Pinch me!

[Mega]

Let it Be, let it be:-
http://www.moneyandmarkets.com/the-b...-morning-47564

Mike

[lektrode]

Re: Pinch me!

http://www.moneyandmarkets.com/the-b...-morning-47564

So think about this for a moment: The credit crunch was the result of too much leverage (debt) in the global economy. So the private sector starts to deleverage and instead of letting the market take its natural course, authorities add more debt to the global economy. Now the imbalances are worse than before the credit crunch.

I couldn’t make this stuff up if I tried.

would someone please ask krugman to read this?



and (below) is where this piece gets _really_ interesting, eh mike?

Thus, I believe this story ends badly again; deleveraging globally is the only way to solve the problem if countries wish to see real growth ever again.

So I leave you to ponder the following chart I created showing the major cycles in the dollar index since the world’s major currencies began floating:

I believe the dollar bear market ended during the credit crunch, in March 2008. That was the major global macro event representing the catalyst; you can see how significant events like that often ignite a trend change. And global deleveraging will be the driver of the New $ Bull Market.

Why?

The process of deleveraging means dollar credit is removed; thus the supply of dollar is removed. And let us not forget that this process will likely be bad for most asset classes as I said. And where does big money hide historically during those events? In the deepest capital markets in the world, which happen to coincide with the U.S. dollar.

Best wishes,

what effect will this have on the AU market?
is this what EJ is getting at in his predictions of a downstroke in gold, just before the POOM sets in?
(and am i phrasing the question correctly)
comments?

[jpetr48]

Re: Pinch me!

gold will hold up the best across most asset classes - look at 2008- i dont have exact prices however it opened at 860/ ounce and closed at 890. What did not help recently was the fed signaling low interest rates till 2013. Japan did the same thing so the low demand part of the equation is baked in the cake with declining commodities, rising bond prices and perhaps a flat performance in gold. From what I am seeing in trends relative to other asset classes, gold may have lower to go with bonds having further appreciation. I am not betting the ranch on this as any one event besides the daily Euro BS rescue news can trigger major sell offs across all asset classes including bonds. I would temper my expectations on any forecast even from EJ, whose economic foresight I respect highly, as the number of variables is beyond human capacity to predict.

[lektrode]

Re: Pinch me!

thanks for the insight jp...

...not betting the ranch on this as any one event besides the daily Euro BS rescue news can trigger major sell offs across all asset classes including bonds. I would temper my expectations on any forecast even from EJ, whose economic foresight I respect highly, as the number of variables is beyond human capacity to predict.

and boy-howdy, is _that_ an understatement...

could this be one such event?
as in tug, tug, tug ....

• OCTOBER 11, 2011

China Props Up Bank Shares

Move Comes as Investors Fret Over Accounting of Chinese Companies, Bad Debts

seen on 2morows wsj headlines, but appears to have come from this one:

http://www.reuters.com/article/2011/...7LA1CN20111010

-------

never mind this:
http://blogs.wsj.com/deals/2011/10/1...r-wall-street/
Volcker Rule Brings Frowns for Wall Street


Preliminary information leaked last week on the Volcker Rule, which will ban short-term proprietary trading, has negative implications for credit investors in U.S. financial giants such as Goldman Sachs and JPMorgan, Moody’s says.
Moody’s says the big U.S. financial firms all have “substantial market-making operations,” which the Volcker Rule is expected to target. The regulations also will remake compensation guidelines so pay doesn’t encourage big risk-taking.
Derivatives lawyer Sherri Venokur said restrictions on compensation are “intended to create a sea change in the mindsets of those who create the culture of our banking institutions — to value ‘safety and soundness’ as well as profitability.”
Separately, the equity analysts at Bernstein project the Volcker Rule — if implemented in present form – will cut revenue for Wall Street brokers by 25%, and cut pre-tax margin of their fixed income trading businesses by one-third.
Bernstein says the proposal’s potential limitations on market-making activities are a surprise as it appears to ban flow trading in “nonexempt portions” of the bond trading business. Bernstein says inventory levels–and presumably risk taking–on a market making desk must be based on the demands of clients and not on “expectation of future price appreciation.”
Bernstein notes that the Wall Street firms most exposed to bond trading revenues in its coverage universe include Goldman Sachs and Morgan Stanley.


--------


or this???
http://online.wsj.com/article/SB1000...691922710.html

Paulson Funds Hit Hard by Recent Gold Selloff

http://online.wsj.com/article/SB1000...691922710.html
A September selloff in gold has turned a bad year for billionaire investor John Paulson into an even worse one.
For much of 2011, Mr. Paulson's largest hedge funds suffered, but his other funds didn't do as badly, thanks to bets on gold and other investments. That changed last month, when the value of almost every fund operated by Paulson & Co. fell sharply.
The declines come at a delicate time for Mr. Paulson, who gained prominence by cashing in on a bet against the U.S. housing market and has a net worth recently estimated at $15.5 billion by Forbes ...


(gee... thats too bad for him, him losing a few bux on his gold trades, eh? kinda almost makes ya feel sorry for him, dont it)