This page has been archived and commenting is disabled.

David Rosenberg Breaks Down "The End Game"

Tyler Durden's picture




 

As always, just as the market is about to set off on yet another dead cat bounce courtesy of vapor volume and the lack of concerted selling (after all the Fed is front and center today which means nothing can possibly go wrong... at least until someone actually does some Mark to Market accounting on the left side of Bank of America's balance sheet), here comes David Rosenberg with a cup of very cold water, thrown right in the face of the misguided optimists who carry the deluded idea that this story could possibly have a Hollywood ending..

The End Game

 

Well, all the major averages have sliced through their respective 50- and 200- day moving averages and have radically undercut the June lows. And recall, QE2 started November 10, 2010. All the gains from QE2 are now gone. In fact, as it now stands, 20 months of hard earned capital appreciation in the S&P 500 has been wiped out in just three weeks ... bear markets are merciless; malevolent beasts. Global growth prospects are clearly being marked down — the action in the once-hot BRICs say it all as these areas are in full-fledged bear mode:

  • Brazil: -33%
  • Russia: -21.6%
  • India: -20%
  • China: -27%

The bond market also clearly has recession in its sights — none of this namby- pamby "35% odds" stuff out of Wall Street. The 10-year U.S. note yield closed at 2.31% in yesterday's session, undercutting last October's QE2-related low; dead air all the way down to 2%, which would be a test of the December 2008 trough.

 

In terms of the end game, it seems obvious now. If we can agree that the problem is excessive indebtedness at a whole bunch of levels (each country seems to have its own unique situation, for example the nonfinancial private sector credit outstanding relative to GDP in Spain is around 200%!) in many countries then there is really only one answer. This is not really about the EFSF, which helps reduce debt servicing costs but does not help alleviate the problem of overall debt burdens — that is just a swap. I think the ECB and the Fed (watch for some big changes in the press statement today), but especially the ECB, has to buy bonds en masse and reduce the amount of European debt outstanding and sharply boost the money supply. I believe that is the only way out right now. The central banks have to be the ones to absorb the debt and bring debt ratios down to more comfortable levels.

 

As for the Fed, when Ben Bernanke gave his testimony to Congress back on July 13th, the Dow was sitting at 12,492 (10,809 at yesterday's close), the 10-year was at 2.92% (2.31%) and oil was at $98/bbl ($81.21). Recall that back then, he did not shut the door on more Fed easing policy if the situation called for it. The only question is whatever it is the Fed decides to do, will it bolster aggregate demand any more than taking rates to 0% and embarking on two rounds of quantitative easing programs. These are the vagaries of a central bank burdened with the task of stimulating an economy saddled with so much debt and so many scars from years of real estate deflation and lingering joblessness.

 

The gold price seems to understand the end game, since it will involve an explosion in the monetary pace. The bond market is doing what it's doing— and now equities with a lag— because this asset class doesn't believe the next reflation wave will really do much to ignite confidence and spending, even if it manages to save the euro and the region's undercapitalized banks.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 08/09/2011 - 13:58 | 1543189 gangland
gangland's picture

"Shit, I know that guy. He's a nihilist."

Tue, 08/09/2011 - 14:13 | 1543258 SheepDog-One
SheepDog-One's picture

Yea Donny, fucking nihilists.

Tue, 08/09/2011 - 15:49 | 1543606 JW n FL
JW n FL's picture

Former CIA operative reveals interrogation tactics

 

In his book, Carle also expands on gathering information on American citizens who opposed U.S. policies, namely the wars abroad, to use against them. Even though intelligence gathering of American citizens is illegal under American law, it was approved by high level officials in the White House during the Bush administration.


 

http://www.presstv.ir/detail/193164.html

Tue, 08/09/2011 - 15:54 | 1543625 gangland
gangland's picture

 

++ + + + ++ + ++

Tue, 08/09/2011 - 14:31 | 1543303 mtomato2
mtomato2's picture

+1

That must be exhausting...

Tue, 08/09/2011 - 14:01 | 1543201 LawsofPhysics
LawsofPhysics's picture

So what are you saying Dave, more QE or no QE?  Grow a pair and put your money where your mouth is.

Tue, 08/09/2011 - 14:01 | 1543205 alexwest
alexwest's picture

started good.,, thne JUST TALKING HIS BOOK, REMEMBER ROSIE buy bonds, so now

he wants unload.. another stupid fast asshole

 

#

. I think the ECB and the Fed (watch for some big changes in the press statement today), but especially the ECB, has to buy bonds en masse and reduce the amount of European debt outstanding and sharply boost the money supply. I believe that is the only way out right now. The central banks have to be the ones to absorb the debt and bring debt ratios down to more comfortable levels.

##

 

hey stupid, if problem is too much debt how about stop issueing debt and at least start balancing   budgets.

 

junk

alx

Tue, 08/09/2011 - 14:23 | 1543287 dropdeadfed
dropdeadfed's picture

agreed.  why are any ideas, adopted or not, involve any of the bullshit that got us into this mess to begin with?  if the problem is too much debt and too much spending then the only logical solution would be to counter that with the exact opposite. 

Tue, 08/09/2011 - 18:26 | 1544312 Dugald
Dugald's picture

Good grief man you just cannot put forth that kind of common sense logic......its, its, er..... Un-American?

The bad guys will mark you down for corrective re-training, or worse!

Tue, 08/09/2011 - 14:02 | 1543208 The Peak Oil Poet
Tue, 08/09/2011 - 15:38 | 1543559 eureka
eureka's picture

- and investors are pimps.

Tue, 08/09/2011 - 19:20 | 1544537 edotabin
edotabin's picture

A bit esoteric here..... call me Upgrade!

Tue, 08/09/2011 - 14:03 | 1543212 espirit
espirit's picture

QE to infinity, until everyone is unemployed?

Epic fail.

Tue, 08/09/2011 - 14:04 | 1543217 slaughterer
slaughterer's picture

"It has leaked, and it ain't good."

Tue, 08/09/2011 - 14:06 | 1543228 RobD
RobD's picture

Heh, that comment would work in the Barny thread. lol

Tue, 08/09/2011 - 14:10 | 1543239 CrashisOptimistic
CrashisOptimistic's picture

That is, of course, the issue.

QE is not OFF ON.  There are magnitudes.  The Fed might act, but do little.  It might act, and do a lot.  It might act, and do something disliked.

It's not zero - one.

Tue, 08/09/2011 - 14:04 | 1543219 pesamystik
pesamystik's picture

Am I remembering wrong, or didn't Rosie throw in the towel when the DOW was at 12700? He is a great contraion indicator. Yeah, if the market didn't trade entirely on intervention, of course he would be right everytime, but he's always betting against central bankers, and that's why he's always wrong. They'll put another 40 trillion into this shitshow, just watch.

Tue, 08/09/2011 - 14:09 | 1543233 SheepDog-One
SheepDog-One's picture

Hes always wrong, until he's suddenly right. Yea while everyone is now conditioned and convinced 'the game' is to just perpetuate the Ponzi markets forever, nearly everyone misses thats not the game at all, but a sudden collapse is the game. The 'central bankers' game isnt ever more bailouts, its to take over everything into a 1 world bank and 1 world currency. The game isnt perpetuating the Ponzi to infinity at all, its making everyone believe that is the game.

Tue, 08/09/2011 - 14:21 | 1543279 Nothing To See Here
Nothing To See Here's picture

+1

Tue, 08/09/2011 - 14:05 | 1543221 SheepDog-One
SheepDog-One's picture

Misguided over-optimism, bitchez. 

Tue, 08/09/2011 - 14:05 | 1543222 Hedgetard55
Hedgetard55's picture

I called Ben this morning. He said no QE until Jackson's Corn Hole. He said more pain to come in order to make sure the bond auctions go off well. Said he loaded up on shorts this morning.  Guess I should have said something earlier to you guys. My bad.

Tue, 08/09/2011 - 14:10 | 1543238 SheepDog-One
SheepDog-One's picture

Ben only cares about his POMO bonds, more wash, rinse, and repeat to equities in store. Before any 'QE' talk drops the DOW will be well below 10,000.

Tue, 08/09/2011 - 14:05 | 1543223 Corn1945
Corn1945's picture

Why do the clowns (Rosenberg included) refuse to allow the debt to default?

Tue, 08/09/2011 - 14:09 | 1543234 alexwest
alexwest's picture

cause he keep bonds + gold..
alx

Tue, 08/09/2011 - 14:55 | 1543411 Smiddywesson
Smiddywesson's picture

They won't allow cascading defaults across all countries because then they would be the losers.  They want to get the public to pay for it, so they have to kick the can and amass gold.  When they have all the gold and stop holding the prices down, one tiny speck will buy your whole net worth and the banks and soverign nations will be solvent.

Initially at least, the entry into a gold standard will place all of the wealth and power back into the hands of the governments and the banks, because they will have all the gold.  The public will be paupers. 

Tue, 08/09/2011 - 18:08 | 1544242 tsx500
tsx500's picture

so then,  what happens to joey sixpack's small stash of gold eagles ?    will there be a black market ? 

Wed, 08/10/2011 - 15:25 | 1547695 Rainbow Randolph
Rainbow Randolph's picture

I'm a bit of an amateur, but I'm wondering if it is possible for them to do that.  They suppress gold and silver prices by selling paper gold and silver... If they drive the price down, and then gather actual gold and silver to themselves, will they not then always still owe their certificate holders more gold and silver than they physically have?  Could they really stiff all those certificate holders while they still have any physical metals left?

Thu, 08/11/2011 - 08:42 | 1550297 MsCreant
MsCreant's picture

Happens all the time in bankruptcy. It is the definition of a default, I owe you x, but I can't pay you x. You are stuck with less, or nothing because I don't have it. Word is they are paying up to 30% over, in cash, when it comes time to take physical delivery. They technically are already defaulting. The joke is that is now easy money.

I googled this for you. The silver bears are cute and their calls have played out pretty well. Try to see them all. There is a series of 7 of them so far. They break it down pretty simple.

Silvergoldsilver is their website, but I could not find the first video there so I went to youtube instead.

http://www.youtube.com/results?search_query=silver+bears&aq=0&oq=silver+bea

 

 

Tue, 08/09/2011 - 14:05 | 1543225 JuicedGamma
JuicedGamma's picture

Fear of QE3 is levitating us.

Tue, 08/09/2011 - 14:10 | 1543237 hedgeless_horseman
hedgeless_horseman's picture

Why should Ben pay while he can get it for free?

 

Tue, 08/09/2011 - 14:07 | 1543226 Cleanclog
Cleanclog's picture

New jobs in America will be government pays us to consume.  Tax robots to pay for it all. Tax on the answering machines and menu models.  Tax on all those productivity improvements through machines.  As humans become more obsolete for production and service provision, we have become necessary for consumption.  Change of model.

Tue, 08/09/2011 - 14:15 | 1543261 DosZap
DosZap's picture

Clenclog,@14:07

there is a Bill right now trying to get heard, that will tax EVERY bank transaction made.

Debit card?1%,checks, 1% ,deposits 1%,withdrawals 1%,credit card use 1%..........................

A 1% FEE tacked onto ANY and EACH transaction that involves a BANK.

Stop and think about that, EVERY use, all.

Tue, 08/09/2011 - 14:43 | 1543357 MsCreant
MsCreant's picture

Gone--->USA

Gone--->Independently owned and operated Banks

Enter the seamless, perfect, Borg entity--->The United Banks of the Americas.

To the rest of the world: "Resistance is futile, you will be assimilated."

Tue, 08/09/2011 - 16:12 | 1543702 Milestones
Milestones's picture
Learn the Truth about H.R. 4646

An internet rumor has been circulating that claims that I introduced a bill titled H.R. 4646 along with Senator Tom Harkin and that it would levy a 1 percent tax on every financial transaction including credit card transactions and even social security deposits.  This is patently false. H.R. 4646 was introduced by Rep. Chaka Fattah of Pennsylvania, and has no cosponsors. I oppose this bill because it wrongly taxes all financial transactions, rather than just focusing on the Wall Street speculators who got us into this current economic mess. Americans making normal day-to-day transfers of money should not be subject to a tax on those transactions.

These days there are innumerable rumors circulating around the internet.  Both Factcheck.org, Snopes and Politifact Oregon have debunked this myth, with Politifact Oregon calling it a “pants on fire lie”

http://politifact.com/oregon/statements/2010/oct/01/chain-email/e-mail-claims-defazio-wants-tax-transactions/

http://factcheck.org/2010/09/1-transaction-tax/

http://www.snopes.com/politics/taxes/debtfree.asp

 

You can also go to www.thomas.gov to verify who introduced or has cosponsored any given bill.

I did introduce a very different bill, H.R. 4191, the Let Wall Street Pay for the Restoration of Main Street Act. My bill would asses a minuscule ¼ of one percent tax on speculative Wall Street trading and an infinitesimal two hundredth of one percent on exotic derivatives.  This tax is specifically targeted at high volume speculative traders on Wall Street, and would have no impact on average investors and pension funds. Under this bill the speculation tax would be exempted or refunded from tax-favored retirement accounts, mutual funds, education savings accounts, health savings accounts, and the first $100,000 of transactions annually.

Again, I do not support Rep. Fattah’s H.R. 4646. The bill that I introduced, the Let Wall Street Pay for the Restoration of Main Street Act, is a minuscule and narrowly targeted speculation tax that will only hit Wall Street speculators.

// www.thomas.gov to verify who introduced or has cosponsored any given bill.\r\nI did introduce a very different bill, H.R. 4191, the Let Wall Street Pay for the Restoration of Main Street Act. My bill would asses a minuscule ¼ of one percent tax on speculative Wall Street trading and an infinitesimal two hundredth of one percent on exotic derivatives.  This tax is specifically targeted at high volume speculative traders on Wall Street, and would have no impact on average investors and pension funds. Under this bill the speculation tax would be exempted or refunded from tax-favored retirement accounts, mutual funds, education savings accounts, health savings accounts, and the first $100,000 of transactions annually.\r\nAgain, I do not support Rep. Fattah’s H.R. 4646. The bill that I introduced, the Let Wall Street Pay for the Restoration of Main Street Act, is a minuscule and narrowly targeted speculation tax that will only hit Wall Street speculators.", updated: "2011-07-22 21:52:04" }, {button: true}); var id = "sharethis_" + obj.idx; var x = document.getElementById(id); obj.attachButton(x); ]]>

  milestones

Tue, 08/09/2011 - 14:10 | 1543235 FLIP THAT BOND
FLIP THAT BOND's picture

I'm ready to load into SLV call options if the Fed announces QE3 in a few minutes, but I'm not counting on them doing so.  My bet is QE3 will be announced in a few days when the Dow goes below 10,000 and cries for Fed invtervention grow louder.  Stocks and SLV decline in the next few days and then when QE3 is announced, stocks stop falling and SLV promptly goes to $75.

Tue, 08/09/2011 - 14:11 | 1543245 SheepDog-One
SheepDog-One's picture

Excellent post, Im in agreement totaly.

Tue, 08/09/2011 - 14:15 | 1543262 HellFish
HellFish's picture

Agreed here too.  They'll run to the rescue next week with an unscheduled printing.  Has more impact and more need after a week or so of more pain.

Tue, 08/09/2011 - 14:58 | 1543427 Smiddywesson
Smiddywesson's picture

Agreed.  Silver has been compressed like a spring and will break out soon.  It is an excellent buying opportunity.

Tue, 08/09/2011 - 14:12 | 1543241 Hook Line and S...
Hook Line and Sphincter's picture

QE until 2-3 billion are skin and bones (some just bones). Inflation > price controls > shortages > forced decrease in commodity demand.

Tue, 08/09/2011 - 14:12 | 1543247 koot
koot's picture

Frankly I don't think David said a damn thing, except for Namby-Pamby which pretty much describes what he said and has been saying. 

Tue, 08/09/2011 - 14:21 | 1543276 SheepDog-One
SheepDog-One's picture

Coffee napkin meanderings. Yea yea we know Rosie...so what?

Tue, 08/09/2011 - 14:14 | 1543248 koot
koot's picture

David is a big disappointment in thinking.

Tue, 08/09/2011 - 14:12 | 1543249 Arch Duke Ferdinand
Arch Duke Ferdinand's picture

*****Arch Duke Ferdinand

Leaving for a State Visit w/ Obama/Obozo/Nero/Teleprompter.
Planning an open landau ride down Pennsylvania Ave.
Nothing can go wrong.....

http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/01/archduke-ferd...

******Six Volcanic Plumes sighted in California and Nevada.....

http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/08/six-volcanic-...

******Pacific Northwest experiencing Earthquakes.....
http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/08/pacific-north...

*****OT:Film Festival Short

The Creek...Knock your head and see what happens.....

http://www.youtube.com/watch?v=BLRAqfN48zo&feature=feedbul

Tue, 08/09/2011 - 14:20 | 1543270 Piranhanoia
Piranhanoia's picture

The plumes were weather events, happen every day.  The Pac NW always has earthquakes, always has. Had a 9 about 1700 near Seattle.  You may want to check out some of these on Snopes or science sites.  Those plumes were odd only because someone said they started at volcanic areas,  but they didn't.

when they blow, nothing you can do. Rather be in earthquake country than tornado alley. 

Tue, 08/09/2011 - 14:12 | 1543251 BORT
BORT's picture

OT, but Fidelity cannot push electronic orders to the floor.  Great, that's all I needed.  Can't get fixed through reps either

Tue, 08/09/2011 - 14:12 | 1543253 FLIP THAT BOND
FLIP THAT BOND's picture

I'm ready to load into SLV call options if the Fed announces QE3 in a few minutes, but I'm not counting on them doing so.  My bet is QE3 will be announced in a few days when the Dow goes below 10,000 and cries for Fed invtervention grow louder.  Stocks and SLV decline in the next few days and then when QE3 is announced, stocks stop falling and SLV promptly goes to $75.

Tue, 08/09/2011 - 14:14 | 1543259 Piranhanoia
Piranhanoia's picture

I don't care about more predictions, because the ones that have come true are based on fundamentals and chaos.  The next are going to be pure chaos. 

Tue, 08/09/2011 - 14:19 | 1543263 SheepDog-One
SheepDog-One's picture

Yep, the one thing we can be assured of going forward is total chaos.

Lets say the free money junkies get dropped $1 trillion from Bernank's chopper...OK then what? Dollar tanks, gold and silver fly, stocks and bonds go into sugar comas. Whatever!

Tue, 08/09/2011 - 14:36 | 1543309 Hook Line and S...
Hook Line and Sphincter's picture

 

There the word chaos is a descriptor of our inability to perceive cause and effect. Such terms denote nothing but the distorted mirror of our own understanding. 

 

Tue, 08/09/2011 - 14:37 | 1543327 lamont cranston
lamont cranston's picture

QE3, QE4, ad infinitum. Welcome to the Weimar Republik of Amerika.

Tue, 08/09/2011 - 14:48 | 1543379 Smiddywesson
Smiddywesson's picture

The game is to kick the can until they can't reasonably expect to acquire any more cheap gold.  Then they will immediately announce we are on a gold standard.  To do otherwise is to see the balance of their performing loans wither away through hyperinflation. 

Controlled inflation and slow gold acquisition allow them to make a profit from manipulated markets and outrun inflation.  When that game comes to an end, it's all eyes on gold prices, because that is all that is keeping the banks from announcing a new standard (that they SAY is backed by gold).

When that happens, you can bet the value of the gold in their vaults will rise to a level that will bail them out, because governments can't do it.  Gold will explode.

Tue, 08/09/2011 - 16:37 | 1543832 Milestones
Milestones's picture

My bet is ONLY the gold in their vaults will be "gold" as in with an IRF chip or some such thing embedded. Your "gold" will be worthless to use as money unless sold to the banks at an enormous discount. Just a  guess.    Milestones

Tue, 08/09/2011 - 15:10 | 1543463 malek
malek's picture

"...boost the money supply."

Can't we just name it by it's real name "Inflate it away, fuck the savers (if there are any left)"?

Tue, 08/09/2011 - 17:23 | 1544061 Grand Supercycle
Grand Supercycle's picture

Equity counter trend short covering rally begins from very oversold levels.

http://stockmarket618.wordpress.com

Tue, 08/09/2011 - 18:54 | 1544438 goldfish1
goldfish1's picture

a press conference has been told by Garry Shewan, Assistant Chief Constable at Greater Manchester Police (GMP).

He appealed to members of the public to "think very carefully about who they support" when it comes to the police effort to bring to justice those who were involved in looting and other acts of criminality.

"My officers are still out there now facing violence and aggression and are battling to regain control of Manchester and Salford," said Shewan, who added that his officers had been attacked on the streets this evening.

 

11pm 8/9/2011 London

 

Tue, 08/09/2011 - 20:46 | 1544691 blindman
blindman's picture

question. have the losses in the market just been turned into cash? i think yes, so the fed pumps up the deflating market and some ones just pocketed the fucking bailout. wasn't me, you already knew. anyway, it's a crime of epic proportions, just stealing in a clown suit and tie. ongoing so ... the market hasn't lost anything but the value of the dollar and much integrity which can never be lost if it ain't there in the first place, so i corrected myself. now i forgot why i wanted to comment here .. oh shit the end game. it is all fun and games 'till someone loses an eye. remember that? never mind the pyramid story. gravity happens, buy silver. the distractions are nearly infinite until they become insignificant , generally expressed and understood. . shit happens, see this. Dylan Ratigan gets all Max Keiser’ish. Dude, have me on your show so I can show you how it’s done! Posted on August 10, 2011 by maxkeiser http://maxkeiser.com/2011/08/10/dylan-ratigan-gets-all-max-keiserish-dud... . i give up.

link

Redrawing The Exter Pyramid: Paul Mylchreest's Latest Observations On The Flow Of Funds And More

http://www.zerohedge.com/news/redrawing-exter-pyramid-paul-mylchreests-latest-observations-flow-funds-and-more

Wed, 09/14/2011 - 05:24 | 1667605 chinawholesaler
chinawholesaler's picture

Wholesale Glass
Wholesale Mobile Phone

Wholesale Waterproof Case
Wholesale Clothing
Electroluminescent

Advertising Material
Lunch Box
CD Holde

Sport Items
Wholesale TelePhone
Wholesale USB Products

Wholesale Sticker
Giveaway Material
Wholesale Sticker

Money Bank
Wholesale Glasses
Wholesale Bookmark

Silicone Products
Electroluminescent
Entertainment Supplies

Wholesale First Aid Kit
Bottle Opener
Baby Products Suppliers

Promotional Items
Wholesale First Aid Kit
Safety Suppliers

Bottle Opener
Wholesale Carabiner
Wholesale TelePhone

Industrial Supplies
Wholesale Mp3
Wholesale Glasses

Wholesale Mobile Phone
Wholesale Calculator
Wholesale Pin

Wholesale Puzzle
Safety Suppliers
Men Beauty Care

Safety Products
Wholesale Earphone
Silicone Products

Wholesale Earphone
Medicine Instrument
Wholesale Calendar

Wholesale Stapler

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