Any news on when KA transitions to POOM?

[friendly_jacek]

I admit that I'm not the brightest bulb here, so it's possible that I missed the between the lines announcement of Ka's demise and beginning of Poom.
The last 3 months of disinflation/deflation (whoever we call the massive money/credit destruction) did qualify for Ka, right?
The coordinated moves of world governments feel like Poom, right?
Did EJ/Fred announced it one way or another? Or are we waiting for more derivatives to implode?

Some of us lesser members could use a big clock on iTulip showing Ka-Poom hours, no? Something like the investment clock:

[GRG55]

Re: Any news on when KA transitions to POOM?

I admit that I'm not the brightest bulb here, so it's possible that I missed the between the lines announcement of Ka's demise and beginning of Poom.
The last 3 months of disinflation/deflation (whoever we call the massive money/credit destruction) did qualify for Ka, right?
The coordinated moves of world governments feel like Poom, right?
Did EJ/Fred announced it one way or another? Or are we waiting for more derivatives to implode?

Some of us lesser members could use a big clock on iTulip showing Ka-Poom hours, no? Something like the investment clock:

You are still looking for a sequential cycle. What's going on now does not fit the "normal" pattern. Remember this diagram?

[friendly_jacek]

Re: Any news on when KA transitions to POOM?

Well, if we are still in the middle of deflationary spiral you depicted, then we shouldn't hold gold, commodities or energy, right?

[Jim Nickerson]

Re: Any news on when KA transitions to POOM?

Well, if we are still in the middle of deflationary spiral you depicted, then we shouldn't hold gold, commodities or energy, right?

Think it through, in what currency are those items priced (though "energy: is a rather non-specific term)?

If the dollar were to become move valuable relative to the items you mentioned, those items should decrease in dollar value.

But then there are those who advocate always holding some gold.

[Guest]

Re: Any news on when KA transitions to POOM?

I think the USD always inverse to gold is actually a fallacy. Dollar up, gold up, other currencies declining vs. the dollar. That's the ticket for the next year or possibly longer. Anyone outside the USD zone: it's a no-brainer. For them owning gold will be a better performer than owning USD. But *not before* the bottom in the commodities rout! March or April 2009 is a date that keeps coming in many different analysts estimations of the end of this commodities bear market. And it is indeed a commodities bear market. Gold can go down below $700 before April next. After that all these guys I'm reading are saying the same thing. Gold (and eventually silver, which could have a rapid 150% upside from that bottom!) will have bottomed out likely around in that time window.

Unless we have "runaway global deflation" but there really is no such thing in an all-fiat world. It could look like that, with other currencies and assets falling relative to the "senior currency USD", but it won't be anything more than what iTulip has been saying for umpteen gazillion years - a "race to the bottom". If you've absorbed and believed what the iTulip macro thesis has been in that regard, then there can be no such thing as an extended global deflation in an all fiat world. It can put on a really good "resemblance" of a global deflation, where the USD looks like the king for relative stability and everything else goes to hell, but look for gold to be rising with the USD, and in net terms across any 24 month span of time to be clearly outstripping the USD, and vastly outperforming all the other currencies in that so called "deflationary" environment.

Think it through, in what currency are those items priced (though "energy: is a rather non-specific term)?

If the dollar were to become move valuable relative to the items you mentioned, those items should decrease in dollar value.

But then there are those who advocate always holding some gold.

[ST]

Re: Any news on when KA transitions to POOM?

So the correct position in that scenario Lukester for a U.S. investor is to sit on cash, perhaps short virtually broad market or commodities, and look for a bottom in commodities in first quarter -how to determine when the bottom comes?

i.e. how to determine whether capital re-flows into commodities earlier than expected (as broader equities fall) or without that clear transition or are you looking for a bearish event such as the CDS related losses to come out (?) into the open and take virtually all except classes minus dollar down.

[GRG55]

Re: Any news on when KA transitions to POOM?

Well, if we are still in the middle of deflationary spiral you depicted, then we shouldn't hold gold, commodities or energy, right?

Evidently you don't remember that diagram. Here's EJ's full article. Worth a re-read...

Dual Cycles of Demand Destruction and the Economic Face Plant

by Eric Janszen - April 8, 2008 (PDF version of this article here.)

An August 2002 iTulip forecast finally made the front page of the business section of the New York Times today, a slightly longer than usual time lag between one of our forecasts and an MSM report. Our thesis then was simply that governments, when faced with the problem of debt deflation that eventually occurs when a debt-laden economy turns down, always resort to currency depreciation and rate cuts as the primary tools to re-inflate the economy. If the debts left over from the previous boom where very large as in the case of the US economy after the housing and mortgage bubbles, the currency depreciation must be severe both in percentage terms and duration. Sooner or later these policies produce all-goods price inflation.

Ben Bernanke as much as admitted this in testimony before Congress earlier this year when he was asked by a member of Congress about the inflationary impact of cutting interest rates to simulate the economy. He replied, "You've put your finger on the problem. We have two problems but only one tool."...

And this one also.

Both may shed some light on your question.

[friendly_jacek]

Re: Any news on when KA transitions to POOM?

Evidently you don't remember that diagram. Here's EJ's full article. Worth a re-read...

Both may shed some light on your question.

Thank you kindly for the pointer. I reread this. Since the article was published in april 08, gold and oil went down and dollar went up. So, what is the point?

[raja]

Re: Any news on when KA transitions to POOM?

Well, if we are still in the middle of deflationary spiral you depicted, then we shouldn't hold gold, commodities or energy, right?

IMHO, when the stock market crashes (more), gold will go up, while energy and other commodities will go down. Fear will rule, and people will be looking for a safe haven, and not just Treasuries.

[phirang]

Re: Any news on when KA transitions to POOM?

Thank you kindly for the pointer. I reread this. Since the article was published in april 08, gold and oil went down and dollar went up. So, what is the point?

Point is a certain someone(EJ) forgot about LIBOR...

[marvenger]

Re: Any news on when KA transitions to POOM?

i'm thinking along these lines too, there needs to be some good news before we get the poom, and the alte bubble seems a way off. I think gold will go up though as people shit themselves more(depend sif people buy deposit guarantees I guess), this will be the exception that proves the rule of inverse relation between dollar and gold and positive relationship between gold and other commodities. But once poom starts its back to normal.

[marvenger]

Re: Any news on when KA transitions to POOM?

of course the other thing that will get the poom rolling will be capital flight, keep forgetting about that one, too scary to consider

[labasta]

Re: Any news on when KA transitions to POOM?

Beat me too it.

It's capital flight that creates an Argenitina, me thinks. It's that lack of faith in the ecomony and currency. That's what would cause the end of the American empire, its military might and globalisation fullstop. This is the hyperinflationary/collapse scenario and ultimately the one to watch out for.

In the meantime, I suppose we will just have a gradually deteriorating economic situation.

If trust in globalisation comes back before the flight, then all is well. But, do you think that is probable, or are the old days truly over? Is there anymore to give in supply side economics? Can the Amercian people take on (a lot more) debt for another bubble push?

If the answser is yes to the above questions, then expect a short-lived bad inflationary recession before bubbling out.

If the answer is no, then expect Argentina (or worse). If it doesn't happen, then look to the sky and say thank you (unless you are an anarchist and have had enough of the system).

[phirang]

Re: Any news on when KA transitions to POOM?

Beat me too it.

It's capital flight that creates an Argenitina, me thinks. It's that lack of faith in the ecomony and currency. That's what would cause the end of the American empire, its military might and globalisation fullstop. This is the hyperinflationary/collapse scenario and ultimately the one to watch out for.

In the meantime, I suppose we will just have a gradually deteriorating economic situation.

If trust in globalisation comes back before the flight, then all is well. But, do you think that is probable, or are the old days truly over? Is there anymore to give in supply side economics? Can the Amercian people take on (a lot more) debt for another bubble push?

If the answser is yes to the above questions, then expect a short-lived bad inflationary recession before bubbling out.

If the answer is no, then expect Argentina (or worse). If it doesn't happen, then look to the sky and say thank you (unless you are an anarchist and have had enough of the system).

capital flight to where? I'd like to hear some suggestions?

Hypo Bank?
Iceland?
Brazil?
Ireland?
Australia?
Moskva?
Japan, land of the crushed Yen?
Switzerland, aka Iceland 2.0?

[GRG55]

Re: Any news on when KA transitions to POOM?

capital flight to where? I'd like to hear some suggestions?

Hypo Bank?
Iceland?
Brazil?
Ireland?
Australia?
Moskva?
Japan, land of the crushed Yen?
Switzerland, aka Iceland 2.0?

You suggest we run to the US$ so Paulson can give the rest of them to the busted up banks to keep them afloat long enough for him to get out of his current office?