So, what do we expect to happen next?

[Mega]

I start the ball rolling, the Dow is safe, till after the Fed cuts.....i expect a run on a number of Hedge funds......than that will fall off, but something MAJOR will happen in the next 5-7 days.......the Fed will be out of ammo.

Mike

[krakknisse]

Re: So, what do we expect to happen next?

I'd also be interested in what happens next, but also in how you guesstimate it. I'm worried of groupthink syndrome, because something could come out of left field and smack you on the head. There must be something I'm not getting. Very hard to get good humint on what TPTB are really thinking. Why wasn't the market down more? Are they all anxiously awaiting the rate cut, as if that will fix it?

I'm using a few weak sigint/meme indicators:
a) Google Trends, with Hot Trends (right now, bear stern employees is #19, lehman brothers is #44, jim cramer bear sterns is #67). I look at "stagflation", "recession", "inflation", "gold price", "iran" trends, esp. by country. Also try to look at Google Trends searches out of DC and London. I'd love to see the search logs of Treasury, Fed subnets on Google and Wikipedia.
b) I also look at newspaper headlines, online and paper. The national broadcaster had an online story on "Could quickly become bank crisis in [name of country]" but not on the front page. Business newspapers have a huge number of crisis stories, an endless procession of bad news, but it hasn't broken through to reality yet.
c) I tried Wikiscanner, and found quite a few edits by Federal Reserve employees on Greenspan and monetary policy, "sanitizing" them for the sheeple. Nothing outrageous. BTW, there's a huge series of edit war over on Wikipedia between Austrians and sheeple.
d) Of course, the blog round. Mish, Tanta, Naked Capitalism etc. But that's a separate sphere which revolves around the same themes, vulnerable to groupthink. The question is finding out when and reasonably accurately how TSHTF. An indicator that could be derived from this bloground there would be traffic to ITulip and bearish blogs, which I think has increased a lot.

The sheeple are not getting the scope of this yet. I've had one "gold makes headlines" sent to me from a reasonably savvy sheeple, but only because that person knew I was a bug. Any other good ideas?

[Sapiens]

Re: So, what do we expect to happen next?

Next the physical economy takes a hit.

Companies will not be able to finance payroll. e.g. layoffs, what not.

But we are not finish with the financials just yet.

[Sapiens]

Re: So, what do we expect to happen next?

Also, you should begin to see the U.S. balance of trade improve, narrow. (The export sector will be a haven).

[Jim Nickerson]

Re: So, what do we expect to happen next?

I'd also be interested in what happens next, but also in how you guesstimate it. I'm worried of groupthink syndrome, because something could come out of left field and smack you on the head. There must be something I'm not getting. Very hard to get good humint on what TPTB are really thinking. Why wasn't the market down more? Are they all anxiously awaiting the rate cut, as if that will fix it?

I'm using a few weak sigint/meme indicators:
a) Google Trends, with Hot Trends (right now, bear stern employees is #19, lehman brothers is #44, jim cramer bear sterns is #67). I look at "stagflation", "recession", "inflation", "gold price", "iran" trends, esp. by country. Also try to look at Google Trends searches out of DC and London. I'd love to see the search logs of Treasury, Fed subnets on Google and Wikipedia.
b) I also look at newspaper headlines, online and paper. The national broadcaster had an online story on "Could quickly become bank crisis in [name of country]" but not on the front page. Business newspapers have a huge number of crisis stories, an endless procession of bad news, but it hasn't broken through to reality yet.
c) I tried Wikiscanner, and found quite a few edits by Federal Reserve employees on Greenspan and monetary policy, "sanitizing" them for the sheeple. Nothing outrageous. BTW, there's a huge series of edit war over on Wikipedia between Austrians and sheeple.
d) Of course, the blog round. Mish, Tanta, Naked Capitalism etc. But that's a separate sphere which revolves around the same themes, vulnerable to groupthink. The question is finding out when and reasonably accurately how TSHTF. An indicator that could be derived from this bloground there would be traffic to ITulip and bearish blogs, which I think has increased a lot.

The sheeple are not getting the scope of this yet. I've had one "gold makes headlines" sent to me from a reasonably savvy sheeple, but only because that person knew I was a bug. Any other good ideas?

If possible try not to get hung up on believing the equity markets are going to do what you think they should be doing--easier written than done.

[DemonD]

Re: So, what do we expect to happen next?

Next the physical economy takes a hit.

Companies will not be able to finance payroll. e.g. layoffs, what not.

But we are not finish with the financials just yet.

Complete agreement and succinctly stated.

When the Fed runs out of bullets, there will be two options:

1. Massive waves of failures - I believe this is the best option. We won't sink into a starving mass of people, things would get tough for a while while private investors move in to start companies (I'm sure Buffett and Boone Pickens and Kirk Kerkorian and Wilbur Ross with all their billions would be able to start up a bank relatively quickly with their own VC).

2. Get the US Treasury to start printing money, or convince congress to automatically revalue the dollar at 1/2 it's current value. It's pretty much the same thing either way. This is the course we are headed on, the more politically palatable one.

I'm reminded of EJ's post from I think 2 years ago where he gave the choices as the following (approx from memory): gold was 2500, oil was 200, and unemployment was 8%, OR gold at 250, oil at 25, and unemployment at 15%.

not to hard to see where this is headed.

[touchring]

Re: So, what do we expect to happen next?

The sheeple are not getting the scope of this yet. I've had one "gold makes headlines" sent to me from a reasonably savvy sheeple, but only because that person knew I was a bug. Any other good ideas?

Surprisingly, for all the price gains and publicity, gold is still laggard. The masses are still not buying gold.

[aa]

Re: So, what do we expect to happen next?

> The masses are still not buying gold.

Why do you expect the masses to start buying gold ?
I wasn't old enough to understand what was going on at the time, but I distinctly remember television news stories in 1980 showing long lines of people outside jewellery shops waiting to _sell_ their gold.

[touchring]

Re: So, what do we expect to happen next?

> The masses are still not buying gold.

Why do you expect the masses to start buying gold ?
I wasn't old enough to understand what was going on at the time, but I distinctly remember television news stories in 1980 showing long lines of people outside jewellery shops waiting to _sell_ their gold.

With the dollar depreciating, i'm surprised that people are not buying gold. 1980, what was the deposit rate at that time? What is it today?

[GRG55]

Re: So, what do we expect to happen next?

> The masses are still not buying gold.

Why do you expect the masses to start buying gold ?
I wasn't old enough to understand what was going on at the time, but I distinctly remember television news stories in 1980 showing long lines of people outside jewellery shops waiting to _sell_ their gold.

Depends on what part of the year 1980 you are referring to. If you go back and check the news reports from very late 1979 and early 1980 you will find that people were lined up outside banks and coin dealers to buy gold coins and wafers. The gold price was in a parabolic blow off. You can't have that happen if people are lining up to sell.

Later in the year, as the gold price collapsed, those last-in were lining up to try to get out. Same scenario as exactly twenty years later with tech stocks (except one did not need to line up to sell those).

With the dollar depreciating, i'm surprised that people are not buying gold. 1980, what was the deposit rate at that time? What is it today?

LOL. I don't believe you are really surprised touchring. We both know where most people get their financial advice. ;)

The last 25 years have been spent creating a widely believed mythology that people need "professional" financial advice, purchased at great cost. "Managing money", a relatively obscure activity largely devoted to selling mutual funds in 1980, now employs armies of people across the developed and emerging economies. Every rinky-dink branch bank now has a "financial advisor" for their depositors, and a family of funds to flog on these captives. Bloomberg and CNBS, which did not exist a quarter century ago, maintain the myth with their constant round of interviews with "experts", who live off the magnificent rent they can extract selling the hope of perpetual outperformance to ignorant "investors".

How many of these advisors are still selling the idea of the diversified portfolio with "so much in bonds, so much in..."? How many that have an allocation in "alternative investments" are holding gold within that allocation? How many of your family, friends, co-workers, neighbours thought you were "nuts" to hold any gold, and realizing they were wrong, now think it is "too expensive" to buy now? Why else would people be flocking to negative real interest return sovereign bonds in the fastest depreciating currency on earth?

The wall of worry around a large price set-back in gold is what will keep this bull market alive.

[BiscayneSunrise]

Re: So, what do we expect to happen next?

Mike,

yesterday we witnessed a major event. There will now be orderly refinancing of balance sheets and protection for account holding clients. (Sadly, can't say the same for shareholders and employees)

By facilitating the JPM/Bear acquisition, the fed set the stage for more mergers in the financial industry.

The markets may need a little more time to digest what happened but yesterday afternoon I couldn't get past the feeling we had witnessed some sort of inflection point.

[Mega]

Re: So, what do we expect to happen next?

The Thing that runs though my mind is this, if GOD came down to Earth & "Magiced" the nasty bad debt away what would we have?

Large Banks, with nothing much to sell......i mean who trust them again after they did this!

Even without debt, its over......i am shocked by:-
A the Feds moves in the last few days
B The market jumping up

Mind you, same sort of thing happened in 29!

EJ sez "Its a procress not an event".

Its coming, might be this week.
Mike

[rabot10]

Re: So, what do we expect to happen next?

The Thing that runs though my mind is this, if GOD came down to Earth & "Magiced" the nasty bad debt away what would we have?

Large Banks, with nothing much to sell......i mean who trust them again after they did this!

Even without debt, its over......i am shocked by:-
A the Feds moves in the last few days
B The market jumping up

Mind you, same sort of thing happened in 29!

EJ sez "Its a procress not an event".
Its coming, might be this week.
Mike

Not this week Mike but soon jmho

[metalman]

Re: So, what do we expect to happen next?

Not this week Mike but soon jmho

on and on and on. we'll be so sick of bad news once the tanks are rolling down OUR street, so to speak... first the sound of distant gun fire (cdos), them over the boarder (investment banks), next in the city miles away (local banks).... then rolling down main street.

morbid wishes these... "where is my crash"! kinda sicko... perverse.

[Jim Nickerson]

Re: So, what do we expect to happen next?

Mike,

yesterday we witnessed a major event. There will now be orderly refinancing of balance sheets and protection for account holding clients. (Sadly, can't say the same for shareholders and employees)

By facilitating the JPM/Bear acquisition, the fed set the stage for more mergers in the financial industry.

The markets may need a little more time to digest what happened but yesterday afternoon I couldn't get past the feeling we had witnessed some sort of inflection point.

I think you are correct in that things have turned here, I believe, definitively for a while--what's a while, perhaps a couple of months. Today was a rather big technical turnaround. It's encourging to me that no one here much seems to wish to consider that equities may go up for a while.