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'The Crash" Will Not Be Caused By An Event...

Tyler Durden's picture




 

Via The Burning Platform blog,

Hussman analytically describing the process leading to a crash. It hasn’t happened yet, so it won’t happen. Right?

From an investment standpoint, market conditions remain characterized both by obscene valuations and still-negative market internals. It’s that combination that continues to suggest potentially vertical downside risks.

 

When people think about crashes, they tend to think about an event – as if some massive, grotesque, red, scaly, fire-breathing, razor-toothed catalyst should be obvious beforehand. But we know from history that that’s not the way it works.

 

Instead, the sequence goes like this: the conditions that create vulnerability to a crash emerge first (elevated valuations coupled with deterioration in market internals and/or widening in credit spreads), the crash emerges second, and catalysts are then identified – often just flashpoints that were consistent with speculative breakdown. Many investors think that “Lehman” caused the global financial crisis, but the mortgage crisis was already unfolding well before that. Lehman and Bear Stearns before it were only symptoms, not causes.  

 

The cause is always speculative distortion that was well-known for quite some time: elevated valuations, often accompanied by speculation and new issues of low-quality stocks representing some “new economy” theme, or yield-seeking speculation and heavy issuance of low quality debt. The main reason investors don’t believe that such speculation will end in a crash is simply that a crash hasn’t happened yet.

 

In shorter-term market action, we see a general tendency toward distribution, for example, declines on expanding volume coupled with low-volume recoveries on mixed breadth and narrowing leadership (which was also the pattern last week). We note that prior to Friday, the Dow Jones Industrial Average had gone 40 trading sessions without setting a 20-day high or low.

 

If we look across history for periods of extended range-bound activity in overvalued markets where: a) the DJIA had gone more than a month without setting a 20-day high or low; b) the DJIA was confined to a range of less than 6%; c) the DJIA was within 10% of a 2-year high; and d) the Shiller P/E was 18 or higher, there are only 7 clusters that fit the bill (1929, 1937, 1965, 1973, 1999-2000, 2007-2008, and today).

 

While the full-cycle resolution was repeatedly brutal, I should note that the short-term resolution was not very informative at all, and didn’t depend on whether the initial break out of the range was higher or lower. What’s interesting about the general pattern is that range-bound action often coincides with distribution on price-volume measures. In October 2000, I mentioned similar measures of distribution, such as one that Peter Eliades called the “sign of the bear” based on range-bound market breadth. As I also observed then, neither elevated valuations, nor internals, nor distribution patterns ensure a market crash, but we don’t like the probabilities. Still, we aren’t terribly impatient about the near-term resolution of what we see as a likely topping process here.

You’ve been warned.

Read Hussman’s Weekly Letter

 

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Tue, 05/12/2015 - 08:11 | 6084327 ZH Snob
ZH Snob's picture

duh.  it will be overnight credit default swaps.

one day we wake up and Tyler will give us the news, as will Drudge, Bloomberg and even MSNBC.

Tue, 05/12/2015 - 08:14 | 6084339 djsmps
djsmps's picture

The HuffPost will blame George Bush.

Tue, 05/12/2015 - 08:31 | 6084387 VinceFostersGhost
VinceFostersGhost's picture

 

 

Who could have seen it coming really?

 

I just got my participation trophy.

Tue, 05/12/2015 - 08:31 | 6084392 negative rates
negative rates's picture

Who really knows anything from history?

Tue, 05/12/2015 - 08:34 | 6084401 VinceFostersGhost
VinceFostersGhost's picture

 

 

Thanks to Common Core, we don't have to do history anymore.

Tue, 05/12/2015 - 08:37 | 6084416 SheepDog-One
SheepDog-One's picture

History may rhyme at times, but then history never had SkyNet so all bets are off.

Tue, 05/12/2015 - 09:03 | 6084512 MonetaryApostate
MonetaryApostate's picture

Nobody is right when everybody is wrong, that's the heart of the problem, a corrupt system is only sustainable by the corruption of the masses who mysteriously feed the pigs, and they don't stop to consider what their master's hands are doing to their hard work... (Siphoning the shit out of their entire lives)

 

Most of them wake up after retirement, realizing their retirement money isn't nearly enough, but by then it's far too late, and that's a damn travesty.

Tue, 05/12/2015 - 09:16 | 6084556 Stuck on Zero
Stuck on Zero's picture

Precipitating events for collapses are like sandpile slides.  You keep pouring on sand delicately and the pile gets higher and higher until - it all slides away.  No precipitating event, only causation.

Tue, 05/12/2015 - 10:54 | 6084954 Bagbalm
Bagbalm's picture

One grain of sand slides first. What does it matter which one anyway?

Tue, 05/12/2015 - 22:13 | 6087798 weburke
weburke's picture

and, its religion up to bat...............

Tue, 05/12/2015 - 09:16 | 6084559 Silky Johnson
Silky Johnson's picture

EVERYTHING is caused by an event. It may be small but it's still a trigger. Stupid title, stupid.

Tue, 05/12/2015 - 09:41 | 6084687 USisCorrupt
USisCorrupt's picture

BOO !

 

There's your EVENT Silky.

Tue, 05/12/2015 - 10:06 | 6084798 worbsid
worbsid's picture

It does not have to be a Black Swan, often a black duckling will do the job.   

Tue, 05/12/2015 - 16:49 | 6086470 mkkby
mkkby's picture

Hey, asshole -- don't outsource my job. We have a union.

Any crash will be blamed on a fat finger, then a long retired politician for letting it happen. Banksters will be the heroes who save us, once again.

Tue, 05/12/2015 - 10:07 | 6084804 Salah
Salah's picture

It's an event they cannot perceive...for example, Spring 2008: CDOs of all stripes being unwound in an "orderly" fashion.  Boom, out of the blue in August, Mr. Putin decides to use a false flag and inavde Georgia.  Everyone rushes for the exit doors, and it gets better.  There's a massive planetary alignment in September while all this other furr is flying. 

Tue, 05/12/2015 - 14:25 | 6085755 DetectiveStern
DetectiveStern's picture

The situation has to exist for the event to happen. That's the point. If there wasn't a honk load of dodgy CDOs based debt that was ALWAYS going to default sloshing around then a mass exit wouldn't really have mattered.

 

Tue, 05/12/2015 - 10:54 | 6084942 robobbob
robobbob's picture

you've missed the point.

 

the article is about depending on a flawed system that is vulnerable to an individual event capable of triggering a disaster. not that there's anything magical about the event itself.

 

the sand pile analogy is perfect. each grain of sand is more or less like any other. its the fact you keep piling them one on top of the other that is creating the instability, not the grains of sands themselves.

 

trying to solve the problem by avoiding this individual event or another is useless unless you fix what makes the underlying system vulnerable in the first place.

Tue, 05/12/2015 - 14:44 | 6085858 SeattleBruce
SeattleBruce's picture

Yeah, sand or cards.  The feux US markets are currently resting on such foundations.

Tue, 05/12/2015 - 10:52 | 6084946 JRobby
JRobby's picture

Herds do run off cliffs

http://www.nps.gov/bica/learn/nature/buffalo-jumps.htm

The muppet masters are at the bottom too, waiting to finish off the injured.

 

Tue, 05/12/2015 - 13:26 | 6085540 Zoomorph
Zoomorph's picture

"Events" are an arbitrary invention of the human consciousness. In reality, there is only the continual process of change. All of the past is the cause of the present and, combined with the present, will be the cause of the future!

Tue, 05/12/2015 - 15:08 | 6086013 silver surfer
silver surfer's picture

Thanks you got me opting out of the empirical world thinking of this quote from Ludwig Wittgenstein:

"If we take eternity to mean not infinite temporal duration but timelessness, then eternal life belongs to those who live in the present."

http://en.wikiquote.org/wiki/Ludwig_Wittgenstein

Tue, 05/12/2015 - 09:25 | 6084597 orez65
orez65's picture

The derivative of theft is corruption.

When you have a financial system whose base is fiat money aka counterfeit aka theft, corruption follows.

Tue, 05/12/2015 - 10:38 | 6084907 ersatz007
ersatz007's picture

what are derivatives then?

Tue, 05/12/2015 - 10:53 | 6084953 JRobby
JRobby's picture

Gambling, highly leveraged gambling.

Tue, 05/12/2015 - 13:38 | 6085593 eatthebanksters
eatthebanksters's picture

But in this casino the house makes sure the odds are stacked against the player.

Tue, 05/12/2015 - 09:26 | 6084600 inhibi
inhibi's picture

Wait a minute....what investors think the crash was CAUSED by LEHMAN?

 

Never met one of those investors lol

Tue, 05/12/2015 - 14:06 | 6085705 gdiamond22
gdiamond22's picture

The one thing we learn from history is that we don't learn from history.

Tue, 05/12/2015 - 09:08 | 6084532 Motasaurus
Motasaurus's picture

What happened to that guy who promised that the crash would happen yesterday and was going to put out a video about why he was so clever and saw it coming today?

You know the guy, smokes a lot, videos on youtube. 

Wed, 05/13/2015 - 10:09 | 6089184 FinancialWizard
FinancialWizard's picture

They misspelled Troof Seker, LOL

Tue, 05/12/2015 - 08:19 | 6084356 prefan4200
prefan4200's picture

"If we look across history for periods of extended range-bound activity in overvalued markets where: a) the DJIA had gone more than a month without setting a 20-day high or low; b) the DJIA was confined to a range of less than 6%; c) the DJIA was within 10% of a 2-year high; and d) the Shiller P/E was 18 or higher, there are only 7 clusters that fit the bill (1929, 1937, 1965, 1973, 1999-2000, 2007-2008, and today)"

Those are 7 pretty scary clusters, considering what happened to the market in those years.  But as everyone knows, this time is different !

Tue, 05/12/2015 - 09:05 | 6084521 prefan4200
prefan4200's picture

Fire monkeys, Dude.

Tue, 05/12/2015 - 11:17 | 6085010 froze25
froze25's picture

Can't go wrong with a fire monkey.  I did enjoy watching the video on the web page the info was entertaining but like all things you take it with a grain of salt.

Tue, 05/12/2015 - 09:13 | 6084552 Motasaurus
Motasaurus's picture

Giant read moon? Check
Volcanic lightning? Check
Doom for all mankind? Check

Great reading is sure to be ahead. 

Tue, 05/12/2015 - 09:17 | 6084560 TheFourthStoog-ing
TheFourthStoog-ing's picture

I'm shaking like a leaf under this tarp. When I stopped to catch my breath I could hear someone softly crying under the other end of it.

Was that you?

Tue, 05/12/2015 - 10:56 | 6084965 JRobby
JRobby's picture

Any article that starts out with: "The following essay is arguably the single most important article on the internet today." Is bullshit.

Tue, 05/12/2015 - 08:22 | 6084366 Oldwood
Oldwood's picture

They were stupid

We are smart

Tue, 05/12/2015 - 08:32 | 6084398 VinceFostersGhost
VinceFostersGhost's picture

 

 

I've made a couple of good calls, but I'd never venture so far as to call myself smart.

Tue, 05/12/2015 - 08:37 | 6084418 ZH Snob
ZH Snob's picture

ha.  this time you missed the /sarc instead of me.

Tue, 05/12/2015 - 08:47 | 6084457 VinceFostersGhost
VinceFostersGhost's picture

 

 

Well I'm an intellectual, so everyone obviously knows I'm a idiot.

Tue, 05/12/2015 - 09:20 | 6084576 TheFourthStoog-ing
TheFourthStoog-ing's picture

Can I trade you a can of Mountain House chili mac for some pork and beans?

Tue, 05/12/2015 - 08:33 | 6084399 negative rates
negative rates's picture

Now that's talent, flippin burgers and pancakes at the same time.

Tue, 05/12/2015 - 08:27 | 6084381 XAU XAG
XAU XAG's picture

We have not recoverd from the 2007-8 crash

 

So we are in a crash now!

 

Only thing that has icreased the the DEBT..............Stawks and house prices and cost of living items....................oh and Elf Care.

Tue, 05/12/2015 - 08:11 | 6084328 post turtle saver
post turtle saver's picture

crashes have been outlawed, didn't you get the memo?

Tue, 05/12/2015 - 08:18 | 6084353 Intelligence_In...
Intelligence_Insulter's picture

Circuit breakers!

Tue, 05/12/2015 - 08:32 | 6084397 DeadFred
DeadFred's picture

The interesting part is that flash crashes can't rebound if the breakers set in.

Tue, 05/12/2015 - 11:19 | 6085015 froze25
froze25's picture

Every time mankind thinks they can control natural forces, natural forces find away to humble mankind.

Tue, 05/12/2015 - 08:18 | 6084350 stocker84
stocker84's picture

OUTLAWED?!

BTFD, bichez...until you can't buy the dip no mo.It works until it doesn't.

 

Tue, 05/12/2015 - 08:24 | 6084373 Oldwood
Oldwood's picture

It is a game of musical chairs except on the final round we will discover that 90% of the chairs have disappeared.

Tue, 05/12/2015 - 08:35 | 6084408 negative rates
negative rates's picture

That's when you grab a seat before the music stops.

Tue, 05/12/2015 - 08:55 | 6084488 Ratbagger
Ratbagger's picture

seriously.

fuck their games-playing. this is my life, and it's not a fucking game

Tue, 05/12/2015 - 14:57 | 6085574 chubakka
chubakka's picture

checkmate

Tue, 05/12/2015 - 09:24 | 6084591 TheFourthStoog-ing
TheFourthStoog-ing's picture

Man, you are quite the repository of market knowledge, aren't you?

A sage in our midst - bitchez!

Tue, 05/12/2015 - 08:20 | 6084358 roadhazard
roadhazard's picture

Butt Butt, "the black swan" that's all I've been hearing about here for years. Make up your mind.

Tue, 05/12/2015 - 14:09 | 6085719 Oldwood
Oldwood's picture

There is always a black swan, it's just that we only see its shadow flying overhead, never looking up to realize what it is we are actually seeing. Once the deed is done, then we realize it was that fucking bird again.

Tue, 05/12/2015 - 14:47 | 6085886 walküre
walküre's picture

Black Swans sailing on the 666th Hindenburg Omen in the Bondapocalypse!

Tue, 05/12/2015 - 08:24 | 6084370 101 years and c...
101 years and counting's picture

just remember, the recessions of 2001 and 2008 were already entrenched before 9/11 and the LEH.  stocks were already down over 15% from highs.  and then crashed.  no reason to think this time is different.  at least in 2008, a fucking bank was destroyed instead of 3000 people and the twin towers.

Tue, 05/12/2015 - 14:48 | 6085892 walküre
walküre's picture

same shit every 7 years

a real good purge and cleanse are overdue

Tue, 05/12/2015 - 08:24 | 6084372 Monetas
Monetas's picture

The soft landing .... of buy back bigotry .... and low expectations !

Tue, 05/12/2015 - 11:10 | 6084989 CPL
CPL's picture

I'm sure there are some good buys on the zimbabwe stock market as well, but even with a stock valued in a trillions it's still only three eggs.  Eventually all these companies listed will be worth less than a productive chicken which only works for chicken feed.

Tue, 05/12/2015 - 12:24 | 6085251 worbsid
worbsid's picture

I valued this horse for $10,000 but I got hungry and traded the horse for two chickens which were obviously worth $5,000 each.

Tue, 05/12/2015 - 08:26 | 6084378 Dragon HAwk
Dragon HAwk's picture

if it's like 2008 the average person will not even notice.. funny how looking back they call it a crash, but living thru it it was like ok lets go get some burgers who has an extra 20 on them..

Tue, 05/12/2015 - 08:47 | 6084458 Stormtrooper
Stormtrooper's picture

Until they received their 401k statements showing 40% loss. Then they woke up.

Tue, 05/12/2015 - 11:25 | 6085038 CPL
CPL's picture

The 40% loss on their RRSP/401k statement or pensions is nothing in comparison to the real 2500% increase in price on daily goods.when those people made the contributions to their 401k's say 10 years ago beef was 49 cents a pound.  Today it's around 7 bucks, next year if modeling real prices against the ignored inflation, it'll be 9 bucks.  If we all wait long enough, all those 'billionaires' will just be worthless hobo's.  They will become the 'great unwashed' no matter what they do.

The fact is, the conditional math of the system is built to make them paupers and starve everyone.  It is poetic justice in putting faith into a ponzi scheme to do anything else while under a delusion they are 'seperate'.  That's amazingly dumb.

Tue, 05/12/2015 - 09:12 | 6084546 Motasaurus
Motasaurus's picture

That's because they hide it better. 

If this was the 1930s it'd be lines and lines of millions of people waiting for soup at the soup kitchen. Instead it's millions of people with their food stamps.

See, it's much less noticable if they replace people shopping at walmart with people shopping at walmart. 

Tue, 05/12/2015 - 09:28 | 6084613 TheFourthStoog-ing
TheFourthStoog-ing's picture

That's because in the modern age crashes are kinder and gentler - no suffering required. Suffering is for knaves and chumps who don't know how to print.

Tue, 05/12/2015 - 10:55 | 6084963 RaceToTheBottom
RaceToTheBottom's picture

Has nothing to do with suffering.  Has to do with welfare for WalMart and control of the peons in the street.

Tue, 05/12/2015 - 11:23 | 6085024 froze25
froze25's picture

The free shit army doesn't give a rats ass about the market or economy as long as they get their free shit.  That said with the growing of the free shit army there are fewer and fewer people who notice.  Until the free shit stops because its impossible to continue to give free shit away forever then and only then will you see a mass awakening then the cycle can repeat.  This is barring the federal seizing of guns from law abiding citizens that would cause the free shit to stop because the producers would be fighting a civil war.

Tue, 05/12/2015 - 08:27 | 6084382 Gohigher
Gohigher's picture

I tried to buy the dip, but which one ?  I can't seem to keep up with Ronnie Robot.

Funny, it probably IS the same as it ever was, but now it happens 10K times every day instead of a few times a day.....

Gruber bomb.  None of the other shit is working ......

https://www.kickstarter.com/projects/empireoflies/empire-of-lies
http://russia-insider.com/en/ron-paul-crowdfunding-film-heres-why-you-sh...

Tue, 05/12/2015 - 08:34 | 6084404 Ted Baker
Ted Baker's picture

HEARD ON THE STREET: TWITTER AND GOOGLE TALKING WITH EACH OTHER?

Tue, 05/12/2015 - 08:36 | 6084413 Dr. Engali
Dr. Engali's picture

There won't be a crash. One day we will wake up and the "markets" will have vaporized. They will simply close the casino doors. Bye, bye, thanks for playing. Tip your waitress on the way out.

Tue, 05/12/2015 - 08:53 | 6084483 TeamDepends
TeamDepends's picture

But, but I still have all these chips! I demand to see the manager! (gales of laughter as giant armed bouncers approach)

Tue, 05/12/2015 - 14:25 | 6085774 Oldwood
Oldwood's picture

Fear not for the doors will open again, once they are convinced you have more bets to place on the table. Casinos don't close because they ran out of money. They close because they run out of "customers".

The key for them is to always have equal measures of apparent arrogance and ignorance so as to lure their "customers" back in. To place a bet you must think you are smarter or luckier than they are, or think you know something they don't. The reality is that they will always allow you to win just enough to keep that idea alive, up until the moment they sense you have put it all on the table. They then claim what they always knew was theirs. It just takes patience, and the best part is that we, as a civilization, never learn.

Something for nothing is an infinite weakness. No amount of pain and loss can kill it in our species. We can be the victims ourselves or witness others suffer, and yet still fall prey to it. It is an insatiable appetite. It is the very basis of our modern economy. It is what empowers our government, using the notion of democracy to take from one to give to a more vocal and populous other. Vote to raise taxes because you believe it will take more from others than yourself, while believing the benefits of that theft will reward you more than it will those being more greatly robbed. Something for nothing.

Tue, 05/12/2015 - 08:37 | 6084415 MajorFall
MajorFall's picture

Its ALWAYS due to a crisis in confidence..

Tue, 05/12/2015 - 08:41 | 6084428 mygameon
mygameon's picture

Mental masterbation!!!!

Go dig in the dirt, collect water, store pm & pb, and pray you are ready when it really happens.

Who cares who called the correct sequence of events and identified the black swan?

What will you do one second after?

Continue to brag about how smart you are in a collapsing society or will you be able to save your family and neighbors?

All those puts will not buy you anything when it really goes down

Tue, 05/12/2015 - 09:11 | 6084542 TheFourthStoog-ing
TheFourthStoog-ing's picture

Every Saturday my family puts on its bug-out bags and we run psy-ops in the forest until Monday morning.

Tue, 05/12/2015 - 09:41 | 6084685 mygameon
mygameon's picture

Reduction to practice is the key to any strategy.  I know people that are "ready" by simply having a survival seed vault in their basement. 

Theory is a bitch when you have to learn how to open the seed vault and try to dig in the dirt without any experience.  Especially if this would happen Oct-March in the Midwest.

I hope your family appreciates your preparation.......

We turn off our electricity and water for a week on every soltice and equinox to practice our home strategy.

Peace

Tue, 05/12/2015 - 09:47 | 6084733 angryBuddhist
angryBuddhist's picture

I have a potted tomato plant on my condo balcony. Does that count?

Tue, 05/12/2015 - 11:30 | 6085061 froze25
froze25's picture

I recently opened a seed vault to plant some of the seeds this year, it was about 7-8 years old.  None of them germinated.  I don't think it was because of bad seeds but I do believe I let it sit tooooo long.  So keep in mind the age of your seed stock.  Look into plants that can over winter or can be harvested in the winter.  Carrots are great they can survive in below freezing temps and are very sweet once the temp drops.  Spinach can be over wintered for a very early spring harvest.  Kale will survive all winter long covered in snow.  Garlic (hard neck) needs to be planted about 2 weeks before your first hard frost date and can be harvested in about the 2nd week in July (depending on climate).  Chickens (winter hardy types) can survive with no heat in 10 degree weather as long as they have a hen house to huddle up in, they stop laying though.

Tue, 05/12/2015 - 08:42 | 6084432 gatorengineer
gatorengineer's picture

Sorry but with HFT and spoofing, there will have to be a very signficant event to create a large enough stop run, that the algos cant turn it....

 

Call for the day the 10 back under 2.26, and the S&P green... Hope I am wrong, but this isnt it.  Just a ripple in the force, not a true disturbance.  Cards arent in place yet.

Tue, 05/12/2015 - 08:53 | 6084481 InsanityIsWinning
InsanityIsWinning's picture

All references to past market actions are moot. Never in history have the Central banks been so myopically focused on 1 thing and 1 thing only.  The market will not be allowed to decline like past serious selloffs.   Of course in the end this will crash and burn but we aren't there yet. . . not by a long shot.

Tue, 05/12/2015 - 12:24 | 6085254 Professorlocknload
Professorlocknload's picture

Took over 60 years in the USSR, to finally consume all the seed corn.

Tue, 05/12/2015 - 14:37 | 6085831 falconflight
falconflight's picture

Exactly, and their feed stock was much less than in the good ole US of SA.

Tue, 05/12/2015 - 09:02 | 6084486 Lumberjack
Lumberjack's picture

 

'The Crash" Will Not Be Caused By An Event..."

 

I would certainly hope not...

 

Gigantic asteroid near miss coming this Thursday

 

On this occasion a collision seems unlikely – but it doesn’t take much of an orbital perturbation to put an Earth grazer onto a collision course.

A collision of 1999 FN53 with Earth, especially an ocean strike, would be nothing short of catastrophic. The fire and blast alone would likely kill millions. It would cause massive earthquakes across the world. An ocean strike would raise mountain size tsunamis which would smash coastal cities thousands of miles from the strike. The climate impact would also be significant – the Younger Dryas, a brutal collapse in global temperatures which lasted 1200 years, may have been caused by an asteroid impact.

-------------------

Now they name storms after people, hopefully they named this one Hillary.

 

Tue, 05/12/2015 - 11:53 | 6085148 hoist the bs flag
hoist the bs flag's picture

" near miss" my ass...more like fear porn horseshit. http://echo.jpl.nasa.gov/asteroids/1999FN53/1999FN53_planning.html

As you can see, the closest approach distance is about 26.5 times the distance from Earth to the Moon. Not a threat in the least.

Tue, 05/12/2015 - 09:02 | 6084510 divedivedive
divedivedive's picture

I'll go with July 25th.

Tue, 05/12/2015 - 09:04 | 6084519 TheFourthStoog-ing
TheFourthStoog-ing's picture

There will be no collapse - period. That's just the frustrated Zeroes talking who missed out on the boom.

However, Zeroes WILL eat cold oatmeal and argue amongst themselves about the virtues of it.

Tue, 05/12/2015 - 09:21 | 6084582 Temerity Trader
Temerity Trader's picture

“Speculative distortions” Duh! FIVE TRILLION $ in money creation can sort of cause that. The Fed bankers all pat themselves on the back and say the alternatives were far worse. They don’t know; they just delay and pray. It WILL all come tumbling down…it has to. Trees don’t grow to the sky and limitless growth is a fantasy. When organic growth ended it was replaced by stock buybacks and mountains of new debt generated through loose credit. Any attempt at “austerity” will cause our cities to burn…just look at Greece. Once the masses taste all the entitlement program handouts, good luck cutting them off.

Silicon Valley is in the largest property bubble in all of history and it is about to deflate. It will start slowly, almost unnoticed, and then accelerate as people who paid insane top dollars for run-down old houses, begin to panic and walk away. Those high-paying tech jobs are starting to evaporate and they have been powering the mania for 40 years. Layoffs are already in progress, and tech companies will have no trouble moving more of their operations overseas.

The Fed will try to appease Wall Street with talk of more QE, but it will not work. This will get ugly…but timing it is always tough and the bears have been gored for seven years now.

Tue, 05/12/2015 - 09:23 | 6084587 Jack Offelday
Jack Offelday's picture

"The cause is always speculative distortion that was well-known for quite some time"

Skyrocketing student loan debt that can/will never be repaid?

Tue, 05/12/2015 - 09:36 | 6084664 blindman
blindman's picture

we never could appreciate the meaning
or significance of the term
"malinvestment", is that it?
money monkeys.

Tue, 05/12/2015 - 09:41 | 6084691 general ripper
general ripper's picture

Title is wrong......the event is already taking place......a 30+ year binge of monetary expansion which increased exponentially over last 7 or so years. Professional investors borrowing low and investing high, Greenspan put, Bernake put, Yellin (man is she ug) put.

The event was - is - and will be the looting of lower, middle and middle upper classes by the professional looting class. This was supported by a spineless government legal system and infected FTC. Never have so few screwed so many while giving total impunity to the guilty.

All this filth and rot will cause an event that may or may not be containable. Be patient, it will happen. 

Gold and cash at home may help.

 

 

 

Tue, 05/12/2015 - 16:09 | 6086302 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Don't forget the Poloz 'Put', and the Carney 'Put', those motherfuckers are butt ugly too, eh. Further, Yellen is a damn sight better than Summers would have been. Fuck me, if Summers had of become FED Chair he would be gloating today and we on Z/H would be even more irate. Yellen is better than Summers, always remember that. And never get out of the boat, never get out of the boat!

Tue, 05/12/2015 - 09:49 | 6084742 slightlyskeptical
slightlyskeptical's picture

The top has been marked with the AOL buyout once again.

Tue, 05/12/2015 - 09:59 | 6084751 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

I triggered the 08 crash, and designed it to wipe out every bank in the World, slowly, and painfully, SUCKERS! Everything is going like clockwork, and the 'Shmeeeeetaaaa' crap-O-la is pure unadulterated bullshit Jewspeak gobble-DE-gook, motherfuckers. The Jews don't know shit-from-shine-O-la and are reactionary because they are getting FUCKED like they have been fucking everyone for the last half century.

 

What goes around comes around, eh.

 

:|

 

bwahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahah

Tue, 05/12/2015 - 14:30 | 6085795 Pareto
Pareto's picture

holy fuck you're retarded

Tue, 05/12/2015 - 14:36 | 6085824 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Not half as retarded as you obviously are, Pareto.

Tue, 05/12/2015 - 10:55 | 6084958 q99x2
q99x2's picture

A crash is when the FED loses power to the applications server.

Tue, 05/12/2015 - 12:25 | 6085258 BI2
BI2's picture

The physical world reacts to the siritual world. It's The American Curse >>>  http://wp.me/p4OZ4v-3z

Tue, 05/12/2015 - 12:26 | 6085268 jesse livermoore
jesse livermoore's picture

Making predictions is hard. Especially about the future

Tue, 05/12/2015 - 14:11 | 6085727 d4pwnage
d4pwnage's picture

But economists are great for making predictions about the past.  That's why they get paid the big bucks.

Tue, 05/12/2015 - 14:42 | 6085844 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

The best predictor of future behaviour is past behaviour. Moreover, American Behaviourists in Experimental Psychology formulated this heuristic, not moi!

Tue, 05/12/2015 - 13:31 | 6085557 BI2
BI2's picture

Beware then and be prepared.

Tue, 05/12/2015 - 13:34 | 6085579 chubakka
chubakka's picture

just load up on subzero penny stocks and you'll be well hedged fpr the collapse.  

Tue, 05/12/2015 - 15:43 | 6086195 bluskyes
bluskyes's picture

There are companies that pay you to transfer ownership of their shares to yourself?

Tue, 05/12/2015 - 13:49 | 6085644 JohnGaltsChild
JohnGaltsChild's picture

What's to worry? Trust the Fed.

Tue, 05/12/2015 - 14:03 | 6085694 d4pwnage
d4pwnage's picture

Decent article, but 

"The cause is always speculative distortion that was well-known for quite some time:"

The speculative distortion is itself a symptom--a symptom of artificially low interest rates / easy money.  The big players are always going to chase the highest expected yieldCentral bank intervention shifts yield from savers to leveraged speculators.

Tue, 05/12/2015 - 14:25 | 6085767 Kirk2NCC1701
Kirk2NCC1701's picture

"By Jove, Sherlock, I do believe that chap is trying to use the Spark & Tinder analogy.  How frightfully clever of him, I dare say."

"Indeed, my dear Watson, indeed.  Did you know that far more ravaging fires are started with a spark or match, than with a torch or a Molotov* Cocktail?  Yes, big things have small beginnings, you might say."

 

* The observation readers will not that the Molotov Cocktail was invented well after the creation of Sherlock Holmes, but the analogy still applies.

Tue, 05/12/2015 - 14:24 | 6085770 kchrisc
kchrisc's picture

I personally believe that since there are fewer and fewer general public investors in the "markets," any "black swan" event can only come from other grifters, banksters, in the system. As a result, I believe that Zion and their banksters are going to engineer the "crash," like they did in 1929.

I believe that that is why the dollar is so artificially and quickly up, as the connected and Amongst are padding their "exit" to the euro, shekel, etc.

I believe that the Saudis were let in on this "exit" in exchange for their cooperation on oil prices. The recent indicators on their dollar assets/reserves seems to support this.

Regardless, I believe that if you are holding dollars, or any other so-called paper assets, you are playing Russian Roulette with a semi-automatic.

Liberty is a demand. Tyranny is submission..

 

Instructions: Tin foil hat on to block reception. Tin foil hat off to receive. Best reception is on the "throne."

Tue, 05/12/2015 - 14:34 | 6085814 falconflight
falconflight's picture

There is EBT, Section 8, Obamacare, energy assistance...the list is endless, and no matter the economy, Amerikans will drink sewage in defense of the aforementioned elements of Freedom.  No regime change is in the offing, ever.

Tue, 05/12/2015 - 14:37 | 6085833 GRDguy
GRDguy's picture

Don't forget the snowball effect of Goldman-Sachs hitting a couple of hedge-funds with unplanned collateral increases that triggered off the avalanche in MBS.  That's all it takes when they decide they've stolen enough on the upside; then they go short for the long ride down.  And they call it "smart" money.

Tue, 05/12/2015 - 14:41 | 6085834 falak pema
falak pema's picture

While the alternate media awaits the crash, like this poster, the MSM heralds the status quo as here : 

http://www.marketwatch.com/story/us-stocks-futures-driven-lower-as-bond-...

Us futures may be decoupled from "reality" but according to these "pundits" they lead the market.

Bonds will save the Stawks overpricing...

You've heard it here! 

Tue, 05/12/2015 - 14:54 | 6085884 Kirk2NCC1701
Kirk2NCC1701's picture

If I had to create a new super-currency -- or even a regular national currency -- I'd base it on (index it to) a Basket of Precious Assets, to make sure that it became regarded universally as Honest Money.

This Basket of Precious Assets would consist of several (5) other Baskets: 

   1. Precious Metals (15%)

   2. Strategic Metals (10%)

   3. Precious & Strategic Minerals (5%)

   4. Precious Carbon Fuels (10%)

   5. Renewable Energies in Watts (10%)

This adds up to a 50% backing of universally accepted Real Assets, and would allow for value-add GDP growth contributing to a currency's strength.  It is the latter part (the GDP component) that reflects the natural reality that "Not all currencies are equal", but that they are competitively priced and retain inherent value for any economy.

This would allow for a large range of nations to create Honest Money, that would be resilient against the predatory (opportunistic and parasitic) efforts of Usurpers, who would seek to speculate, manipulate and profit from mere exchange of money.  It would, hopefully, end the rule of the Moneychangers, and usher in an era of Builders, Creaters, Inventors and Enablers (value-add Service Providers).

Are you listening, BRIICS and AIIB?

Tue, 05/12/2015 - 15:46 | 6086208 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Captain, you don't get that gold is universally accepted currency already and that there is really no need for a basket system. This is why all nations are rushing to gold and hoarding it en masse. It also explains why gooberment is keeping the price of gold low whilst they buy it up. The basket thesis is reasonable, but it is a reset proposition, and does nothing for the current state of affairs with this gold rush that is manifesting. Your post is certainly a very excellent post though, and I'm glad you are bringing this up. What do the Tyler(s) envision for the best possible basket of currencies? This is what I want to know? You are the first to compile a list here, kudos.

Tue, 05/12/2015 - 16:25 | 6086367 Magooo
Magooo's picture

The crash will come when the central banks policies result in pushing on a string.    Until then - nothing will take the markets down because the Fed can print to infinity.

 

So buy the index and go along for the ride. 

 

Because when this crash comes it does not matter if you are on the sidelines.   Civilization will end.  Your cash will be handy in starting a fire to heat up some rotting rat meat to go with your bark and grass

 

THE PERFECT STORM (see p. 59 onwards)

The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf

Wed, 05/13/2015 - 09:49 | 6089104 fstwrtr
fstwrtr's picture

the new currency will be .22 rounds, canned food,and AR-15 parts.

Wed, 05/13/2015 - 13:48 | 6089931 ron17571
ron17571's picture

Death by a thousand cuts. We have been in a recession/depression for years.Kept afloat by steadily rising debt and printing money. It's all smoke and mirrors.

It will end badly,I am guessing not to far in the future.It's what jade helm is about.Our government getting ready for mass riots and civil unrest.

Obama is doing his best to make it happen.Nobody can really not lead at all. Cloward and Piven stuff is what he is about.

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