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Guest Post: The Economy Is On The Ropes And Going Down

Tyler Durden's picture





 

Submitted by Chris Martenson

The Economy Is on The Ropes And Going Down

The risk faced by those who are analyzing macro trends is sounding like a broken record. For those younger readers who have no idea what that means, imagine an MP3 song that will stick on and endlessly repeat a random segment of the song you are listening to until you give your device a sharp knock on the side. That's what a broken record sounded like.

The world economy is on the ropes and it won't ever recover. At least not to anything resembling its recent past. Neither the gleeful housing bubble nor the free-flowing credit that enabled that side bubble to emerge will return. The resources simply do not exist to repeat that final orgy of consumption. A new reality is upon us and - while fortunately more and more people are choosing to face our predicament rather than pretend the current risks and challenges do not really exist - the absolute numbers are still small and for the most part don't inlcude any of our political leaders.

The macro trends of worsening public and private debt loads, a looming and unaddressed Peak Oil threat, exponentially increasing global population, resource depletion, and an all-too-human tendency to use the money printing machine to deal with tough economic problems all remain pointed firmly towards an uncomfortable conclusion: There's a future of less in store for most people.

Our best hope is for a negotiated decline to lower levels of economic activity that allow us to gracefully adjust our expectations to a new and lower level consumption that offers an even more enjoyable and purpose filled existence. Our worst fear is that a stubborn insistence on business as usual by our leadership leads to a future shaped by disaster rather than design.

The Fundamental Issue is this: you can't solve a problem rooted in too much debt with more debt. It just doesn't pencil out.

"Here we go again…solving a debt problem with more debt has not solved the underlying problem. ...Can the US continue to depreciate the world's base currency?" 

    ~ Goldman strategist Alan Brazil     (Source)

Yet we now see that both Europe and the US are busily conceding to banker demands and coming up with all manner of fancy schemes to hide the fact that what is happening is simply that old debt is being replaced with new debt. 

Consider the confusing news about the European EFSF, the so-called rescue facility for the Eurozone, which is currently conceived to use leverage (to solve a debt problem!) and is thought to look something like this:

(Source) 

We could analyze the details of that flowchart and opine on the structure, but that really won't aid anything. Additional complexity and Jell-o redistribution will not change the basic fact that the debts simply cannot be paid back under current terms or out of any imaginable future economic growth.

As far as I can tell the complexity serves one main purpose and that is to baffle enough of the populace for long enough to allow a significant transfer of public wealth to occur in broad daylight into private pockets.  In this regard Europe and the US seem to be identical.

A Bad Reaction

On September 21, 2011 the Fed disappointed the world equity and commodity markets by announcing Operation Twist, nothing more than monetary Jell-o being moved from one side of the plate to another, instead of more QE stimulus (which would be additional Jell-o in this metaphor).

The reaction was swift and negative. 

Beginning with stocks, we see that a couple of severe down days (the red bars in the green circle) ensued following the operation twist announcement. 

 

We also note that the S&P 500 is down year to date (YTD, blue dotted line) and that it is bouncing between the 1120 and 1220 marks (purple lines) with a lot of volatility but not much direction. The simplest explanation for this is that tensions exists between what the fundamental data is telling us about the state of the global economy (not good, more below) and the hope that more central bank money will soon be flooding the world.

As always, this is not a good sign and any time you read the word "investors" being used in an article about who is driving these price movements I invite you to replace that word with "speculators" as that's what we all are now; speculating wildly about when and how much thin-air money will next be injected by one central bank or another.

Gold had particularly tough going after the Twist announcement getting clobbered for ~$100 on a couple of days (green circle) following the twist announcement:

These price drops had nothing to do with an improved outlook on the viability of the world's fiat money systems or a reduction in overall systemic risk. Neither were appreciably altered by the Fed decision although systemic risk was probably elevated.   Without the Fed absorbing additional existing debt the entire system is at greater risk of slipping into a deflationary spiral that could get out of control.

If that happens, you want to be sure to have gold, in hand.

Silver was especially slammed, and was the undisputed loser of the entire commodity complex losing as much as 25% in a single session (before recovering):

I have always held that the risk for silver in this current rout would be that it behaves more like an industrial metal than a monetary asset and therefore could slip in price regardless of systemic stress. For a while there throughout July and August I began to think that silver was displaying some money-like qualities but the recent slam dispelled those thoughts.

I continue to think that this rout is not yet over and am waiting better prices for silver before I remove some of my dry powder and accumulate some more.

The 'off note' in this story is the price of oil: 

Until and unless oil, the main lubricant of commerce and a feed-in to the price of everything, slips and plummets a long way from here, I remain bullish on commodities in general. The macro story for oil is simply that a marginal new barrel of oil costs at least $70 in today's world and quite a bit more in some cases. 

If oil falls below that $70-$80 level then you can forget about new supply coming on line. In many respects we are living in an 'oil shadow' created by the plunge in oil to $38 in 2009 which delayed a large number of oil development projects that would otherwise be yielding supply today.

Should oil fall below the marginal cost again here in 2011 or 2012 then we'll have another oil shadow to contend with a few years down the line.

Of course I should point out here that the above chart is for US oil only (WTIC) and that the world price for oil is roughly $20 higher as indicated by the price of Brent crude at $104/bbl.

Slip Sliding Away

Presently, the global economy is not doing all that well. There are troubling signs from Japan, the US Europe and now China that the economy is stalling out and in serious danger of slipping back into recession. If that happens, all of the debt rescue plans will both have additional headwinds with which to contend and new debt implosions to rescue. 

Any analysis of the global economy has to begin with Dr. Copper, the most trusted source for an accurate economic diagnosis. Used in an enormous variety of commercial applications from houses to cars to electronics to electricity cables, copper prices usually provide a useful early read on the direction of the economy.

That tale is one of weakness:

Copper prices are now back to where they were in 2008, although still considerably up off the lows of late 2008 and early 2009, and are in negative territory YTD by more than 20%.

Consistent with the weakness in copper prices are recent reports of Chinese manufacturing activity slipping into contraction:

China manufacturing data paint weak picture (Sept 22, 2011)

HONG KONG (MarketWatch) — HSBC’s preliminary China Manufacturing Purchasing Managers’ Index, or “flash” PMI, fell to a two-month low in September, indicating a broadening slowdown in the Chinese economy, with industrial output swinging from a modest expansion to a deterioration.

The weak data were a factor in the broad equities sell-off in Hong Kong Thursday.

The headline preliminary PMI for the month was 49.4, down from 49.9 in August, HSBC said in a statement Thursday.

The PMI’s output index fell to 49.2 in September, down from 50.2 in August and below the 50 level dividing expansion from contraction.

China is addicted to rapid rates of growth and its banking system is heavily exposed to a wildly over-priced real estate market, especially in their major urban centers. If the Chinese property bubble busts then expect major banking stress to follow suit.

Perhaps one nearby indicator is the health of the Hong Kong real estate market which is now entering a dangerous phase:

Hong Kong’s Tsang Sees Property ‘Soft Landing,’ Backs Peg (September 27, 2011)

(Bloomberg) -- Hong Kong Financial Secretary John Tsang predicted a “soft landing” for the real estate market and said the city will keep its currency peg to the U.S. dollar, blamed for helping drive home prices up about 70 percent.

 “The residential market has basically frozen as a result of the curbs and the global downturn,” said Alva To, head of consulting for North Asia at DTZ, a property broker. “Our surveyors are seeing almost a 60 percent drop in the number of valuation queries from banks compared with normal times.”

Hong Kong’s used home sales have slowed, with prices falling for the first time in seven months in July. That’s not a “very violent reaction,” Tsang said. Prices have jumped about 70 percent since the start of 2009. New loans approved fell 10.3 percent in August from a month ago.

A 70% jump in prices in two years is not a healthy sign; it is an indication of a bubble.    The basic trajectory is simple enough; falling sales then lead to falling prices. Once the dynamic is underway it will not stop until prices again reach affordability for the median household (at best) and may even badly overshoot to the downside (at worst).

More directly, Chinese real estate developers are encountering a slump in both sales and prices:

China Developers Face More ‘Severe’ Credit Outlook, S&P Says

Sept. 27 (Bloomberg) -- Chinese developers face an “increasingly severe” credit outlook, which may force them to cut prices and turn to costlier funding sources as sales weaken, Standard & Poor’s said.

A 30 percent decline in sales may leave many developers facing a liquidity squeeze, S&P said after conducting stress tests of the nation’s real estate companies. Most developers would be able to “absorb” a 10 percent sales drop next year, the credit rating company said.

“The worst isn’t over for China’s real estate developers,” S&P analysts led by Frank Lu wrote in a report today. “Developers are bracing themselves for slower sales and lower property prices ahead.”

Fewer than half of the 70 cities monitored by the government in August posted month-on-month gains in home prices for the first time, according to Samsung Securities Co.

What will happen to Chinese lending to the US and Europe if global trade slumps and their banking system begins to experience severe stress as a consequence of their own real estate bubble popping? Probably nothing good. That's why we have concerns that the enormous bubble in US Treasuries may be exposed as early as next year (2012).

Consistent with the rumblings from Dr. Copper are the reported slumps in global trade recently hitting the wires:

German Exports Unexpectedly Fell in July (Sep 8, 2011)

German exports unexpectedly declined for a second month in July, underscoring signs Europe’s largest economy is losing momentum as the global recovery falters.

Exports, adjusted for work days and seasonal changes, fell 1.8 percent from June, when they dropped 1.2 percent, the Federal Statistics Office in Wiesbaden said today. 

German growth is slowing as Europe’s debt crisis prompts governments from Spain to Ireland to cut spending, sapping export demand. Factory orders from abroad dropped in July and executives and investors grew more pessimistic last month. Bayerische Motoren Werke AG (BMW), the world’s biggest maker of luxury cars, said on Sept. 1 that U.S. sales dropped in August.

Japan exports disappoint, could weaken further (Sept 20, 2011)

TOKYO, Sep. 20, 2011 (Reuters) — Japan's exports rose in the year to August at less than half the pace expected as a global economic slowdown, a strong currency and Europe's sovereign debt crisis put Japan's own recovery increasingly in doubt.

"The impact of a slowing in the global economy is starting to become visible in Japan's export figures," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"In the coming months exports may go back to posting year-on-year declines, meaning the economy will have no sufficient support factor unless the government quickly implements reconstruction spending."

[US] Economic indicators predict continued weak growth (Sept 22, 2011)

[F]actory orders, unemployment benefit applications and hours worked were among six measures that weakened in August.

Existing home sales up but price outlook grim (Sept 21, 2011)

WASHINGTON (Reuters) - Existing home sales rose in August to their highest in five months as lower prices and rock-bottom interest rates drew more buyers into a still moribund market.

Sales climbed more than expected, up 7.7 percent from the previous month to an annual rate of 5.03 million units, the National Association of Realtors said on Wednesday. The median price was 5.1 percent lower than a year earlier.

Existing home sales have trended lower in 2011 and prices are still weakening. One factor keeping prices low is the high rate of "distressed sales" which include those forced by foreclosures.

Distressed sales accounted for 31 percent of August transactions, up from 29 percent a month earlier.

Comment: Note that falling prices are not a good sign here. Also the 7.7% bump in sales, assuming we believe the NAR data (always worth taking it with a grain of salt), still leaves us well off the peak of several years back and is being driven in large measure by distressed sales.

Let's contrast the distressed bargain activity with new home sales, also for August, to see if a different picture emerges:

New home sales fell in August for 4th month (Sept 26, 2011)

Sales of new U.S. homes fell to a six-month low in August.

The fourth straight monthly decline during the peak buying season suggests the housing market is years away from a recovery.

The Commerce Department said Monday that new-home sales fell 2.3 percent to a seasonally adjusted annual rate of 295,000. That's less than half the roughly 700,000 that economists say must be sold to sustain a healthy housing market.

New-homes sales are on pace for the worst year since the government began keeping records a half century ago.

New home sales are on a pace for the worst year since records began fifty years ago? That statistic alone should tell you exactly where we are in this so-called recovery. Absolutely nowhere.  The decline in new home sales wipes out the warm glow from the increase in existing home sales.

Summary: Part I

The world that Europe, the US and Japan are desperately trying to sustain is no longer possible in a world of too much debt and too expensive energy. The plethora of sliding data noted above are classic warning signs one would expect to see from a global economy in systemic decline.

We are now down to the wire. Over the next few months and years, our story of credit growth - four decades in the making - will continue to unwind. Those who place their faith in the authorities to first understand the true nature of the predicament and second to implement restorative policies are at tremendous risk of personal and/or financial losses.

In Part II of this report: Understanding What Happens Next, we discuss important decoupling trends, what steps global leaders will be forced to take later this year to deal with thism, why these steps won't work, and what prudent individuals should be doing now to protect themselves and their wealth.

Click here to access Part II of this report (free executive summary, enrollment required for full access)

 


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Wed, 09/28/2011 - 11:54 | Link to Comment nyse
nyse's picture

We're gonna need some smelling salts soon...

Wed, 09/28/2011 - 12:01 | Link to Comment JumpinJonnyK
JumpinJonnyK's picture

I think we are going to need gold and silver not salts.  Premiums and shipping times are rising on silver in the US again http://www.goldshark.com/products/silver-coins/silver-coins-rounds/american-silver-eagle-coins.html.  Glad I took action in 2007 and bought a good bit of silver and lead!

Wed, 09/28/2011 - 12:04 | Link to Comment SheepDog-One
SheepDog-One's picture

Gold and silver metal is ok....copper jacketed lead metals gets you out of severe pinches more surely though.

Wed, 09/28/2011 - 12:43 | Link to Comment Jay Gould Esq.
Jay Gould Esq.'s picture

Appropriate image inserted in that flowchart -- of a Lancaster "Dam Buster."

Purely coincidence, no doubt.

Wed, 09/28/2011 - 14:21 | Link to Comment optimator
optimator's picture

I read it as a standard Lanc, Battle of Britain Memorial flight,  that carried incendiary conflagration starters. Think firestorm.

 

Wed, 09/28/2011 - 15:41 | Link to Comment Pure Evil
Pure Evil's picture

Is it time for World War III already?

Thu, 09/29/2011 - 11:02 | Link to Comment Estrella
Estrella's picture

Yeah but... those guys got shot up very badly. I think the loss rate was over 75%. A bold plan, but it failed. Hmmm...

Wed, 09/28/2011 - 13:59 | Link to Comment Silver Dreamer
Silver Dreamer's picture

We're also going to need a lot of lime and trash bags.

Wed, 09/28/2011 - 12:04 | Link to Comment HardlyZero
HardlyZero's picture

Ron Paul might be on the correct side of this equation.  I think his smaller is better approach may work out just fine.  I don't have any qualms about his integrity or judgement.

Maybe.

 

Excellent charts and points.  My opinion is that fiat printing is not "capital" at all...its just paper which is not really capital.  Capital is something tangible...that you can touch and feel...that is owned and not borrowed.

The problem is real capital is hard to come by these days...and the economy is based on fiat capital which is 10000x the size of the real capital.  What you gonna do ?

Wed, 09/28/2011 - 12:05 | Link to Comment Deadpool
Deadpool's picture

maybe Rue Paul...nobody can fix this multi generational (since 1913 to be exact) problem. By the time the fool that gets sworn in on that freezing January 2013 day the paper currency the world will be floating on will drown everything. The sooner we realize the F'ed killed us the sooner we can be reborn.

Wed, 09/28/2011 - 12:15 | Link to Comment SheepDog-One
SheepDog-One's picture

Rue Paul! Now thats funny!

Wed, 09/28/2011 - 12:50 | Link to Comment baby_BLYTHE
baby_BLYTHE's picture

that line comes from the Zionist radio talk jock Mark Levin. There are numerous youtube videos of Levin blasting Ron Paul over his views on Foreign Policy. Levin loves war claiming, if in charge, he would double the size of our already oversized military.

go to the :48 second mark

http://www.youtube.com/watch?v=9hv1_yMQtS0

We are not going to let them get away with their tricks this time around!

Wed, 09/28/2011 - 15:49 | Link to Comment BigJim
BigJim's picture

Mark Levin - what an unpleasant man. If he's a semite, I'm not surprised he finds many people are anti-semitic.

Thu, 09/29/2011 - 03:25 | Link to Comment MSimon
MSimon's picture

Economic distress often brings large wars. Ron Paul may not be as smart as he thinks he is.

 

BTW LOVE him on domestic policy!!!!!!!!

Wed, 09/28/2011 - 12:01 | Link to Comment HardlyZero
HardlyZero's picture

We just have to figure out how to downsize this megalith, this megadeath.

Listen to Peter Gabriel song from late 70's "DIY"...keep it small....and Do it Yourself.

We have to "come together" and DIY and Keep it Small.

Wed, 09/28/2011 - 12:03 | Link to Comment SheepDog-One
SheepDog-One's picture

Yea thats the problem, which multi billionaires are going to step forward to be 'downsized'? None of em! Meanwhile the rest of the public is bankrupt, so we all know the answer is huge haircuts must be taken but there arent any volunteers and wont be any tomorrow either...so what to do....oh I remember how they always 'solve' this-

World War.

Wed, 09/28/2011 - 12:13 | Link to Comment Deadpool
Deadpool's picture

Russia did it, Argentina did it, Iceland did it. All it takes is the political will to rip the band aide off quickly and let the banks that made bad loans and the lenders that lent foolishly take hits. Until the dead wood is flushed out the economy can't heal and begin to grow again. Look at New Zealand post Christchurch earthquake...growing again nicely, thank you very much. Take the pain, heal, grow. What US and Europe are doing is providing the heroin addict more heroin. Keeps the body alive, but doesn't cure the addict. The ever expanding debts that banks need to grow (and governments need to economically enslave) is over. Bring on the hard times so the good times can come sooner. Gov't intervention is the problem...

Wed, 09/28/2011 - 13:33 | Link to Comment r101958
r101958's picture

....however, we need to realize that the 'growth' or 'recovery' will be completely different from what we have known in the past.

Wed, 09/28/2011 - 14:06 | Link to Comment fonestar
fonestar's picture

The problem is with these bubbles is that population levels are tied to them as well.  Yes, smaller is better and that also spells a die-off just like rabbits in a ten year cycle.

Wed, 09/28/2011 - 11:58 | Link to Comment falak pema
falak pema's picture

small is beautiful.....plus paradigm change...frugal living...and innovation.

Wed, 09/28/2011 - 12:24 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Spot on Falak, spot on.

ORI

Wed, 09/28/2011 - 12:03 | Link to Comment Josh Randall
Josh Randall's picture

I didn't see Chewco on that flow chart, now I'm really concerned

Wed, 09/28/2011 - 12:03 | Link to Comment NEOSERF
NEOSERF's picture

Great article...important to keep the eye on the ball and not get wrapped up in the rumors, headlines and general puffery going on in the media...this is going down, whether this week, next or early next year...the data says it has to.

Wed, 09/28/2011 - 12:04 | Link to Comment giocatoli
giocatoli's picture

This article is so negative.  Let's have something a little more 'glass half full' shall we?  I saw a unicorn this morning, for example.  And it gave me a ride to the end of the rainbow...

Wed, 09/28/2011 - 12:24 | Link to Comment B9K9
B9K9's picture

Boy, everyone is embracing sarcasm these days - I guess it's the new black.

As to the main article, Chris, the system was always headed for collapse as long as humanity did/could not discover & develop an alternative to oil. If compound principle+interest is growing @ 2-3% per annum, it requires GDP to grow at the same relative rate simply to stay even. Since GDP correlates exactly 1:1 with oil consumption, that means oil utilization must grow @ 2-3% to avoid a deflationary collapse.

Hubbert nailed it - once the USA passed peak domestic production in the 70s, the transition to a credit financed consumer economy in the 80s was foreordained.  I mean, it's all we had; that, and a global military operation in which to enforce the dollar standard. Otherwise the boomers would have had to eat the shit sandwich that is now on everyone's plate.

Denninger keeps talking about how our political 'leaders' need to conduct "an adult conversation" with the body politic. This little talk should have taken place 30 years ago - now it way, way too late. Of course, the bankers who not only saw this occurring, but actually engineered the system to take advantage of the new paradigm have made off like bandits.

Jesus H. Christ, but wasn't it a sweet ride while it lasted?

Wed, 09/28/2011 - 12:26 | Link to Comment SheepDog-One
SheepDog-One's picture

'Satire is the peoples last weapon'

Wed, 09/28/2011 - 13:24 | Link to Comment LFMayor
LFMayor's picture

I thought it was sticks and rocks.

Wed, 09/28/2011 - 13:54 | Link to Comment hidingfromhelis
hidingfromhelis's picture

No, those will be the next weapons.

Wed, 09/28/2011 - 14:04 | Link to Comment oldman
oldman's picture

The glass is half empty of what you want and half full of what you don't want to read or hear about; that is just how things are.

Maybe what we want does not exist and the glass is full of what 'is'. Who can say? And what are we going to DO about it, anyway.

I am tired of reading on ZH fantasies about fantasy as we post every unfounded rumor that shows its head, but this is all the news there is

Yeah, me too: what I want does not exist                  om

Wed, 09/28/2011 - 23:44 | Link to Comment Sunshine n Lollipops
Sunshine n Lollipops's picture

Hey oldman! (I'm giving you the Do-Nothing Gang secret handshake.)

Y'know, I got to the point where I didn't want anything. Nothing. It was very boring. It was the result of my trip to transcendentalism. You know, eliminate all desire until you disappear into nothingness. Sheesh, what a goal! Didn't become transcendent, that's for sure, but I was able to disconnect from the material world for a while. But the raw, messy spectacle of it was irresistible, so here I am at ZH with a front row seat at the ongoing carnival of tragi-comic human self-destruction. My righteous fury has almost completely abated, since I've come to terms with the reality that there's fuck-all I can do to change any of it. The apparently cataclysmic trajectory we're on frequently brings moments of despair, but bemused resignation generally takes its place. I'm thoroughly convinced that none of it matters a whit, and as you said, it's all fantasies on top of fantasies, a dream. The world as it's presented to us these days is an aberration, an abomination, nearly devoid of humanity in the macro. All we can do is dream our own dream and make sure it's a sweet one and always keep a song in our hearts. And try to avoid any activity at all if possible.;o)

Sun, 10/16/2011 - 18:26 | Link to Comment oldman
oldman's picture

SnL,

We are in just about the same place.

This stuff is addictive and also helpful to an oldman's mental health if I just do not get too attached to it. The conditioned self, however, loves to see how important it is and measure what others think and play games----I go to the forest as often as I can as my remedy---but, it is a trap.

Knowing you are trapping your 'self' is not the same as the feeling of 'being trapped' was----and I laugh at this oldman all of the time.

Living in a cartoon is the best place i've ever lived     om

Wed, 09/28/2011 - 12:05 | Link to Comment Going Loco
Going Loco's picture

A delectable example of resource depletion was reported on BBC this week. Helium may be a common element but it's hard to get (damned hard to make), stocks are running low, and it's desperately needed for MRA scanners and other cool things. What are we doing with it? 16% of consumption last year went up into the atmosphere in kids' party balloons and is presently making its slow but inexorable way out of our atmosphere and out into space.

Having said that, and much as I admire him, I don't agree with Chris Martenson's analysis of OT2. I prefer the analysis which was posted here, possibly the most brilliant post I have ever seen on this board:- http://www.zerohedge.com/news/panic-and-perspective-wall-street-art-cash...

Wed, 09/28/2011 - 12:23 | Link to Comment papaswamp
papaswamp's picture

Yea Lefty is freaking brilliant. Like the TD's he is one of those people that completely sees the whole game as opposed to just seeing the part immediately in front. It is going to be a crazy ride....what is really nuts is it seems that things really are going to unravel in 2012. I'm not a believer in the craziness of the ancient predictions....but they may end up being damn close to when this game of musical chairs is over and the people have no place to sit.

Wed, 09/28/2011 - 12:05 | Link to Comment Joe Shmoe
Joe Shmoe's picture

I think a lot of people agree with downsizing the government.  It's just that the timing is all wrong.  Try to radically downsize now and you could be sure the economy would collapse.  That's what's so annoying about policy right now.  No one had the balls (or votes) to do enough of any particular policy.  We didn't go down a Keynesiain pathway, we went halfway down that path.  So it didn't work and now we can't get off the path.  Austerity measures in a fragile economy may make the Tea Partiers sound macho, but it's totaly suicidal policy.  We're fucked between a rock and a hard place.  We should never have done the TBTF bailouts.  The aftermath of letting C and BAC, etc. fail would have been super painful.  But we'd be working htrough it by now.  We are in the land of classic Econ soundbites: "moral hazard," "pushing on a string."    

Wed, 09/28/2011 - 12:09 | Link to Comment SheepDog-One
SheepDog-One's picture

Well 1 thing is for damn sure, the government does NOT agree with downsizing the government so get ready for war if thats what you want to make happen.

Wed, 09/28/2011 - 13:29 | Link to Comment Sgt.Sausage
Sgt.Sausage's picture

==> Try to radically downsize now and you could be sure the economy would collapse.

It's going to collapse, anyway.

Might as well kill two birds and knock out the bloated, useless bullshit at the same time.

 

 

Wed, 09/28/2011 - 14:30 | Link to Comment Joe Shmoe
Joe Shmoe's picture

Define collapse... what you really think is going to happen, in real life and not in some rural trailer park fantasy world where you get to save the world by shooting the bad guys.

Wed, 09/28/2011 - 12:06 | Link to Comment PaperBugsBurn
PaperBugsBurn's picture

Yaaaaaaaay!!!!

Going down, bitchez!!!

Get the bankstasssssss!!!!!

The zionista drug traffickers and juden fetzen pushers along with their illuminati brethren!

Wed, 09/28/2011 - 12:07 | Link to Comment monopoly
monopoly's picture

A quiet day so far, nothing much going on. FCX almost 50% off its high. The best copper producer out there. China slowing down, we all know the rest and interest rates creeping up ever so slowly.

Quiet before the storm?

It always amazes me that some would rather buy the dollar then an ounce of gold or silver. But, that is why they call them "markets". Always two sides.

Wed, 09/28/2011 - 12:07 | Link to Comment gjp
gjp's picture

None of this is any problem.  AMZN is releasing a new tablet, the world is saved!

Wed, 09/28/2011 - 12:07 | Link to Comment SheepDog-One
SheepDog-One's picture

Yet equity Hindu cows are looking on at the Western World economic devastation and calmly chewing their cud as if theres no danger at all today, tomorrow, or ever.

Wed, 09/28/2011 - 12:08 | Link to Comment fdisk
fdisk's picture

Cheerleaders forgot to compare SPX and Gold/Silver..
should I say correlation? You better pray for Market recovery
or get your toaster ready for Gold/Silver sandwiches. :)))

Wed, 09/28/2011 - 12:11 | Link to Comment SheepDog-One
SheepDog-One's picture

'Market recovery' in what? Take the lowest index, we're still only 15% below ALL TIME highs.

Wed, 09/28/2011 - 12:16 | Link to Comment fdisk
fdisk's picture

You wanna see $4 Silver? Don't tell me those who hold 10k oz would be happy to see 400k$ turn into 40k..

I guess, you just forgot, that Silver and Gold belongs market as well named - Commodity Market

Wed, 09/28/2011 - 12:17 | Link to Comment SheepDog-One
SheepDog-One's picture

See, your mistake is saying '$4 dollar silver'...what its priced at in dollars is irrelevant. The equation is reversed. 

Wed, 09/28/2011 - 12:38 | Link to Comment Going Loco
Going Loco's picture

Sheepdog - if the dollar price of silver is irrelevant I guess you won't mind buying my little stash for USD$10,000 an ounce, today? Not in 2 years' time. Today.

Wed, 09/28/2011 - 14:05 | Link to Comment Silver Dreamer
Silver Dreamer's picture

Most people I know are not buying PM's to make US Dollars.  You're missing the entire point.  When all you have is fiat currency and fiat currency backed assets but are still broke because they are worthless, you might begin to understand.  When you're starving because your fiat currency buys nothing, you might begin to understand.  I wouldn't bet any money (or PMs) on it however.

Wed, 09/28/2011 - 18:15 | Link to Comment Prometheus418
Prometheus418's picture

That's a sad strawman.

No one in their right mind pays more for anything when they do not have to.  It has nothing to do with how a person respects the dollar or not- is is a matter of common sense.

If we are at peak oil, as some claim, and there is a say coming when food is precious and gasoline is non-existant, there is no reason why I would trade you a truck for an ear of corn right now, whether I knew that day was coming or not.  Everything has it's time and place.

Wed, 09/28/2011 - 14:46 | Link to Comment Rhodin
Rhodin's picture

 Dollar price of silver is irrelevant today, only if you are the Fed, or Fed crony bank, and have no cost dollars.  It MAY eventually be true for all of us, IF wages, goods, bills, and taxes can be paid in silver and/or if dollars are worthless.

Today i watched silver price drop $2, then bought a small stack.  I then watched it drop another $ in an hour.  The price matters to me because i would have more silver now if it was lower when i bought. 

I will keep stacking  if it goes to $4 or $4k, but that number will impact how much i can stack.

 

 

Wed, 09/28/2011 - 12:15 | Link to Comment monopoly
monopoly's picture

Not sure how you figured that. Spoos at 1,530 once, now 1,170. More like 25% to me. Am I missing something?

Wed, 09/28/2011 - 12:22 | Link to Comment SheepDog-One
SheepDog-One's picture

Yea typo I didnt catch meant to say 25% or so, then throw in the dollar devaluation and crazy P/E's, really our markets are higher now than they were then. $25 trillion thrown in there sloshing around.

Wed, 09/28/2011 - 12:13 | Link to Comment SheepDog-One
SheepDog-One's picture

'Oh I got an idea...govt and banks just take a big haircut and 'downsize'...LOL anyone actually BELIEVE thats going to happen? Not without 1776.

Wed, 09/28/2011 - 12:41 | Link to Comment Vergeltung
Vergeltung's picture

don't forget 7.62  ;)

Wed, 09/28/2011 - 13:37 | Link to Comment Sgt.Sausage
Sgt.Sausage's picture

39 or 54 ?

(I gots 'em both piled high, wide, and deep)

 

Wed, 09/28/2011 - 21:40 | Link to Comment UP Forester
UP Forester's picture

Better to have 51, or 5.56.  I don't think (hopefully) any Red Star pop-up targets are on the horizon.  Blue helmets, a little more likely, but black masks and helmets most likely.  Uncle Sugar may re-supply you (in a sense), if you're not over-run by the jack-boots....

Wed, 09/28/2011 - 14:05 | Link to Comment Milestones
Milestones's picture

We are very rapidly running out of a sane peaceful resolution time frame. Each day we do nothing, the inevitable someting becomes more certain. By 2012 there will be no alternative but a bloodbath or capitulation to FEMA camps.  Milestones

Wed, 09/28/2011 - 14:08 | Link to Comment Silver Dreamer
Silver Dreamer's picture

Bloodbath it is then.  If FEMA camps ever get populated, a bloodbath will certainly result.  Americans will NOT go quietly into the night.

Wed, 09/28/2011 - 12:14 | Link to Comment Jumbotron
Jumbotron's picture

Any analysis of the global economy has to begin with Dr. Copper, the most trusted source for an accurate economic diagnosis. Used in an enormous variety of commercial applications from houses to cars to electronics to electricity cables, copper prices usually provide a useful early read on the direction of the economy.

That tale is one of weakness:

 

Check out this 15 year chart of copper.....can you say "Toppy" ?

 

http://www.infomine.com/chartsanddata/chartbuilder.aspx?z=f&g=127669&dr=15y

 

Wed, 09/28/2011 - 13:38 | Link to Comment r101958
r101958's picture

....now compare it against inflation of the dollar over that same time and I think you'll see what he means.

Wed, 09/28/2011 - 12:15 | Link to Comment cabtrom
cabtrom's picture

Yea whatever, these prediction of "bank failures" are like a broken record too.

Wed, 09/28/2011 - 12:18 | Link to Comment monopoly
monopoly's picture

Well, we broke 1,640, 1,610 next.

Wed, 09/28/2011 - 15:05 | Link to Comment Rhodin
Rhodin's picture

It just did that,  & met a bid @ 1,600 and bounced.  I'm just watching here, curious to see what resistance is shown.  Won't consider buying Au unless silver turns back up, or Au hits 1,200, whichever comes first. 

Wed, 09/28/2011 - 12:20 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

Well, last Friday there were a whopping 2 million October put option contracts against the S&P 500 (SPX). That´s up from a usual volume of 10-20 thousand contracts, an increase of 10-20,000 per cent.

Haven´t checked the number as of now but wouldn´t be surprised if it´s over 3 million.

Wed, 09/28/2011 - 12:23 | Link to Comment SheepDog-One
SheepDog-One's picture

It also wouldnt surprise me 1 bit if the record put buyers are the FED central banksters themselves.

Wed, 09/28/2011 - 12:32 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

Nah.

The sellers are obviously funds indexed to the S&P 500 and the buyers are mostly banks, hedge funds, etc. The usual suspects.

They have the potential through those puts to transfer gigantic amounts of wealth next month.

 

Wed, 09/28/2011 - 12:20 | Link to Comment monopoly
monopoly's picture

Coal also. ACI down 50%. PCX, although not a great company down 60%. Growth, OK, show me.

Wed, 09/28/2011 - 12:23 | Link to Comment monopoly
monopoly's picture

I guess as long as we keep eating those Burritos all is well.

Wed, 09/28/2011 - 12:25 | Link to Comment SheepDog-One
SheepDog-One's picture

I stopped eating the $8 rice burritos long ago, the need for stockpiles of Colon Blow and adult undergarments makes those damn things not worth it at all.

Wed, 09/28/2011 - 12:40 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

Ms. Bull seems to be biting granite today.

A quick shot up to 1184, the first line of resistance (23 points below the first major one) then into the tank.

Two thirds of the market is down, they´re mostly dressing up select loser dogs for the end of the quarter.

Wed, 09/28/2011 - 12:41 | Link to Comment MrBinkeyWhat
MrBinkeyWhat's picture

OT: Since the article on the China hard landing won't let me post a comment there:  Here from the "Fringe" of "fringe blog sites" I would point out that currently there is a geo-magnetic storm thanks to a recent coronal mass ejection (sun event) that is messing with my computers, my network(s) and the internet.

So if your equipment is getting squirelly, don't blame the IT folks. It is "cosmic man".

 

Wed, 09/28/2011 - 12:42 | Link to Comment fdisk
fdisk's picture

I hate this Market.. Everything: Shares, Gold, Silver Cooper, whatever

It's all SHORT. It's like sitting and betting on somebodies dead.

Wed, 09/28/2011 - 12:44 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Er, what was the point of this article?  Buy low sell high, same as it ever was.  Think the game is corrupt?  Get the fuck out of the game and get physical physical.  Any questions?  

Wed, 09/28/2011 - 12:56 | Link to Comment Snakeeyes
Snakeeyes's picture

Socialism / Crony Capitalism is massively expensive and not sustainable. The Tao of Elizabeth Warren at work!!

http://confoundedinterest.wordpress.com

Wed, 09/28/2011 - 13:00 | Link to Comment Killtruck
Killtruck's picture

Anyone else notice the shit-ton of Iran related articles in the MSM lately?

Interesting how the Iranian boogeyman comes out of hiding, unprovoked and "all of a sudden" when the real Euro death spiral starts.

Wed, 09/28/2011 - 14:11 | Link to Comment Silver Dreamer
Silver Dreamer's picture

War is always a convenient distraction from economic disasters.  It's the Ace in the banksters' hand.

Wed, 09/28/2011 - 13:07 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

"unaddressed Peak Oil threat, exponentially increasing global population, resource depletion [...] all remain pointed firmly towards an uncomfortable conclusion: There's a future of less in store for most people."

I always view these kinds of comments with suspicion.  These "problems" can be posited by the guilty parties and their apologists as the reason for all our problems i.e. "an act of G-d".  All of our problems are man-made and a result of politics.

Wed, 09/28/2011 - 13:15 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

It´s the old and by now thoroughly discredited myth of scarcity - the very foundation of economics.

Since these old wives tales ran into the massive waves of technological advances, stupendous productivity increases and incredible oversupply of everything, 20-25 years ago, all hell has broken loose in inflation propaganda.

 

Wed, 09/28/2011 - 13:43 | Link to Comment r101958
r101958's picture

I think you might want to consider some physical laws (thermodynamics) and the fact that resources are finite.

Wed, 09/28/2011 - 14:03 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

They certainly are finite and probably some of them may mostly run out in the next centuries but I don´t think that´s much of a concern for today´s markets. Much of this stuff is likely to become obsolete anyway long before it runs out.

Wed, 09/28/2011 - 14:15 | Link to Comment Silver Dreamer
Silver Dreamer's picture

A mass culling will certainly lower demand and prices for a wide range of commodities.

Wed, 09/28/2011 - 14:42 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

Yeah, I´ve heard that a lot and view it as part of the inflationary propaganda. Those professional doomsayers peddle gold and silver and freeze-dried food.

IMO you should start shorting producers of pet food since they are likely to go out of business in the next years when Americans get rid of all that hoarded stuff as the world fails to end and prices fall.

 

Wed, 09/28/2011 - 15:24 | Link to Comment SokPOTUS
SokPOTUS's picture

...or when people have to start eating their pets for food...

Wed, 09/28/2011 - 21:22 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

So if no one had ever been born, we'd have no problems.

You are very wise, Bike Guy.

Wed, 09/28/2011 - 13:23 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

It´s big news when the volume of bets against the S&P 500, the cream of the crop of U.S. stocks, suddenly jumps by 10-20,000%. Yet, you don´t see anything about it in the papers or bubblevision. That should be cause for some concern IMO.

Wed, 09/28/2011 - 13:33 | Link to Comment eddiebe
eddiebe's picture

Just make people afraid enough and you can get them to do anything you want.

Wed, 09/28/2011 - 13:54 | Link to Comment Sophist Economicus
Sophist Economicus's picture

The world that Europe, the US and Japan are desperately trying to sustain is no longer possible in a world of too much debt

 

Just stop there Chris.   The rest is too embarassing (have you checked the dollar inflation adjusted cost of what a barrel of oil should be?    $80/barrel in today's fiat is not anywhere near where it should be -- either oil producers are as dumb as a box of rocks or peak oil only exists in your imagination)

 

Also, one of the most dangerous things to think is that Dr. B's Operation Twist is  "nothing more than monetary Jell-o being moved from one side of the plate to another".   He is trying to buy breathing room for Treasury at the long end and try and stop the 'vigilantes' from creating a real sh*t storm by pumping up the asset value of the bonds till 2013, knowing the market liquidity will keep the short end from getting out of control.   All the while screwing savers and erroding the value of government debt and enabling the aggressive redistribution of wealth from producers to bums.

 

Like your perspective on gold though....

Wed, 09/28/2011 - 15:12 | Link to Comment Falcon15
Falcon15's picture

As a petrochem industry employee I need to expand upon a couple of points regarding oil.

According to readily available data through the DOE as of 2010 the world produced

86,740,349 barrels of oil a day.

The world consumed

85,294,471 barrels of oil a day.

The total excess produced oil was, for each day was: 1,445,878

The total excess produced (not consumed) oil for the year was:  527,745,470 - enough oil to run the world for 6.1 days with ZERO additional production.That is it. No more, no less. It is indeed scarce, and what is that about supply and demand? Oh, yes. Economics 101. When supply exceeds demand the price goes down. Or does it?

Average cost of a barrel of oil in 2010 - $71.21, with monthly average lows in the $60's and highs around $81.

Throw in all the MENA instability we have had just this year, coupled with 4 major boots on the ground military actions (oh hell I'll say it - wars)...oil consumption has seen an increase while production has decreased. I do not care how you want to winnagle it, when countries like Lybia are not producing, it takes away from the excess other countries are producing, driving the price upwards, or at least it should. For example: 100% - or close to that - of Italys oil comes from Lybia. If Lybia is not producing, and it was not until a few days ago, their needs have to be met somehow. Increased demand for oil means increased future delivery price. Period.

 

In 1950 the total world consuption of oil was 8 million barrels of oil per day. As of 2010, we consumed the entire yearly consumption of the world in 1950 in 34 days. By February 3, 2010. That is an increased consumption of more than 10 times that of 1950. Again,demand drives price.

The price of a barrel of oil in 1950, inflation adjusted was $25.90 a barrel. Oil was easy to find, and more and more fields were being proven almost daily. Oil was relatively simple to extract, there was no OSHA, EPA or pesky bothers like that.  The price of oil today if ANYTHING is reflective of the difficulties of drilling deeper and deeper and extracting what oil is left. A majority of all refineries in the world have been in operation since the oil boom era. They are bought, owned and more than paid for. In fact many refineries sell power to the grid, and increasingly oil by-products are sold to chemical, plastic, and manufacturing industries - all profit, it is waste to the refinery, but industrial raw materials to others. The ongoing maintenece costs are, in the grand scheme of things, negligible - as they are a major tax write off for all major producers. 

So, oil is not even close to it's actual costs. It is as manipulated as precious metals.

Does peak oil exist? If the depths we have to drill to and the lenbgths we have to go to today, compared to 1950, to extract even one barrel of oil is an indicator, I'd say yes. Even if oil is abiotic, the stocks are being depleted faster than they can replenish. Just my humble 2 copper washed zinc slugs. YMMV.

Wed, 09/28/2011 - 15:56 | Link to Comment DosZap
DosZap's picture

Falcon 15,

Question................

According to readily available data through the DOE as of 2010 the world produced

86,740,349 barrels of oil a day.

WERE THOSE FIGURES @ 100% OF CAPACITY?.

Uh,No.

Also,

The figure NO ONE can give is the amount LEFT on the planet...............just what they KNOW about.

Wed, 09/28/2011 - 16:26 | Link to Comment Falcon15
Falcon15's picture

Absolutely NOT at 100% pumping capacity. This too, is a manipulation tool used to manage the price.  Also, there are very ACCURATE scientific estimates of the amount of oil left in the known reservoirs, but not the unfound resources. Obviously they are unfound.

Wed, 09/28/2011 - 15:19 | Link to Comment V in PA
V in PA's picture

Aren't the oil companies responsible for like 99.9% of all of man's knowledge about oil.

So when they claim peak oil or that it 'comes from dino's' (finite oil) we are duty bound to believe them. Besides, they would never try to scare us to drive the cost up.

There has been 30-50 years of oil supply left my entire life (40 years). We always seem to find enough oil to keep the '30-50 years left' myth alive.

Wed, 09/28/2011 - 13:58 | Link to Comment PulauHantu29
PulauHantu29's picture

Deep Depression coming sooner rather then later if Ben and Barry don't act.

I doubt Barry will ever get elected again.....hard to win when the nation is in Deep Depression, stock market plunging, RE nosediving, etc.

Wed, 09/28/2011 - 15:44 | Link to Comment DosZap
DosZap's picture

PulauHantu29

I doubt Barry will ever get elected again.....

PRAY to GOD he does not, or we are 100% guaranteed,totally destroyed.NO way  out,we will be in a state of 100% Fasicsm in short order.

I pray the election is held BEFORE the sytem implodes.............or we are truly scroomed.

He is the least qualified, and most Marxist/Communist/Socialist bitch we have ever had.

ZERO experience with running anything remotely related to an econmy,he excels at one thing HATING America.

HE and his policies are what has caused ZERO growth since elected.

Not accidental either.

 

Wed, 09/28/2011 - 16:12 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

"HE and his policies are what has caused ZERO growth since elected."

Then you must have been born some time near the end of the 3rd quarter of 2008. :o)

Thu, 09/29/2011 - 01:03 | Link to Comment dark_matter
dark_matter's picture

Just out of curiosity, which of the big name republican candidates do you think can save our bacon when Obama is not re-elected? Romney? Perry?

Wed, 09/28/2011 - 14:04 | Link to Comment whatswhat1@yahoo.com
whatswhat1@yahoo.com's picture

Eternally Unemployed: guaranteed!

 

131.2 million. The total number of jobs held by Americans in August. In January 2000, total nonfarm employment stood at 130.8 million. That means that over the past decade or so, less than 400,000 jobs have been added overall. At the same time, the eligible work-age population (those older than age 16, who are not in the military or prison) has grown by 28 million.

....and the rest of the ugly truth

http://finance.yahoo.com/news/15-Stunning-Statistics-About-usnews-374399...

Wed, 09/28/2011 - 14:14 | Link to Comment Duffminster
Duffminster's picture

After much reading, research and trying to challenge my own paradigm, it seems apparent to me that everything hinges on China and whether Europe can pull together and this from the standpoint of the EU, ECB and the internal political workings of the various governments and it depends on whether China has a hard or soft landing, which part has to do with their credit markets and their ability and willingness to devalue their currency to support their own banks.

At the end of the line I see a currency war and all fiat currencies being devalued.   In the short run (next 18 months) I see a hard landing in China, Europe unable to find common ground to bail its banks out and the Fed having its hands tied to go into more QE (a blessing a curse).

As a result, while I will not sell any physical precious metals, I am for the time being selling my ETF positions in my retirement accounts because I see a complete wave of combined failure to monetize and hence defaults and a derivatives and concurrent stock market melt down of large order on the horizon.  At the end of all this the only real money left standing will be gold and silver and barter for that matter.   In the short term I see a massive derivatives based meltdown in just about every asset class, much like the Lehman debacle.  

I am taking a large loss on my ETF positions from their highs but a significant gain since I started investing in them several years ago.  I should have seen this coming sooner and I was wrong.  I am going short the stock markets.  I could be wrong again here but I want to share my thoughts with those who listen to me.  I hope that I am not created in the Narcissistic model of Darwin.  I want to be able to view my mind and if I find that there is a mistake in my reasoning, which in this case was "that Europe would be able to Monetize its own bad debt and would do so willingly, and also that China would continue to be able grow even as the rest of the major economies are contracting."  At this point, it appears that the Central Banks simply don't have the ability to overcome the derivatives markets through monetization and that in the process of broad based default, starting in Europe and finally returning to the United States, the stock markets will begin to reflect the future economic depression that is coming and all asset classes, including commodities, stocks, and even gold and silver will be sold down.   The difference is that gold and silver will rise from the ashes as the true money but in the short term US Bonds will be the short term recipient of inflows and so will the US dollar, unit it becomes evident that the US is also heading towards a depression and will default and then all bets are off and gold will be the only investment to be in.  

I could be wrong about all this but I have enough gut level feeling about it that I sold my retirement gold and silver ETFs today and am going short.  I don't believe anything short of direct government hiring can put American's back to work quickly and stimulate the economy and given the total gridlock between the Tea Party and the President, I don't think the government will be able to do anything effective quickly.   I am very sad about what I see and also I am happy that my analysis of what the central banks and governments could do to monetize debt was for the time being wrong.  

I will shift back to my previous paradigm if I see all of the following occurring:

1. China moving towards a resolution of its banks developing liquidity and GDP contraction problems
2. Anything that looks vaguely politically feasible for the EU to come together to monetize their un-repayable debt.
3. The Federal Reserve Stepping Up with QE 3 on Steroids
4. The US Government Actually doing Something that Will Actually Stimulate Economic Growth.

For now, I see all 4 points being relatively solid "No's".   The more I look at it, the more I see that the lynch pen, China, appears to be going down and without strong growth in China, all bets are off as far as growth in Europe and the US.

Again, I could be wrong.  I am sharing with you so that you can weigh these thoughts for yourself.  Evolution requires questioning the prevailing paradigm.  In this case I am questioning my own paradigm, my own wisdom or lack thereof.

 

Duffminster

Wed, 09/28/2011 - 14:36 | Link to Comment Commander Cody
Commander Cody's picture

There is no clear path when governments and central banks manipulate markets.  From my viewpoint, the world is in a deflationary deleveraging cycle that will last years.  Amidst this cycle will be attempts to reinflate which is why I see currency devaluation as the major outcome.  With economic growth anemic or perhaps negative, capital preservation rather that growth is the path for me.  The ability of the fraudsters to wipe out shorts makes me too nervous to play with any conviction.  Be careful.

Wed, 09/28/2011 - 15:10 | Link to Comment SIOP
SIOP's picture

Diffminster,  Thank you for your post, Right now I am looking for a safe place to hide my retirement money, and I am seriously thinking of shorting the market like you said. Nothing fancy, just buy some SDOW shares or something. But honestly, I really don't know what to do!  Gold Silver? I'm not sure but that's where I'm at right now, T bonds? no way they'll get eaten up via inflation, cash? nope, So where? I have no freaking idea and running scared as I am approx 10 years away from retiring.  I'm not fishing for advice here, I'm just saying what I bet a lot of others are thinking.

Running scared.

Wed, 09/28/2011 - 15:19 | Link to Comment New_Meat
New_Meat's picture

SDOW = -3x DIA daily.  Watch that wastage.

Wed, 09/28/2011 - 17:21 | Link to Comment Jimmy Carter wa...
Jimmy Carter was right's picture

@SIOP,

I'm thinking the same thing about my PM's but will hold till the bitter end or next bubble, then sell half.   With that get a woodlot, some tillable land (not much) on zero zoning restrictions, with water, wind and sun. 

Wed, 09/28/2011 - 16:13 | Link to Comment New_Meat
New_Meat's picture

Duff: lynch pen--I had an immediate thought of the Wall Street protestors in their make-shift pen.

- Ned

{and maybe Freudian replacement for linchpin, but I like yours better ;-) }

Wed, 09/28/2011 - 14:36 | Link to Comment Commander Cody
Commander Cody's picture

Deleted.

Wed, 09/28/2011 - 14:35 | Link to Comment r101958
r101958's picture

Really.....the only thing that will 'save' the status quo is finding two and a half more Saudi Arabian oil fields. One in the U.S. and one in Europe and half of one in Japan.

Wed, 09/28/2011 - 15:48 | Link to Comment Rhodin
Rhodin's picture

Who is to say they didn't find one or two allready and just didn't tell?  Like maybe one in Lybia for example.  Oil Cos would't lie to Daffy now, would they?  Would make current "war" understandable.  No announcement 'till things are properly "stable" though, and price is where they want it. 

Wed, 09/28/2011 - 15:02 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

They try to keep up the price of this overabundant stuff with endless wars and uncertainty around the most important extraction areas, which Allah chose to place under its followers.

The internal combustion engine has dominated for a century now which probably means that it should have been pretty much obsolete 20 years ago. It only hangs on due to business interests.

Wed, 09/28/2011 - 15:28 | Link to Comment V in PA
V in PA's picture

It took 5000 years to replace the horse and now, you say, it should take 80 years to replace the horse-less carriage.

Wed, 09/28/2011 - 15:43 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

Not replace it as such, rather what drives it.

Wed, 09/28/2011 - 15:58 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

And how long from Matthew Brady photos, to silent films, to talkies, to color movies, to black & white tv, to color tv, to vhs, to dvds, to downloads from Netflix? (rhetorical question)

Wed, 09/28/2011 - 15:51 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

We still boil water to make most of our electricity.

Wed, 09/28/2011 - 17:10 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

 

 

Relying on old outdated heat technology for everything from powering lawn mowers to powering spacecraft into orbit is getting so ridiculous.

We should have moved beyond heat technology by now. There are better ways to move electrons on a large scale. Why haven't we developed them?

We should have electric cars without batteries. Forget batteries. That's old outdated technology. We should have direct nuclear matter-to-energy electricity production going by now, even beyond that, matter / anti-matter electricity production, far more efficient than even direct nuclear. Don't split those atoms generating freikin heat and spewing neutrons all over the place, consume those atoms, neutrons and all, turn them into pure energy.

We should have conquered gravity by now. We should have moved beyond airplanes supported by wings to craft supported by reverse-gravity fields and propelled through the air by artificial gravity vectors. You know, like those UFOs seasoned airline captains keep reporting zipping around their plane doing maneuvers we can't even imagine much less explain how.

How are we going to get to warp drive and things like that if we stay stuck in old outdated technology controlled by a few greedy oil companies and coal companies and steam-generating nuclear reactor makers?

Wed, 09/28/2011 - 18:29 | Link to Comment Prometheus418
Prometheus418's picture

Who says?

Go ahead and make it happen, since it's so easily done.

Wed, 09/28/2011 - 21:13 | Link to Comment bid the soldier...
bid the soldiers shoot's picture

Shoulda. Woulda. Coulda. I'd be living next door to The Donald in Palm Beach.

Wed, 09/28/2011 - 15:08 | Link to Comment PulauHantu29
PulauHantu29's picture

"...down in Florida hundreds of people have been selling off their burial plots in an attempt to raise cash."

Read more: http://theeconomiccollapseblog.com/archives/17-facts-that-prove-that-the...

Wed, 09/28/2011 - 15:30 | Link to Comment Conax
Conax's picture

Everyone is thrashing about looking for a market (any market) where the rules of finance still apply so they can trade using the knowledge they've accrued all their lives. Unfortunately, it has all gone full schizo and the banks are the only ones that get tomorrow's newspaper. That last margin increase was telegraphed to the boyz, they knew.

The move for now is SELL SELL. someone has to buy, and that someone is picking up all sorts of assets at firesale prices.

A shearing of the flock, more complex but the same outcome as the great depression.

When the last metal is scrounged and the last functioning company is in their rucksack, they'll leave this dying husk. They're not even smart parasites, killing off the host this way. Where can they go next?

 

Wed, 09/28/2011 - 15:44 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

The stock market - the most important forward looking economic indicator - has crashed twice by 50% in the last decade and seems  headed straight into yet another fiasco along the same lines.

At this rate crashes of this magnitude could become an annual event in the near future. But of course, if left in peace and given time  to find equilibrium, the market will sort out its dysfunctions.

It´s a hopeless task to peddle shortages and inflation in a rising tsunami of technological advances and productivity increases. It has been totally hopeless for the last 25 years at least but still followers of archaic economy theory have done their best to keep the myths alive, thereby ensuring maximum pain as the inevitable correction hits.

 

Wed, 09/28/2011 - 16:25 | Link to Comment hooligan2009
hooligan2009's picture

a new way of examining the problem is what is required here. we know treasury notes and bonds are worthless as they will never be repaid, the fed is attempting to rescue the "economy" by setting up a zero coupon perpetual "risk free" rate. this of course is nonsense, what is the value of a bond that pays (close to) zero interest forever? well umm thats easy, its worth nothing. the price being paid by investors is an exchange of money that is also worth absolutely nothing. from nothing comes nothing. we need to think about things ina different way. we have moved away from a military industrial complex where the world need america to kick ass and was quite prepared to exchange raw material for american finished goods...into a world where the rest of the world has copied america production methods and can do it better, for cheaper and with higher quality. this has consigned america to the trash can...except it has a large, technologically advanced army. of course, that advantage is illusory, since most of the technology is sourced from asia and increasingly from china..whats missiles, (copper) wafers and (silicon) chips in cantonese?

let's look at things differently. we want a society that is safe, fed and watered and allows lots of play time and respect for its elders. that's all. we don't mind too much where we live, provided we can move if we change our mind and someone else wants our spot. this happens in population dense countries like india, where the majority of people are poor and a tolerable amount of corruption occurs in politics. the people are not threatened by the power of large banks, oppressive government regulation and without huge amounts of violent crime. india's expertise lies in superior application of logistics in handling the problems associated with a dense population. it achieves this by peoples good will (large tooothy grins) and a binding religion.

now we don't want to run around with funny coloured dots and toothy grins or to be any poorer than the bottom 98% of the country already is. we have a big advantage, a collective wish to improve living standards.

the barriers to us improving living standards are the funding of the exisiting military industrial complex, the corruption of the banks and government (unintended and oh so very smart and sophisticated) which has resulted in a complete apathy for a democratic system as evidenced by the growing tendency to swing to welfare benefits, where voters opt out of the system and vote for whoever increases the "bread and circus" handouts. 

the answer is to write off the banks and the government debt and replace the model of funding benefits with debt accumulation and replacing it with a collective/religion/awareness that is based either on pure self reliance (very hard) or a system that is "engineered" to make food, health, shelter and energy very cheap (except for energy, we have that now).

the banking system can be curtailed to leave only a transmission mechanism. real companies (that is, ones that exist because they have real, not financial, products) remain, with all the share market and debt financing they require. the economy becomes grounded in real assets, not fictitious "financial" or "derivative" ones. 

the financial crisis can be turned into a blessing by simply cancelling all debt and replacing the "assets" that this debt represents with a flow of value (not cash) in terms of food health shelter and energy.

breathe in.

probably impossible to do because bankers and governments do not trust people and certainly do not want to work for a living if there is easy fiat "money" to be made retaining the current system. how to get there without being branded a hindu with a spotty forehead and a toothy grin? is it by just confirming that each group of more than ten people are highly motivated to get along, without being poltiical or religious? how are criminals to be treated in such a shift? the opportunities for looting are enormous!

just for the record. i have no gold at the moment (can't bring myself to short or buy between 1400 and 1900) have a value tilt in equity portfolios and a (hopeful) hedge that inflation linked bonds will actually preserve real value and I can sell them when i need them. oh and about 60% cash earning double O, triple O fuck all blank awaiting a shift to housing and a portfolio of shares consisting of the health, energy and food retail companies that i need to retire on in about ten years.

:) 

 

Wed, 09/28/2011 - 17:06 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

The dollar lurks, being a bit off its recent high.

This is the big dog on which the fleas of Dow multinationals and commodities and safe haven metals scurry. It´s the counter-trade to pretty much everything.

Now, markets resemble warfare. There are endless skirmishes between bulls and bears in individual stocks but at high command the strategy is about entrapping the maximum number of the opposition in the most unfavourable  position and then destroy them.

I think many long market participants fail to recognize the power of dollar rallies off a cyclical low. A flea contently sucking the blood of a dog probably isn´t paying much attention to which direction the dog is  heading, Best of luck, Mr. W.

Wed, 09/28/2011 - 17:22 | Link to Comment terryfuckwit
terryfuckwit's picture

two proxy dilutable versions of Gold and Silver called slv and gld allow the TPTB to create the illusion that the undilutable is dilutable and no longer a safe haven..When ..per chance this illusion becomes convincing check your phys if your ounces are now half ounces stop stacking ...

 

AMEN

Wed, 09/28/2011 - 19:00 | Link to Comment Raymond K Hessel
Raymond K Hessel's picture

YAWNNNN!

Wed, 09/28/2011 - 19:10 | Link to Comment Mr_Wonderful
Mr_Wonderful's picture

You can see that after 25 years of hopeless inflation peddling after Volcker, the FED is totally bankrupt. It is leveraged 60-1 against its own capital which is why it is by now reduced to shuffling its portfolio around between long and short. Given its hopeless situation I believe it will be seized and nationalized in the next quarters.

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