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Market Commentary: What An Ugly, Ugly Day

Tyler Durden's picture




 

From Peter Tchir Of TF Market Advisors

Market Commentary: What An Ugly, Ugly Day

We are finishing at the lows or within spitting distance of the lows across the board, except for Gold, which traded like gold, all day long.  Nothing really did anything to slow the increase in the price of gold.  Overnight stock trading was less painful than many people expected (and more than some), but basically S&P futures traded in a range from down 35 to down 15.  Bad, but not extreme.  We even had a few rallies as the ECB seemed to buy a lot of bonds.  The only true bright spot in the day (other than gold), was totally ignored for now. That other bright spot was that Spanish and Italian 10 year yields managed to get to around 5.25% and stay there.  That actually seems like a big accomplishment.  An even bigger accomplishment was how few European politicians spoke today.  Those that did speak had recognizable names.  They seemed to manage to muzzle the deputy ministers etc, who often like to get their names in the paper.  Trichet did seem to be unsupportive.  Yapping about not turning the ECB into a bad bank.  Feels like he is trying to pin as many of his mistakes as possible on his successor, but honestly, Europe seemed as co-ordinate as they have been and seemed to focus more on a direct approach of putting capital to work than on coming up with elaborate plans, with lots of initials that never get implemented.  Hmmm, maybe that is a sign that the Germans have taken charge from the French since it is all their money, and if anyone loves a complex solution where a simple one would be better, its the French. 

Ultimately, it was the U.S. that disappointed the market.  There was a slew of downgrades announced by S&P.  Most were pretty well expected as they were a direct result of the U.S. government downgrade. The insurance industry came under pressure, that was a bit more of a surprise, and a definite negative.  Ultimately, BAC became the story of the day.  It was down 20% or so, and its CDS was out 90 bps, to 300.  Scary numbers without a doubt.  

In spite of that, the market held off on full capitulation waiting for Obama.  And then waiting for Obama.  Then waiting some more.  By the time he finally addressed the nation stocks had already slipped to new lows.  His completely uninspiring speech just accelerated the sell-off.  He did nothing at all to give any comfort to the market.  I thought it was one of his worse performances ever.  Stocks proceeded to new lows.  Somehow they managed to bounce back after 3pm for some magical reason.  Maybe the PPT.  After anyone who had held longs into the president's speech sold into this rally we faded into the end of the day.

There is no point talking about being oversold because clearly every indicator showed oversold coming into today, and left anyone betting on them, nothing but 1 day older and deeper in debt.  The Fed was very quiet today.  Yes I know they have a meeting tomorrow, and are in a "quiet" period, but maybe today was a good day to break it.  Maybe they aren't planning on doing anything.  Maybe they want the market to feel pain.  I assume there are a lot of phone calls coming from Europe trying to figure out if their translation of "co-ordinated" was wrong?  Had the Fed done something today on the back of Europe, I think we would have bounced.  They didn't do anything, so there was no bounce.  If the plan is to do something tomorrow, I think they made a poor decision.  The ECB may not be able to keeps Italian and Spanish bonds bid for another day.  If those bonds start trading back hard, it will be difficult for the Fed to stop the bleeding, certainly much harder than it was today.

The only remaining positives in the market, and they are small positives, is that many who saw only positives 2 weeks ago, only see negatives now.  Perception has shifted a lot.  Two weeks ago, if you said HYG could go to 85, people looked at you like you were from another planet.  I get that look a lot, so I'm pretty good at recognizing it.  HYG at the time was at 91.5.  Today, if you tell people you think HYG can go to 85, they once again look at you like you are from another planet, but now it is at 83, having hit a low 82.33   That is about 12% in 2 weeks.  Remember that case study I wrote about bond markets grinding higher and getting clubbed like a baby seal?  Well the seal just got clubbed.  Not a pretty sight.  But the bearishness does get extreme.  The only time I heard about earnings, it was in relation to how bad they could be in a double dip.  No more talk about how they supported 1,450 valuations on SPX.  VIX also got very high. It has been higher, but this is near the top of a pretty long term range.  I don't think VIX is a leading indicator anymore.  It is part of the risk on/risk off crowd, but just like when the CDS indices start trading too cheap to fair value, when VIX gets this high, it is a decent sign a lot of hedges are in place.  Maybe too many. 

I have no idea on the next move.  Headlines will continue to dominate.  If the ECB can't or won't keep Spanish and Italian rates down tomorrow, and the Fed doesn't initiate QE3, it could get really ugly.  Seems weird saying that it could get really ugly after a down 6.66% day in SPX, but it could.  BAC is another wild card.  With market volatility so high, and liquidity minimal, the one thing that makes the most sense is to stay small and nimble.

 

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Mon, 08/08/2011 - 16:51 | 1539305 No One
No One's picture

good news folks.. the senate will be investiagting the S&P downgrade.. All is good.

 

"FLASH: Senate Banking committee probing S&P downgrade of U.S. credit rating -aide"

 

 

Mon, 08/08/2011 - 16:55 | 1539331 Long-John-Silver
Long-John-Silver's picture

I hope they use a prophylactic while their probing. They have spread too much to too many already.

Mon, 08/08/2011 - 17:02 | 1539383 max2205
max2205's picture

Somebody needs to probe congress for 4 - 20 years of financial mismanagement

Mon, 08/08/2011 - 17:02 | 1539389 cocoablini
cocoablini's picture

The Senate? They are going to threaten the SP for telling the truth...for a change??? CANNOT tell the truth-just like them

Mon, 08/08/2011 - 17:05 | 1539397 oogs66
oogs66's picture

congress should be investigated

Mon, 08/08/2011 - 16:52 | 1539308 Long-John-Silver
Long-John-Silver's picture

Silver will follow Gold soon. You can't have one without the other.

Mon, 08/08/2011 - 16:54 | 1539324 Spitzer
Spitzer's picture

Im all in support of the silver bugs but if you don't own any gold then you are asking for a kick in the nuts.

Mon, 08/08/2011 - 16:57 | 1539345 Long-John-Silver
Long-John-Silver's picture

I am diversified, I own both.

Mon, 08/08/2011 - 17:06 | 1539407 Sudden Debt
Sudden Debt's picture

9 to 1 silver vs. gold in value.

So I would like my silver to rally a bit harder. But I've got time on my side :)

People will start to panick. Panick hard. The market isn't going to react like after QE2. And everybody will first try the QE2 bets, fail and run for the hills when they hit rock bottom. And they'll try to recover losses in gold in silver which will be 50% before they'll try it.

And then BOOM!

Funds will need to cover their losses and go for security : Gold/Silver

...

Little memo to Bernanke: YOU FAILED! YOU FAILED YOU FUCK! HAHAHAHAHA!!!

 

Mon, 08/08/2011 - 18:07 | 1539655 Re-Discovery
Re-Discovery's picture

The fight in silver --- industrial vs currency -- is about to be resolved in fovor of currency.  All who missed the Gold move will go looking for something else.

Gold will drag silver higher.

As for volatility, silver behaved very well today after an early day sell-off.  Held its 38.7 support very well.

Mon, 08/08/2011 - 18:35 | 1539746 Jendrzejczyk
Jendrzejczyk's picture

After an initial reaction of "WTF, why isn't silver going to the moon", I realized that just holding in place while the financial world crashed around it was proof that silver is a solid store of wealth.

Mon, 08/08/2011 - 18:42 | 1539765 Jendrzejczyk
Jendrzejczyk's picture

Let's not forget the heckling that gold and silver are just commodities that will sell off with the stock market just like they did in '08.

Mon, 08/08/2011 - 18:58 | 1539828 Re-Discovery
Re-Discovery's picture

remember, silver still went up about .6 from friday close.  which equates to a $25 gold move.

one of the few days silver hasnt outperfomed

Mon, 08/08/2011 - 23:21 | 1540942 Fancy Bear
Fancy Bear's picture

In my car today I heard someone interviewed on NPR who stated that gold is a currency since it isn't consumed like food or oil. The concept is only finally hitting mainstream America. To me, $1750/oz is still a bargain.

Tue, 08/09/2011 - 00:14 | 1541169 Ponzi Unit
Ponzi Unit's picture

good point.

Mon, 08/08/2011 - 21:35 | 1540389 zorba THE GREEK
zorba THE GREEK's picture

One year ago August, silver was $18 and gold was over $1100.

Big spread. I bought several 100 oz bars because I knew it would catch up.

Re Dis is right, gold will always drag silver higher, just wait for big

spread to maximize profits, especially if you are cashing out gold to buy.

Mon, 08/08/2011 - 20:58 | 1540222 Stares straight...
Stares straight ahead's picture

both nuts?

Mon, 08/08/2011 - 17:34 | 1539502 tyler
tyler's picture

If you don't own any silver you won't be able to do things one day you only dreamed of.  I swapped my gold for silver a few years ago due to the fact I want to retire and didn't have enough money in gold to do so.  I hope all metals go to the stratoshphere so we can stick it to society.  I don't really mind a kick in the nuts, this is fight club.

Mon, 08/08/2011 - 17:55 | 1539616 Spitzer
Spitzer's picture

Swapping gold for silver sounds like a speculative bet to me. I wish you well, our interests are aligned, we want the easy money, douche bags to get kicked in the nuts.

Mon, 08/08/2011 - 20:20 | 1540094 Thomas
Thomas's picture

I wanna be an easy money douche bag.

Mon, 08/08/2011 - 18:06 | 1539647 lawrence1
lawrence1's picture

Agree, both. As Sprott said in a recent interview, he believes that the manipulation is directed now toward silver as a means of discouraging gold purchases. Might be a good time to trade some gold for silver as the ratio is now 44-1.  I believe it will resume its downward trend soon. 

 

Tue, 08/09/2011 - 00:16 | 1541179 Ponzi Unit
Ponzi Unit's picture

bought a little more today.

Mon, 08/08/2011 - 18:07 | 1539652 lawrence1
lawrence1's picture

Agree, both. As Sprott said in a recent interview, he believes that the manipulation is directed now toward silver as a means of discouraging gold purchases. Might be a good time to trade some gold for silver as the ratio is now 44-1.  I believe it will resume its downward trend soon. 

 

Mon, 08/08/2011 - 16:52 | 1539310 Spitzer
Spitzer's picture

XAU was green all morning, down on the close.

Mon, 08/08/2011 - 16:54 | 1539322 Turd Ferguson
Turd Ferguson's picture

Gold.

Silver, too.

Mon, 08/08/2011 - 17:00 | 1539366 Chief KnocAHoma
Chief KnocAHoma's picture

Luv the Turd!

But don't forget land - with water - house - game - in the right area.

http://sotcksdairyroadfarm.blogspot.com/

I am The Chief

Mon, 08/08/2011 - 17:06 | 1539410 InconvenientCou...
InconvenientCounterParty's picture

platinum is screaming something, but I can't quite make it out.

Mon, 08/08/2011 - 17:18 | 1539462 wombats
wombats's picture

Who cares about Platinum.  What about Plutonium at Fukoshima?

Mon, 08/08/2011 - 20:12 | 1540061 trav7777
trav7777's picture

it's saying the same thing oil is

Mon, 08/08/2011 - 17:21 | 1539468 Boston
Boston's picture

Platinum?

Mon, 08/08/2011 - 16:54 | 1539327 redpill
redpill's picture

I loved the little failed stick save attempt by PPT in late trading that got buried.

Mon, 08/08/2011 - 17:49 | 1539584 LMAO
LMAO's picture

My sentiments exactly.

That surely was a notable effort on the SPX, a 25 pts. pop after a 75 downmove followed by a 40 pts. smackdown.

BTFD!

Mon, 08/08/2011 - 18:17 | 1539686 Iam_Silverman
Iam_Silverman's picture

"I loved the little failed stick save attempt by PPT"

<sarc> Well, I heard that it was a resurgence by the retail investors once they finally digested the Presidents speech and realized that he was reiterating the need to "tax the rich".  This was their way of showing approval.  </sarc off>

Mon, 08/08/2011 - 16:54 | 1539329 Mr. Poon
Mr. Poon's picture

"I have no idea on the next move."

Obviously, you don't think like the President, or you would know that what we need next is another inspiring speech.

Mon, 08/08/2011 - 16:58 | 1539355 brew
brew's picture

no idea just like every other "expert" ou there...soft patch?

Mon, 08/08/2011 - 17:17 | 1539458 ElvisDog
ElvisDog's picture

The market sold off after Obama's speech, because it made it even more clear that he has no answers. A new deficit reduction plan in a few weeks. Great. Calls for an extension of the withholding decrease. Fabulous. It's Kevin Bacon from "Animal House" telling the crowd "All is well".

Mon, 08/08/2011 - 17:38 | 1539551 andybev01
andybev01's picture

Speaking of 'a few weeks', are the good men & women still on (their 5-week) 'vacation'?

Mon, 08/08/2011 - 19:00 | 1539842 citta vritti
citta vritti's picture

Let ‘em serve half time (that is, half of the half time they already serve), or restrict the scope of their legislative duties as the Constitution intended. As has been oft and truly said, “No man’s life, liberty or property are safe while the legislature is in session.” Judge Gideon Tucker, Final Accounting in the Estate of A.B.

Referenced here: 

http://www.barrypopik.com/index.php/new_york_city/entry/no_mans_life_lib...

Mon, 08/08/2011 - 16:56 | 1539335 arizona11912
arizona11912's picture

I wonder if its possible to have the margin requirements increase for Silver without creating a rush for delivery? Can anyone comment about that? Thanks

Mon, 08/08/2011 - 16:56 | 1539336 arizona11912
arizona11912's picture

I wonder if its possible to have the margin requirements increase for Silver without creating a rush for delivery? Can anyone comment about that? Thanks

Mon, 08/08/2011 - 16:56 | 1539337 arizona11912
arizona11912's picture

I wonder if its possible to have the margin requirements increase for Silver without creating a rush for delivery? Can anyone comment about that? Thanks

Mon, 08/08/2011 - 18:24 | 1539706 Iam_Silverman
Iam_Silverman's picture

"I wonder if its possible to have the margin requirements increase for Silver without creating a rush for delivery? Can anyone comment about that? "

Yes.

Mon, 08/08/2011 - 16:56 | 1539341 Ghoaster
Ghoaster's picture

Obama did seem sad in his little tele-speech today, bummer. NOT!

Mon, 08/08/2011 - 17:02 | 1539381 Long-John-Silver
Long-John-Silver's picture

It took two days to get over the ass kicking the S & P gave him.

When he did get his act together and present a "straight face" on TV the market took it's turn kicking him in the ass as he was speaking by dropping below 11,000.

Mon, 08/08/2011 - 17:18 | 1539459 NeroAmerika
NeroAmerika's picture

And if people were smart, they could have made a quick buck or two.  Everytime Obambi gets on TV the markets take a dump, easy money.

Mon, 08/08/2011 - 17:09 | 1539423 mynhair
mynhair's picture

Oweblahma:  cue that 'deer int the headlights' pic.

Tue, 08/09/2011 - 00:19 | 1541195 Ponzi Unit
Ponzi Unit's picture

downside of being a GS employee

Mon, 08/08/2011 - 17:00 | 1539364 mynhair
mynhair's picture

Any info on that wierd volume drop in SPY?  Was watching the 5-min chart, and the vol died around 3:35p.  Related to the MS outage?  And is MS the only trader of SPY?

Mon, 08/08/2011 - 17:00 | 1539365 max2205
max2205's picture

What a great article. Thanks

Many have their convictions on hold. Praying for a quick deep selloff so they can get well on a short skullfuck rally

Tue, 08/09/2011 - 00:20 | 1541200 Ponzi Unit
Ponzi Unit's picture

skullfuck rally!

Mon, 08/08/2011 - 17:01 | 1539379 Greater Fool
Greater Fool's picture

If BAC does fail with conditions the way they are now, we are in for a hell of a ride. Even so, I welcome equity valuations that look to be a bit more in line with reality than they have been for some time now.

Mon, 08/08/2011 - 17:01 | 1539380 treemagnet
treemagnet's picture

Tchir writes like today was a fluke.  This things on fire and even the rats have enough sense to run.

Mon, 08/08/2011 - 17:32 | 1539520 oogs66
oogs66's picture

he writes like he got it wrong today:)

Mon, 08/08/2011 - 17:02 | 1539388 molecool
molecool's picture

Did you guys see NYSE breadth today? 47:1

http://evilspeculator.com/?p=22936

Mon, 08/08/2011 - 17:03 | 1539392 MrBoompi
MrBoompi's picture

I think the gold price better settle down or someone will sell a LOT of GLD and dump the price.  Or else they'll raise the fucking margins again. 

Mon, 08/08/2011 - 17:21 | 1539469 malusDiaz
malusDiaz's picture

Good! Get everyone into 100% physical, then watch them raise margins on 100% delivery price... 

 

True Price Discovery Bz!

Mon, 08/08/2011 - 17:05 | 1539396 cocoablini
cocoablini's picture

I always suspected Citibank or JP to hit the floor first. BAC I knew was exposed to Merrill and the mortgages. My money is in there-I wonder if it gets nationalized or dissolved

Mon, 08/08/2011 - 18:28 | 1539719 Iam_Silverman
Iam_Silverman's picture

"My money is in there-I wonder if it gets nationalized or dissolved"

We prefer the term "repatriated".  You are now invested in really stable, super double-plus good U.S. Treasuries!

Seriously dude, I'd start my own little bank run on 'em....

Tue, 08/09/2011 - 00:21 | 1541214 Ponzi Unit
Ponzi Unit's picture

they are not in the club that owns the Fed

Mon, 08/08/2011 - 17:05 | 1539398 Cdad
Cdad's picture

Well...that looked like capituation to me...on ES.  We could see some lower prints in the morning, but I think you might see the VIX get slaughtered tomorrow...forcing the algos to reconsider putting in a bid for "historically[er] cheap valuations" as we head towards the Bernanke Day announcement....which I also expect to have a very short half life.

Consumer discretionary still seems vulnerable...and the RIETs...places I'd still be short.

Good luck out there, brothers.

 

 

Mon, 08/08/2011 - 17:07 | 1539415 oogs66
oogs66's picture

makes sense.

Mon, 08/08/2011 - 17:22 | 1539464 Shell Game
Shell Game's picture

So does Molecool (above).  This may have some momentum..

 

It's what happens when you make the market carnivore, the short-seller, extinct by way of Fed induced attrition since '09.  Who's buying, if no one's covering...?

Mon, 08/08/2011 - 18:01 | 1539632 Cdad
Cdad's picture

Continued negative momentum...sure.  I'm just saying...probably not in a straight line.  Maybe a low print in the morning and a short covering rally into the Fed announcement.  That is the extent of my call.

After that...  ?

Mon, 08/08/2011 - 18:32 | 1539734 Iam_Silverman
Iam_Silverman's picture

"and a short covering rally into the Fed announcement"

of QE3, or some other structured "relief operation"?  My money is on a statement somewhere along the line where they are "evaluating all options and will act soon" in order to confuse the day traders and make them sit tight on their positions for a while why they pretend to backstop the ECB......

Tue, 08/09/2011 - 00:22 | 1541222 Ponzi Unit
Ponzi Unit's picture

slick.

Mon, 08/08/2011 - 19:27 | 1539928 Shell Game
Shell Game's picture

You certainly could be spot on with your call.  IMVHO, the bounce was meant to occur today at around 2:30EST, and was promptly overruled.  IDK..   But I will buy you a beer if you get it right.  ;)

Mon, 08/08/2011 - 17:07 | 1539412 trillion_dollar...
trillion_dollar_deficit's picture

I suspect Presentdent ObAmA+ won't be giving another speech tomorrow.

Mon, 08/08/2011 - 18:35 | 1539750 saulysw
saulysw's picture

Over the last year or so I have been constantly amazed at the seemingly endless variations of the name "Obama". I think this is one of the best.

Mon, 08/08/2011 - 22:56 | 1540775 StychoKiller
StychoKiller's picture

You don't like Obamatron, leader of the Decepticrats?

Mon, 08/08/2011 - 17:07 | 1539416 Gloeschi
Gloeschi's picture

Peter, your posts are always informative and well readable. Thanks!

Mon, 08/08/2011 - 17:08 | 1539417 Newsboy
Newsboy's picture

The King ($) is dead.

Long live the King (Gold)!

Mon, 08/08/2011 - 17:11 | 1539424 LetThemEatCake
LetThemEatCake's picture

Ugly is in the eye of the beholder, because I think this is the true picture of the current state of affairs. It was a fantastic day/week if you went in short with call option protection.

Nobody today had any insurance (i.e. puts), and everyone, it's clear now, had been levered up to the hilt. Friday was the day when a few 'buy the dips' guys bought the "dips" (like that fool Cody on Marketwatch). Other than that, no one is willing to put in hard earned cash into anything other than gold (which can only go up longterm, unless Ben announces tomorrow he had been wrong all along).

The market wasn't oversold, it was overhyped.

Mon, 08/08/2011 - 17:15 | 1539439 Caviar Emptor
Caviar Emptor's picture

There are still many, many people over invested/leveraged in stocks. As per usual, they assumed the bull run would never end. And the plunges happened fast. Lots of denial around, trust me. 

Gold is decoupling even more completely from /ES and DXY. The reason is scary fundamentals, ominous central bank maneuvers, spooky currency markets, frightening bank and financial sector health and even bigger concerns than that. People have gradually learned the lesson: you gotta have gold, not confetti. 

When Zombies roam you gotta have gold. 

Mon, 08/08/2011 - 18:34 | 1539741 Iam_Silverman
Iam_Silverman's picture

"When Zombies roam you gotta have gold."

I'll finish the sentence for you:

When Zombies roam you gotta have gold, Silver, and Lead.

Mon, 08/08/2011 - 17:15 | 1539444 treemagnet
treemagnet's picture

How exactly does the bernanke think more fiat on the fire will get him anything other than a better fire?  After an S&P downgrade it'll look pretty fucking stupid won't it?  Can American handle AA w/neg. outlook - how bout munis, etc.  No way.

Mon, 08/08/2011 - 17:16 | 1539448 wombats
wombats's picture

Perhaps it is good that Bernanke and the FED did nothing today.  They have been a disaster and it seems like they could have only made things worse by saying/doing anything.

Mon, 08/08/2011 - 18:35 | 1539748 Iam_Silverman
Iam_Silverman's picture

"Perhaps it is good that Bernanke and the FED did nothing today."

Do nothing, do nothing wrong.  Homer Simpson logic!

Mon, 08/08/2011 - 17:22 | 1539473 Fix It Again Timmy
Fix It Again Timmy's picture

Once aroused, the reptilian brain is not easily placated - fear will rule..

Mon, 08/08/2011 - 17:34 | 1539529 oogs66
oogs66's picture

Obama needs a DC sniper or an OJ car chase.  something to distract the masses

Mon, 08/08/2011 - 18:36 | 1539754 Iam_Silverman
Iam_Silverman's picture

DWTS, American "Idle", X-Factor, anything!

Mon, 08/08/2011 - 17:24 | 1539486 falak pema
falak pema's picture

According to Putin, the Dow will be at 8000, the USD will be toast  and this will make the rouble the most sought after currency in the new bancor of IMF. They are thinking of bringing out a Stalin rouble that says : now we know that russia really won the cold war; as it killed its own evil communist regime and its global enemy USa as well. 

Mother Russia is now uber-west. As both China and Germany needs it gas and oil. Russia rising. What a great movie that would make. Pity Putin is no Dostoievsky or Tolstoi. Maybe Spielberg could do a blow up job on his already inflated ego. Like in Duel. All he needs is that GWB send him some cowboy boots. Go long Pravda.

Mon, 08/08/2011 - 17:25 | 1539492 TwoHoot
TwoHoot's picture

What are the chances (my guess = zero) the FED sells into the bond bubble, reducing their balance sheet for future action? Well if it is Zero for the FED, what about the Chinese? (No Guess).

Cordially,

TwoHoot

 

Mon, 08/08/2011 - 17:28 | 1539499 BearishFeijoadaSushi
BearishFeijoadaSushi's picture

In the bearish world of ZH, ugly is awesome!!!

Mon, 08/08/2011 - 17:31 | 1539516 Highrev
Highrev's picture

With market volatility so high, and liquidity minimal, the one thing that makes the most sense is to stay small and nimble.

Or just stay away (especially if you're doing anything but fading at this point).

Mon, 08/08/2011 - 22:58 | 1540792 StychoKiller
StychoKiller's picture

"Let's get small!" -- Steve Martin  :>D

Mon, 08/08/2011 - 17:49 | 1539589 QQQBall
QQQBall's picture

Today marked the end of Brick's presidency. The "Uncle Warren says..." speech will go down in history as one of the most pathetic, desperate and vacuous speeches ever. Brick read the teleprompter and the market read him their verdict - One (term) and Done beesh! One and Done!

Mon, 08/08/2011 - 17:54 | 1539610 FunkyOldGeezer
FunkyOldGeezer's picture

How anyone can be glib about all of this, is beyond me. How anyone can be gloating is beyond me too.

Unless all the postrers on ZH are multi, multi-millionaires thinking they'll be immune from any fallout and / or from a different planet they can retreat to at any time they desire, how can what's happening and what's being promulgated by many posters here, be a truly good thing?

You'll get true price discovery, but at what cost to millions and millions of perfectly decent people around the world, including yourselves, who'll be caught up in the maelstrom? The reset will be good for what exactly? The whole world will be like the worst places on earth with mass starvation, mass disease, anarchy with gun law and all humanity lost to the dark forces.

Be careful what you wish for. I hold metals NOT because I want the system to totally collapse, nor should you. If you do, reckon with being dead a long time before it would have otherwise naturally occured.

Mon, 08/08/2011 - 18:00 | 1539627 Spitzer
Spitzer's picture

I agree

But the sooner it happens, the better it is for the world. It is sad that gold holders are ecstatic but they deserve to be.

Thailand had tanks rolling in the streets in 1997(literally), they let their system collapse and they rebuilt.  Now they are buying gold.

Mon, 08/08/2011 - 18:14 | 1539674 OldTrooper
OldTrooper's picture

The eye that looks ahead to the safe course is forever closed.

Mon, 08/08/2011 - 18:38 | 1539731 Dr. Acula
Dr. Acula's picture

>How anyone can be glib about all of this, is beyond me. How anyone can be gloating is beyond me too.

Rejoice that the doom of fiat currency approaches, heralded by the soaring nominal price of gold. The gangrenous flesh (fractional reserve banks, murder industrial complex, etc.) needs to be cut out of the patient so the true healing can begin. The market works relentlessly to rid itself of these parasites, and it will prevail.

>The whole world will be like the worst places on earth with mass starvation, mass disease, anarchy with gun law and all humanity lost to the dark forces.

You greatly underestimate the power of the free market and the entrepeneurial spirit.

 

Mon, 08/08/2011 - 19:15 | 1539892 Ungaro
Ungaro's picture

Recessions, even very deep, severe ones, are good for curing excesses (debt, consumption, government, etc.), malinvestment (insert your own long list here) and rampant speculation (fifth- and sixth-order derivatives). The end of the world is not a good thing and whoever advocates that should have all their heads examined.

Mon, 08/08/2011 - 18:20 | 1539695 falak pema
falak pema's picture

the Eu says they have the solution. Federate and consolidate to dilute the debt. Just when imperial USA implodes, imperial dreams are belatedly, desperately, reborn in EU. As in China, but there it seems more solid. Is USA now supernovad and CHina/EU keynesianised central planned rising stars of command-controlled-regulated world economies; where all financial speculation will be verboten; all naked derivative plays banished and all energy concentrated on social market model?

Whatever that means as nobody really understands the chinese model. Can it survive once the US consumer pump is turned down and global flow to USA becomes trickle down business? Will Asia replace it, will Afirca eat its investment for new markets to emerge? We are a long way away. But it could just be that China's own momentum keeps the fly wheel going for slower but steady growth.

Pain in EU/USA and  adjustment to new norm in BRIC w/o implosion. India will suffer as its model is very dependent on US corporate demand. If US corporate profits stay on line it could feed the Indian service sector. But it will slow down for sure.

Recession and liquidity crunch in 2012/2015 period on the cards. Those who survive will then consolidate...

We enter a long dark tunnel.

 

Mon, 08/08/2011 - 18:28 | 1539721 css1971
css1971's picture

Did COMEX manage to kill everyone on margin in PMs? I was hoping for a dip. No margin means no dip. Bastards.

 

Mon, 08/08/2011 - 18:40 | 1539759 saulysw
saulysw's picture

Can someone explain to me why the AUD has been pounded over the last week or so? It's gone from 1.105 to 1.018 (AUD:USD), which is a massive move. Money coming from high interest investments to pay off debts back home?

Mon, 08/08/2011 - 19:03 | 1539851 Manthong
Manthong's picture

Someone earlier responded that contraction in China will substantially affect the exports of our friends down under.

Mon, 08/08/2011 - 18:47 | 1539778 SPAREPARTS
SPAREPARTS's picture

The system, our society has moved off track, our values and incentives have been turned upsidedown by a manipulative elite, its been a sacrifice to follow your sense to PM's, all the people I talk to think I am the one that is the loser, I guess some of these poster feel abit like me, nice to get alittle affirmation that your not crazy. Yes blood in the streets is bad news, the average joe getting hoodwinked by charlatans is terrible but how else can we get back to sanity, somebody gotta take some hits, the goverment and the financial self centered dogs brought the loins share into the game I would like to see them get jamed here good, sorry for all the good guys that didnt see coming, I am not gonna say I told'em so 

Mon, 08/08/2011 - 18:54 | 1539810 SPAREPARTS
SPAREPARTS's picture

Hey can anyone tell me if mining stocks will ever benifit from all this, PM price movement , paas  was down, gg moved by a dime. come on tell me something that might help me.thanks

Mon, 08/08/2011 - 18:58 | 1539827 FunkyOldGeezer
FunkyOldGeezer's picture

Rejoice that the doom of fiat currency approaches, heralded by the soaring price of gold. The gangrenous flesh (fractional reserve banks, murder industrial complex, etc.) needs to be cut out of the patient so the true healing can begin. The market works relentlessly to rid itself of these parasites, and it will prevail.

I'm happy that metals are preserving my wealth. However, it is the market that needs all the fractionally reserved fiat currency to maintain liquidity and there's the rub. Having just Gold and/or Silver wouldn't have grown America or the world economies enough for the ever increasing population to enjoy an increasing standard of living, would it? Can it just be coincidence that technological advances and standards of living in the West have gone expotential at the same time that fiat currency in circulation has done the same? Do you really think our forefathers had it better a hundred years ago? Life was damned hard back then, for 99.9% of the population.

Personally, I put the massive population increase at the core of our problems, NOT fiat currency per se. Once a critical mass population was reached, something had to be done to pay those who went to work. Gold and Silver would have been exhausted long ago? I'm not saying fiat is better, but truthfully, I can't see just Gold and Silver as a viable alternative, not now with 7-8 billion people on the planet.

Mon, 08/08/2011 - 19:27 | 1539885 Dr. Acula
Dr. Acula's picture

>Having just Gold and/or Silver wouldn't have grown America or the world economies enough

What makes you think that? Money means tokens of social exchange. There is no optimum quantity of tokens. Even 1 microgram of gold would be enough currency for the whole world, if you could manipulate individual atoms in practice. And if everyone had an average of 1000 pounds of gold, it would still be an acceptable currency, assuming everyone could carry around hundreds of pounds. As long as the quantity of currency is in a practical range, it suffices to enable indirect exchange.  Remember, our current money is backed by zero grams of nothingness.

Money derives its value chiefly from people's expectation that it can be exchanged for other goods. E.g. the dollar bill is valued because we expect other people to accept it, not because it can be used as wallpaper, tinder, or toilet paper.

The other function of money is that it serves as a store of value. The dollar has been an epic failure at this, losing 98% of its value in 98 years. When the losses become unbearably rapid, the dollar will be ejected from the sphere of commerce. It will cease to be money.

>it is the market that needs all the fractionally reserved fiat currency to maintain liquidity

Again, there is no optimum quantity of money. You don't need to dilute the medium of exchange with credit created through bailment fraud (fractional reserve banking) to enable indirect exchange.

>Can it just be coincidence that technological advances and standards of living in the West have gone expotential at the same time that fiat currency in circulation has done the same?

I'm not sure what you mean. Would you say you have an "exponential" standard of living? I don't. By some measures, standards of living have declined in the past few decades.

>Personally, I put the massive population increase at the core of our problems

No. Land sits unused; factories idle, if you have ever driven through US or Canada you should know that there are not nearly enough people. There are always more material factors of production waiting to be transformed into goods in the service of humanity.

It sounds like you have a lot to learn about economics. I strongly recommend reading Hazlitt, Rothbard, and von Mises. There are a lot of free books online, for example, at www.mises.org. Hazlitt's "Economics in One Lesson" is a pretty enjoyable read. For the subject we're talking about, Mises "Theory of Money and Credit" covers it but it's not at all an easy read.

Mon, 08/08/2011 - 19:06 | 1539862 jmc8888
jmc8888's picture

Obama's sophistry filled list of cliche's was absolutely ridiculous.

It might as well been Nuke/Crash's list of cliches

-We gotta play 'em one day at a time.

-I'm just happy to be here. Hope I can help the ballclub

-I just want to give it my best shot, and the good Lord willing, things will work out.

I wonder if tthe teleprompter's are HFT enabled? Who else could write a speech so bad other than a tone deaf robot?

Good thing Ash (Alien: 1979) didn't tell the truth

-Bring back Fraudulent Ponzi Market. Priority One. All other priorities rescinded.

 

Glass-Steagall or the past couple of days is only the beginning of the next stage of the farce we find ourselves in. Impeach Nero (he won't enact it, and without it, the world is fucked).  Let the fraudsters burn.....not everyone else.

Mon, 08/08/2011 - 19:34 | 1539949 thewhitelion
thewhitelion's picture

Adjusting allocation may be a good move, but if the event is taxable, it could easily be a loser.

Mon, 08/08/2011 - 19:58 | 1540009 slewie the pi-rat
slewie the pi-rat's picture

this is a well-done article, but peter t. seems to contradict himself:  "The Fed was very quiet today.  Yes I know they have a meeting tomorrow, and are in a "quiet" period..."

yes, but after the G-whatever (7?  20?) phone par-ley yesteday,

  • a) only a very few, recognizable europeans spoke,
  • b) the spanish and italian bonds got huge, co-ordinated, central-bankster support and
  • c) the FED let the prez0 stand up & take the political heat for a downgrade which S&P has said was largely due to FACT that the pols used the word "default" waaaay too much while "debating" the wisdom of more debt, right now. 

not that S&P believed them, any more than i did, but i think the ratings agency was put in a very difficult spot by the political & banking leadership of the US and just said "Fuk you, too, BiCheZ!  Here's what's comin your way, too!"    Hahahaha! 

S&P starring in:  Nanny Get Your Gun!

Mon, 08/08/2011 - 20:06 | 1540047 disabledvet
disabledvet's picture

time to throw the balast of MBS overboard. "Ligthen the load" a little. That would be an interesting news conference to attend. What will The Bernank say? (does nothing.) What will he say? (does nothing.) "Time for the close up."

Mon, 08/08/2011 - 20:22 | 1540102 FunkyOldGeezer
FunkyOldGeezer's picture

I'm not sure what you mean. Would you say you have an "exponential" standard of living? I don't. By some measures, standards of living have declined in the past few decades.

Any of our forefathers, except our own fathers, wouldn't recognise the world we live in. Go back just one hundred and fifty years and virtually no-one would have envisaged such a simple thing as electric lights. They certainly wouldn't have envisaged vehicles that coud do a steady 70 mph on tarmac roads with six lanes in either direction, refrigerators in virtually every home etc etc.

No. Land sits unused; factories idle, if you have ever driven through US or Canada you should know that there are not nearly enough people. There are always more material factors of production waiting to be transformed into goods in the service of humanity.

On a planet with finite reources? It's not a question of land being unused or factories idle. It's a case of how much land is needed to feed everyone and how much land needs to be permanently destroyed in order to fill a factory's raw material needs.

What makes you think that? Money means tokens of social exchange. There is no optimum quantity of tokens. Even 1 microgram of gold would be enough currency for the whole world, if you could manipulate individual atoms in practice. Total theoretical nonsense, in my view.

And if everyone had an average of 1000 pounds of gold, it would still be an acceptable currency, assuming everyone could carry around hundreds of pounds. As long as the quantity of currency is in a practical range, it suffices to enable indirect exchange.  Remember, our current money is backed by zero grams of nothingness.

Again, theoretically speaking, yes. However, the issuing countries wouldn't have gained any worth for their currencies ever, if you belive in your assessment and take your argument to a logical conclusion.

Money derives its value chiefly from people's expectation that it can be exchanged for other goods. E.g. the dollar bill is valued because we expect other people to accept it, not because it can be used as wallpaper, tinder, or toilet paper.  

So where does the function of production of goods and services sit within this? The dollar became strong because the USA produced myriad goods and services AT A PROFIT, at a competitive price. Therefore it would have had a backing as such and a reason for others to accept it. Once the USA began to lose its manufacturing base and depend more on financial derivatives to produce wealth, that's when things started to seriously unwind. Again, fiat currency is not to blame for this per se, more the function of how profits and capital were made and put to work.

However, yours is a fatuous statement. Ultimately, Gold and Silver also depend on the same function, without having any means of production. Their value is only self perpetuating because people holding Gold and Silver have a vested interest NOT to rock the boat and as they are inevitably the wealthier (and possibly more 'intellectual') members of society, that can see further than the ends of their noses. In essence, it is ultimately a con trick, make no mistake. The function of its accepted value is more to do with an elite telling the hoi polloi (who could never attain the metals in any quantity) that they were valuable, as anything else. If Gold is so valuable, why aren't far more rare metals like Platinum, or Palladium worth multiples of the Gold price? I propose, it's simply that they weren't discovered (in enough quantities) during those times when the Gold 'myth' was expounded by royalty and rulers. They wouldn't have had any 'industrial' uses in ancient times and are just as shiny.

I hold metals and realise their 'worth' in a fiat world, BUT I don't buy all the BS that goes with it.

Mon, 08/08/2011 - 20:42 | 1540168 Die Weiße Rose
Die Weiße Rose's picture

There's nothing more therapeutic than Austerity and Depression

to focus Body and Mind and restore a healthy sense of Reality.

It's been long overdue !

Mon, 08/08/2011 - 21:09 | 1540273 pods
pods's picture

Well, the matrix opinion of all of this (via talk radio) is that all of this was merely caused by our bickering during the debt debate.  

Yep, Tea party Reps got most of the blame, even though by my account they rolled over like dogs.

I have figured out that 95% of the population is not intellectually honest enough to even imagine what is really going on.

Gotta go find another audio book............................

pods

Mon, 08/08/2011 - 21:58 | 1540497 Heroic Couplet
Heroic Couplet's picture

So the banks and hedge funds don't want regulation. They take a 700 point down day on the Dow instead. What's the difference? NOTHING.

 

Mon, 08/08/2011 - 23:20 | 1540941 Grand Supercycle
Grand Supercycle's picture

THE S&P 500 MONTHLY CHART THAT FORECAST THE CRASH.

Further downside expected.

http://bit.ly/x618

Wed, 09/14/2011 - 05:14 | 1667543 chinawholesaler
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