The 10 Principles Of Bubbles Show Why The Whole Planet's On Central Planner "Crack"
Submitted by Harry Dent via Contra Corner blog,
The global markets just reacted to another 7% plunge in Chinese markets – the biggest bubble of our time.
Go on the Internet and look up any article about China’s economy. Nine times out of 10 they’ll acknowledge the problems in overbuilding, real estate vacancies, rising debt and everything else.
But they always take the position that China will be able to have a soft landing. Through government guidance, they’ll be able to transition to a consumer-driven economy like the U.S. instead of a government-driven infrastructure and exporting one.
Meanwhile, very few analysts in the financial media think that stocks are in a bubble, when this rally since early 2009 looks exactly like every bubble in history.
And that’s the problem – when it comes to predicting the future, humans are invariably almost always wrong.
When bubbles get going, everyone gets “high” and no one wants the high to end… so we go into denial.
I recently shared a chart showing the human model of forecasting. At the top, we think we’ll never have another recession – that we’ve reached escape velocity. When it all starts to topple, we assume it’ll be a soft landing. And when it all hits the floor, we think things are so bad they’ll never get better again.
Every time!
We project in straight lines, when reality is cyclical.
The truth is, we don’t like cycles. We love it as the getting gets good, but we hate the downside. So when you start hearing that it’s going to be a soft landing – that is a sure sign that everything’s about to hit splat against the pavement!
That’s why I thought it was a good time to remind you of the 10 principles of bubbles from Chapter 5 of The Demographic Cliff, after the recent reminder of the fragility of global markets.
- All growth and evolution is exponential, not linear.
- All growth is cyclical, not incremental.
- Bubbles always burst; there are no exceptions.
- The greater that bubble is, the greater it’s going to burst!
- When bubbles burst, they tend to go back to where they started or a bit lower.
- Financial bubbles tend to get more extreme over time, as the available credit that fuels them expands as our incomes and wealth expand.
- Bubbles become so attractive that eventually they suck in even the skeptics.
- No one wants the “high” and easy gains to end, so we go into denial as the bubble evolves, especially in its latter stages.
- Major bubbles occur only about once in a human lifetime, so it is easy to forget the lessons from the last one. (And the last one’s my favorite.)
- Bubbles may seem fruitless and destructive when they burst, but they actually serve a very essential function in the process of innovation and human progress.
So make no mistake – it’s a bubble, damn it! And worse, it’s a global bubble. It’s saturated the whole frickin’ planet to the point where hardly anyone can see it, because you can’t get out of it!
From stocks, to real estate, to bonds – it’s all caught up in the euphoria!
The commodity bubble has already burst, and China’s stock bubble has peaked and will continue to burst, despite government intervention with hundreds of billions to prop it up.
It already fell another 7% Monday and global stocks along with it (though not as bad), as the world’s finally waking up to the fact that China ain’t all it’s cracked up to be – it, like all other markets, is just on crack!
Bubbles don’t correct – they burst! Sure, U.S. stocks might have climbed out of the August correction. But too many small- and mid-cap stocks are in the red to say "the coast is clear." And these growing divergences in the market are showing that we are very, very close to bursting.
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Toil and trouble, bitchez.
"We have a COLOSSAL credit bubble in China and how it will unwind we don't know. It may happen through significant weakness in the RMB although...it could also happen through significant weakness in the economy and some sectors of the economy in China, like steel production, they already have experienced hard landing..." Marc Faber, January 2016 https://youtu.be/6Oq_Ze8LG-Q?t=15s
You take the blue pill—the story ends, you wake up in your bed and believe whatever you want to believe. [/Morpheus]
It's not crack it's Flakka the new syntetic drug that makes people think they have superhuman strength when they just don't.
https://www.youtube.com/watch?v=aJMynNIms3E
https://www.youtube.com/watch?v=I169gVx5VI4
Now we finally have a volatility party....
Smokin fuckin rocks. A visual representation. https://youtu.be/wTA3qGQouaU?t=1m51s
"You May Know When Your Society Is Doomed"
**When you see that trading is done, not by consent, but by compulsion
**When you see that in order to produce, you need to obtain permission from men who produce nothing
**When you see that money is flowing to those who deal, not in goods, but in favors
**When you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you
**When you see corruption being rewarded and honesty becoming a self-sacrifice — you may know that your society is doomed.
Atlas Shrugged : Ayn Rand
Your betters are in control, and just because they have to take their shoes off to count above ten means nothing. We , as a group, have a tendency to blindly follow self-appointed "smart people" and ship the dissenters off to the Gulag. So once more off the cliff we go, but it'll be a long fall this time.......
I agree.
Ambition, Efficiency, Rationality, Integrity, and Good Work Ethic is an anchor around the neck these days.
I worked at a hospital years ago and my managers actually instructed me to "slow down", because I was making the other employees feel "inferior". Nothing I was saying, nor am I a confrontational guy...I prefer keeping things happy but functional...no, it was simply: I MUST EASE UP on my hard work due to the fact that others who do not work hard/efficiently feel bad...
Fuck this world.
Your experience is a common one, felt whenever a private-sector person works in a government-sector job.
A similar situation when you work in a union shop the first time.
Crabs in a bucket. A soon as one crab starts to climb up & out, other crabs pull him back down.
Please, having been a FIAT WORLD with governments printing the money without any COLLATERAL REQUIREMENTS the "private sector" is largely a fucking myth.
Unless of course you really believe that all those primary dealers are "private banks"... or that a MIC company, that is dependent on GOVERNMENT CONTRACTS is really a "private company"...
LMFAO!!!
The world just figured out how good the government tit was and now everyone is on the fucking dole.
Guess what fuckers? Time for everyone to actually WORK for a living again!!!
now jump you fuckers jump!!
Locomotive
-GnR
Gonna find a way to cure this loneliness
Yeah I'll find a way to cure the pain
If I said that you're my friend
And our love would never end
How long before I had your trust again
I opened up the doors when it was cold outside
Hopin' that you'd find your own way in
But how can I protect you
Or try not to neglect you
When you won't take the love I have to give
I bought me an illusion
An I put it on the wall
I let it fill my head with dreams
And I had to have them all
But oh the taste is never so sweet
As what you'd believe it is - well I guess it never is
It's these prejudiced illusions that pump the blood
To the heart of the biz
You know I never thought that it could take so long
You know I never knew how to be strong
Yeah, I let you shape me
But it feels as though you raped me
'Cause you climbed inside my world
And in my songs
So now I've closed the door to keep the cold outside
Seems somehow I've found the will to live
But how can I forget you or try not to reject you
When we both know it takes time to forgive
Sweetness is a virtue and you lost your virtue long ago
You know I'd like to hurt you but my conscience always tells me no
You could sell your body on the street to anyone whom you might meet
Who'd love to try and get inside and bust your innocence open wide
'Cause my baby's got a locomotive
My baby's gone off the track
My baby's got a locomotive
Got ta peel the bitch off my back
I know it looks like I'm insane
Take a closer look I'm not to blame
No
Gonna have some fun with my frustrations
Gonna watch the big screen in my head
I'd rather take a detour
'Cause this road ain't gettin' clearer
Your train of thought has cut me off again
Better tame that boy 'cause he's a wild one
Better tame that boy for he's a man
Sweetheart don't make me laugh
You's gettin' too big for your pants
And I's think maybe you should cut out while you can
You can use your illusion -
Let it take you where it may
We live and learn and then sometimes it's best to walk away
Me I'm just here hangin' on
It's my only place to stay at least
For now anyway
I've worked too hard for my illusions
Just to throw them all away
I'm taking time quiet consolation
In passing by this love that's passed away
I know it's never easy - so why should you believe me
When I've always got so many things to say
Calling off the dogs a simple choice is made
'Cause playful hearts can sometimes be enraged
You know I tried to wake you -
I mean how long could it take you
To open up your eyes and turn the page
Kindness is a treasure - and it's one towards me you've seldom shown
So I'd say it for a good measure
To all the ones like you I've known
Ya know I'd like to shave your head
And all my friends could paint it red
'Cause love to me's a two way street
An all I really want is peace
But my baby's got a locomotive
My baby's gone off the track
My baby's got a locomotive
Got ta peel the bitch off my back
I know it looks like I'm insane
Take a closer look I'm not to blame
No
Affection is a blessing
Can you find it in your sordid heart
I tried to keep this thing ta-gether
But the tremor tore my pad apart
Yeah I know it's hard to face
When all we've worked for's gone to waste
But you're such a stupid woman and I'm such a stupid man
But love like time's got its own plans
'Cause my baby's got a locomotive
My baby's gone off the track
My baby's got a locomotive
Got ta peel the bitch off my back
I know it looks like I'm insane
Take a closer look I'm not to blame
Yeah
If love is blind I guess I'll buy myself a cane
Love's so strange
Look at the official "poverty level" in the western world. In 'merica it was somewhere near $55,000 per year for a family of 4 the last time I looked. At that point the government will subsidize your food and housing, why work?
Yes, GLOBAL WEIMAR.
As more and more baby boomers demand that those fat state and federal pensions be PAID, everyone else needs to prepare for what we all know comes next.
What comes next is "gloom, despair and agony on me...deep dark depression, excessive misery..."
Nope he means cannabalism
Never gloom, despair, etc. in a moving market up or down a trade can be made to achieve a return.
Now stagnation, no movement = no trade to be made.
Correct. Looks like everyone will just have to actually WORK for a living again.
Jump you fuckers!!!
Plus the view that immigrants are all the same and they will become productive workers very fast. All immigrants are not like the Vietnamese or other groups that have thrived in the US.
Some are not going thrive and will become more of a drain on services and culture...
Words to describle PENSIONS: false hopes, smoke and mirrors, dreams, "what, me worry"?...
Human beings are "wrong" due to the propaganda they are fed by the globalist-elites: Garbage in; garbage out.
So, are you saying that the world is sniffing Janet's crack?
Ah the trees grow to the sky growth mantra writ into a ponzi perfectly designed to extrac grift from the growth.
Trouble is trees DON'T grow to the sky there is a limit to growth.
We have no clue how to do a sustainable society with low and/or zero growth and maintain the ponzi at the same time. We evolve through this or die.
Oh and getting rid of the ponzi would be great but the bigger problem is really learning to live sustainably.
AGAIN SUCKERS!
The MAIN ENABLER of sizable asset price price bubbles is keeping the inflation-adjusted price histories rarely seen.
http://showrealhist.com/yTRIAL.html
Higher volatility is good for Wall Street trading firms, as they extract more money from the less sophisticated main street home gamers.
These sorry financial institutions can no longer steal money on mortgage repackaging and sales, mergers, stock IPOs, credit spreads, .... so this is one way they can make a few bucks to maybe keep the lights on a little longer. Thank the Fed for that.
Central Planners Cracklogic is real. I have seen it.
"if you dont give me more debt for my confetti, i will rob Grandma".
"So make no mistake – it’s a bubble, damn it! And worse, it’s a global bubble. It’s saturated the whole frickin’ planet to the point where hardly anyone can see it, because you can’t get out of it!"
So you're saying we're trapped and we can't get out? And whose fault is that? They're certainly no heroes unless they help fix the problem they caused. And if they need help they'd be wise to ask for it. They might be forgiven.
It appears no one wants to look at the fundamental causes of financial “bubbles”. Capitalism has one purpose, to maximize profits for a given investment. What Capitalism is not- moral, caring or honest. The US emerged from WWII as the world’s dominant financial and military power. In the mid 1970’s profits of US manufacturing firms began to decline, a consequence of re-industrialized Europe, Japan and later China. In response to this structural decline in profitability, the US government and large corporations pursued a number of policy changes: 1) cut taxes for the wealthy (Reagan), 2) attacked organized labor (beginning with firing of striking PATCO workers; Reagan), 3) out-sourced high paying manufacturing jobs to Mexico, China and other low-wage platforms and reduced financial aid/welfare benefits for poor families (Clinton), 4) deregulated the financial industry- repeal of Glass Steagall act and passage of Commodity Futures Modernization act of 2000 (Clinton). In 2000, Bush II was elected president and promptly enacted more tax cuts for the wealthy. These policies played a major role in creating the financial collapse in 2008, which is still ongoing. In response, the US Fed flooded banks with $ trillions from US taxpayers (QE), which inflated assets- stocks (fueled by corporate stock buy backs using ultra cheap QE money), trendy real estate in SF, NYC, Boston, etc., and propped up car sales with subprime auto loans and other financial gimmicks. In response to the terrorist attacks of 911 (15/19 hijackers were from Saudi Arabia, a long standing US “ally”), US foreign policy has become increasing bellicose and reckless. In 2003, Bush II invaded Iraq, and following the invasion, the Iraqi military was disbanded; subsequently, many Iraqi military “vets” joined up with ISIS/ISIL. The US/NATO war theater now extends from the Levant, to Caspian Basin, Persian Gulf, China Sea, Indian Ocean, Horn of Africa, the Maghreb, to Eastern Europe and Russian border. Not only has this policy been astronomically expensive for US taxpayers (costing $ trillions), it is extremely dangerous, greatly increasing the chances of a direct military confrontation between the US, Russia and China.
While economic problems in China are affecting markets in other countries, many of the economic problems (read- financial bubbles) confronting the US are of our own making.
I agree with the header... so... why would a Chinese economy stuffed on 24 trillion of easy money experience a soft landing. Crash already. I got shit to do.
We have at best a mixed economy with government controlling a sizable chunk of it. We have socialized medicine and socialized education and socialized retirement benefits. Then on the other side we have fascists’ arrangements with big banks, big auto and big oil. In the underground economy we have unbridled capitalism where buyers and sellers meet in an open market. We have embraced all the isms.
Let me assure you that government cannot put another barrel of oil in the ground or reverse the population decline. So, dream all you want, there is no solution to the end of growth.
"population decline"...
FAIL
http://www.worldometers.info/world-population/
I dont know why everyone hates bubbles, I love them! Load up on shorts of Emini Nadaq and DIJA futures and I won't have to work for a couple of years.