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Biderman On Biflation And 'After The Endgame'

Tyler Durden's picture




 

"What happens when the Bernanke Put dies?" is the salient question that Charles Biderman of TrimTabs asks and answers in today's effusive excursion into a market that will face both deflation and inflation. In response to the question of what happens after the current miasma of markets ends, Biderman opines that assets will deflate - once the Bernank's constant handing over of trillions to bankers is done, equity and bond prices will deflate and commodity prices will inflate. Nominal USD-priced commodities will soar against a deflating currency as asset prices for everything else will deflate. Concerned, just as we have been, that outbreaks of violence will occur in Europe as their 'safety net' unravels, Charles adds that while the US faces turmoil, Europe will get their ahead of us as "their entire welfare-state-based economies will need a do-over". He does offer a silver-lining for the post-modern world with some thoughts on the productivity boom (and not just leverage) that an online world will bring and while he believes US housing has bottomed for the lowest 2/3rds of the population, he remains extremely cautious on equity prices and their inevitable crash.

 

 

 

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Thu, 06/28/2012 - 11:19 | 2568959 Newsboy
Newsboy's picture

Stop looking at the fiat money. Too variable, a shell game.

Figure out what you need and make arrangements.

Thu, 06/28/2012 - 12:28 | 2569493 LMAOLORI
LMAOLORI's picture

Will All the Money Printing Lead to Hyperinflation?

http://www.cnbc.com/id/47960752

Thu, 06/28/2012 - 11:20 | 2568969 Doode
Doode's picture

Tired of these - at some point it will al blow up. Please, be specific on when and how - otherwise the sun will blow up in 5 billion years, so you know you better be prepared. Some folks were trying to short YHOO in 1996 because PE was too high - they all went belly up after 1997,1998, etc. No more abstract shit will hit the fan - everyone knows there are problems. A true analysis puts a firm scenario layout with dates and facts instead of nonsensical blabbering about something bad can happen at some point. At least Ray Dalio sticks to 2013 as his timeframe - I respect that! All else is BS!

Thu, 06/28/2012 - 11:32 | 2569054 Spastica Rex
Spastica Rex's picture

Oracles are a dime a dozen. Always have been.

The Willing Suspension of Disbelief is the BEDROCK of our modern world.

Thu, 06/28/2012 - 11:34 | 2569065 RagnarDanneskjold
Thu, 06/28/2012 - 12:42 | 2569586 XitSam
XitSam's picture

Doode, no one can be specific. No one can be specific. I understand your frustration and sometimes it gets to me too. Why are people so vague? Because it all depends on other people's decisions. At the level of Bernanke, Merkel, Monti, et al., and the people of each country making their own decisions.  Additionally, there are the black swans. Not the tail risk financial stuff that someone foresees, but truly unforseeable stuff. Personally, I thought Syria shooting down the F-4 could have been it ... Turkey counter-attacks Syria, demands NATO help, arab mideast & Russia rally for Syria and attack Israel because the opportunity is there, oil spikes, economic collapse. You need to do your own evaluation, then take what actions you think protect you best given the varied scenarios.

Thu, 06/28/2012 - 13:12 | 2569751 Saro
Saro's picture

We're in car, headed towards a cliff, with Bernanke at the wheel.

How long will it take the car to go off the edge?  Can you even predict this, since Bernanke is the one working the gas pedal?  No matter how accurate you are today, he could decide to go faster or slower at any time, making your previous prediction worthless.

Just because we can see the end coming doesn't imply that it's possible to determine exactly when it will happen.

Thu, 06/28/2012 - 15:31 | 2570493 TWSceptic
TWSceptic's picture

"Please, be specific on when and how"

 

That's the stupidest thing you can do, besides it's incredibly hard to predict timing.

Thu, 06/28/2012 - 16:43 | 2571001 Jam Akin
Jam Akin's picture

Doode, we're scroode!

Thu, 06/28/2012 - 11:21 | 2568981 buzzsaw99
buzzsaw99's picture

Another harvard egghead with a system to beat the stock market. :roll:

Thu, 06/28/2012 - 11:23 | 2568984 bdc63
bdc63's picture

Bernanke will NEVER stop issuing QE ... QE to infinity and beyond.

So the real question should have been, "what happens when markets wake up and realize that unlimited liquidity does not solve our solvency problems?" ... ie, the "put" is still there, it just doesn't work anymore.

Thu, 06/28/2012 - 11:41 | 2569122 Sockeye
Sockeye's picture

So Bernanke is a smart guy, and he has got to know that his put doesn't put anymore - that's kind of the end of QE isn't it?

Thu, 06/28/2012 - 11:54 | 2569199 bdc63
bdc63's picture

"That's kind of the end of QE isn't it?"

NO! ... QE NEVER ends and ZIRP NEVER ends.  If they do, our country defaults ... on everything.  The FED will absolutely abandon everything else they supposedly stand for in the name of keeping interest rates at zero.

Thu, 06/28/2012 - 11:22 | 2568986 Spastica Rex
Spastica Rex's picture

New Biderman epsiode out:

http://www.youtube.com/watch?v=GEXzcyo4seQ

Thu, 06/28/2012 - 11:22 | 2568990 BandGap
BandGap's picture

Thanks Chuck!

Thu, 06/28/2012 - 11:23 | 2569002 Mugatu
Mugatu's picture

Bernanke PUT = Bernanke Premium

If you are long, you overpaid!

Thu, 06/28/2012 - 11:24 | 2569009 Dr. Engali
Dr. Engali's picture

Where in the hell does he get the welfare state isn't entrenched in the U.S? Has he been paying attention? WTF?

Thu, 06/28/2012 - 11:49 | 2569068 gjp
gjp's picture

No kidding.  The shock, and the do-over, will be much larger in the U.S. where denial is off the charts.  The three-year free pass the U.S. has got while Europe drags through its political issues only makes it worse.

Europe's welfare state has produced aggregate budget deficits of 3% of GDP with high interest rates in many countries while capitalist America is at 8% of GDP with manipulated ZIRP  and lots of dishonest accounting (Freddie and Fannie anyone?).  Europe is in aggregate trade balance with the rest of the world while America sucks up the world's resources and products in ever greater quantities sending nothing but bogus paper, soldiers and weaponry in return.

(America does have a food surplus, but even this depends on foreign energy despite what nat gas fracking / abiotic oil / energy independence crazies might think)

The rudest of awakenings awaits in the belly of the beast.

Thu, 06/28/2012 - 22:34 | 2572071 Lord Koos
Lord Koos's picture

It has been some years now since the U.S. changed from being a net exporter to a net importer of food. 

Thu, 06/28/2012 - 11:24 | 2569010 TahoeBilly2012
TahoeBilly2012's picture

Everyone goes when the whistle blows! It seems to be coming close, like a monster in the dark. I want someone to explain why it couldn't happen in like 3 days at anytime...it really seems like it could all be over in a heartbeat, which is sorta scary, since I am going backpaking for a few days here soon.

Thu, 06/28/2012 - 11:26 | 2569022 bdc63
bdc63's picture

it has felt exactly like this at least a half a dozen times since Sept 2008.  go backpacking.  have fun.  forget about this crap for awhile.

Thu, 06/28/2012 - 11:25 | 2569019 Conman
Conman's picture

BTFD in effect right now. Look at that algo go.

Thu, 06/28/2012 - 11:26 | 2569021 KNiCKER
KNiCKER's picture

2013-2015 is the end of the end-game... End of fiat, end of central planning put, end of wellfare states, end of pension funds and I hope: THE END OF THE ELITE, IF NECESSARY BY FORCE

Thu, 06/28/2012 - 11:31 | 2569052 RagnarDanneskjold
RagnarDanneskjold's picture

Does not compute. If the Bernanke put dies, USD goes to the moon and commodities go to the woodshed. Everything goes down. Gold collapses the least because Europeans, Japanese and Chinese won't be able to get their hands on enough USD.

Thu, 06/28/2012 - 12:10 | 2569348 Kimo
Kimo's picture

yes....biderman needs a lesson on deflation.  high priced commodities is not sustainable with falling wages.

Thu, 06/28/2012 - 12:15 | 2569379 Bay of Pigs
Bay of Pigs's picture

Are you related to kito?

Thu, 06/28/2012 - 12:47 | 2569622 FieldingMellish
FieldingMellish's picture

It can be because the US is no longer the biggest consumer of commodities. That belongs to nations whose incomes are rising. When the dollar is no longer trusted as  a store of value, its velocity will skyrocket. No one will want to hold onto it longer than they have to. They will exchange it for hard assets as fast as they can.

Thu, 06/28/2012 - 11:36 | 2569083 FieldingMellish
FieldingMellish's picture

Great episode. I say its great becuase I agree with him. People should always concentrate on the positive while keeping an eye on the negative. Buy commodity producers, they have been whacked big time lately.

Thu, 06/28/2012 - 11:38 | 2569103 impermanence
impermanence's picture

There's no way commodity prices are going north if everything else is heading south.  Money is going to disappear a hell of a lot quicker than it appeared when the credit spigot finally runs dry.

Thu, 06/28/2012 - 11:39 | 2569115 mirac
mirac's picture

Housing is not remotely close to bottoming...Price levels, worst case scenario, go back to 1970's levels when fiat money began.  Reset will be a bitch and everything in the banking world will probably be nationalized or gone...

Thu, 06/28/2012 - 12:03 | 2569245 slewie the pi-rat
slewie the pi-rat's picture

yup!  w/put the bernanke put, assets will tend to deflate

somebuddy ought to tell biderman that globally-co-ordinated QE for the purpose of keeping the checks in the mail has been in evidence since january '12

and that fungibility of global ponzinomics is bullish for assets in general but not wildly so as were QE's I & II by the FED

therefore, things are kinda...dead

however, things are not as unstable as before dodd/frank gave the FED the new job description and powers to regulate almost the entire "economy" as it sees best

this power is from congress;  the political hacks had destroyed the economic system with the "housing for all" bullshit and the instability was threatening their political management of perceptions

so they passed the buck to benzelbub and said:  we need this stabler

yes, this is raiderNationRadio...  and i saw cliff branch at kMart tuesday, trying to keep things upbeat;  the guy is like 2 years younger than slewie;  i don't think he was there for the kids

i saw some niners players set up at a grocery when i paid my elec bill last month;  very upbeat to the shoppers looking over the $6.99 watermelons and the steaks @ $12.99/lb.  uncooked.

maybe season ticket sales aren't where TPTB would like to see them or memorablilia can make a comeback right along with housing?

aaand...we have another "do-over" socialism doesn't work! sighting for the re-set crowd on zH to thump their chests over, too!

what a fuking show!  keep drinking, tyler!

Thu, 06/28/2012 - 12:42 | 2569583 MrBoompi
MrBoompi's picture

Yes, there is a sunrise even after a nuclear explosion.  Isn't that comforting.

Thu, 06/28/2012 - 13:07 | 2569727 Bastiat009
Bastiat009's picture

So fed up with the the-end-of-the-world-is-tomorrow story. All I know is that the US$ is getting stronger every day and the gold crash is accelerating. All those people who know what will happen but don't see what is happening are fucking annoying. I live here now so do you.

Thu, 06/28/2012 - 13:46 | 2569936 shovelhead
shovelhead's picture

Disneyland?

Thu, 06/28/2012 - 13:47 | 2569802 daxtonbrown
daxtonbrown's picture

I've written a book on "Biflationary Depression" that has insights on why this happens. My background is thermodynamics and information theory, so it doesn't contain the usual Keynesian drivel. I know, it's a book from a non-economist, but how have those guys been doing lately?

http://www.futurnamics.com/biflation.php

Thu, 06/28/2012 - 16:48 | 2571032 steve from virginia
steve from virginia's picture

 

How can assets not deflate? Everyone is broke, there is no new money in the system all the central banks can do is recycle existing (bad) loans.

What matters is one asset relative to another: there is no absolute hedge against deflation. Some assets will decline in price rapidly because they have no long-term value (suburban development). Others will decline in price (much) less than the others (gold, resources).

As for currency, I don't claim to know the endgame of currency and neither does Biderman, there are too many variables.

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