Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

[santafe2]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

Wow! And it is a logarithmic scale. On the flip side, does it mean that shipping was a hugely profitable business just 6 months ago?

Baltic Dry Index is down from ~11,800 in mid May to 700 today. That's a drop of 94% but the actual daily shipping rate has dropped 99% according to this article. I'm going to file this one away so I can read it the next time I'm feeling put-out by our own business environment.

CAPESIZE and panamax indices are...$2,316 per day, less than 1% of the record high of $233,988 recorded on June 5.

“It’s difficult to see how much lower it can go. This is desperate stuff,” said a Baltic Exchange freight market representative. If the rates continue to plummet the index may approach its lowest recorded level of 554, in early August 1986.

The rates are falling off a cliff not just because there is so little demand for raw materials. That lack of demand is feeding on itself. Demand for raw materials has fallen to a point where it's not profitable for many producers to process and sell the materials that go in the tankers.

http://www.lloydslist.com/ll/news/ba...0017596233.htm

[jtabeb]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

you're being suckered into buying this rally... again. this is how the insiders always get out with their money out after the racket is over... and how they've been getting out of the usa stock market since dec. 2007. rally after rally through the debt deflation bear market, systematically they separate retail investors from their money. amazing how it keeps working! sucker them in, take their money. sucker them in, take their money. sucker them in, take their money. lab rats in cages learn faster than traders in this bear market... even rats don't keep hitting the 'feed' lever after it zaps 5 times with 1000 volts each time.

'maybe it won't zap me this time!' says the trader, now down 50%. 'ok, i was wrong about the bottom at 11000 and 10500 and 10000 and 9500 and 9000... but 7900... that was the bottom. now we're going to 9500 fast. yes, i can FEEL it! and i got these charts that show the dangle doo dah ratio to the intermediate whatnot. and this newsletter from joe genius guru trader dude. it's a sure thing!'

'don't do it', says the rat, watching from his cage.

ZZZZZZZZZAAAAAAPPPPPPP!

the rat shakes his heads in disbelief as the market tanks to 6500 on the news that the ultimate fire econ 'industrial' company ge is going out of business despite a previously unacknowledged $500billion infusion, and the usa airline industry will be nationalized, and so on.

you'll know when the markets hit bottom... all the online brokers will be out of business after all the retail investors' money that can be stolen is gone. you go to use your account you get a big message pops up... ACCOUNT CLOSED! THANKS FOR PLAYING!

Isn't the whole question "how bad do things have to get before the Gov ponies up with a truly MASSIVE inflationary PUSH?" Is that not why people are still paying for their "tuition". Do you think that the BIG ONE (inflation) is NOT coming?

All questions, wish I had answers for them.

[goadam1]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

Look at the s and p 500. If it earns $70 and people want to pay a premium at 20x earnings then strap on the rockets. If it earns $60 and people feel bearish at 10x earnings then look out below. Your play. But I think you invest by paying a fair price in cash and risk for return. Cash feels pretty good to me right now. I will keep looking for what I think will make money at a fair price. Things feel a little expensive. For risk to reward: if we aren't in a full collapse then corporate bonds and senior debt are looking tasty.

[ThePythonicCow]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

with 1000 volts each time.

Ah - but we get to control the voltage.

I still play in the market with perhaps ten percent of my money just so that I keep some skin in the game. My reptilian brain simply doesn't learn at any school other than that of Hard Knocks. Fortunately, my cortex gets to set the price of tuition.

We're all crash test dummies on the maiden voyage and sinking of the worlds largest ever Financial SuperTanker. No one told us how this tanker was designed; we're having to reverse engineer it as it crashes and sinks, while we frantically search about for safer positions and life boats and sea rations.

The more one can learn about various parts of the Tanker, without getting killed in the process, the better ones chances should be.

[ThePythonicCow]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

Pythonic Cow - I am heavily invested in your thesis, and so I'm effectively short Jack Crook's thesis in my posture - needless to say, the bulk of my investments would prosper mightily should you be correct - but with every passing month I conclude further that for the next two or three years, you won't be correct.

If by "my thesis" you mean the thesis that the Dollar will collapse sooner rather than later, then perhaps it is coming time to ask what happens after -both- the Euro and the Dollar have suffered severe damage. I was not so much disagreeing with Jack Crook as pointing out the rather predictable observer bias in his comments. He might still be right.

The time is coming to stock up on physical goods and property and to arrange ones life so as to minimize ones dependency on any currency.

For those of us, perhaps including you or me, who are fortunate enough to have modest unspent wealth (be it $10K or $10M) left over after making these arrangements, I'd advise keeping light on ones feet and dispersed, so that one can move ones uncommitted wealth quickly, and so that being blind sided by either of

1. a some sudden, inescapable turn of events or
2. a some stupid investment decision on ones own part

doesn't entirely wipe out ones stash.

One should avoid positioning ones liquid wealth so that one has to decide now the final outcome of the race to the bottom of the worlds currencies. Rather one should look to be more right than wrong on the intermediate changes in trends.

[metalman]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

No "bottom" until the debt is gone

Is it conceivable that the massive governmental response to the credit crisis with the trillions of dollars to be spent will avert a further bottoming out of the debt deflation cycle and lead to a quicker ramp-up of inflationary expectations, i.e. could Ka be aborted sooner than we think leading to Poom sooner than we think, or am I merely being suckered into buying this rally?

No one can deny the values that stocks have fallen to. In my opinion, it would take further massive debt deflation and a collapse in earnings expectations below where stocks are now priced to drive stocks below their 7552 DJIA low.

Would love to hear some thoughts.

you're being suckered into buying this rally... again. this is how the insiders always get out with their money out after the racket is over... and how they've been getting out of the usa stock market since dec. 2007. rally after rally through the debt deflation bear market, systematically they separate retail investors from their money. amazing how it keeps working! sucker them in, take their money. sucker them in, take their money. sucker them in, take their money. lab rats in cages learn faster than traders in this bear market... even rats don't keep hitting the 'feed' lever after it zaps 5 times with 1000 volts each time.

'maybe it won't zap me this time!' says the trader, now down 50%. 'ok, i was wrong about the bottom at 11000 and 10500 and 10000 and 9500 and 9000... but 7900... that was the bottom. now we're going to 9500 fast. yes, i can FEEL it! and i got these charts that show the dangle doo dah ratio to the intermediate whatnot. and this newsletter from joe genius guru trader dude. it's a sure thing!'

'don't do it', says the rat, watching from his cage.

ZZZZZZZZZAAAAAAPPPPPPP!

the rat shakes his heads in disbelief as the market tanks to 6500 on the news that the ultimate fire econ 'industrial' company ge is going out of business despite a previously unacknowledged $500billion infusion, and the usa airline industry will be nationalized, and so on.

you'll know when the markets hit bottom... all the online brokers will be out of business after all the retail investors' money that can be stolen is gone. you go to use your account you get a big message pops up... ACCOUNT CLOSED! THANKS FOR PLAYING!

[Smitty]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

No "bottom" until the debt is gone

Is it conceivable that the massive governmental response to the credit crisis with the trillions of dollars to be spent will avert a further bottoming out of the debt deflation cycle and lead to a quicker ramp-up of inflationary expectations, i.e. could Ka be aborted sooner than we think leading to Poom sooner than we think, or am I merely being suckered into buying this rally?

No one can deny the values that stocks have fallen to. In my opinion, it would take further massive debt deflation and a collapse in earnings expectations below where stocks are now priced to drive stocks below their 7552 DJIA low.

Would love to hear some thoughts.

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

Pythonic Cow - I am heavily invested in your thesis, and so I'm effectively short Jack Crook's thesis in my posture - needless to say, the bulk of my investments would prosper mightily should you be correct - but with every passing month I conclude further that for the next two or three years, you won't be correct.

The currency collapse, as seen by a veteran currency trader, begins.

Already we've seen the huge, complex mortgage backed debt market enter its collapse, stressing many and taking down those too close.

Other bubbles that remain to pop:

1. World-wide inbalances in trade, mining, farming, manufacturing and shipping have been built up since the Second World War. Chinese farmers migrate to the city to build trinkets for fancy houses that Americans buy on debt paid for by shuffling paper between Peking and Washington. Dubai builds cities of immense architectural wonders on oil wealth. Such imbalances cannot persist (though they can last a long time.)
2. The political promises of tomorrow to American voters of today, seen in the unfunded liabilities of Social Security and Medicare.
3. The still large nominal present day value of anticipated future pension fund, IRA and 401K withdrawals remains to be cut down to size (by confiscation, taxation, rules changes, investment losses, defaults and inflation.)
4. The social problems in many other nations and in some failing American cities and regions will grow immense as this world wide economic, trading and financial bubble collapses.

I do not think that the other nations will stand by idle while their currencies bleed to death as the Dollar stands strong. As Caesar turned to Brutus one day, so the Dollar will turn to the Yen: "Et tu, Yen?"

So long as the financial and economic pain is not too great, the other (non-Dollar) nations will have difficulty mustering the resolve for a frontal attack on the Dollar.

I saw a stunning video clip last week of the world leaders mounting a stage at their big economic summit for a group photo. As they walked past each other, they ostentiously shook hands and shared smiles with each other, except for one man. No one would look George Bush in the eye or offer a hand. He was being ostracized, quite publicly, on the (literal) world stage. The world is preparing to turn on America, just as its leaders turned the back of their hands to Bush.

The transition to Obama may buy the Dollar a little time, as world leaders are optimistic that he will be someone with whom they can better work. But the same Banksters remain in the real positions of financial power in America. The honeymoon will be short; the falling out brutal.

Like most of us watching this collapse, we see the part we know collapsing and predict that part will fall next (implicitly assuming the rest that we don't personally know so well will not change so much right away.)

I saw the same thing whenever I took over managing some new group of computer programmers in my previous life. I could quickly tell who was expert in what by presenting some scary but ill-defined problem to the group. The widget guy would immediately volunteer how it was a failure of widgets that he could remedy; the gadget guy would similarly offer up a diagnosis and remedy involving gadgets; similary the doohicky and whatsits engineers. In thirty minutes of listening, I could go from having almost no clue what the group did, to knowing in what each person in the group took pride. I hear stories that people seeking medical advice find the same thing; the diagnosis and prescription reflect more on the expertise of the doctor attending them than on the particulars of their condition.

In short, I don't think that this currency trader has proven to me that the non-Dollar currencies of the world will collapse as the Dollar stands. I think he has just proven to me that he is an expert in the strengths and weaknesses of the worlds non-Dollar currencies, especially the Euro.

[Jam]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

Hum, so you think this chart shows a downturn in the cost of shipping "stuff" across the sea?! Maybe you're right. I wouldn't ski on a slope like this.

[ATTACH]840[/ATTACH]

Wow! And it is a logarithmic scale. On the flip side, does it mean that shipping was a hugely profitable business just 6 months ago?

[ThePythonicCow]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

A massive flight to safety — OUT of euros ...

The currency collapse, as seen by a veteran currency trader, begins.

Already we've seen the huge, complex mortgage backed debt market enter its collapse, stressing many and taking down those too close.

Other bubbles that remain to pop:

1. World-wide inbalances in trade, mining, farming, manufacturing and shipping have been built up since the Second World War. Chinese farmers migrate to the city to build trinkets for fancy houses that Americans buy on debt paid for by shuffling paper between Peking and Washington. Dubai builds cities of immense architectural wonders on oil wealth. Such imbalances cannot persist (though they can last a long time.)
2. The political promises of tomorrow to American voters of today, seen in the unfunded liabilities of Social Security and Medicare.
3. The still large nominal present day value of anticipated future pension fund, IRA and 401K withdrawals remains to be cut down to size (by confiscation, taxation, rules changes, investment losses, defaults and inflation.)
4. The social problems in many other nations and in some failing American cities and regions will grow immense as this world wide economic, trading and financial bubble collapses.

I do not think that the other nations will stand by idle while their currencies bleed to death as the Dollar stands strong. As Caesar turned to Brutus one day, so the Dollar will turn to the Yen: "Et tu, Yen?"

So long as the financial and economic pain is not too great, the other (non-Dollar) nations will have difficulty mustering the resolve for a frontal attack on the Dollar.

I saw a stunning video clip last week of the world leaders mounting a stage at their big economic summit for a group photo. As they walked past each other, they ostentiously shook hands and shared smiles with each other, except for one man. No one would look George Bush in the eye or offer a hand. He was being ostracized, quite publicly, on the (literal) world stage. The world is preparing to turn on America, just as its leaders turned the back of their hands to Bush.

The transition to Obama may buy the Dollar a little time, as world leaders are optimistic that he will be someone with whom they can better work. But the same Banksters remain in the real positions of financial power in America. The honeymoon will be short; the falling out brutal.

Like most of us watching this collapse, we see the part we know collapsing and predict that part will fall next (implicitly assuming the rest that we don't personally know so well will not change so much right away.)

I saw the same thing whenever I took over managing some new group of computer programmers in my previous life. I could quickly tell who was expert in what by presenting some scary but ill-defined problem to the group. The widget guy would immediately volunteer how it was a failure of widgets that he could remedy; the gadget guy would similarly offer up a diagnosis and remedy involving gadgets; similary the doohicky and whatsits engineers. In thirty minutes of listening, I could go from having almost no clue what the group did, to knowing in what each person in the group took pride. I hear stories that people seeking medical advice find the same thing; the diagnosis and prescription reflect more on the expertise of the doctor attending them than on the particulars of their condition.

In short, I don't think that this currency trader has proven to me that the non-Dollar currencies of the world will collapse as the Dollar stands. I think he has just proven to me that he is an expert in the strengths and weaknesses of the worlds non-Dollar currencies, especially the Euro.

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

Steveaustin2006 -

Here is Jack Crooks (currency trading veteran) talking about what is happening to the USD. I am a loyal friend to the precious metals in this global environment, and I think their time will come. But I now count myself among the skeptics as to the inevitability of iTulip's USD currency devaluation occurring in the near future. The large and exceedingly nebulous "grey area" regarding the near term future of the USD valuation is not what happens TO the USD, but rather what continues to unfold AROUND the USD, in the rest of the world's currencies. Jack Crooks is putting forward some increasingly compelling arguments.

I believe we are in for a period of several years of amazingly persistent USD strength as we observe a progressive disintegration of multiple currencies worldwide. This is one area where iTulip's exceedingly rational assessment may be kept waiting for longer than they project. The notion is that in a world of disintegrating currencies the USD zone can even see massive monetization of debt and debt service while the poom is held in abeyance pending the subsiding of collapses in other currencies. Poom in the USD cannot occur before repudiation of the USD becomes manifest, and if two or three or a half dozen currencies or national debt markets are imploding each year the USD simply is not given any fixed benchmark of other currencies against which to collapse.

Imagine this: a massive monetization of the debt occurring with it's "inevitable" inflationary outcome held in curious suspended animation for several years, because the explosions occurring in minor currencies the world over, and minor debt markets, can create such frightening mayhem outside the USD zone that it simply denies the USD anything fixed or firm overseas to drop against. Every month now I feel more inclined to think this is what's going to work out. It will stump some of the smartest observers, who look at the debt trap and insist that massive debt inflation becomes the sole plausible sequel. Of course large inflation is the outcome - but there is danger in too implicit an assumption that this must necessarily arrive rapidly because "US debt and approaching monetization are unsustainable". Sure they are unsustainable, but the event may be a lot slower arriving than we assume.

Yes, massive debt inflation will be attempted with deadly seriousness - and debt monetization is therefore overwhelmingly likely to be in our future - but a currency cannot collapse unless it's sister currencies provide a fixed point for it to collapse against, and global currencies won't give the USD this option for the next two or three years, IMO. Very "paradoxical" but then the markets exist to fool most of us, most of the time. Dollar is just tipping into what could be a sizeable short term correction of it's rise, but I am a USD bull for the next couple of years. Whether I've "drunk the kool-aid" or have "seen the true light" remains to be seen.

I'm going to be selling a modest portion of my (somewhat immoderate) PM holdings into this just-emerging rally just because I am over-allocated by a large extent, but the rest is going to remain firmly held for the larger trade within the small trade, but the point is I may have to wait 3 years for this paradox market to finally break down due to more fundamental issues in the USD.

I don't see why it must get worse before a currency devaluation takes place to deflate the debt. Could a dollar devaluation not take place at any time now? Isn't unsterilized monetization only one baby step beyond QE?

Why This "Mouse" Is About to Roar! - by Jack Crooks

Most investors are understandably fixating on the spectacle of the U.S. debt crisis and Washington's $7.8 trillion in loans, investments, commitments and guarantees designed to end it.

So when a significant deadline passed two weeks ago in a remote corner of the global economy, virtually no one noticed. It's a small event with big implications ... that provides a valuable clue to the shoe that's most likely to drop next in this crisis ... and that also presents you with one of your best opportunities for profits.

The news that gets lost in the cacophony of reports about the U.S. economy is this: Two major crises now hammering emerging nations:

First, sinking exports.

Over the last few years, the historic economic growth in emerging markets like Ukraine, South Korea, the Czech Republic, Poland, and others was driven almost entirely by demand for their exports from the U.S. and Europe.

Now, with the U.S. and Eurozone economies sliding, that demand has started to evaporate. And because these countries have little domestic demand to drive their economies, they've suddenly been thrown into a struggle for their very survival.

Second, plunging oil.

As the economic crisis has slashed oil prices by nearly two-thirds, oil-producing emerging nations — Russia, Venezuela, Ecudor and others — are suddenly starving for cash to pay their bills.

Combined, these two events are now conspiring to set off a chain reaction that will bring the biggest creditors to these emerging markets — such as Europe and the UK — to their knees. When the history books are written, two key dates will be cited as moments when critical warnings were clearly telegraphed, duly recorded and promptly ignored until it was too late:

Key Date #1: Thursday, November 13. Seventeen days ago, the government of Ecuador failed to pay interest on bonds it had sold to investors. Citing plunging oil revenues, the government postponed its interest payments for a full month.

Key Date #2: Monday, December 15. Fifteen days from today, Ecuador must make those interest payments plus interest for the month of November. If it fails — if Ecuador defaults on its government bonds — it's could be first the domino in a chain reaction of government debt defaults that will sweep the globe.

Tiny Ecuador: The Canary in the Coal Mine

Is Ecuador a big player? Of course not. But it's merely the first one. As you read this, governments throughout Asia and Europe are facing similar circumstances: Foreign demand for the products they produce is virtually non-existent ... their own citizens are unable to buy the products their factories produce ... and even oil producing nations are starving for cash as energy prices crater.

Russia is now begging China for a $25 billion loan to save its cash-strapped energy companies. Its foreign currency reserves have plunged $122.7 billion — a full 21% — in just 3 ½ months. Foreign investors are stampeding for the exits.

A few days ago, leaders from 21 nations, the International Monetary Fund (IMF) and three other international organizations attended an emergency, two-day summit to address the catastrophe among emerging nations. Japan pledged $100 billion for emergency loans to the governments of South Korea, India, Indonesia and other economies and urged other potential donor nations to do the same.

Similar stories can be told about dozens of emerging economies throughout Asia, Eastern Europe and Latin America: They're drowning in debt they built up during the good times ... and now, with their exports vanishing before their very eyes, their economies are cratering.

Why should we care that these emergency economies are on the verge of collapse?

Because ...

European Banks Loaned These Countries - A Staggering $3.5 Trillion. When They Go Down, So Will Europe's Largest Banks!

Fortunately for us, U.S. banks loaned only $500 billion to these emerging markets and Japanese banks loaned them only $200 billion. But European banks loaned them a whopping $3.5 trillion — five times more than the U.S. and Japan combined.

Amazingly, European banks loaned these countries amounts so large they're the equivalent of a whopping 21% of their Eurozone's total GDP, according to Bank for International Settlements. And when you look at individual countries, the numbers are even larger:

In Sweden, banks loaned an amount equal to 25% of that country's GDP ...
Swiss banks loaned the equivalent of 50% — fully HALF — of Switzerland's total GDP ...

And Austrian banks loaned an amount equal to 85% that nation's GDP — with 80% going to the countries in Eastern Europe that are now suffering the greatest economic pain of all!

Now, these emerging markets are being squeezed mercilessly. Investors are fleeing. Credit is as rare as hens' teeth. Exports are slumping and income is vanishing.


Now, as these once-emerging countries sink into depression, those loans are beginning to go sour. European banks are ALREADY getting hammered for huge loan losses — and investors who own their shares are ALREADY getting slammed. My forecast: You're going to see ...

1. Huge loan defaults in emerging markets like Ecuador, Hungary, Ukraine, and Argentina ...
   
   
2. Massive losses and even outright failures among Europe's largest banks ...
   
   
3. Panic selling on stock exchanges throughout the Eurozone ...
   
   
4. A massive flight to safety — OUT of euros ...
   
   

[ST]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

I don't see why it must get worse before a currency devaluation takes place to deflate the debt. Could a dollar devaluation not take place at any time now?

Isn't unsterilized monetization only one baby step beyond QE?

[metalman]

Re: "In the Year 2012"

bwah! the videos posted with this thread are killing me!

[Munger]

Re: "In the Year 2012"

I think he is talking about Greenspan:

[Chris Coles]

Re: Beware Relief Rallies Update 1: DJIA 7552 the bottom? - Eric Janszen

Next year the fiction will be dispelled that governments can stop debt deflation by means that do not either produce mass unemployment or horrific inflation. As they try and repeatedly fail to meet expectations the Period of False Hope and Uncertainty will give way to the Era of Total Despair, and then we will see a bottom.

This is the kernel, the core of the debate. Most of us are here on iTulip because we also believe that EJ is correct to so describe the next stages of the scenario before us. If we add the possibility of the same sort of "events" we are watching in India this week, happening in London or New York then anything could happen next year and I for one believe we must batten down the hatches and be prepared for anything.