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Guest Post: Big Trouble Brewing
Submitted by Chris Martenson
Big Trouble Brewing
I do not toss around the idea of a market crash lightly. If you've been following me long enough, you know that only in very rare instances do I issue a cautionary Alert (I've only issued four since my website launched in 2008), and I am generally not given to hyperbole.
Let's be clear: I'm not issuing an Alert at this time. But I am concerned that a materially adverse disruption to the financial markets is increasingly likely in the near future.
Perhaps a definition will be helpful as we begin. A 'market crash' is an event where there are no bids to meet a wall of selling. The actual amount of the percentage decline is less important to note than the amount of chaos, or loss of control, that a given market experiences. Some like to say that a market downdraft requires a decline of 10%, or maybe even 15% or 20% (or more), in order to qualify as a 'crash.' For me, the key factor is not so much the amount of the decline, but the pace of the decline.
With perhaps a quadrillion US dollars of hyper-interconnected derivatives outstanding -- that's the notional value, but who really knows what the real number is? -- an orderly market is essential for knowing whether or not the counterparty to one's trade is solvent. During periods of intense price swings in the market, such things are simply not knowable, and spawn the fear and paralysis that really define a market crash.
The Next Market Crash
Like everybody, I have no idea when the next market crash will occur, but I do happen to hold the view that a market crash is on the way. In fact, my view is that the entire future from here onward will be marked by sharp plunges (both crashes and regular market declines), followed by periods of stability, if not apparent recovery.
What I track instead are imbalances and risks. Sort of like being a fire marshal who takes note of an outlet with fifteen things plugged into it, some with frayed cords, located near a pile of old cleaning rags. I can't tell you for sure that a fire will result, only that the odds are elevated. A prudent person will take steps to remedy the situation or at least prepare for the possibility of a fire.
Here's one view of the possible trigger for the next meltdown from Dr. Robert Shapiro, advisor to Presidents Clinton and Obama, and now the IMF, as offered on BBC Newsnight on October 5, 2011:
"If they cannot address this [the sovereign debt crisis in Europe] in a credible way, I believe within perhaps two to three weeks, we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system.
We're not just talking about a relatively small Belgian bank, we're talking about the largest banks in the world. The largest banks in Germany, the largest banks in France that will spread to the UK in part through the sovereign debt problems in Ireland.
It will spread everywhere because the global financial system is so interconnected, all those banks are counterparties to every significant bank in the US and in Britain, and in Japan and around the world. This would be a crisis, in my view, more serious than the crisis in 2008."
(Source)
What he's warning about here are two main things. The first is the risk of contagion, where problems in one area spread to another because everything is so intertwine. The second is that you can count on the rot spreading from the weaker periphery to the stronger core. Crisis always progresses from the outside in.
That dynamic has been playing out for months, and it should be obvious to the most casual of observers that the Greece situation has not been improved one iota by any of the steps yet taken.
The stakes could not be higher. Normally staid politicians are letting their guard down and saying previously unthinkable things. For example, this shocker recently came from the Polish finance minister:
Poland warns of war 'in 10 years' as EU leaders scramble to contain panic
Oct 14, 2011
Speaking to MEPs in Strasbourg on Wednesday morning (14 Sept) [the Polish finance minister] warned of the need to act rapidly to prevent grave danger for the EU. Making reference to a recent report entitled 'Euro Break Up - The Consequences' by Swiss financial giant UBS, he declared: "There is no doubt we are in danger. Europe is in danger".
The paper by UBS, normally known for its highly sober analysis, warned that historically, monetary unions do not break up without civil war or some other form of authoritarian reaction. "The risk of civil disorder questions the rule of law, and as such basic issues such as property rights. Even those countries that avoid internal strife and divisions will likely have to use administrative controls to avoid extreme positions in their markets", it said.
The Polish minister went on to warn of a doubling of unemployment within two years "even in the rich countries".
He concluded his comments by recollecting a recent conversation he had with an old friend who is now head of a major bank: "We were talking about the crisis in eurozone. He told me 'You know, after all these political shocks, economic shocks, it is very rare indeed that in the next 10 years we could avoid a war'. A war ladies and gentlemen. I am really thinking about obtaining a green card for my kids in the United States".
(Source)
I'm not sure whether the US will be a much better place to ride out the storm if the European banking system collapses, as it will be only a matter of time before the US is exposed as being just as financially and fiscally ruined as the EU.
Supporting this view is a rather famous Harvard economist (and the probable successor for Bernanke's current position, according to some rumors):
Martin Feldstein says there's a "nontrivial" chance the U.S. economy will turn down again and calls the recovery "about as bad an expansion as I've ever seen."
Another downturn here will further expose the fact that there are still towers of tottering debt that can only be serviced by an expansion, and a robust one at that. With this next revelation of systemic weakness, expect more debt defaults, institutional failures, and the same sort of banking weakness seen in Europe to occur in the US.
In short, there's every chance here that an even worse repeat of 2008 could happen at any time. And in my estimation, the chance that this will come in the form of a market crash is too high to ignore.
Right now, with the rot creeping from the outside in, I see those chances as not only high, but rising.
From the Outside In
It can be very difficult to envision what an 'outside in' crisis looks and feels like. In order to get a better feel for the dynamic, we turn to Phoenix, Arizona for an excellent case study.
Once the darling of the housing boom, with endless desert building lots enabling the most egregious sort of bubble sprawl, Phoenix is now in the grips of a horrific housing crash. Like all big adjustments, it appears to those experiencing it to be in slow motion:
Phoenix-area real estate collapse echoed troubles
Oct 9, 2011
A look at metro Phoenix's foreclosure crisis over the past five years shows an economic crash moving through time and space.
The collapse started in new-housing areas on the fringes and then swept inward, hitting more established areas as the unemployment rate climbed. Now, as the stock market struggles and speculation swirls about another recession, foreclosures are flaring in the Valley's luxury-home neighborhoods.
(Source)
That's a perfect illustration of the 'outside in' dynamic. At the beginning of the bubble's burst, it was almost certainly unthinkable to the inhabitants of the wealthier neighborhoods that they would get swept up in the cataclysm. But they did -- first the weaker and more distant locales, then the middle-strength ones, and then the core.
The article continues:
A new Arizona Republic analysis, which maps out every home in default in the region over the past five years, is the first comprehensive look at the wave of foreclosures that has swept the Valley since the market began its steep decline in 2007.
The analysis, based on data from Phoenix foreclosure-information service AZ Bidder, plots individual foreclosures and overall trends by year.
It shows how the Valley's foreclosure crisis was more than one crisis. Foreclosures arose in waves, driven first by problematic mortgages, then by the job woes of the recession and now by lingering economic effects being felt in expensive neighborhoods.
(Source)
It wasn't just caused by housing weakness alone, but the way that housing weakness led to job weakness, and how they ended up preying together on confidence in the bubble and ultimately dragging down the local economy.
One more perfect passage from that article that illustrates our point:
As Phoenix's foreclosure crisis crept inward from the fringes during late 2008, it was being driven not just by subprime lending but also by the economy at large.
The state and the nation had fallen into a recession. Hundreds of thousands of jobs, many in the construction industry, were lost in Arizona.
As metro Phoenix's unemployment rate climbed, so did foreclosures. The number of borrowers losing Phoenix-area houses to lenders hit a record in 2009.
Foreclosures began to affect communities closer in, where less speculation and new building had taken place. Chandler, Gilbert and Glendale, as well as central and north Phoenix, began to see foreclosures climb and home values fall.
(Source)
Similarly, the European debt crisis began in the weakest locales first (Ireland and Greece), then infected the middle countries (Portugal, Italy, and Spain) and now threatens to overrun the core (Germany and France). A wave of sovereign defaults will sweep across the region, progressing from the outside in with a self-sustaining and self-reinforcing dynamic, unless somehow stopped.
That's the important risk to focus on. And whether the crisis is a little one or one that ends in everyone's worst fear -- another war on the Continent -- remains to be seen. But the probability of an approaching market calamity is non-trivial. So that brings us to the main insight we are trying to convey here: We need to be prepared for a major market clearing event that finally allows the rot to be cleared from the system.
Progressive Failure
The problem in Europe is very far from resolved at this point, the recent happy noises about Belgium nationalizing part of Dexia bank notwithstanding. As an aside on that matter, I found this to be quite interesting:
Belgium nationalizes part of Dexia bank for $5.4B
Oct 10, 2011
The Belgian state will buy the national subsidiary of embattled bank Dexia for euro4 billion ($5.4 billion) and provide tens of billions of euros in new guarantees as part of a wider bailout of the lender, the first victim of a new squeeze in European credit markets.
On top of the nationalization, the governments of Belgium, France and Luxembourg together will provide an additional euro90 billion ($121 billion) in funding guarantees for the bank for up to 10 years.
Belgium will provide 60.5 percent of these guarantees, 36.5 percent will come from France and the remaining 3 percent from Luxembourg.
(Source)
This means Belgium is potentially on the hook for $78.6 billion in bailout funds for a single institution, which amounts to 17% of GDP (2010 figure). To put this into perspective for our US readers, that would be the equivalent of the USA guaranteeing $2.6 trillion...for a single bank. Anybody care to guess whether the amount that they decided to guarantee will be ultimately sufficient to cover the actual amount of the total potential losses? My guess is that over time the number will prove to be far, far below the final and true cost.
Even if the Dexia situation has been temporarily stabilized, Greece has not, and this is where the Europe story really begins. With Greek ten-year notes over 24%, two-year notes of 75%, and one-year notes over 150%, there is virtually no chance of anything happening other than a Greek default.
A writedown of Greek debt is inevitable here; the only question is, how much? Here's the current view:
Europe Divided on Greek Writedowns That Juncker Says May Top 60%
Oct 11, 2011
European Central Bank President Jean-Claude Trichet said Europe’s debt crisis now threatens the region’s financial system as officials race to put together a new plan to end the turmoil.
“The crisis has reached a systemic dimension,” Trichet told lawmakers in Brussels today in his capacity as head of the European Systemic Risk Board. “Sovereign stress has moved from smaller economies to some of the larger countries. The crisis is systemic and must be tackled decisively.”
European leaders are trying to shore up the region’s banks as they debate how best to manage the fallout from any Greek default. Governments yesterday pushed back a summit amid opposition to Germany’s drive for deeper-than-planned Greek bond writedowns that Luxembourg’s Jean-Claude Juncker says may exceed 60 percent.
“Time is always of the essence when you have to be in a mode of crisis management,” said Trichet.
(Source)
A 'writedown' is just another of many more pleasant-sounding terms that are being used instead of 'default,' which is precisely what Greece will soon be doing.
With the triggering of a default, the fear of contagion will spread, because, frankly, nobody really knows where the time bombs are located in the credit default swap (CDS derivative) markets. Sure, we can know roughly who is holding what, but each of these holdings is then linked to the primary institutions' own credit ratings, which themselves have vast piles of CDS paper attached to them. In other words, everything is so interconnected that it's nearly impossible for anyone, even the owners of these derivatives, to conduct an accurate risk-assessment or predict how they're going to behave during a market dislocation.
These in turn are held by other institutions and funds, which are heavily leveraged and exposed to the very same market forces that will assure that the exact opposite of hedging will erupt during the hairiest part of the coming rout.
For perspective, Greece has nearly 330 billion euros ($445 billion) of debt outstanding, on top of which CDS paper has been layered. That is, if Greek debt gets a 60% haircut, the basement-level losses we can expect as a result are $270 billion, but the CDS paper will certainly amplify that number much higher for some unlucky institutions.
For even more perspective, consider that Spain and Italy have nearly $3.4 trillion in debt, making their combined predicament worth about 7.5 Greek dramas.
If you think the big banks represent the smart money, I would remind you that when the subprime CDS disaster finally blew up, it was the big banks (and AIG) that were holding the bag -- supposedly the smartest of the smart money. I somehow doubt they are going to be any smarter this time.
The contagion fear here is that several mega banks (and/or funds) will fail as a result of these cross-correlated and therefore unhedged bets. When the European Banking Authority ran their stress tests a while back, several very large banks in Spain and France barely passed, and that was without booking any losses on any of their outstanding loans to Greece, Ireland, or Portugal. If one tips over, so will the rest, because they all owe each other.
To simplify, here's a picture of the world banking system as it currently stands:
Another form of contagion will come with the thought that if one major Western economy can default, others can, too. A precedent will have been set, and other over-indebted economies will suffer higher interest rates on their borrowing as a result. The thing about higher interest rates is that once they are past a certain level, they become self-fulfilling prophecies, virtually assuring that default is a mathematical inevitability (see Greece, above). Over the long haul, interest rates over the long haul cannot be higher than the nominal rate of GDP growth, generally speaking. In today's low-growth environment, that is a low bar, indeed; perhaps just 2%-3%.
A final concern for European banks (in particular) concerns bank runs, in which institutional and retail depositors decide to flee a given bank, causing it to topple over, as the first domino in a long line.
The bottom line here is that the European situation is quite far from resolved, and as we've been saying all along, it really can't until large losses are taken by someone. For now, the banks are trying desperately to convince the world that the losses should be shared by everyone through the miracle of inflation (with central banks printing money, a.k.a. "quantitative easing" or QE, to buy the bad debts off the banks) while the people of various countries are increasingly protesting this regrettable practice of socializing banks' losses, yet allowing privatized profits.
Expect Volatility
The key point to understand about our economy is that it is anything but straightforward and linear. It is a complex system, meaning that it has two characteristics of which we should be aware: It requires energy to maintain and/or increase its complexity, and it is unpredictable.
One typical feature of complex systems is that they tend to jump rather abruptly from one state to the next. Where they can exist in some sort of seeming equilibrium for quite a while, a sufficient exogenous shock (or a change in conditions, such as becoming energy-starved) can often cause them to transition rather suddenly to the next point of 'equilibrium'.
Said more simply, systems often have tipping points, where they no longer react to insults proportionally, but chaotically and sometimes violently. Phoenix, Arizona was coasting along just fine until experiencing a tipping point in its housing market that involved both the job market and the broader economy, dragging both down on the way to finding a new and much lower equilibrium point.
Focus on Positioning Yourself Prudently
What we have here is an ideal set of conditions for a tipping point to arise in our financial system. When such a tipping point occurs, you should expect wild volatility in the markets and be prepared for things to be moving far too quickly to react to with any sort of precision or grace.
That's why it's best to be pre-positioned in your financial, physical, and emotional preparations, so that when the next bout of extreme volatility exerts itself, little to no immediate action is needed on your part during the tumult.
Ride out the chaos in safety and confidence. Be a support to those less prepared within your family and community. And take advantage of the luxury few will have to plan your next steps carefully, once the corrective forces clear much of the current uncertainty out of the markets. Doing so will set you up better than most to prosper in the aftermath.
In Part II - What to Do Before the Next Crash, we detail the steps you should be taking now to secure yourself in advance of the market dislocation predicted above, including:
- protecting the purchasing power of your assets
- securing the essentials (water, food, heat, etc.) in case system shocks disrupt supply chains for a period of time
- developing sufficient physical and emotional fitness to deal with whatever change the future may bring
Click here to read Part II of this report (free executive summary, enrollment required for full access).
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Hey! Quit measuring things in terms of value!
You know that's illegal!
Not the end of the world, just the end of fiat.
To Hell with the Socialists/Communists who wish for bailouts and other measures to prevent the inevitable. This corrupt society needs the wakeup call of Truth to free it from the shackles of debt slavery. I cannot believe the number of ZH posters who are in support of the Communist/Socialist agenda. ANY bailout is a form of CRONY CAPITALISM. Only a CRONY would support it. Refuse to be a CRONY conformist to the establishment quo...
So if there's a "bank holiday", would that include credit unions also?
I'm issuing a hyperbole alert; only my fourth one in two hours. Beware, doomers stalk the land!
Retardation stalks your brain
Oh good, more doomsday no profit info.
Give it a rest ZH.
You've cost your readers more money than Greenspan and Geithner.
you want happy talk go play with Cramer...he's bullish ALL the time
Isn't it funny how these guys always pop up on market up days? When we have big drops, they're under rocks hiding.
what are they doing here in the first place? Is it just masochism? I don't go to marketwatch and make comments. I think they're here because they're terrified ZH is right.
"what are they doing here in the first place? Is it just masochism?"
or a good .gov / .wallstreet paycheck?
(btw, your avatar was my roomate in Santa Monica in the 80's right when he got his "Family Ties" gig...Funny, down to earth guy. He could answer a phone from a dead sleep, in a flying leap, like no one I've ever seen...)
anyone who boughtt silver or gold when this site started up has made pots of money. anyone who shorted the dow at 12800 has made pots of money
Comment obviously endorsed by Wall Street Inc... or a really dumb trader.
LOL Cramer has a new ZH ID 'SparkySC'?
You've cost your readers more money than Greenspan and Geithner.
Sparky - do you see the contradiction in what you wrote here? Give it some time...
BTW, thanks to the ZH mentality, I'm proudly holding strong to a portfolio that is well up for the year despite the huge drop in equities and other "choice" securities.
ZHers have become one trick ponies. Their love for the FAZ will bankrupt them before ACT II even begins.
There is only one trick left: durables like gold and silver. All the rest is about accumulating more of that.
Cloward -Piven working well for Oblahblah
'Working' how? Last I saw Obummers approval ratings were down the shitter.
Why, working to take down the whole economic system, Sheep. This has always been about a 1960s redux, a rapid Revolution with no clue about how everything works once the smoke clears. We are obviously ripe for it...
Have you read "The weight of the poor" by Jim Cloward and Francis Fox Piven? This evil strategy has already proven itself in NYC in the 1970s when the city was forced to declare bankruptcy due to rapid expansion of the welfare rolls during the economic problems back then.
Trouble brewing? What are you smoking? We're up over a hundred already today on rumor about a plan about plan of a rumor that there's a planned rumor that rumor has it will make a plan to fix Europe for the 25th time this month.
These constant comments about the crashing markets and end of the world as we know it are getting old. Really. I'm starting to think there are an infinite number of cans on an infinite number of roads and an infinite number of buffoons willing to kick them. It's called progress.
sunny
the plan is to make you think just that
They want you thinking its 'the new normal'.
As someone said before: You're always right until you're wrong... and while ignoring the fundamentals might be a choice way to make paper profits in the now, it won't over a long time period. Good luck trading anyone's volatility and no, it's not called progress.
It's called diversion.
http://en.wikipedia.org/wiki/Normalcy_bias
Or as N.N. Taleb says: it's not the frequency with which you are right, but the cumulative effect of your losses that matters.
Fed to provide $2.6 T to DOT's bank, to avert new crisis.
Worldwide contagion will be limited to a small fever and a cough !
In other news:
DOT's bank announces a $42 Billion program to educate voters.
So the takeaway from this is fill up large containers with water, pack large supplies of food, and get some fire wood. I do that every weekend when I go camping.
Stock market is up.......what's going on?
Why would you be surprised? Did you think the 100%manipulated markets would go back to reflect reality this morning?
Chris Martenson is one of the best analysts out there. I recommend you go to his website www.chrismartenson.com and watch the crash course.
The FED will decide when the markets crash, just like in 2008.
And no one knows when that will be, tomorrow, 6 months from now...so all speculation about it is just hot air.
hmmm... *looks around innocently* I wonder what happens when I pull this liquidity out... now, for the right price, I think I might be able to put it back... and then some. But, I wouldn't want to have to pull out more liquidity.
To paraphrase a well and oft used internet meme: "All your markets are belong to us!"
Give ZH a break. Its reporting the facts, but if the markets operate in an inverse universe, who can we blame. Dont we know, that we take out all the higher stops, make people long, before turning down. Its seems thats what is going on.
More Money, more higher commodities, and bernanke can count on another dozen countries going revolution.
these current plans are not going to solve anything and may delay a crash briefly, but at the cost of making that crash worse than it would have been if they let it happen now
The more posts like this one, the more stock/pm's I buy. The pessimism today is more palpable than in 2009 March. The global currency debasement will continue until our debts are pale by comparison. Never underestimate the replacement power of equities within a Zimbabwe-esque global policy environment.
Good luck on your gamble buying stocks hoping you MIGHT keep pace with currency devaluation/inflation at best while all is as risk for opening some morning down -10% due to the next 'unforeseen event'. Go buy stocks! NO ONE is stopping you! The FED will welcome your money with open arms and a smile, degenerate gambler!
you are absolutely insane. what "pessimism"??? all i see (not just here EVERYWHERE, CNBS, BLOOMBERG, EVERYWHERE) are foaming at the mouth bulltards telling everyone to buy this 15% rip in 7 days on decreasing volume at the top, and a bunch of totally emasculated shorts that are terrified of getting back in the water.
China's futures market is kicking retail investors out of silver. Must have over 100k rmb or be under the age of 50. Silver market is on pace to grow from 200k tons this year to 360k tons next year without the move.
If you want to know if precious metals are in a bubble, you will never find out by watching the U.S. market. China and India are now the dominant players.
The Love of Money is the root of all evil. Consider this phrase when you hear about the EU attempts at bailouts. If TPTB just let them fail and got on with the restructuring, the People of the World would not suffer so much. Right now TPTB are orchestrating a slow meltdown which will eventually accelerate off a cliff, taking the remaining middle class with it.
Prudence dictates reasonable people to take precautions against a worst case scenario. No need to panic, just prepare. But in this world of "do it for me" and "I'm entitled to be taken care of", the chaff shall be blown away with the winds of change...
1 Timothy 6.10 THE LOVE OF MONEY is the root of many kinds of evil.....
Details often count.
As it is said. The devil is in the details, or lack thereof. Preach on!
IMO, when the markets reverse this time it is likely to be fast and furious and I might add come out of no where with virtually no one expecting it. The market right now is being pushed up on fumes. Not even IBD is ready to call this rally for real.
Interesting you say that, cos Vin Diesel just got out of my broken fridge and said 'Come with me, if you want to live'
Sorry but mad crazed nude men asking me to come with them as if my life depended on it, sounds too much like a politician asking me to approve a bail out!
<now where's that pipe? Why watch cartoons when your fry'd, when theres CNBS>
;-)
"an orderly market is essential for knowing whether or not the counterparty to one's trade is solvent. During periods of intense price swings in the market, such things are simply not knowable"
I know my silver is solvent
Silver For The People
http://www.youtube.com/user/BrotherJohnF?feature=mhee
My food stores and firearms and ammo are solvent as they ever were.
Beans, bullets, and band aids, with a side stack of wealth transitioning phyzz, FTW!
Kill the dollar....save america....kill the dollar...save america....
Martin Feldstein to replace Baranke? Fuck me, Fuck you, Fuck everybody, because that's what he'll be doing. This piece of Harvard Shit mislead Reagan and started us on the road of bubbles and Greenspan. The guy is a snake in the grass, putting the knife in the hands of every naive true believer to slash a clear path for every syncopant to America's ruling Kleptocracy.
Fuck this guy. I'd put him in jail with Baranke, Geithner, Paulson, Dimon, Blankenfein, et al......
Let's get this Revolution moving,... I'm tired of this shit.
Of course if you point out hes yet another Jew your post will get wildly down-voted by the knee-jerk morons.
Not so much....I've been impressed that most seem to understand that there is a highly conspiratorial jewish cabal in charge of the world economy, that they, if their names were a litany of Sicilians, would have been outed by the media long ago.
Now your fucktard rants against Ron Paul last night make more sense.
Congratulations, You finally recognize both facts. Props to you.
Sorry, the revolution has been called due to inflated markets and profitable bubbles. And.....the new fall line-up on the networks is super awesome.
No, you heard that wrong. Marty Feldman (eve though he's dead, he'll do a better job) is to replace Bernanke.
as for revolution...
p.MsoNormal, li.MsoNormal, div.MsoNormal { margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: Times; }div.Section1 { page: Section1; } Don't worry, there will be a revolution. It has already been designed and constructed, and all they have to do is let it out of the box. First, the debt will be written off. Like Sheep-Dog 1 said, "I'm not fucking paying it!" (or something to that effect). But we will... in the form of a big, nasty war, and bloody, bolshevik revolution...
The efects of the revolution will be the greatest tyranny ever seen, complete with Committees for Public Safety possessed with a savagery Robespierre could only dream of.
There can be no reasoned transition back to the sanity of Constitutional Republicanism, because every attempt at an orderly retreat is so easily co-opted by the nihilists in Washington, on Wall Street, and in the media. If you need an example, just look at the Ron Paul tragedy, the tragedy of the voice of reason drowned out by the roar of the mob. It will be a bloody revolution, or it will be nothing, and these are such thoroughgoing nihilists, they care not a fig that it will be their heads that roll from the guillotines
You have no idea what actually happens in a Revolution do you?
Calling for Revolution now is like deciding to torch your boat in the middle of the ocean with your family on board because you don't like the fact that the wood on you deck has started rotting. You need to read some non-revisionist history books, seriously.
Never run from something you dislike. Run to something you know is better.
the resonable people are going to be the first killed, you know.
I sold all my silver and gold and turned in all my 12-gauges voluntarily today and bought LULU...You got to believe right Sheep Dog!!
Not the course of action I would have taken myself but hey whatever floats your boat!
and/or sinks it.
I'm saying it again:
The roof, The roof, The roof is on fire!
We don't need no water let the mofo burn, burn mofo burn!
Respect to the Celente Plan: Gold, Guns and a Getaway Plan
Who has an idea of the notional value of derivatives?
Satjadit Das.
Signed,
Franjeet
stocks do not relate to any...economic reality....
AH yes, but the public has been trained to believe they DO! In fact to the average american, the DOW closing numbers is the only relevant economic indicator around!
Of course they do, and so does the Fed, and so does congress, and so does Obama, and so does Wall Street, and so does Disneyland.
I do think we are teetering on the edge most of the time lately, and it is possible that a big one (the big one?) is coming soon.
But this business of trying to call it all the time makes fools of otherwise reasonable people. I've been watching this mess unfold for about 8 years and really thought everything would have crashed much harder by now. The bulk of us have really NO idea what is going on behind the scenes and these .gov/.$ guys have pulled more rabbits out of their (our?) asses than I ever expected.
Yes, it is fun to try to predict based on inferences, political events, hare-brained meetings between Merkel/ Sark, whatever. But honestly, those of us on our toes will all know about the same time unless we happen to have some inside info. I don't think this chap does. He's just inferring/guessing like the rest of us. But, it is good for subscription sales.
The FED bankers will decide when the markets crash, same as 08.
A lot has gone down already. It is like being messed up with meth and still looking in the mirror everyday and do not realize. America is much worse than 5 years ago. We still think we are ok. Ask some one else who is watching us from outside.
Wish to christ that one of you doomsayers were right in the last three years. Or the next one.
I've been preparing for the crash that never happens, as ephemeral as the possibility of a sexy phone call from Doutzen Kroes.
All you can do is gather data and act on it. There is a lot of noise out there, choose which wave you want to listen to and ride it.
There is such a poor distribution of wealth and income among the human species that, aside from controlled and mandatory euthanasia, until this remedied there is no hope for any solution to this illusion of eternal crisis. We have been through this before and there will be a re-distribution, in one form or another.
Everyone knows that whether the derivitives are several hundred trillion or several quadrillion dollars that they cannot be paid, nor do they have to be whenever the hit comes; the banks lose, a new system arises, and we go on---------
No one loses anything but the illusion that this or that virtual asset, which no longer exists anyway, is worthless and has to be accounted for as such. End of game, reshuffle the deck and let's play again.
This truly is ridiculous to real people. It is a very tiresome bad joke-----on a species too ignorant to be 'controlling' a planet such as ours is. Like that kid's game called 'Monopoly', it is make-believe om
As make-believe as hunting rats in the (empty) dumpster. Which is what most of us will be doing fiarly shortly, due to all that make-believe money vanishing from the virtual vaults of the virtual banks.
Deflation. It's a bummer...
It will make all of us virtually starving to death. There's your market solution to over-population!
Lest we lose sight of what the derivatives are... Most of them are bets on underlying assets. A type of insurance bet based on what may or may not happen.
If a financial calamity occurs, few of these bets will be paid since those holding counterparty risk have made other bets... that will not be paid.
Just think of the derivatives as a cloud of paper near the stratosphere and encirciling the earth... This cloud of bets has little or no claim on real earth bound assets.
Some of the fools holding derivative bets will attempt to pay off their losses... Most will not. When AIG couldn't pay GS for it's derivative bets gone bad, the US Taxpayers were stuck with the bill and GS got paid. This time the bill will be so large that the taxpayers of the world will not be able to pay regardless of the amount of austerity enforced or how much taxes are increased.
Bankers that made derivative bets should be treated no differently than compulsive bettors that went to the horse track and lost their entire pay check... Let them eat beans till next pay day... or, indefinitely.
Thanks, Snidely
It is really much ado about nothing unless you thought the baloon still existed after it went 'POP!'
I don't understand why we are even talking about this, because every day thousands of baloons pop and all anyone says to real people is: 'oh, how terrible---I'm truly sorry to hear that you lost your home'
This is getting very stupid----fretting over those poor bankers like they had lost their homes, of course:
'oh, how terrible----sorry to hear that you lost your bonus'
thanks again om
I have no issues with a majority of your point(s). I do take issue with your statement "this is ridiculous to real people" - you are suffering normalcy bias if you truly think this.
The other thing I have issues with the expedience you imply a "new system" will arise to replace the defective and self destructing one. We not only lose the illusion of virtual assets, we lose an entire infrastructure. How long until a government can enact a system to replace the old one? How long to quell the chaos that will result in the, to paraphrase, "loss of illusory assets"?
There are, on average, 3 days of food in the run-of-the-mill person's cupboard, in the 1st world, the "wealthiest" nations. Food is delivered to grocery stores from an average distance of 1500 miles away.
How will the food get delivered when trucking companies cannot pay for fuel? How will municipalities pay for the energy they need to pump water to all the millions of people in their districts? Who will have what "assets" to pay for refined, or manufactured goods?
This is not ridiculous. This is reality. Case and point, when every major city in America loses grid power and communications what happens?
This can and very likely will happen because Joe the Power plant worker or Jane the telecomm worker cannot go to work because they have no fuel in their car, and no way to get any. Besides all of their money suddenly vanishing from their bank accounts, their cash is suddenly worth less than toilet paper. They have no internet, no phones, and their credit cards stop working, there is not even a loaf of bread or can of vegetables on the shelves in the local mega-mart. What possible reason or motivation, short of viable currency in hand or better yet food and water in hand, would anyone have to go to work?
The government did not have the time, personnel, or resources to secure and maintain order in a city the size of New Orleans, until weeks, even months after Hurricane Katrina, and the "system" was still in existence. What happens when every major city experiences these things simultaneously? Do you think food riots are out of the question? Do you think the average Joe/Jane with 3 hungry kids, no TV, no beer, no food, and no options is going to sit and wait for Uncle Sam to set things right? What about the average welfare lifer? Do you think that any government in the world is going to just wave a magic wand and create a new currency system out of nothing with no period between failure of the old and full reinstatement of a new? If you do, you've got a lot of thinking and planning ahead of you.
"The nine most terrifying words in the English language are "I'm from the government and I'm here to help" - Ronald Reagan
This is not fear mongering, this is experience speaking. I lived through Hurricanes Andrew, Rita, Katrina, Opal, and Ike. I watched the Miami riots from my neighborhood growing up. I witnessed the pandemonium in New York City first hand after the attacks on 9/11. I witnessed the Rodney King Riots in LA, and the anarchy in England just recently. All of these things are small potatoes compared to a complete economic collapse.
Oh, and FWIW, normalcy bias is also called "the sheep effect".
Got preps? Pray for the best, prepare for the worst.
Yes, the 'just in time' food distribution may become the 'too late, you're dead' system. And the government is doing all it can to discourage local food production and sales. They know about the weakness of the JIT system, so that reeks of treason and deadly intent.
Falcon, thanks for your comments.
I am not prepared nor will I prepare for the future. Call me stupid, if you want, and I have been wrong before, but I am not going to prepare a 70 year old man who has had the best of everything for whatever comes, and I, too, fear the worst. But, fear is just another illusion and not so important after one has died a couple of times; besides, I'm a gambler of sorts, and pass a lot of time on the edge,
I am not intelligent enough to even comprehend most of your points, so I can only respond to a few.
"I have no issues with a majority of your point(s). I do take issue with your statement "this is ridiculous to real people" - you are suffering normalcy bias if you truly think this."
There are a lot more real people than we in the US realize. About four billion are without most 'neccessities' we take for granted. Around fifty million of these live in the US, but are not truly poor. These four billion are who I think of as real people, because they live each day as it comes, doing what needs being done, awakening the next day to live yesterday over again. There are also real people who are not poor, but who are called the sheeple because they, also just go from one day to the next without thinking about it at all.
I do not consider myself, you or any of us who have the wherewithal and intelligence to read and comment here at ZH 'real people'; we are not. We are special and privileged, and with the greatest capacity for setting the system in balance, but look at us----we are blind to anything that doesn't jingle in our pockets except the few times each day when we remember our conditioning and a sense of guilt creeps out of our human stuff. I will go no further with this because, hopefully, I am wrong and castigation is not my intent. Still, I say we are not 'normal' or real people or sheeple and trust that this will satisfy your issue with my earlier statement.
"The other thing I have issues with the expedience you imply a "new system" will arise to replace the defective and self destructing one. We not only lose the illusion of virtual assets, we lose an entire infrastructure. How long until a government can enact a system to replace the old one? How long to quell the chaos that will result in the, to paraphrase, "loss of illusory assets"?
There are, on average, 3 days of food in the run-of-the-mill person's cupboard, in the 1st world, the "wealthiest" nations. Food is delivered to grocery stores from an average distance of 1500 miles away.
How will the food get delivered when trucking companies cannot pay for fuel? How will municipalities pay for the energy they need to pump water to all the millions of people in their districts? Who will have what "assets" to pay for refined, or manufactured goods?
This is not ridiculous. This is reality. Case and point, when every major city in America loses grid power and communications what happens?
This can and very likely will happen because Joe the Power plant worker or Jane the telecomm worker cannot go to work because they have no fuel in their car, and no way to get any. Besides all of their money suddenly vanishing from their bank accounts, their cash is suddenly worth less than toilet paper. They have no internet, no phones, and their credit cards stop working, there is not even a loaf of bread or can of vegetables on the shelves in the local mega-mart. What possible reason or motivation, short of viable currency in hand or better yet food and water in hand, would anyone have to go to work?"
The above has already been answered by the Argentina over the past twelve years or so. I do not remember their not being ablre to figure out ways, immediately, to get on with their lives and an organic system organized itself promptly. What you have outlined, however, is precisely what I offer as the solution rather than voting or protesting. I tried to sell it here but we aren't having any of my idea of 'doing nothing' until tptb realize that we(us real people, little people, including you and I, Falcon) have the power and not they. Now, they will use this against us----forced slavery with TSA chumps running our part of the world. Shit, man, I don't like this option, at all!I prefer the Argentine option---unprepared and in collaboration with my fellow humans.
"The government did not have the time, personnel, or resources to secure and maintain order in a city the size of New Orleans, until weeks, even months after Hurricane Katrina, and the "system" was still in existence. What happens when every major city experiences these things simultaneously? Do you think food riots are out of the question? Do you think the average Joe/Jane with 3 hungry kids, no TV, no beer, no food, and no options is going to sit and wait for Uncle Sam to set things right? What about the average welfare lifer? Do you think that any government in the world is going to just wave a magic wand and create a new currency system out of nothing with no period between failure of the old and full reinstatement of a new? If you do, you've got a lot of thinking and planning ahead of you.
"The nine most terrifying words in the English language are "I'm from the government and I'm here to help" - Ronald Reagan
This is not fear mongering, this is experience speaking. I lived through Hurricanes Andrew, Rita, Katrina, Opal, and Ike. I watched the Miami riots from my neighborhood growing up. I witnessed the pandemonium in New York City first hand after the attacks on 9/11. I witnessed the Rodney King Riots in LA, and the anarchy in England just recently. All of these things are small potatoes compared to a complete economic collapse.
Oh, and FWIW, normalcy bias is also called "the sheep effect".
Got preps? Pray for the best, prepare for the worst."
No government has a magic wand, but human beings have been survivors of worst events than this when left to their own instincts. I am putting my faith in human history, Falcon---in genetics because the genes have brought us this far, and it is time for a quantum leap in the human consciousness that we all share in common. I hope you will join me in this experiment; life is so much easier than my mother told me. My poor mother was afraid of everything; she was eleven years old in 1929 and a member of a 11 member farm family. She had no reason for her fear of the future but was very scarred by the poverty of her family. I always pitied her, but understood that she was locked in a time warp called 'the Great Depression.
Thanks so much for inspiring a lazy oldman to put forth such an effort-----I feel more confident than ever that we are on the correct course for this planet and all of the other species with whom we share it om
Yes, this sounds bad but what if, just by chance, we issue a statement each week that SOUNDS like we might have a plan....I think that might work to create growth and maybe just get the markets to go up...let me work on combining the words PLAN, MEETING, AGREEMENT and NEXT WEEK and see if I can't keep this thing humming
What did you say, Tyler?
"An orderly market is essential for knowing whether or not the counterparty to one's trade is solvent."
I suppose one could invert that, and say,
"Knowing whether or not the counterparty to one's trade is solvent is essential to an orderly market."
I would have to say, soberly and without giving myself over to hyperbole or dramatics...
"OOOOHHHH SHIT! FUCK! WE"RE FUCKING DOOMED! OH GOD NO!!!!!
Tyler, you should define very precisely the emerging new EU Currency, the Greek Drama. Failing to do so will crash the immediate future's financial software. LOL
BTW... How many Greek Dramas for an Italian Operetta? :P
Awesome bull market, vertically up, I'm selling all longs I can possibly find. I won't get another one like this for a while.
A prudent piece of advice: keep a month's worth of cash handy; bank runs and "holidays" in the US and Canada are quite probable if Merkosy's can cannot be kicked any further.
apberusdisvet
keep a month's worth of cash handy;
IF you have grown children, increase that amount,also, a minimum of 2-3 weeks food.(enough for all, as they mostly are clueless).
apberusdisvet
IF you have grown children, increase that amount,also, a minimum of 2-3 weeks food.(enough for all, as they mostly are clueless)
FWIW, if you have any children, grown or otherwise, keep 2 months of cash on hand, and make sure you have at a minimum one years worth of food, medical needs, fuel (firewood, propane, and/or liquid fuels if you can store them, as needed) on hand. Also, a means to protect and safeguard your loved ones, and those items (in most of America that means guns and ammunition). Also start talking with friends now who know the fecal material will match coordinates with the oscillating air mover, and build a mutual support network.
YMMV.
Got preps? Pray for the best, prepare for the worst.
Even if you don't buy the doom scenarios, you owe it to your family and your neighbors to be prepared. You don't have to do it all at once. Here's the $200 starter plan: Get a half dozen 30 gallon trash cans and larger trash bags. Fill the bags with water and cap, you can get a half dozen, 180 gallons, for $70 or so. Refill every month or so. While at the store, get an extra can opener and a bunch of canned food that's palatable, and can be eaten cold. Just doing this will help you sleep better at night. That's how I started, and my garage is now our supermarket first-stop, stocked with items we normally use and eat, replaced in bulk as they deplete. Nothing ever goes bad, and it can all be sourced locally, for now.
Two thumbs up to Chris Martenson...Good podcast with Puplava Yesterday...
Marty Feldstein is a bag of shit, a fucking snake.
So 'Cliff High' is either serious, or gay.
read the below and let me know. he seems rather sarcastic.
---------------------------------------------
These are not regular humans. These are psychopath beings who are a danger to us all.
These are not regular humans. These are psychopath beings who are going to crash the planetary (mostly USofA/UK/EU centered) financial system over these next few weeks. Our data suggests that the most likely target date will be October 17th (a Monday), after very shocking developments emerge on October 15th.
The reasons, and goals of the psychopath masters of the banksters and political/military minion classes are not of concern at this moment in the process. We leave such examinations for the show trials of the survivors of the psychopath class later this decade. What is our concern is the immediacy of this pending event.
Wrap your head around the idea: the planetary financial system is collapsing now. The collapse was initiated a long time ago, and cannot be averted by anything that may be done at this point in the process of it falling over dead.
It is also important to note that the collapse of the financial/banking system MUST happen and further is a GOOD thing for most humans albeit on the other side of the suffering that is attendant to the process of this global death. We MUST grieve, but we must also BURY this stinking corpse as it is rotting of corruption!
So, let it die. We will rebuild. Note this. WE will rebuild....not they, the banksters, but we, the humans of earth.
But first, we have a funeral to attend. They, the banksters, and minions, have killed off the banking system. We note that already (October 8, 2011) the rumors of THE derivative swap cotango contagion are eroding 'confidence' in these 'trickster notes' globally. By the 15th of the month when our forecast shows a very sharp and sudden switch to release language that lasts but short days, the poison in the veins of the system should be clear to all. That is when we will all, like it or not, protest or not, be participating in the FUNERAL of the Zombie (planetary) Central Banking system.
The data suggests that as the derivative implosion initiated by the psychopaths erupts from compression to smouldering to flames over October, the 'giants' will be faced by a new competitor as Civilization One will make its move. Their goal is much as the banksters in that they want as much of the 'hard asset' currencies, or other leverage, as may be obtained. In much the same fashion that the Vikings preyed upon the those of more southern Europe, spurred to action by radical climate change, those humans involved in Civilization 1/One (the underground pan global alliance of military industrial complexes centered around reverse engineered space alien technology), are forced by circumstances to prey on terrestrial humanity. Note that the banksters, even those aware that they are serving Civilization 1/one, will be very very surprised by the upcoming series of events involved in this Grunch as they, also, will be victims.
And these days are when the data says reality gets really interesting. It is with tip of the cap toCalleman that we note how close the Grunch, and the subsequent Revealing, and theUnleashing/Unbinding/Free'ing are to his calculations of the Mayan (meso american) Long Count results. As the derivative implosion proceeds, the banksters, and their minion slaves, are going to be attempting to steal every possible 'dollar' of value anywhere obtainable. What will be very interesting for those of us not emotionally involved in the process of death of paper debt will be to watch and wait for the howls of emotional dick crushing when the banksters discover their loot gone missing from their hidey holes. By the way, this absence of the 'loot' is showing in our data as creating 'fatal circumstances' for many of the bankster class who will not be able to pay back when hunted down and taken prisoner over these next few years as the planet transitions to whatever terrestrial humanity will invent of it next.
Thus Raven cries in warning, Grunch just ahead. Watch your step. These giants aren't house trained....
copyright blah blah blah more blah 2011 by clif high blah blah and more blah
By the way if you read this far and have the inclination it may pay you to learn latin as when the vatican sorcerers palace of evil is liberated in the next few years a treasure of latin language based knowledge will be available. Just a thought.
Genius, insanity and/or some interesting fiction?
Maybe he is serious, with several specific predictions to proceed from a set date, if he is wrong, who will he sell his reports to afterwards? If he is correct, then he has no market. Is this a retirement announcement?
IMHO psycohpaths are common, and it is "normal" for them to rise to positions of control, so i disagree there.
Considering their long history, it is difficult to imagine that banksters are disposed of so easily, after only a few years of chaos. Not getting any expectations aroused on that one. The current system crash seems unavoidable, but i expect those who own the banks to be behind the next system, even if they abandon bankster minions along the way.
As for a black human civilization with advanced UFO level tech, guess i'll need to be shown, not the believer type. Them taking out the banksters is right up there with the Rapture, Second Coming and return of the Nephilium!
The tone may be a result of too much time spent playing with webbot spyders, reading Douglas Adams, or, OTOH maybe some unusually potent drugs?
"...come to grips with reality and post some stuff that resembles what is really going on; you know slow growth with high unemployment and what not..."
Really? You think that is what is "really" going on?
Alrighty then.
Jump! You Fuckers!
When they bring out the big guns with bow ties to yell "Fire!", that ususally means they have the green light to print. Expect massive printing and bailouts.
Of course! Why would they behave any differently? They have absolutely no impetus to change their game plan....yet.
Fantastic article, everyone needs to read this.
'Spain and Italy have nearly $3.4 trillion in debt, making their combined predicament worth about 7.5 Greek dramas.'
And their combined net worth about 7.5 Greek drachmas.
MWA HA HA HA!!!!
In this market that's bullish news.
'A 'market crash' is where no bids meet a wall of selling'.....so what, the FED then will unplug the machines and stop bidding stocks higher I guess?
That's the Halloween movie they watch over and over and pass along to each other. Like we enjoy slasher movies
If its not John Carpender, David Cronenberg or Guillermo del Toro I aint buying ;)
Yea but meths and crack will be up!
Double plus good!
you know that only in very rare instances do I issue a cautionary Alert (I've only issued four since my website launched in 2008)
4 Alerts in 3 years? Hardly seems "rare" to me. I stopped reading after that.
"Materially Adverse Disruption" is Greenspeak for the sky is falling ! In Monedaspeak it means your peepee fell out of the hole ! Monedas 2011 Comedy Jihad Sex Clinic
Or in 1984 speak
Double plus bad!!!
I never got around to reading 1984 ! Then after I lived through it, I said: "Oh Well !" (Orwell) ! Monedas 2011 You don't have to be medicated to enjoy my humour....but it helps !
I have a personal code of ethics that states: "If everyone in the world reads a book then I don't have to ! I just osmose it up !" Monedas 2011 Life is easier with rules !
wow lots of haters on this thread.
what's up haters...where can I get some of that good hopeium you guys have?
I think it's pretty simple really
to much debt + not enough of...well, anything else= crash
or is it that you all still believe the "experts" and politicians running this show have your best interests at heart, or even care that you exist at all?
what will it take for you people to realize they only give a shit about you in 2 situations
1. when they need your vote
2. when they need your money
and it's getting to be that there is less and less of a need for any approval from "we the people" especially on the money front, and once they have complete control over that they won't need our votes anymore either.
haters, stop living under the delusion that you are important to the PTB's that run this matrix in which we all live, your just another battery, easily replaced.
you, me, none of us matter to these people except in how we can be used to feed the machine to their benefit, meat to be ground up in false wars for profit ect.
so calling for a little preparation, absolutely...because the PTB's have already taken steps to insulate and protect themselves, they will be fine, their lifestyles will be preserved while the puppets take the fall
and you haters, you will be on your own holding the fiat paper stock bag wondering wtf just happened.
don't let your normalcy bias get the best of you...
I see nothing worthy of hate here.
Being prepared is Boy Scout, grade school level. The intelligent make it a habit then, and consider it normal, and integrate it into everything they do. Nevertheless, many learn not to talk about preparedness, if they want a social life, not a reason to be unprepared though.
Chris has a good grip of the obvious and has value for those didn't learn young and/or who haven't been paying attention. He irritates people who don't prepare and know they should. He irritates those who have been prepared since childhood and dislike gurus. And he irritates casual readers who might like to read a complete article without paying for a book.
well, i guess as long as canadian real estate is going up, up, up, all is well! right?
its different this time!!!!!!!!!!!!!!
Quoting Hank Williams Jr.:
But he was killed by a man with a switchblade knife
For 43 dollars my friend lost his life
Id love to spit some beechnut in that dudes eyes
And shoot him with my old 45
Cause a country boy can survive
Country folks can survive
IMHO Hank Williams Sr could sing and write songs, Jr is no match for Sr.
Hank Williams Grandson has a much better voice than Jr.
It's hard to believe Sr was only 29 when he died.
Of course, everyone is entitled to his/her own opinion.
The talent in that family definitely skipped a generation.
Hank Jr is a caricature....a writer of garbage music that will be forgotten along with most of the rest of the shit pushed by ABCNBCDISESPCOM.
Hank Sr. and Hank III had/have more talent in their stool than poor drug addled Jr has in his entire liquor soaked carcass.
Pretty Boy Floyd
by Woody Guthrie
<Snip>
Yes, as through this world I've wandered
I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.
And as through your life you travel,
Yes, as through your life you roam,
You won't never see an outlaw
Drive a family from their home.
http://www.youtube.com/watch?v=GtLNCmsJVFI
LOL
Here's another Jr gem....
"There’s a tear in my beer
’cause I’m crying for you dear"
Shitfire Darryl....that fucker surely can write <snort>....
Yeah there’s big trouble brewing alright but the markets are only the canary - the trouble is brewing not in portfolios but in hearts and minds. A new narrative is being written, a new paradigm is being forged. What is being destroyed isn’t just the the global economy but the the “full faith and credit” of the nation state business model. What will follow isn’t predictable. We are going over a waterfall and the nature of the river beyond will depend on the will of the survivors. If we choose honest money over paper I believe we are heading into a new golden age - if we once more choose to rely on the honesty of men we will find ourselves mired in a swamp of slavery.
what a joke of a prediction??? market and euro going up 1% a day till the end of year....so just keep those negative news and commentary coming....hahah
Cliff, what do you do when I like all the birds?
http://www.youtube.com/watch?v=MjYnMTVsxgI
All this talk of collapse on zero hedge is nothing but keeping the lemmings in line to be picked clean. Then blame it all on the bankers. Seems like zero hedge is just a big collection of malcontents. Just like OWS, nothing but a group of people with no ideas and a lot of bitching
very well said
Bear market rally ... very tough to buy here. The market is very much over their skiis.
Hey dipsticks, how are these FAZ positions treating you?
I want my mommy!
Just bought my FAZ at 50. Ask me that question in 3 months. I'm looking for a double.
Today sucks, no fucking financial doom to speak of...WTF.
Clif High said years ago that" after March 2011 nobody will care about anything but survival"...
Sunday/Monday D-Day?
The writer is right, civil war is inevitable because the gigantic dislocations in the financial system are insurmountable. What we are seeing is the global collapse of the welfare state, but the statists aren't going to go quietly, they will try to convince us that more bailouts of the poor and corporations are necessary along with greater central regulation. None of this Keynesian bullcrap has a chance in hell of working, it is all free lunch nirvana that makes the problems worse.
What the author misses is that we are already in a civil war and have been for a while, it is just subliminal. The Tea Party is one faction, the Occupy Wall Street groups and union backers another, but plenty of people are already choosing sides. It is a civil war over debt bondage, slavery to massive unfunded welfare state liabilities which have to be defaulted. Your kids each have a debt load of over half a million te day they are born, that can't be allowed to exist, they have the moral right to default on that burden.
The Fed is papering over the problems, but can't do so indefinitely. The FedGov only takes in 60% of what it spends and we all know how screwed Europe is. So the prudent course for individuals is to "Go Galt". http://www.futurnamics.com/goinggalt.php But just as imporantly, people need to understand what a long term low grade civil war will look like in modern times, it won't look anything like CWI but will be just as disruptive. http://www.futurnamics.com/civilwar.php
By the way, the article doesn't even mention the demographic trends as boomers retire, Japan goes senile, China ages, and Italy with a birthrate of 1.5 is carted to the bone heap. Yup, we are all fucked. all we are debating is whether it is slow motion fucked or off a cliff fucked. Short judiciously
sources?
There has been more negative news than positive news. I think there will be a dramatic drop in the market. And with the political foolishness in washington, Europe, etc.. there is not much postive. My gut tells me I should reduce my equities and sit on some cash on the sidelines and maybe pounce on some the low points or big drops.. but Im not a huge fan of day trading.. dont have the time or patience. Is this common sense or just my knee-jerk reaction reading ZH everyday, 3x a day?!
'poland' warns of war...................muahahahaahahahahahaahahahahahahhaahha how did that work out last time??????????????????????????????
don't know we still haven't heard from the cavalry unit they sent out to stop the Blitzkrieg
Friends,
In all my years in the trenches, at many different firms, my view was always to have someone outside the "paid shills gallery" that I found on my own, to check, outlooks, opinions, forecasts.
This person never steered me wrong in over 32+ years.
I value his advice highly, he reminds me of Reggie. He is cautious and methodical, and principled.
I would say he is among the best "customers-men", in the purest sense of the word, actually looking out for the customer (investor).
******************************
This is his latest:
Martin D. Weiss Ph.D. – Money and Markets October 9, 2011As soon as we see the likelihood of major bankruptcies and defaults, we don’t wait around. We warn you immediately.
We know you need time to get your money out of danger. And we also know that financial disasters don’t obey any particular clock.
They can strike suddenly — especially in the stock and bond markets, where investors often start selling in anticipation of the troubles to come.
That’s why we specifically warned our readers about …
• The failure of Bear Stearns 102 days ahead of time (Money and Markets of December 3, 2007) …
• The failure of Lehman Brothers 182 days ahead of time (Money and Markets of December 3, 2007 and March 17, 2008) …
• The near-failure of Citigroup 110 days before (Money and Markets of August 11, 2008) …
• The failure of Washington Mutual 51 days before (Money and Markets of August 11, 2008), with advance warnings also issued many months earlier (Safe Money Report of March 2007 and June 2008) …
• The demise of Fannie Mae four years before it collapsed (Money and Markets of September 24, 2004), plus …
• The failure of nearly every bank and insurance company that has occurred since Weiss Ratings began rating them decades ago.
Now, the time has come to issue new advance warnings — some of the most important in the 40-year history of my company.
My new warnings are mostly focused on Europe. But as I’ll explain below, they’re bound to have a life-changing impact on nearly all investors in the U.S. and around the globe.
Warning #1
Greece will default very soon.
Banks and other investors who hold Greek notes and bonds have already seen massive losses in their market value — over 50% on 2-year notes and even more on other issues.
Until now, European authorities have turned a blind eye as their largest banks continued to carry these toxic assets on their books at full value — as if they were the best, most pristine assets in the world … as if the sovereign debt crisis never happened!
But now, European authorities are finally conceding that the banks must “partake in any solution of the crisis.”
In other words, the banks must bite the bullet and take some big hits in their Greek loans. They must officially recognize at least some portion of their losses.
Conclusion: Whether the banks accept this “solution” voluntarily or not, it will mean Greece is in DEFAULT!
Warning #2
The contagion of fear will spread.
Anyone who thinks global investors will turn a blind eye to the Greek default is in for a big shock.
Greece is not a small, third-world country. It’s a member of the European Union and part of the euro zone. It has over 328 billion euros in debt, more than Ireland and Portugal combined.
Moreover, Greece is not alone, and investors know it. Investors will automatically assume — with good reason — that if one major Western government can default, so can others. And with that assumption, they will refuse to lend any more money to highly indebted governments. Or they will demand outrageously high yields.
Warning #3
European megabanks will collapse.
Some of Europe’s largest banks will collapse under the weight of defaulting sovereign debts and in the wake of mass withdrawals.
Spain’s banks are especially vulnerable, swimming in a cesspool of bad mortgages left behind from that country’s giant housing bubble and bust.
In fact, this year, the European Banking Authority ran stress tests on the largest banks in Europe; and among the eight banks that failed the test, five were Spanish. Their names:
Major French banks are bigger and in no less trouble. They barely passed the stress tests. And that was DESPITE the fact that they were allowed to cheat — not booking a penny of their losses on loans to Greece, Portugal or Ireland. According to Bankers Almanac, on a consolidated basis …
• BNP Paribas has $2.7 trillion in assets, making it the largest in the world …
• Crédit Agricole has $2.1 trillion and is the world’s fourth-largest bank, and …
• Société Générale has $1.5 trillion.
The total assets of these three French banks alone are greater than the total assets of the banking units of JPMorgan Chase, Bank of America and Citigroup.
All three are drowning in bad loans to PIIGS countries. All three are in danger, in my view.
But there’s an even more imminent threat: mass withdrawals!
You see, banks in the euro zone get less than 35% of their funds from deposits, according to Bloomberg data. Instead, they rely far more heavily on what’s called “wholesale funding” — money borrowed from other banks and institutions.
In other words, they’re hooked on HOT MONEY!
That’s the kind of money that is quickly withdrawn at the first sign of trouble. And that’s also the same kind of money that caused mass bank runs in the U.S. three years ago — runs that doomed big U.S. banks like Washington Mutual, while nearly sinking giants like Citigroup and Bank of America.
Big European banks are especially vulnerable because they rely on hot money far more than U.S. banks. And many appear to be suffering big runs at this very moment.
This is why the European Central Bank rushed to the rescue last week with 40 billion euros in emergency loans for banks suffering withdrawals. But 40 billion is a drop in the bucket, barely covering ONE CENT for each dollar of PIIGS’ debts outstanding.
In the weeks ahead, will governments stand idly by while their biggest banks collapse? Initially, no, which leads me to …
Warning #4
European governments will suffer a
cascade of new credit rating downgrades.
The richest governments of the European Union — France and Germany — will scramble to rescue their failing banks, and so, global markets may breathe a temporary sigh of relief.
But recent history proves that the entire concept of bank bailouts is seriously flawed because of the following, now-obvious sequence of events:
• In their zeal to save the banks and the economy, the governments gut their own fiscal balance.
• They suffer big downgrades, losing their stellar credit ratings.
• And as soon as they have to borrow more money, they must pay through the nose with far higher interest rates.
In other words, in their zeal to lift banks up from the brink of failure, the governments themselves are dragged down into the abyss.
Case in point: Last week, we learned that Dexia, a Franco-Belgian megabank, is in distress. It’s smaller than the giant French banks in trouble. But its assets are still 1.5 times the size of Belgium’s ENTIRE economy!
What happens if the government of Belgium tries to help rescue the bank? It will surely lose its still-good credit rating.
Indeed, late Friday, Moody’s announced it’s ALREADY putting Belgium on review for a downgrade just based on the POSSIBLITY it may have to bail out banks like Dexia.
Moody’s specifically states that a key reason Belgium is on the ratings’ chopping block is “the impact on the already pressured balanced sheet of the government of additional bank support measures which are likely to be needed.”
And the prospect of big bank bailouts is also a key reason other major PIIGS countries have suffered massive downgrades in recent days. (More on this in a moment.)
Warning #5
Spain and Italy will be next to face
default on their massive debts.
Spain and Italy have nearly $3.4 trillion in debt, or about 10 times more than Greece.
But with their borrowing costs surging and their big banks failing, they will be unable to borrow enough new money to pay off old debts coming due.
Result: Spain and Italy will also risk default.
Warning #6
Global debt markets will
suffer a critical meltdown.
In anticipation of a default by a country as large as Spain or Italy, nearly all debt markets in the world will freeze, as investors withdraw in panic.
This panic will not only crush the borrowing power of the PIIGS countries, hastening their default … but it will also threaten to melt down the bond markets of countries like France, Germany, Japan, the U.K. and the U.S. That could mean sharply higher interest rates and, ultimately, the inability to borrow at almost any cost.
Warning #7
The vicious cycle of sovereign debt defaults and
bank failures will lead to a global depression.
Sovereign debt defaults will trigger more bank failures. More bank failures, in turn, will precipitate more sovereign debt defaults.
This vicious cycle will cut off the flow of credit to businesses and households, sink the global economy into a depression, and perpetuate the vicious cycle.
Ultimately, we will see an extended period of great economic hardship for billions of people on every continent.
Skeptical?
If so, I don’t blame you, and I assume you have your reasons. Yet there are far stronger reasons to be skeptical of all those who believe we can easily avoid disaster …
Continues in full at source…
Well, it looks like they are back to beating gold down, as they do every day after it goes up at night.
I will be so glad to see PAGE fully operation before years end so we can get real price discovery
and not just comex paper manipulation.
Other big trouble news:
UK unemployment total reaches 17-year highhttp://www.bbc.co.uk/news/business-15271800
NY comptroller warns of weakness on Wall Street
http://www.google.com/hostednews/ap/article/ALeqM5jkbJTZiwQdo2lRHbQttRNW...
UPDATE: ECB Draghi: Italy's Recent Fiscal Policies "Not Enough"http://online.wsj.com/article/BT-CO-20111012-709837.html
Draghi Urges Italy to Implement Austerity to Avert Debt Spiralhttp://www.businessweek.com/news/2011-10-12/draghi-urges-italy-to-implem...
you need to be physically fit enough to punch your banker in the nose..
The really good news about this rally is that it signals that more QE and money printing isn´t needed. This means that accumulating gold and silver at outlandish price is now totally pointless.
Thank BIG BUSINESS for lobbying for the opportunity to run the baseball bat up the collective asses of the "American People" every politician talks about. Politicians are wannabe businessmen - but with no talent, and no capital, and no work ethic. They are what they are. Might's well get pissed at the raccoon that raids your trash cans. He is just doing what evolution gave him a job to do. Corporate World Co is your friend - NOT ! They run the show - every one else is cannon fodder at best, or a problem to be eradicated immediately at worst. The new religion of the millennia. Be careful, or you will be branded as a witch and burned at the stake. Actually, if you read or comment on this website, you are already doomed, 'cause the fluoride in your water, drugs and pesticides in your food, and poison in the air have not yet eliminated free will, or cognitive thinking, the ANTICHRIST of corporate religion.
"What he's warning about here are two main things. The first is the risk of contagion,.."
Gee, do you think that remark is referring to those hundreds of trillions in worthless credit derivatives (i.e., securitized debt) peddled by the banksters around the globe???
Gee, one wonders why they never, ever mention that in regard to what's happening in Euroland and America???
For every $1 of debt on hand, the banks and investment house sold from $100 to $1,000 in debt. (Averages closer to $1,000.)
So the banksters made billions and billions in selling trillions and trillions in debt.
And that is why there's so much debt out there.
No way, no how could they ever, ever cover it.
"Sir, I paid you my dollar and interest back, why are you demanding another mysterious $100 from me?"
I watched the movie TBTF this week. It was like freaking deja vu all over again. The way they tell it, Paulson did look into the abyss, and it did scare him shitless.
I'm a prepper, and have always wondered how a bank run/failure could bring everything down. Chris has explained it, if you click through to part 2. I like Chris.
Screw investing, start prepping. Dislosure: I am long physical stuff.
What America needs is this kick ass pol:
http://www.youtube.com/watch?v=lu61aU4N8mM&feature=player_embedded#!
And this music vid ain't too bad, either:
http://www.youtube.com/watch?v=YfkYdpX_OUM&feature=player_embedded
Article is a complete rehash of what the SHTFers on ZH have been saying.
But just like Paulson was 3 years late to the housing trade but came out looking the smartest by not being wrong for a long time, I could see guys like this that woke up at 11:58 PM being remembered over those of you that were saying this March 2009.
We could rally through Thursday, particularly if JPM is decent tomorrow. Break the 1,220 upper limit to get the final capitulation to the upside. Then mid-day Friday, everyone tries to get out at the same time to avoid being long into the weekend.
I've played this 1,120 to 1,220 range 5x now. It's been freaking amazing. Up 45% in 45 days. But when we broke to 1,099, I almost second guessed the strategy. Could the bottom this time be 1,000?
I don't think Europe is going to give up the goose till Nov. Plus Thanksgivig will make the debt ceiling debate look civil. We could have 1 more down then up cycle before then. And WHEN Europe gives up the goose and forces the world into recession - 900 will probably be the risk-adjusted entry point - with maybe a 2-3 day spike below that for those that are nimble.
After egging the SHTFers on 10/3 I went all-in long with UMDD and FAS. Closing it out today and will prob get short 3% higher on the major indicies.
Here's a perfect example of why the top won't ever fear the bottom:
http://www.youtube.com/watch?v=I-gWNSY3JHs&feature=related
And that's another thing too. Once everyone gets all worked up, the message is doomed, because there is more doom up above.
It's all coming down! Don't ever stay focused in the first place. We've got tons more crap to show you.
Gnite folks I'm here all week!
The bigger the trouble "brewing" the bigger the consequent rally will be.
The Wall Street CROOKS will never quit their bullshit game until there is no more money left to steal........