Looking Beyond Europe

Tyler Durden's picture

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wang's picture
wang (not verified) Oct 27, 2011 3:18 PM

look to Japan the next disaster

Weinberg Says Japan Headed for Economic Meltdown (Audio)


azusgm's picture

Absolutely watch the yen. Kyle Bass says the chart is trying for a blowoff top.

That one will be big.

DormRoom's picture

agreed.  US & Europe printing, pushes down USD-JPY, causing BOJ to intervene, and conduct its own QE.  This pushes agents into commodities, stoking global inflation, or into current account surplus currencies/assets. 


Now that the big 3 Central Banks (US-EU-JPY) are at risk of a liquidity trap, effective world interest rates >> 0, so agents will scour for hard assets to anchor purchasing power.


The results being higher input costs for developed countries, and currency inflows into China, coupled with high inflation, raises the likelihood of a hard landing, as Chinese policies to course correct, are overwhelmed by foreign macro-conditions seeking refuge in the Middle Kingdom.


In developed countries, high input cost, causes firm to stall on hiring.   While higher CPI causes consumer to consume less, since it's effectively shifts thier Income constraint line down, so they will buy fewer goods--likely cuasing a spike in jobless claims.  This causes a negative feedback loop in the economy, forcing governments to intervene with monetary stimulus, which pushes more agents out of fiat currencies, and into hard assets, or current account surplus currency/assets.

Then we head into hyper-stagflation & hyper-inflation.

Then guess what? The great reset. The global economy has adjusted.. All the misallocation of capital, and debt from the bubble years are reconciled.  .  There is no free lunch.  The longer government distort, or kick the can down the road, the more extreme the adjustment.


As economies collapse, there are no faith in any institutions, or party politics, and the people rise up.  Societies will collapse, and hard liners will move to take control, and provide a Hobbesian remedy to the anarchy.  But this will be in the context of a world littered with unguarded nuclear weapons.


The economic consequences of maintaining the debt peace!

rumblefish's picture

do you have a reference for Mr. Basses comment?

eureka's picture

Yeah, it's bad - US might take a lesson from EU - give US banks a 50% haircut...

wandstrasse's picture

Yes to bailouts, yes to EFSF, yes to leverage. Because if you restrain the ponzi it will just take longer.

SheepDog-One's picture

Oh dont spoil the bulltard party, all anyone cares about today bottom line is worthless stock indexes are up. Silver, oil, dollar, none of that matters.

GeneMarchbanks's picture

Attention shifts away from Eurozone for only a short period. US & China will continue same policies, OWS will probably be the next (short term) focus.

LFMayor's picture

OWS?  Yeah, probably, since I see that the attempts to generate an outrage about that lard assed snail fighter getting kicked off of Dancing with the Stars isn't getting much traction.

The Big Ching-aso's picture

'Fundamentals' don't matter anymore.    Speculation has replaced it.   This is otherwise known as betting on either red or black, or to hedge, both.

SeverinSlade's picture

So to sum things up:

The rumor mill is dead (for now).  Now it's time for the market to focus on fundamentals: corporate earnings (darlings AMZN, NFLX, etc. have all disappointed), economic growth, etc. 

Is the DOW really going to shoot straight up to 14,000?  I think not.

IrritableBowels's picture

Well now that Greece is "fixed," isn't there ONLY bad news in the future?

SeverinSlade's picture

It really is disgusting when you think about it.  Bankers love this crazy volatility.  Right when the market seemed destined to slide off a cliff and EVERYONE was going short, the bankers quickly covered and went long.  Now that the shorts are beginning to capitulate and are panicking, I think it's safe to say that the bankers are going to start (if they haven't already) selling into strength all while piling on more shorts.

HellZero's picture

Just waiting for the end of day market ramp up

jcaz's picture

50% haircut to China, via a stronger Dollar-  you want your money back?   No prob....

sabra1's picture

my gut tells me this ramp up is followed by huge downgrades coming after the bell! insiders will all short seconds before the bell, leaving longs calling for their mommas!

SheepDog-One's picture

I love the line 'The rumor mill is now over'....LOL until when tomorrow morning? After the bell today? All they have is rumors. 

Load up the bulls and drop it next.

SeverinSlade's picture

I suppose they could begin floating rumors about a massive economic boom currently underway in Europe and the US...but I don't think anyone is stupid enough to believe those rumors...

SmoothCoolSmoke's picture

Hope you are right....but can't say I am going to bet on that.

HellBoy6's picture

I would expect to see futures trade off after the close.  Who know what will happen tomorrow morning but this rally shouldn't be bought with vigor, expect some kind of test of what looks like now was prior resistance...


Don't fight the tape.

Reese Bobby's picture

And Goldman always means what it says...

SmoothCoolSmoke's picture

I'm afraid that.................."Despite all our rage we are still just rats in a cage".   I'll say that's how I feel today.

unionbroker's picture

its official all the shorts are k####ed

SheepDog-One's picture

OK well if thats true, then next we head down.

FinalCollapse's picture

There is something weird and unreal to this crazy rally. VIX doesn't want to go below 25 - should be closer to 20 now. I feel like watching a surrealistic movie on my computer screen.

Something is up in the air, and it is not fart. I get a feeling that a major event is coming.

SheepDog-One's picture

Yep. Anyone who thinks all this is to just 'keep the Ponzi rolling' are nuts. We'll wake up to the next 9-11 one morning real soon.

firstdivision's picture

Who cares that the SHTF next week.  We're up 4% today on nothing!! Yay!!  Efficient markets! Efficient markets! Gooooo Efficient markets!!

FunkyMonkeyBoy's picture

No way this is just a corrolation to the EUR/USD...

gwar5's picture

Immediate crises averted in EU and it's back to the new normal, where things still suck.


BTW, the consumer spending spike vs poor consumer sentiment might also be telling us people are dumping their USD, not on trinkets, but on survival goods such as food storage, guns, and ammo. I know a lot of people who are.  Don't fight the FED... unless you really really mean it.






SheepDog-One's picture

Yep that was my conclusion as well....just because people are spending doesnt mean its on IGear trinkets.

SeverinSlade's picture

Perfectly logical conclusion considering that both AAPL and AMZN just missed earnings expectations.  When was the last time AAPL sold fewer iphones than it projected?

SeverinSlade's picture

You could be right.  I mean after all, gun ownership has surged to 47%...And I don't think people were buying their guns with gold and silver...

citrine's picture

Actually, consumer spending on seasonally unadjusted basis was down in September by 4.96%

Lady Heather...UNCLE's picture

repeat after me...I will NEVER short the equity market again, I will NEVER short the equity market again etc etc etc. I DO own gold (Swiss PAMPs). I DO own 10 acres of land in New Zealand. But I will NEVER short equities EVER again

oceanview76's picture

410 points.  Un-f'king - believable.  GS and C up 10.5% on the day.  Did those individual stock circuit breakers trip today?  Or do they automatically turn them off for rally mode?

mynhair's picture

Wonder why the Eurotard banks didn't recap immediately, knowing this rampage would happen?

Archimedes's picture

Blah, blah blah..the market is up 400 points. Bears need to lick their wounds and admit Temporary defeat. This market is going to drift higher now that Europe has kicked the can for a few months. There is nothing to stop the melt up until the debt commitee fails to reach and agreement / Downgrades of France or the US again / 4th Qtr GDP comes in negative.

I have been a bear since 2007. There is no way America or Wurope can grow their way out of this. But I am also smart enough to know when I can't fight coordinated fraud.

I am frustrated and NOT long as I would rather sit on the sidelines but in a few weeks or so I will think about re-entering some shorts.

No one likes a sore loser. Take your lumps and move on.... The Fraudsters are still winning the future....for now.


oceanview76's picture

Just to clarify Archimedes, I'm not a sore loser.  I'm short, but I'm hedged appropriately for this type of b.s. (put ratio back spreads w/short horizontals offsetting my long legs) and as such I had a very nice day, although if we were down 400 points I would have had a spectacular day.  I'm just expressing disbelief in the fact that this b.s. "solution" out of Europe can trigger a historic move in the equity markets and that the markets appear to be this unhealthy as a whole.    

Archimedes's picture

Hey sorry,

My rant is not directed at your post or any one post. Just the collection of posts for the day.

lizzy36's picture

20% down, then 20% up.

The music is blasting so we all must dance.


slewie the pi-rat's picture

thxz!  i needed that!

it was a graveyard smash
they caught on in a flash

more popcorn?

falak pema's picture

now the markets are getting irrelevant more and more as they need to be totally revamped.

slewie the pi-rat's picture

who wrote this?

dom. wilson = Robo_T?


MiningJunkie's picture

"and those fundamentals are not a rosy as many would have us believe..."

Typed by another BBQ's shorty that missed the rally and got carried out on a stretcher...


Lady Heather...UNCLE's picture

Yes, Archimedes is right. Lets move on.

unionbroker's picture

the whole market is a penny stock, pump and dump, promote and distribute did you think it was anything else?

mynhair's picture

Nice dip there, am now on the sidelines, too.