of Japan rose sixteen fold between 1984 and 1989 to a price/earnings ratio of 170 times. It did not matter that IBJ’s free-float was just four per cent – a $130bn market cap ($250bn today’s money) transformed its appetite for risk.

 

Infamously, IBJ got involved with Osaka hostess-turned-restaurateur Nui Onoue, who channelled stock tips to her sponsors via a giant ceramic toad in weekend séances. The “Dark Lady” became the world’s largest individual speculator until the market collapsed and the $20bn she had borrowed was found to have been fraudulently obtained. She took down the bank’s chairman and two small lenders, ending up with a twelve-year jail sentence and personal debts exceeding $3bn.

 

Property prices were out of this world. With Tokyo fast becoming an international financial centre, it was claimed that 250 super high-rise buildings would need to be built. Prices were marked up to the point where the capital’s landmass was worth more than Canada and the value of its Imperial Palace grounds – which you can run round in about 40 minutes – could buy the entire state of California. The government’s Management and Coordination Agency valued Japan’s land at ¥2,000tn – $15tn at the time, or about four times that of the US with twenty-five times the area.

 

In a Japanese version of tulipmania, golf club memberships were traded like stocks. Koganei Country Club to the west of Tokyo cost over $3m to “join”, plus green fees. Organised crime could not resist getting in on the act. Ibaraki Country Club turned out to have minted around 52,000 subscriptions rather than the 2,830 officially sanctioned.

 

The urge to splurge pervaded every facet of life and reached across the globe in the form of tourist spending and the acquisition of trophy assets, some of which were national icons. Naïve students embarked on the study of Japanese as a short-cut to riches.

 

...

 

Then when the Bank of Japan called time and the bubble began to deflate, everyone watched in disbelief as layer upon layer was painfully peeled back and the mess of what had really been going on became plain for all to see.

Source: Deutsche Bank

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 11/26/2014 - 21:59 | 5492905 AUD
AUD's picture

Did the BOJ really call "time"? I doubt it.

Wed, 11/26/2014 - 22:09 | 5492914 Yen Cross
Yen Cross's picture

Did you short the retrace? aud/usd.

 I did. ;-)

  I just took close to a 100 pip hit closing my aud/usd shorts.

  These situations are exactly what I'm talking about for currency traders. You need to take the hit, and relax.\

 I'm hedged, against the pound and yen.

   I noticed a lot of " Towel Heads" rinsing their OIL money into Cable over the last 3 days. (gbp/usd) chart.

  This is currency trading bitchez/

Thu, 11/27/2014 - 04:30 | 5493476 StychoKiller
StychoKiller's picture

To Deutsche Bank:  The pot calling the kettle an Afro-American colour!

Sun, 11/30/2014 - 19:34 | 5502718 Remington IV
Remington IV's picture

nice trade 

Thu, 11/27/2014 - 08:44 | 5493624 Burt Gummer
Burt Gummer's picture

Japan is fucked. Cast off the anchor and be done with that weird fucker.

https://www.youtube.com/watch?v=IGYaFMFU63U

Wed, 11/26/2014 - 21:59 | 5492906 order66
order66's picture

"The U.S. will carry the entire world next year on its robust 2.5% growth."

Drink

Wed, 11/26/2014 - 22:01 | 5492913 Goldilocks
Goldilocks's picture

How To Use a Douche
http://www.youtube.com/watch?v=C7D5zJI4KDM (1:34)

Wed, 11/26/2014 - 22:02 | 5492920 Cognitive Dissonance
Cognitive Dissonance's picture

I feel so used.

Wed, 11/26/2014 - 22:27 | 5492979 Goldilocks
Goldilocks's picture

Oliver - please sir i want some more
http://www.youtube.com/watch?v=sZrgxHvNNUc (0:11)

Thu, 11/27/2014 - 00:20 | 5493204 A Nanny Moose
A Nanny Moose's picture

Oh Dear.

Wed, 11/26/2014 - 22:01 | 5492916 SpanishInquisition
SpanishInquisition's picture

Krugman is new the Toad of Osaka

Wed, 11/26/2014 - 22:03 | 5492924 Cognitive Dissonance
Cognitive Dissonance's picture

But...but...but this time is different................again.

<It's deja vu all over again.>

Thu, 11/27/2014 - 01:13 | 5493304 disabledvet
disabledvet's picture

You could get something worse than 9/11.

Hmmmm. 9/11. Wonder who came up with that day?

Wed, 11/26/2014 - 22:03 | 5492926 Carpenter1
Carpenter1's picture

"The FED will inflate the market forever."

Doesn't sound any smarter than the shit the Japanese believed.

Wed, 11/26/2014 - 22:05 | 5492934 world_debt_slave
world_debt_slave's picture

someday over the rainbow

Thu, 11/27/2014 - 00:58 | 5493278 A Nanny Moose
A Nanny Moose's picture

Put me outta my misery....

https://www.youtube.com/watch?v=GLQ2TIul8pI

Wed, 11/26/2014 - 22:13 | 5492944 Yen Cross
Yen Cross's picture

  Short the $usd

Wed, 11/26/2014 - 22:37 | 5492992 eXMachina
eXMachina's picture

I just had my ass hanged to me by audusd spike. 

Wed, 11/26/2014 - 22:51 | 5493029 Yen Cross
Yen Cross's picture

It's ok. I did also. Low volume stop hunting. Stay out of the game.

 I was hedged so I'm good, but I covered some loses.

  3 days ago I noticed 75-100 pip spikes in gbp/usd so I started adjusting my position. The housing and employment numbers were way off.

   The cable is rallying because petro dollars are getting rinsed.

Thu, 11/27/2014 - 01:21 | 5493318 disabledvet
disabledvet's picture

Why?

Thu, 11/27/2014 - 11:49 | 5494038 Urban Roman
Urban Roman's picture

Petro dollars? Rinsed?

Thu, 11/27/2014 - 13:28 | 5494421 surrational
surrational's picture

I think he means that people are selling oil which is priced in USD (petrodollars) and getting back their british pound currency. Creating upward bias on the GBP/USD pair.

After a string of highly successful months, I also was raped by the stop hunting trying to short the dollar :( Lesson learned....fuck holidays.

With the huge economic misses recently and overbought status of USD in addition to all the riots and poor weather. Seemed like a no brainer. Figured everyone would want to cash out before the holidays and USD would continue to see downward bias for a bit. Still bearish on dollar however with so many piled in long, rogueish stop hunting behavior aside.

Thu, 11/27/2014 - 14:29 | 5494620 Urban Roman
Urban Roman's picture

Thanks.

Wed, 11/26/2014 - 22:16 | 5492952 A Lunatic
A Lunatic's picture

DOW 34,000....

Wed, 11/26/2014 - 22:27 | 5492977 Yen Cross
Yen Cross's picture

 Troll/ do you actually contemplate what you're saying before you bloviate?

 RoboTrader ?

Thu, 11/27/2014 - 00:27 | 5493220 bid the soldier...
bid the soldiers shoot's picture

US DOLLAR 0.001 cents

 

Thu, 11/27/2014 - 00:58 | 5493273 sun tzu
sun tzu's picture

50,000 going once, going twice, sold to the suckers holding 401k plans

Wed, 11/26/2014 - 23:00 | 5493053 Prairie Dog
Prairie Dog's picture

Good to be reminded what a real bubble looks like

Thu, 11/27/2014 - 00:23 | 5493214 FieldingMellish
FieldingMellish's picture

Gold and silver tanking. Early dim sum?

Thu, 11/27/2014 - 00:43 | 5493250 RaceToTheBottom
RaceToTheBottom's picture

The war still has some innings left.

Thu, 11/27/2014 - 07:33 | 5493552 El Hosel
El Hosel's picture

Tagging up Grasshoper?  Maybe testing ( from above ) the trendline on the last leg down from July, mabe go hit its head on $19?... previous support

 

http://finviz.com/futures_charts.ashx?t=SI&p=d1

Thu, 11/27/2014 - 01:24 | 5493323 ZombieHuntclub
ZombieHuntclub's picture

If you've been playing poker for 30 minutes and you haven't figured out who the sucker is, it's you. We are the suckers but can't cash out in this game

Thu, 11/27/2014 - 04:35 | 5493477 StychoKiller
StychoKiller's picture

Already "cashed" out, just waiting for the Rest of the World to realize it's been snookered!

Thu, 11/27/2014 - 06:20 | 5493522 tylerD
tylerD's picture

Do central banks intentionally only hire people who are full of shit or are they just retarded cause at this point it's really just becoming impressive

Thu, 11/27/2014 - 13:51 | 5494499 Village-idiot
Village-idiot's picture

"Birds of a feather flock together."

Thu, 11/27/2014 - 09:46 | 5493717 dalitis
dalitis's picture

An excellent article this. Some more historical perspective on how bubbles become monstrous and credible (by the masses) until they go spectacularly wrong. 

Do NOT follow this link or you will be banned from the site!