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For Marc Faber The Iron 'Ore' Lady Has Sung

Tyler Durden's picture





 

Frustrated with the know-it-all bullish 'experts' on the Chinese economy lambasting wise boots-on-the-ground deep-thinkers such as Hugh Hendry and Albert Edwards; Marc Faber (who discussed this in detail in the clip we presented here) today set about correcting some of that vacuous chatter on China's dominance (with all its current stuffed inventory). Noting that the Chinese stock market is not exactly pointing to the growth everyone is relying on (and we add since the MAR09 lows it is only fractionally better than Spain), Faber brings up one chart (courtesy of The Bank Credit Analyst) to rule them all. Alongside the mega-bubbles of: Gold in 1970s, the Nikkei in the 80s, and the Nasdaq in the 90s, Iron Ore prices since the start of 2000 have them all beat - and recently (as we noted here) have begun to roll over.

 

The four biggest bubbles of the last 40 years... with Iron Ore the clear winner...

 

and how is China's equity market doing?

 

as Faber adds:

All these indicators [which he discusses at length from electricity production to Macau gaming revenues and consumer spending habits to appliance and air-conditioning volumes] do not necessarily suggest that the Chinese economy is collapsing, but they reliably do suggest that the economic slowdown is more pronounced than official Chinese statistics would have you believe. In addition, these indicators do not imply that the Chinese stock market will decline further (but it could). Perhaps the weak performance since 2008 has already discounted much of the slowdown in economic growth.

Charts: The Bank Credit Analyst and Bloomberg

 


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Thu, 08/23/2012 - 22:03 | Link to Comment max2205
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Iron ore.... Where's the 3x ETF?

Thu, 08/23/2012 - 22:12 | Link to Comment AldousHuxley
AldousHuxley's picture

that's why china is going to print more...

 

 

Thu, 08/23/2012 - 23:56 | Link to Comment Michael
Michael's picture

Have you heard there's a run on Vietnam banks tonight? I always enjoy a good old fashioned bank run.

Fri, 08/24/2012 - 03:04 | Link to Comment francis_sawyer
francis_sawyer's picture

 "The legend lives on from the Chippewa on down
Of the big lake they called 'Gitche Gumee'
The lake, it is said, never gives up her dead
When the skies of November turn gloomy..."

Fri, 08/24/2012 - 05:56 | Link to Comment JPM Hater001
JPM Hater001's picture

So hard landing it is...on iron.

Fri, 08/24/2012 - 06:14 | Link to Comment Doubleguns
Doubleguns's picture

Notice the wealthy chinese are fleeing and buying homes outside of china. Call that the insiders selling shares.

Thu, 08/23/2012 - 22:53 | Link to Comment philipat
philipat's picture

Why would I invest in any country that is only now going to grow at 7.5% pa, when I can invest in Europe, the US, Treasureis etc.

No, wiat...............................

Thu, 08/23/2012 - 23:03 | Link to Comment James_Cole
James_Cole's picture

OT - but interesting, looking forward to zh weighing in: http://gawker.com/5937299/inside-mitt-romneys-tax+dodging-cayman-schemes

Fri, 08/24/2012 - 01:27 | Link to Comment Rincewind
Rincewind's picture

So you are waiting for somebody to spoon-feed you your opinion?

What's your point in posting this?

 

Fri, 08/24/2012 - 02:51 | Link to Comment James_Cole
James_Cole's picture

One of the Tylers is pretty good with tax law, would be interesting to hear their take. There's a lot of differing opinions over the advantages / disadvantages of the cayman accounts with main benefit being the foreign investor money. For people who don't have those sorts of accounts it's interesting to get some insight into how they operate, who uses them, what they're good for etc. particularly when it's involving someone who will probably be the next president.   

Fri, 08/24/2012 - 07:23 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Oh for fuck's sake. There's a lot of reasons to dislike Romney, but this ain't one of them.

Meanwhile, Obama is tearing this country to pieces, and the MSM continues to look the other way.

Can't wait until this mummer's farce of an election is over.

Fri, 08/24/2012 - 07:54 | Link to Comment bobnoxy
bobnoxy's picture

Yeah, and after all the hard work Bush, Cheney and Rove did to unite the country too!

Being stipid is bad enough. Posting for all the world to see graduates you to imbecile status.

Fri, 08/24/2012 - 08:49 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

I swear, the next libtard who bleats "it's Bush's fault!", I'm going to punch out his smarmy little fuckface.

And this is coming from a guy who did not like Bush.

Fri, 08/24/2012 - 09:06 | Link to Comment bobnoxy
bobnoxy's picture

I swear, the next right wing dumb ass who bleats ''it's all Obama's fault'' I'm going to...well, it's pretty imbecilic to say I'd punch his face given that we're posting to a blog.

And this comes from a guy who didn't vote for Obama, and won't this time around either. It's just that the degrading comments about him usually border on the moronic, like yours.

Just how is he ''tearing the country apart''?

Fri, 08/24/2012 - 11:21 | Link to Comment FeralSerf
FeralSerf's picture

It's Bush's fault that Obama is President. Punch away, conman.

Fri, 08/24/2012 - 11:21 | Link to Comment carbon
carbon's picture

good post, i am thankf fully to ZH,lots of people are over tensed  and scared, how things are. TODAYS fox news flash ! ABOUT OBAMAS HOPE AND CHANGE, only 29 percent said it was for the better. 

Fri, 08/24/2012 - 07:04 | Link to Comment Colonial Intent
Colonial Intent's picture

Without the use of tax havens america would not be where it is now, be thankful that those hi-iq boys on wall st knew what they were doing or those tax havens could have been abused by unscroupulous and nefarious characters!

 

Thu, 08/23/2012 - 22:55 | Link to Comment Silver Bug
Silver Bug's picture

Faber has been spot on with his predictions over the last decade.

 

http://davidmorganblog.blogspot.ca/

Fri, 08/24/2012 - 05:21 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

we were discussing this here when that fuking graph FIRST broke and china refused the ore it had already purchased from the aussies at the prices it had already struck b/c the price was on the downhill race-course

so marc is not incorrect

just waaaay late with his "amazing" analysis.  as usual

he is in front of most curves;  he is again so behind ours here;  way behind.  as usual

this guy is the reason tyler "inadvertantly" gave his publisher's imprimatur to rPaul isn't he?  didn't tyler do that kissing this moron's ass on HIS "official endorsement" of rPaul which tyler pasted here thatSunday?  or was that some other guy with tyler's lipstick on his glutes?

lotta articles for so late at night tonight too...  we were blogging past along at the 250 mark on this piece and approaching 10K hits  Republicans Consider Returning To Gold Standard: Real Or Red Herring?

 10PM new york and BOOM!  5 articles over the top of ripping the shit outa mittens with:

  1. SEC
  2. solar cycle
  3. military spending
  4. law enforcement and
  5. this bullshit

covered the string in fairly rapid-fire succession for this time0'night doncha think?  too bad we can't get this kinda room sevice on the weekends?

hi there, marc!  how's the mittens work coming along?  paying good for everybody to push push push?  goooood!  we're happy yer doin soooo well.  so far.  as usual

what a brilliant mind!  a 40-year chart showing iron ore as money?  got zinc?

i think the toboggan-run started early lastSpring, didn't it?  BHP cut back its port expansion in australia in june

thanks so much to tyler and marc!

Fri, 08/24/2012 - 06:54 | Link to Comment Colonial Intent
Colonial Intent's picture

I think tyler(s) should tell their backers to get lost and refuse to declare for romney, think of the (self) respect they would gain.

 

Fri, 08/24/2012 - 06:23 | Link to Comment neidermeyer
neidermeyer's picture

FWIW I usually get delayed at a Florida Central Railroad crossing near sidings where they asemble individual cars into trains ... it used to be that the majority of cars were filled with iron scrap ... lately (as in for the last several months)  the trains have been short enough where they don't impede traffic at the crossing near the yard.

 

As an aside I now see signs for people buying scrap cars at all time highs ,, usually around $350-$400 ... the only way to make money on cars at that price is the PM's in the catalytic converter... (my car has 4 cats!)  

Fri, 08/24/2012 - 06:46 | Link to Comment rsi1
rsi1's picture

there is one little difference between iron ore and the three before, retail investors! the suckers, those are not buying iron ore and are unlikely to know what it is and ever buy it.. so its not a bubble, it might fall, but there is no euphoria.

Fri, 08/24/2012 - 07:27 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Good point.

Thu, 08/23/2012 - 22:03 | Link to Comment Capitalist
Capitalist's picture

As an Australian this is concerning. Luckily coal prices aren't dropping too... oh wait. http://www.theaustralian.com.au/national-affairs/budgets-10bn-hit-from-coal-iron-ore-slump/story-fn59niix-1226457049108

Fri, 08/24/2012 - 03:02 | Link to Comment Element
Element's picture

 

They broke down in 2008 as well ... and look how that turned out just a year later.

The question is, will people want commodities in 2 to 3 years environment?

I think it's a pretty clear case that they will. 

Iron ore most likely will not peak again soon though.

 

Fri, 08/24/2012 - 03:03 | Link to Comment Cyrano de Bivouac
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Not good for Australia definitely.

Fri, 08/24/2012 - 03:07 | Link to Comment Element
Element's picture

Why?  The same sort of international economic situation led to a massive boom in 2009 as money looked for a safe place to invest big, to buy real bulk high-grade inputs to industrial production processes, cheaply with good supply terms and reliability.

And it'll more or less happen again this time.

Fri, 08/24/2012 - 06:45 | Link to Comment youngman
youngman's picture

Also Quantas cancelled a big order with Boeing for long range planes....the reason..they do not see the future as expanding as much as they thought...not next quarter...these are 10 year purchases....they see world travel slowing down for the next ten years....

Fri, 08/24/2012 - 12:16 | Link to Comment GeezerGeek
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Reminds me of California salivating over the Facebook share prices at IPO. Boo hoo.

Fri, 08/24/2012 - 03:17 | Link to Comment Peter Pan
Peter Pan's picture

As an Australian I am also concerned that 50% of our income is derived from iron ore and coal and that 50% of our exports go to China and Japan. A truly diversified economy.

Our biggest problem is short sighted politicians........oh wait........ I forgot that's the problem everywhere.

Fri, 08/24/2012 - 11:30 | Link to Comment FeralSerf
FeralSerf's picture

It may be about time for the AUD and the rest of Oz to roll over.  You've had a good run mate, but it's about time to change horses.

Thu, 08/23/2012 - 22:03 | Link to Comment ACP
ACP's picture

Iron, bitchez?

Fri, 08/24/2012 - 06:22 | Link to Comment zhandax
zhandax's picture

CME doesn't have an iron ore contract (steel only).  The most un-manipulated data available.  The people with an iron ore contract are (strangely enough) the people who were buying it.

Thu, 08/23/2012 - 22:13 | Link to Comment Cult_of_Reason
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Steel Prices Fall to Lowest Level in Three Years (China)

Domestic steel prices fell to 3,670 yuan ($583) a metric ton on Aug 21, the lowest level in three years, according to a report in the Economic Daily.

Major Chinese steel producers lowered their steel prices in September based on the falling prices in August. The steel industry is still registering losses and investors lack confidence.

http://www.chinadaily.com.cn/business/2012-08/23/content_15701507.htm

 

Iron Ore Breaking Down

http://charts.stocktwits.com/production/original_9220602.jpg

Thu, 08/23/2012 - 23:54 | Link to Comment otto skorzeny
otto skorzeny's picture

at least the geniuses at FoMoCo are going to build a lot of truck body panels out of aluminum to wring another 1 mpg out of their gas-sucking F-Series pickup trucks-of course that will "only" add another few thousand dollars to the cost of the truck.

Fri, 08/24/2012 - 00:05 | Link to Comment DoChenRollingBearing
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Maybe that means bearing prices will start to come down soon.

Fri, 08/24/2012 - 01:45 | Link to Comment knowless
knowless's picture

have fun sourcing materials when upstream cant make payroll.

Thu, 08/23/2012 - 22:09 | Link to Comment vertexa
vertexa's picture

Marc Faber warns of 100% chance of global recession: Germany into recession soon, corporate profits will disappoint over the next 12 to 18 months, and who wins the election won’t matter!

Thu, 08/23/2012 - 22:14 | Link to Comment Cult_of_Reason
Cult_of_Reason's picture

"Greece was warned last night it has one ‘last chance’ to avoid bankruptcy as allies of Angela Merkel made clear she does not care if the country drops out of the euro.

The ultimatum was delivered by eurozone boss Jean-Claude Juncker as a week of crunch talks over the fate of the single currency started..."

http://www.dailymail.co.uk/news/article-2192262/Angela-Merkel-says-doesnt-care-Greece-forced-leave-eurozone.html

Fri, 08/24/2012 - 07:52 | Link to Comment NEOSERF
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Ultimatums lose a little bit of their oomph when you are on number 3 or 4 or 5....

Thu, 08/23/2012 - 22:18 | Link to Comment kito
kito's picture

Jim rogers is boots on the ground....still bullish as ever on china....

Thu, 08/23/2012 - 22:23 | Link to Comment fonzannoon
fonzannoon's picture

i did not junk u but Rogers is bullish long term not necessarily right now. he claims he owns usd right now.  i know because i saw him on cnb....nevermind

Thu, 08/23/2012 - 22:45 | Link to Comment Dr. Engali
Dr. Engali's picture

You better be careful watching that channel. I've heard tales of rational thinking people's heads spontaneously combusting watching the propoganda coming out of there.

Thu, 08/23/2012 - 23:09 | Link to Comment kito
kito's picture

oh lordie fonz, you promised to kick the cnbc habit......that station will give you nightmares.....and rogers continues to say that he buys as much renminbi that he can get his hands on........sorry, but when this all goes down.....whenever that be.....max keiser just made a bold call for april of next year.....i digress............china will be in a much better position than any of the other major countries.....fonz, you live in manhattan ( i presume)....head down to the bank of china in chinatown, open a renminbi based account.....throw a couple of benjamins in there....and watch how your savings multiplies like chia pet hair over the next decade..............

Fri, 08/24/2012 - 01:29 | Link to Comment Bay of Pigs
Bay of Pigs's picture

okay doelarr bull....please tell us how that 1350 gold short is coming? 

yeah, keep yapping.

Fri, 08/24/2012 - 01:58 | Link to Comment knowless
knowless's picture

currency swaps will magically save the day. just arb the fuck out of something, the exploitable misallocations will continue to exist, even if in shorter duration.. preservation.

Fri, 08/24/2012 - 10:05 | Link to Comment kito
kito's picture

Bay...you getting tough because gold managed to get off the rocking chair this week???......

Fri, 08/24/2012 - 03:32 | Link to Comment Peter Pan
Peter Pan's picture

Jim Rogers bullish on China?

Right now I think it's a bull in a China shop.

Thu, 08/23/2012 - 22:59 | Link to Comment reader2010
reader2010's picture

Jim Rogers is in TV Show Biz these days.

Fri, 08/24/2012 - 00:35 | Link to Comment Yardfarmer
Yardfarmer's picture

remember, bow tie daddy got his start collaborating with George Soros.

Fri, 08/24/2012 - 03:44 | Link to Comment Western
Western's picture

He is intermediately bullish dollar, long term bullish PMs/ farmland............... long term bearish dollar

 

is there something i am missing?

Fri, 08/24/2012 - 06:25 | Link to Comment tu-ne-cede-malis
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I've never seen Jim comment on his relationship with Soros. The two of them are exact opposites. 

Fri, 08/24/2012 - 06:48 | Link to Comment youngman
youngman's picture

Why???  Is Jim married to an old hag.....Soros is engaged to a 40 year old hottie

Wed, 09/26/2012 - 10:14 | Link to Comment Vendetta
Vendetta's picture

some day, some people will figure out that Faber's business relationship to Soros and whatever Soros means to some people from the political rhetoric heard over and over ad infinitum is irrelevant to any meaningful discussion  ... but not today.

Thu, 08/23/2012 - 22:27 | Link to Comment Dr. Engali
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I look forward to seeing where the bond bubble compares after it blows up against those charts.

Thu, 08/23/2012 - 22:20 | Link to Comment JackT
JackT's picture

Even Dr. Doom has to have a CYA statement.

"...these indicators do not imply that the Chinese stock market will decline further (but it could)."

Thu, 08/23/2012 - 22:22 | Link to Comment Barometer
Barometer's picture

Chanos has picked off another ponzi scheme in Fortescue Metals and their "highly promotional management team"

Fri, 08/24/2012 - 00:46 | Link to Comment Freddie
Freddie's picture

I really like Chanos. He is one of the straight shooters and there are only a few.

Thu, 08/23/2012 - 22:53 | Link to Comment AU5K
AU5K's picture

well, 1974 sugar was a much bigger bubble than any of those ($5 to $65 to $8 in 5 years) but who decides what is a bubble anyways...

and how can gold be a bubble when it is 2x higher today than it was at the peak.  real bubbles *never* come back.

Fri, 08/24/2012 - 03:47 | Link to Comment Western
Western's picture

***FYI inflation adjusted price of gold in 1979 = $2350 FYI****

Wed, 09/26/2012 - 10:18 | Link to Comment Vendetta
Vendetta's picture

indeed.... $2350 using BLS numbers only and we all trust those numbers  /snark

Thu, 08/23/2012 - 22:57 | Link to Comment reader2010
reader2010's picture

The Porn of the Century goes exceedingly well with the Short of the Century!

 

 

Thu, 08/23/2012 - 23:11 | Link to Comment billwilson
billwilson's picture

China is in the process of a major downturn. They simply do not ahve the systems to handle the complexity of a modern economy. As a result they will only discover they have gone over the cliff when they are half way to the bottom. Inventories are piling up, banks are stuffed with NPLs and the rich are shipping capital out of the country. Not looking good.

Thu, 08/23/2012 - 23:23 | Link to Comment reader2010
reader2010's picture

Because the rich and powerful have gotten their money using rampant corruption, fraud and open theftery. They are not stupid and of course they know a huge revolution is coming up in China and they will be torn apart alive by the angry mob.  Even the coming Party Boss and President Xi is openly discussing and planning for the days after the Party's gone with his innner circles as we speak. By the way, all his brothers and sisters including his only kid are foreign citizens by now residenting in the West.

Thu, 08/23/2012 - 23:59 | Link to Comment Problem Is
Problem Is's picture

"Because the rich and powerful have gotten their money using rampant corruption, fraud and open theftery..."

Wait
Are you talking about China or the US????

Fri, 08/24/2012 - 00:02 | Link to Comment reader2010
reader2010's picture

it's an equal opportunity thing now.

Fri, 08/24/2012 - 03:48 | Link to Comment Western
Western's picture

(focus your energies on China not the USA... that's right, no elites will be deposed in the USA, repeat this mantra)

Thu, 08/23/2012 - 23:17 | Link to Comment OldE_Ant
OldE_Ant's picture

What got me was the 'real terms' legend on the left these graphs are plotted against.

And why not show all bubbles (highlight them) over all time vs. your cherry picked bubble ramp time, and then show where each of the 'bubbles' are now against the 'real terms' relative value chosen.   How about the two oil spikes during same time, sugar, orange juice, beef, corn, natural gas, etc.

GOD talk about CHERRY PICKING I mean If I put on chart 'shit economy' vs. 'time' I can draw any f'g line I want based on how I define 'shit economy'.

This is journalistic reporting of today?

I'm not disagreeing I think China is slowing down (probably due to the fact they don't have the LAND and reason to build MORE EMPTY CITIES) but just that the above article and analysis behind it I might expect from a 9 year old, not an adult.  And guess what the 9 year old would probably define the term 'real terms'.

More vapour, move along!

End of Line

Thu, 08/23/2012 - 23:18 | Link to Comment gwar5
gwar5's picture

Down goes Frazier! Down goes Frazier!

Fri, 08/24/2012 - 04:23 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

but wait!
L0L!!!

Thu, 08/23/2012 - 23:24 | Link to Comment chump666
chump666's picture

Canada and Australian safe haven flows will crunch, bonds will tank, currency/stocks/housing all will be blown to hell.

Oil inflation will do the rest.

Thu, 08/23/2012 - 23:49 | Link to Comment Never One Roach
Never One Roach's picture

The Housing Bubble Bust in Australia will be Ginormous! My cousin is there and looked at property in Darling Harbor area...hold onto your seat, Ladies and Gentlemen....

USD$1,000 per sq foot !! [abut $1.8 million for 160 sq meters]

and.....Median house price througout Ozland is USD$680,000

and get this,

Median income = USD$ 65,000

Add in....Resource companies there already suspended several Mega-projects due to China's cancelling orders.

I am hoping ZH stays on top of this since when Ozland Housing (and/or China) collapses, the Ripple effects will hit us too. I ordered extra popcorn for the show and am taking heed what the Honorbale Marc Faber recommended.

Fri, 08/24/2012 - 03:47 | Link to Comment Peter Pan
Peter Pan's picture

The Achilles heel of the Australian housing market will be revealed when unemployment rises from the present 5 point something per cent level. Rates though have softened recently and this may hold prices up a little longer.

My on the ground contacts indicate that margins across various sectors have softened, even in banking, which has become a little more competitive in rates but tighter on lending.

Real estate sales have softened and it was revealed recently that the so called housing shortage in Australia is non-existent because the Bureau of Statistics over estimated the number of hosueholds by about one million in a nation of 23 million people.

 

Fri, 08/24/2012 - 06:52 | Link to Comment youngman
youngman's picture

That is a bubble...wow.........Canada has one coming up too...Vancouver comes to mind..but not that big....$1000 sf.....holy moly

Thu, 08/23/2012 - 23:57 | Link to Comment otto skorzeny
otto skorzeny's picture

I NEED AN iSHARES 3X SHORT AUSSIE HOMEBUILDER-STAT!

Fri, 08/24/2012 - 00:09 | Link to Comment dbomb12
dbomb12's picture

What a suprise!!! the communists are liars?? who woulda thunk it LMAO

Fri, 08/24/2012 - 00:13 | Link to Comment q99x2
q99x2's picture

Maybe that little chinc near the end of the iron ore graph is the soft landing.

Can't knock the Chinese stock market because at least it is reflecting something other than counterfeiting.

Fri, 08/24/2012 - 00:14 | Link to Comment vft2212
vft2212's picture

short vale since they also own the largest fleet of container/ships reminiscent of the 1970s companies that all ended in bankruptcy

Fri, 08/24/2012 - 06:58 | Link to Comment memyselfiu
memyselfiu's picture

vale |(or its predecessor) is the reason the market is ramped up....back in the 80's they flooded the market with ore and huge numbers of mines and smelters around the world shuttered their doors...they then proceeded to slowly jack up the price.

I watched my dad and 500 of his fellow workers walk away from an ore mine that still had 15 years left of proven reserves in the ground. The pits are a cool place to go diving now...

 

 

Fri, 08/24/2012 - 00:51 | Link to Comment dirtbagger
dirtbagger's picture

Not so sure that iron ore prices are necessarily the best indicator of economic direction.  Iron ore production is a monopoly controlled by three companies, Vale SA, Rio Tinto PLC, and BHP Billiton Ltd.  These companies produce about 70% of the world's iron ore and control the price.  Supply/Demand not so important when monopolies are operating. 

Fri, 08/24/2012 - 03:29 | Link to Comment reload
reload's picture

They can only control the price by backing off production as demand falls. Its the falling demand which is the tell here. Also dont forget Steel and Iron Ore prices are much harder for interested parties to try and influence, than say the PM market - no futures contracts. 

Fri, 08/24/2012 - 07:01 | Link to Comment memyselfiu
memyselfiu's picture

Interesting you should say that....I see a LOT of new players trying to come into the market right now...wonder if the big boys are getting nervous and trying to suppress the price to shake out the competition....

Fri, 08/24/2012 - 01:20 | Link to Comment longorshort
longorshort's picture

Is anyone out there shorting the austrailia bubble in USD?  I have considered a currency play but am looking for some creative long term plays with decent tax advantage and leverage.  I have been watching for the cracks for several years on Austrailia and Canada closely.  I wish there were more futures indexes like the one that tracks Japans stock market in USD so you could take advantage of being hedged in $ and get the tax advantages.  Also are there any pure PMI insurance like plays with the housing bubble?  I shorted these in the 40s to about a buck during the US bubble.   Cool thing was fannie freddie and all the badies never all fell at one time so I reaped over 300% on total capital with leverage.   Its been tough to stay sidelined.  Never dreamt the would reinflate so long and so far with the quick access to data compared to the 1930s crash.  Good luck folks.  Please share ideas.  I would like to see more strategy on these boards.   Other thing roach never mentioned is how large Austrailia mortgage market has gotten, its not just the prices.  Austrailian tax credits on primary and vacations homes have really put lighter fluid on a big problem.  Allot of nice blokes who had no business buying homes are going to get burned badly.  Thats allot of bonds backed by the big 4.  Maybee there will be the big 3 soon.  Canada isnt much better shape and its not just housing.  The blow up in both countries will be horrible.  It is scary how people say how sound their banks are its almost as though they are a iphone groupie describing their precious.  Also down the road it makes me wonder a bit about switzerland with some of secrecy stuff getting pissed on, negative bond rates, and all the scared money flowin in one has to truely wonder how long before capital finds its way to stupid investments......., but this time its differnt, right

Fri, 08/24/2012 - 01:23 | Link to Comment dunce
dunce's picture

I do not think comparisons to other boom/bust cycles is not very helpful.  the chart values are based on fiat currencies. The relation to some other commodities might be more revealing of distortion. For example a ton of steel versus barrels of oil and ounces of gold and tons of soybeans.

Fri, 08/24/2012 - 01:34 | Link to Comment longorshort
longorshort's picture

It is when you look follow the bread crumbs.   200% + price growth in a multinational housing bubble in like a decade.  US Commercial store space per consumer has roughly doubled in the last in the last 10 years.  China is build large empty roads, malls, and cities.  This takes huge ammounts of raw materials not just to build but to build the equipment and tools to build this kind of growth as well.  It feeds on itself, but it is not healthy growth.  The bill payment is getting deffered and when the bubble pops its going to be ugly.  Also What is unique about now though is that I have never seen a point in history with so many different simultaneous bubbles happening in different market sectors throughout the planet.  Its going to cause some real roller coasters of ups ands downs asl it all deflates.

Fri, 08/24/2012 - 01:43 | Link to Comment ak_khanna
ak_khanna's picture

The market operators are using expected QE as an excuse to kill the shorts by running up the price of stocks and commodities. Once most of the shorts are out of the system and go on the long side, the operators will themselves take the short position and move the market to the downside using poor economic data as an excuse to kill the longs. This is what price discovery is in today's world.

The stock, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.

www.letstalkmoney2012.in

http://www.marketoracle.co.uk/UserInfo-Akhil_Khanna.html

Fri, 08/24/2012 - 01:49 | Link to Comment longorshort
longorshort's picture

One would think so.  I would like to see more regulatory requirements on dark pools though.  I think there seems to be more dark pool products in the market in the last 10 years and I would like to see more confirmation of how much volume has really left in the traditional sense if that makes sense.   Also I think the biggest problem with the high frequency trading is it could help kick off a crises since they are playing them off as market makers providing liquidity when they are not putting the regulatory requirement on them to keep those transactions flowing when the crap hits the fan.  Very scary with so many bubbles floating high in the market sky.

Fri, 08/24/2012 - 02:27 | Link to Comment longorshort
longorshort's picture

I see bubbles, their everywhere.   AUD, CAD, Farmland, UK housing, CAD housing, AUD housing, oh hell almost forgot brazil bubbles, natural resource commodites, bonds, municiple bonds, stocks with absurd market caps and PE distorting the market indexes, Grain even before drought,  When people are paying 12k and acre for farmland in the midwest and you do the math on the profits its a bubble,  Anyone know any public banks or stocks concetrated on farmland?  Farmer stuff is pretty scary when you consider farmers are buying more than one years worth of seed and fertilizer to hedge costs when this has not been done really to speak of in past and before this years harvest is out they are saying the dust bowl was different because it was a multiyear drought, umm what if this happens to be year one?  What a mess it all is.

Fri, 08/24/2012 - 03:58 | Link to Comment reload
reload's picture

I dont disagree; But here in the UK farmland tends not to be purchased on finance. Big profitable farms get bigger and more profitable by buying up smaller neighbouring farms. The little guys go past go to a happy retirement (if they still own their property unencumbered) and the big guys avoid tax be reinvesting profits into their business. The country gets more efficient and productive agriculture as a result. Thats the theory at least, in reality we have had several distortions to land prices. In the 5 or 6 years to 2007 there was a lot of `hot` Irish money pushing up prices, and in addittion we have for over a decade had a tax system which makes family ownership of farmland extremely attractive.

In Esat Anglia where I live, harvest is underway and yields and grain quality are excellent. This year will be a good one despite some extra input costs (i.e an extra £40 per acre on anti fungal agents due to the wet weather). Most farmers here would still be profitable with considerably lower grain prices and patient money likes land. So a collapse in prices is unlikely. The risks are the same as they have been for sme time - a change from friendly to unfriendly taxation and changes to the way farm subsidy is calculated under the European CAP. As to taxation in the UK - who knows, but a lot of connected and influecial people own land. Cahnges to the CAP? possibly ..changes are needed, but the French will fight hard to keep things as they are.

Good arable land here is  £8-10k per acre. About the last thing I would want to be short, even at these prices.  

Fri, 08/24/2012 - 02:44 | Link to Comment dadoody
dadoody's picture

Did you pay the iron price or did you pay with gold?

We do not sow, we are Ironborn!

Fri, 08/24/2012 - 04:05 | Link to Comment intric8
intric8's picture

Im trying to teach my son the value of charts, and started with this

Fri, 08/24/2012 - 04:49 | Link to Comment theprofromdover
theprofromdover's picture

Rule No.1

China doesn't want to be your friend.

China doesn't need to be your friend.

Fri, 08/24/2012 - 06:08 | Link to Comment I am Jobe
I am Jobe's picture

Print Print Print. Long Live banksters while the sheeples are busy watching the Debates and wearing Puke and Dumbo's on their sleeves. Pathetic Amerikans are made to believe in crap and more crap.

Fri, 08/24/2012 - 10:21 | Link to Comment capitalist bison
capitalist bison's picture

Wait... China LIED about it's performance!?

 

/sarc

Fri, 08/24/2012 - 11:11 | Link to Comment EmileLargo
EmileLargo's picture

How do you short iron ore? Perhaps the only way to short it is by shorting the big miners.

Fri, 08/24/2012 - 11:13 | Link to Comment rish
rish's picture

"Perhaps the weak performance since 2008 has already discounted much of the slowdown in economic growth"

So faber slips in this little gem at the end of his otherwise disifo post.  yes total disinfo just to promote himself I guess.  It just goes to show you have to think for yourself because the disinfo agents are plying their trade on both sides. The fact is... as long as more QE takes place, iron ore and all other essential commodities will continue to move higher.  And gold and silver are proving that now.   The Weimar chart is the key.

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