Debt Deflation Bear Market: First Bounce - Eric Janszen

[Jay]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

Like Labasta said in an earlier comment, (for which he's still waiting for an answer) the statement above looks like a contradiction to me. Wasn't WWII just the Mother of All Stimulus Packages--albeit with fantastic motivation?

From what I understand, part of the recovery that occurred after WWII was based on getting rid of world over capacity.

[ThePythonicCow]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

Marty Chenard, over at StockTiming.com, describes an unusual and scary buying pattern in the stock market bounce of the last week or two. Beware. I have already faded the short term speculative long positions that I took in mid-March.

The above was written over this last weekend. This Monday morning the market gapped down on the open. So far (one hour now) so good on this warning .

The other technical analysts I enjoy reading the most, such as Captain Hook at treasurechestsinfo.com, Sy Harding at streetsmartreport.com and Steven Hochberg at ElliottWave.com, are less scary, at least by my reading of them, in the time frame of a few weeks or months.

Over on another thread (Gene Inger) in the post Re: Gene Inger I just provided an annotated list of the other financial sites I enjoy reading.

[Mashuri]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

What's the best way for us to get out of this depression? I guess "debt forgiveness" is pretty close: BANKRUPTCY!

No government intervention and letting all the bad investments liquidate as fast as possible will get us through this mess faster and better than any other way. We have 1 and 2 year depressions in our history because they went down with little to no intervention.

[Guest]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

Why the response that sounds like it contains 'attitude' toward a reader who couldn't understand a column?

"clearly stated" and itulip columns are not always highly correlated. I thought maybe I was just losing IQ points. Then I spoke with a couple of other readers who had the same response i did. I've come to the conclusion that the primary goal here is not really to educate but to demonstrate knowledge, perhaps for ego gratification. Education just happens to be the method used. So it's no wonder the message often gets lost. Some have the heart of a teacher, some are just smart guys who want to show everyone how smart they are.

You have valuable and occasionally unique information worth hearing. It's too bad actually imparting that information isn't the real motivation for the existence of the site. But if it makes you feel good, yes, you guys are really smart about money.

[rjwjr]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

Why the response that sounds like it contains 'attitude' toward a reader who couldn't understand a column?

"clearly stated" and itulip columns are not always highly correlated. I thought maybe I was just losing IQ points. Then I spoke with a couple of other readers who had the same response i did. I've come to the conclusion that the primary goal here is not really to educate but to demonstrate knowledge, perhaps for ego gratification. Education just happens to be the method used. So it's no wonder the message often gets lost. Some have the heart of a teacher, some are just smart guys who want to show everyone how smart they are.

You have valuable and occasionally unique information worth hearing. It's too bad actually imparting that information isn't the real motivation for the existence of the site. But if it makes you feel good, yes, you guys are really smart about money.

This should kill any further discussion, whether educational or not. Bruce, are you also the guy that complained about bad punctuation?

[CanuckinTX]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

I think we're reading the response completely different Bruce. The question posed put Fred on the defensive by asking 'Don't you think...' and then Fred spent a lot of time summarizing the points that refuted the 'Don't you think' premise.

That seems like a decent attempt at education to me.

[rjwjr]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

This should kill any further discussion, whether educational or not. Bruce, are you also the guy that complained about bad punctuation?

Oh yeah. And upon a quick search, you have also complained about posts that are too long and spelling "intelligent" incorrectly. It's unfortunate the site and the typical iTulip-er is not up to your standards of decorum, manners, and grammarical professionalism.

I happen to find the site exhilarating, the characters knowledgeable, the discussion stimulating, and the punctuation and spelling errors a complete non-issue. But, hey, I'm also a NASCAR fan.

[CanuckinTX]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

Great, you're the NASCAR fan, I'm the hockey fan. If we could just find a swamp buggy racing fan we'd have all the redneck sports covered!

[goadam1]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

Sometimes gamblers make for good packaged bonds.


http://www.bloomberg.com/apps/news?p...SPQ&refer=home
March 31 (Bloomberg) -- In the smoky Maruhan gambling parlor near Tokyo’s Shinjuku station, Shunichiro Nagasawa feeds a 1,000-yen ($10) bill into a “pachinko” machine, helping Japan’s biggest gaming industry beat the recession and Las Vegas.

“It’s exciting -- usually, after I lose many times, I win big the next time,” said Nagasawa, a 29-year-old systems engineer, pushing a button and watching hundreds of small steel balls pour down through the machine. “I do worry about the economy, but I still have a job.”

As Japan’s economy shrank at an annual 12.1 percent pace in the last quarter and revenue slumped at Las Vegas casino companies like MGM Mirage and Las Vegas Sands Corp., the 23 trillion-yen pachinko industry is on a roll. Sales from the machines, which resemble upright pinball games, rebounded 0.5 percent in last quarter, reversing a six-year decline, and rose 0.9 percent in January, according to government statistics.

“There are many companies in the red -- automobile makers, electronics and so on,” said Hirohito Niji, an analyst at Standard & Poor’s in Tokyo. “Against that, pachinko hasn’t really felt the effects.”

That’s good news for holders of “pachinko bonds” -- debt backed by securitized gambling revenue -- and for equipment makers including Mars Engineering Corp., the best performer in the 124-stock Topix Machinery Index in the past six months.

[Brooks Gracie]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

WWII brought the economy back to life not because of spending government dollars on the war effort. The economy recovered and eventually boomed because all of Europe's factories were decimated, and we were the only producers of many goods. Detroit boomed during the immediate post-war time period--no one else was selling cars in competition with it.

A war not would just be a collossal waste of resources that are needed here at home. What the US needs to compete worldwide is a payroll tax on outsourced labor. This would generate plenty of revenues for the treasury, while giving companies a large incentive to keep jobs in this country. Otherwise, we are going to be a nation where the only jobs are in the domestic service sector, which, other than healthcare (and formerly finance), don't pay a whole lot.

And I am absolutely disgusted with this bailout of the bondholders and bank shareholders--another giveaway to the very wealthy, at everyone else's expense. As if the Bush tax cuts wasn't enough, now they want direct subsidies. The wall street banks should be allowed to fail. My local bank is doing fine right now--they have no exposure to the causes of this crisis.

[Chris Coles]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

Why the response that sounds like it contains 'attitude' toward a reader who couldn't understand a column?

"clearly stated" and itulip columns are not always highly correlated. I thought maybe I was just losing IQ points. Then I spoke with a couple of other readers who had the same response i did. I've come to the conclusion that the primary goal here is not really to educate but to demonstrate knowledge, perhaps for ego gratification. Education just happens to be the method used. So it's no wonder the message often gets lost. Some have the heart of a teacher, some are just smart guys who want to show everyone how smart they are.

You have valuable and occasionally unique information worth hearing. It's too bad actually imparting that information isn't the real motivation for the existence of the site. But if it makes you feel good, yes, you guys are really smart about money.

The primary content comes from EJ and Fred and their invited commentators. After that, if any of us see something that may be of interest, we post it on news. After that it is open for anyone to make any comment they wish, within reason. As the members seem to come from every corner of the planet and every age and income group, there is often a lively discussion, but tempered by the particular interests in the particular thread. May I suggest that you have every possibility to change threads when the discussion is not to your particular taste, as we also do.

IMHO, This by far and away the very best site for an open discussion of any matter related to the ongoing disintegration of the worlds financial system. We all have to adjust to the realities of a wide range of individuals and related backgrounds. But surely, that is the real strength of any successful group, regardless of the subject.

[Finster]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

... Think of a consumer-dependent economy as a waterwheel, with household cash flow from wages and credit driving the wheel, and the wheel driving the creation of new jobs, income, and credit, pumping money into the economy. If either the credit flows or the income flows dry up, the wheel slows. If they both dry up, one after the other, the wheel slows a lot. In a recession, the government tries to get the wheel moving again by making up for private credit flows and private income flows with government credit and government jobs.

A depression, on the other hand, happens when debt levels are so high that there is not enough cash flow from incomes or new credit creation in the economy to service the interest on the debt. The result is debt deflation and economic depression. Debt deflation started in 2006 for households when the price of their homes began to fall.

A depression, unlike a recession, is not induced by government raising interest rates to combat inflation. On the contrary, a depression occurs in spite of all efforts by government to expand credit; interest rates are cut to zero yet the debt deflation goes on.

Debt deflation cannot be stopped by government credit expansion because that effort only increases debt levels that are already excessive as a result of decades of previous interventions to re-start the already over-indebted economy. As the economy shrinks, there is even less income available to repay debt, and a vicious cycle sets in. The wheel not only stops, it begins to run backwards and pumps money out of the economy...

... The flawed philosophy and ideology of curing the debt deflation illness with further exposure to the debt disease, as the U.S. attempted in the 1930s and Japan has tried since the early 1990s, do not encourage optimism but point to a prolonged and painful period of global economic contraction...

FWIW, emphatically agreed. It's tempting to speculate on why, despite enormous unpopularity with the public (bailouts ... etc.), the government nevertheless pursues such flawed measures. It may be in part rationalized through this flawed ideology. And it also may in part be due to the outsized impact on the government's own financial viablity. Deflation is like death to a debtor, who wants to repay his obligations in the future with cheaper money. And who is a bigger debtor than the US government? My guess is that an important prime mover behind the government's frantic exertions is its own financial survival. It desperately wants to get inflation going again, so much as to subordinate both economic sanity and the will of its electorate to that end.

[stockman]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

Looking at both sides. The bounce (in stocks) should be respected IMHO. Is it at least POSSIBLE that the global margin call compressed a cyclical bear (within a secular bear) in time? In effect cutting the duration in 1/2?

NYA compressed bear 040209.jpg

Even a cyclical bull can wipe out an overly confident short. In 2003 for example.

NYA 2003.JPG

Speaking of which that 1st quarter looks familiar.

NYA 2003 and 2009.jpg



Entering the 2nd quarter in the 2nd year of a multiyear decline is a good time to expect weakness in equities.

Entering the 2nd quarter in the 1st year of recovery is a good time to expect strength in equities.

Until proven otherwise the current rally appears to favor recovery. If it deviates from the path... that would be an opportune time to consider alternative strategies.

I am not suggesting to anyone that they should rush out and buy stocks. However that survey with only 2% expecting a more enduring rally makes me think there may be folks here wanting to (or are already) short this rally. That could prove hazardous to your wealth... even if the long term picture is just as negative as most here except.

Speaking of that lonely 2%. THEY are taking the contrary position today. Even Taleb recently pointed out that the 'black swan' today is betting that things actually work out and we avoid catastrophy. In the most recent AAII numbers cash levels shot UP in spite of the little rally we've seen- TO THE HIGHEST LEVEL EVER (data since 1988). Mutual fund cash levels are also higher than 2002/2003 levels. So you may not want to be long, but being short is a dangerous game to play here IMHO. As they say- 'there are buyers higher, sellers lower'... and they have a very large wad of cash in their pocket.

[Guest]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

I've been sounding the possibility of this theme for six months here. Saying that we'd see a market turn going into March / April that would steadily change the entire complexion of the "US Depression". These are just the glimmerings of the baby steps. Do a position check on this theme in late 2009 and a lot of people may already then have forgotten how "John Steinbeck-ish" this entire community was sounding in the winter of 2008-2009. We ain't there yet - but I'm sticking to that thesis. Nobody here is willing to countenance this idea - but perhaps the ridicule is just a little fainter now than it was six months ago. Not by any means saying the US can't have very depressed conditions, but it can unfold against a highly anomalous stock market action, as the stock markets do their usual squirrely and apparently irrational thing - acting as one of the earliest anticipators of the future.

[ThePythonicCow]

Re: Debt Deflation Bear Market: First Bounce - Eric Janszen

I've been sounding the possibility of this theme for six months here. Saying that we'd see a market turn going into March / April that would steadily change the entire complexion of the "US Depression". These are just the glimmerings of the baby steps. Do a position check on this theme in late 2009 and a lot of people may already then have forgotten how "John Steinbeck-ish" this entire community was sounding in the winter of 2008-2009. ..

Might well happen (stocks rising in the next several months) but if so, I would predict that it will be a bear market rally, and (in later 2009) one of the better shorting opportunities of our lifetime.