A week of market carnage?

Skyrocket · Jan 14, 2016

^ after I win the 1.5 billion

JulieW · Jan 14, 2016

sovereignman.com nails it:

The United States is a wonderful country. It's clean. Modern. Reasonably safe. Standard of living is very high.

But decades of insane regulation, government debt, and astonishingly destructive monetary policy have resulted in a society where it is now easier to consume than produce.

Prosperity is not complicated. People figured out thousands of years ago that if you wanted to do well, you had to produce more than you consumed.

But the American system is the exact opposite, favoring those who recklessly borrow and spend, rather than those who work hard and responsibly save.

The President of the United States boldly accused everyone who doesn't share his view as just making things up.

In his words, "Anyone claiming that America's economy is in decline is peddling fiction."

This is an extraordinary (and delusional) statement.

The government's own numbers show that they are completely insolvent, to the tune of nearly $18 trillion.

The annual reports for the Social Security trust funds show that they are rapidly running out of money.

The Federal Reserve's own balance sheet shows that it is precariously undercapitalized, with net capital less than 1% of total assets.

The Census Bureau's data shows that the earnings for middle class Americans are stagnating.

The Labor Department's numbers show that the number of Americans who have dropped out of the work force hasn't been at this level since the Carter administration.

USDA figures show that the number of food stamp recipients is near an all-time high, simultaneously when the number of homeless children in America is at a record high.

And all of this, at a time when trust in government is near an all-time low.

These are all facts, not fiction.

The only fiction is pretending that this story has a happy ending.
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JulieW · Jan 14, 2016

But Randy Newman nailed it before then:

[youtube]http://www.youtube.com/watch?v=Du3WhHrrNgs[/youtube]

Caput Lupinum · Jan 14, 2016

Bought some oil shares today for the first time in a long time while with Brent dropping below $30 a barrel. Not expecting a rebound anytime soon, just bottom fishing

JulieW · Jan 14, 2016

More doom in the MSM:

The City of London's most vocal "bear" has warned that the world is heading for a financial crisis as severe as the crash of 2008-09 that could prompt the collapse of the eurozone.

Albert Edwards, strategist at the bank Socit Gnrale, said the west was about to be hit by a wave of deflation from emerging market economies and that central banks were unaware of the disaster about to hit them. His comments came as analysts at Royal Bank of Scotland urged investors to "sell everything" ahead of an imminent stock market crash.

"Developments in the global economy will push the US back into recession," Edwards told an investment conference in London. "The financial crisis will reawaken. It will be every bit as bad as in 2008-09 and it will turn very ugly indeed."

Fears of a second serious financial crisis within a decade have been heightened by the turbulence in markets since the start of the year. Share prices have fallen rapidly and a slump in the cost of oil has left Brent crude trading at barely above $30 a barrel.

"Can it get any worse? Of course it can," said Edwards, the most prominent of the stock market bears the terms for analysts who think shares are overvalued and will fall in price. "Emerging market currencies are still in freefall. The US corporate sector is being crushed by the appreciation of the dollar."

The Soc Gen strategist said the US economy was in far worse shape than the country's central bank, the US Federal Reserve, realised. "We have seen massive credit expansion in the US. This is not for real economic activity; it is borrowing to finance share buybacks."

Edwards attacked what he said was the "incredible conceit" of central bankers, who had failed to learn the lessons of the housing bubble that led to the financial crisis and slump of 2008-09.

"They didn't understand the system then and they don't understand how they are screwing up again. Deflation is upon us and the central banks can't see it."

Edwards said the dollar had risen by as much as the Japanese yen had in the 1990s, an upwards move that pushed Japan into deflation and caused solvency problems for the Asian country's banks. He added that a sign of the crisis to come was the collapse in demand for credit in China.

"That happens when people lose confidence that policymakers know what they are doing. This is what is going to happen in Europe and the US."

Europe has shown tentative signs of recovery in the past year, but Edwards said the efforts of the European Central Bank to push the euro lower and growth higher would come to nothing in the event of a fresh downturn. "If the global economy goes back into recession, it is curtains for the eurozone."

http://www.theguardian.com/business...at-2016-financial-crisis-warns-city-pessimist
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TheEnd · Jan 14, 2016

Hold onto your hats people we are all in for one hell of a ride!!!

SpacePete · Jan 14, 2016

TheEnd said:

Hold onto your hats people we are all in for one hell of a ride!!!
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Don't strap me in. Let me off now!

Revils · Jan 14, 2016

Bargains galore

errol43 · Jan 14, 2016

Hello, this is the bank asking you for a margin call... OH No can you wait a few days while I sell some shares and so the carnage begins.

Regards Errol 43

JulieW · Jan 15, 2016

Interesting thought from Bill Holter:

I think China has done some very intelligent maneuvering particularly since the 2008 crisis. They figured out our fractional reserve scheme was toast but they played along anyway. They even levered up as much or more than we did since then. However, with this increase in credit they have built infrastructure in the form of roads, bridges, cities, plant and equipment all for and with future uses. The West on the other hand has thrown a "standard of living party" and neglected infrastructure to the point of dilapidation. Yes China's financial system will implode with all the rest, they may even lead it! But, they will be left with new infrastructure and "money" (our gold) to get started again. President Xi has even said this to his people and to the world. He said the short term would be difficult but the long term beneficial. I think he is telling the truth!

http://www.jsmineset.com/
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bordsilver · Jan 15, 2016

Debt defaults on infrastructure still leaves you with ongoing maintenance costs but mostly it saps confidence from savers meaning that future investments with real benefits become less likely to occur until a point where trust can be reestablished. Consequently you risk degrading future rate of growth. Yes, the future economy has a 6 line A-grade road to nowhere and a bunch of empty buildings in existence that may open up some new opportunities but a malinvestment is a malinvestment.

JulieW · Jan 15, 2016

Good point.

I live mostly in Melbourne with a dearth of intelligence guiding infrastructure investment (spend a billion to cancel a road construction!), trains that slow down because of dodgy tracks, and no rail link to the airport (along with contracts forbidding competition to the toll roads).

There's 'malinvestment' and then there's ' bad investment'!

ryan71 · Jan 15, 2016

willrocks said:

It's more likely to last a year than a week.
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Absolutely.

BuggedOut · Jan 15, 2016

Friday China drops 3.55% and overnight the Dow drops another 2.39%. Europe looks just as red.

Lots of carnage this week but I found the fascinating moves the fluctuations in the USD and Gold price that combined to give us some big swings in the AUD gold price this week. I guess Gold and USD are being considered safe haven assets at the moment and investors are bidding them up together.

Skyrocket · Jan 15, 2016

ryan71 said:

willrocks said:

It's more likely to last a year than a week.
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Absolutely.
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Maybe 5 years if everything snowballs badly! :/

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