Welcome to the New iTulip.com Forum

[EJ]

As we mentioned in the New iTulip.com About page, we're bringing the iTulip.com message forward in a new way. No more missing central banker clues about what's next for The System, the next asset bubble. Greenspan told U.S. senators at a hearing in 1999 not to worry about a collapsing stock market bubble because 70% of household wealth was tied up in real estate. If that wasn't a clue to the Fed's next move after the stock bubble popped -- creating a real estate bubble -- what was?

iTulip.com has always been blessed with a global community of the best and the brightest who work together figure out not only what's coming next, but what to do before, during and after the events we collectively predict. We intend to guide a lively discussion among our prized and loyal members, especially those who contributed so much to our predictive success in the past.

Only registered iTulip.com Forum users can post to the forum. Rules of conduct are simple:

1) Don't say anything to anyone on this forum that you would not say to their face. That means no cursing, insults or other anti-social behavior.
2) Stay on topic: economics, financial markets and politics.
3) If the moderator receives three complaints about a registered member from three separate registered members, that registered member will be suspended for a period of one week. (3-Strikes rule).
4) If a registered member is suspended a second time, the suspension is permanent.

If you're new to iTulip.com, welcome. If you're an iTulip.com veteran, welcome back! And thanks for your participation on this forum.

Eric Janszen
Founder, iTulip.com

[metalman]

Thanks for restarting this site. Really helped my a few years back. Hope we can pull everyone back together again. Where are they now?

[stevenstevensteven]

I'm sorry to have missed your site during its first trip around, but I am certainly excited to see it now. I've already added you to my list of daily reading bookmarks.

I'm looking forward to your speculation on the following....

"The housing bubble will end and money will be printed to reflate the economy once again and that money will flow elsewhere. Not to stocks or real estate or bonds or hedge funds or venture capital or private equity. But where?"

Answering this question has been on my mind for the last several years, but I have yet to see the next move. I'm anxiously awaiting your insight.

[pocrunner]

I was a member of the original website. Great.

OK, I escaped the big dot come bust, built up my capital, stayed very liquid and debt free. Have just finished selling the last of my vastly over inflated real estate holdings. Stocks seem to be a scam...a la Cramer hyping....bonds are going down due to raising interest rates and according the real estate bubble article on Tulip we are about to bust again. If the real estate bubble doesn't get us the price of oil will.

Now what?

Peter O'Connell

[EJ]

I'm sorry to have missed your site during its first trip around, but I am certainly excited to see it now. I've already added you to my list of daily reading bookmarks.

I'm looking forward to your speculation on the following....

"The housing bubble will end and money will be printed to reflate the economy once again and that money will flow elsewhere. Not to stocks or real estate or bonds or hedge funds or venture capital or private equity. But where?"

Answering this question has been on my mind for the last several years, but I have yet to see the next move. I'm anxiously awaiting your insight.

stevenstevensteven,

I have my theories but rather than simply give the answer I'm hoping to test my hypothesis against others'. Just as Greenspan told us in various ways that the housing bubble was to cure the disease of the stock market bubble, my belief is that Greenspan repeated told us what is likely to happen after the housing bubble ends. He is a masterful politician, always leaving behind him an open back door that lets him say, "Don't tell me I didn't warn you." While overseeing the greatest credit expansion in history, on several occasions complained about what he, and we at iTulip.com, refer to as The System that runs the way it does, that produces this result, of which he was merely a custodian, rather than developer or a proponent. And he suggested a remedy several times which was viewed as extremely eccentric. usually uttered at times when it was most likely to be discounted, such as at senate hearings when other matters were under dicusssion.

Can you guess what I'm referring to?

[EJ]

I was a member of the original website. Great.

OK, I escaped the big dot come bust, built up my capital, stayed very liquid and debt free. Have just finished selling the last of my vastly over inflated real estate holdings. Stocks seem to be a scam...a la Cramer hyping....bonds are going down due to raising interest rates and according the real estate bubble article on Tulip we are about to bust again. If the real estate bubble doesn't get us the price of oil will.

Now what?

Peter O'Connell

Welcome back, Peter.

As you can see from my reply to 3stevens above, I have a few ideas but am reluctant to jump right to what I think is the answer before letting iTulip.com readers beat up the hypothesis behind it first.

Process of elimination does help get us to our answer, but the answer is to be found in the interplay between monetary policy and politics. The collapse of the housing bubble will involve the giant U.S. debtor class that has become a majority under The System over the past 20 years. Most of the indebtedness that's likely to lead to household insolvency if housing prices fall significantly over time will be concentrated among the lower three income bracket quintiles. This creation of a majority debtor class has coincided with a major shift in the distribution of income gains over the same 20 period...

http://www.itulip.com/itulip_income_...ion_chart.html

The lower quintiles maintain the standard of living they expect by substituting more credit for cash that is no longer coming from income gains, and The System has only been too glad to supply it. The following paper investigates and models the correlation:

The main finding of the paper is that the rise in within-group income inequality can explain at the same time all of the increase in debt, the large widening of wealth inequality and the relative stability of consumption inequality.
Private Debt and Income Inequality: A Business Cycle Analysis
Matteo Iacoviello - Boston College - July 17, 2005
http://www2.bc.edu/~iacoviel/researc...IVATE_DEBT.pdf

At some point this debtor majority will put pressure on its elected government to provide some form of debt relief, and depending on whether the pain comes slowly or in a crisis, the responses are in either case likely to put the political wind to the backs of debtors vs creditors. Recent bankruptcy laws, pushed through by the credit card companies during the time when creditors had the political upper hand, may be repealed. The more or less inevitable process of dollar depreciation as proposed in Ka-Poom Theory will be politically expedient at this juncture, with foreign holders of dollar denominated debt the biggest losers, but U.S. debtors as a majority voting class protected.

[WRP]

Looking forward to the new iTulip. I've passed the word to the WRP list and TB2K, both groups number in the hundreds of members and many were iTulip regulars.

WTP and TB2K'ers will be interested in the new iTulip.

By the way, many of the 600+ WRP'ers cashed out of equities in November 1999 and were solidly in CDs', money markets, GIC's, metals, by January 14, 2001 when the DJIA turned down.



http://groups.yahoo.com/group/W-RP/

[JC Ernharth]

Eric --

Glad you are back! The more peopel pressing these issues, the better!

Stay Vigilant!

[qwerty]

Greenspan's "Open Back Door"
(See E.J.'s observation on Greenspan laying clues above)

Googled and found this:

R.W. Bradford writes in Liberty magazine that, as Fed chairman, Greenspan (once) recommended to a Senate committee that all economic regulations should have fixed lifespans. Senator Paul Sarbanes (D-Md.) accused him of 'playing with fire, or indeed throwing gasoline on the fire,' and asked him whether he favored a similar provision in the Fed's authorization. Greenspan coolly answered that he did. Do you actually mean, demanded the senator, that the Fed 'should cease to function unless affirmatively continued?' 'That is correct, sir,' Greenspan responded.

Bradford continues, The Senator could scarcely believe his ears. 'Now my next question is, is it your intention that the report of this hearing should be that Greenspan recommends a return to the gold standard?' Greenspan responded, 'I've been recommending that for years, there's nothing new about that. It would probably mean there is only one vote in the Federal Open Market Committee for that, but it is mine.'

link

That's gone under a lot of people's radar, hasn't it?

Jim Sinclair, years ago was predicting that the Gold Cover Clause would be reinstated by 2004.

I think he claimed that the Government could use it to put the breaks on a US dollar free-fall once they had let if fall far enough to bail out the debtors (see EJ's later piece). The more common theory is that the US would not risk a dollar free fall because it could go to far, but Sinclair said that the re-institution of this Gold Cover clause, with the ratio dialled in to set the dollar at the level required, would cause instant belief and confidence in the new, gold-standard dollar.

[EJ]

Greenspan's Open Back Door
(See E.J.'s observation on Greenspan laying clues above)

Googled and found this:

R.W. Bradford writes in Liberty magazine that, as Fed chairman, Greenspan (once) recommended to a Senate committee that all economic regulations should have fixed lifespans. Senator Paul Sarbanes (D-Md.) accused him of 'playing with fire, or indeed throwing gasoline on the fire,' and asked him whether he favored a similar provision in the Fed's authorization. Greenspan coolly answered that he did. Do you actually mean, demanded the senator, that the Fed 'should cease to function unless affirmatively continued?' 'That is correct, sir,' Greenspan responded.

Bradford continues, The Senator could scarcely believe his ears. 'Now my next question is, is it your intention that the report of this hearing should be that Greenspan recommends a return to the gold standard?' Greenspan responded, 'I've been recommending that for years, there's nothing new about that. It would probably mean there is only one vote in the Federal Open Market Committee for that, but it is mine.'

link

That's gone under a lot of people's radar, hasn't it?

Jim Sinclair, years ago was predicting that the Gold Cover Clause would be reinstated by 2004.

I think he claimed that the Government could use it to put the breaks on a US dollar free-fall once they had let if fall far enough to bail out the debtors (see EJ's later piece). The more common theory is that the US would not risk a dollar free fall because it could go to far, but Sinclair said that the re-institution of this Gold Cover clause, with the ratio dialled in to set the dollar at the level required, would cause instant belief and confidence in the new, gold-standard dollar.

This is not the only such statement that Greenspan has made on this topic over the years. I mention a couple of others in the one and only post on iTulip.com about gold, in 2001...

http://www.itulip.com/gold.htm

The piece also quotes Big Al making the statement:

Gold still represents the ultimate form of payment in the world. Fiat money in extremis is accepted by nobody. Gold is always accepted.
- Alan Greenspan - May 20, 1999

A temporary return to a gold standard, for lack of alternatives, is not out of the question if The System truly goes haywire. This is why I recommended putting 10% to 15% of one's assets into gold in 2001 at $270, as a way to hedge that risk, with the hope that the option expires worthless. As it turns out, the option has more than doubled in value since then.