Wall Street crash 'even worse' than 1987 is coming, says Marc Faber

[Pirocco]

The point I was trying to make is that he was linking Q.E. with the stock market in a simple cause and effect relationship which is simplistic and wrong. He fails to understand the real driver of the market. Q.E. or tapering is but a pimple on an elephants ass when you look at capital flows globally.

Isn't that pimple on the other side of the monetary multiplier?
QE brought expectations.
The authors of QE don't like general price risings in an uncontrolled/noncontained fashion.
On the other hand, they don't like seeing the places where they steal, get empty, with nothing or what is hard to steal left.
So, their rather obvious motive is to get rid on bank deposits, in one way or another.
One way, is to trick people into paying temporary bloated prices, prices that their buddies increased by backing up the truck earlier.
To then drive the truck back, and dump it for sale. They don't need the dollarprofits, remember, they are the dollarcreation-privileged side. All they want, is to destory existing dollars, as to give their new no competition, and thus can continue to spend, without general price risings, simply because the losing side lacks the bank deposits to spend.
Stock markets sit over recordhighs. It must be their wet dream to lure people further in even from those levels. What you name as 'elephants ass', is in reality the ass of an inflated plastic elephant. Some people sit on its top. New people join them. Then they will open the valve.
That's what I think is happening, based on a number of elements, and a certain level of understanding of the whole.
But I and anyone can be wrong nevertheless, so if you think something else is going on, feel free to explain.

 

[tolly_67]

The point I was trying to make is that he was linking Q.E. with the stock market in a simple cause and effect relationship which is simplistic and wrong. He fails to understand the real driver of the market. Q.E. or tapering is but a pimple on an elephants ass when you look at capital flows globally.

And Ninja loans were a pimple on the ass of an elephant when compared to the total mortgage backed securities market back in 2007. Don't be so naive to believe that any number of events, that may look tiny now, can set this whole house of cards flying down.

If they cut QE off tomorrow the collapse would be disastrous and immediate. For a start the US government would have to start paying market rates on their bonds. And we all know without the Fed creating an artificially low market rate for USG bonds, the number of willing participants at the current rates would be very low.

Everything is cause and effect. It's just how far you want to join the dots. Faber or anyone else isn't going to join every single dot for you in an interview or a news paper column. So simplifying it down to a direct link between QE and the stockmarket is a simple one with a whole heap of dots removed but it's still an accurate one.

You have to understand that q.e. is tiny and it's effects minimal at best in the big scheme.
For example, world bond market is ten times the size of all world stock markets combined. Poor governance is manifesting itself into the movement of capital away from sovereign bonds. This type of capital is massive and it will look for the safest option. It is global movements that will propel the stock markets way beyond what most deem possible. The problem is people that try explain the irrationality of market movements while failing to understand the serious flaws in their opinions.
Global is the key. Domestic issues are continually focused upon but they are dwarfed by the bigger issues. Follow the narrow minded domestic analysts to your own peril. In the end they will give you every reason why an event should not have happened regardless of the fact that it has happened.

 

[tolly_67]

As for interest rates, economies and stock markets, stop looking for simple cause and effect. It is not there.
Lower interest rates have done nothing for the economy except feed a deflationary collapse and wipe out pensions. Morons in charge of money. Couldn't look at japan to see that lowering interest rates is not the answer. Nope, they had to follow.
Interest rates rising is more a sign of a healthy economy.
It raises the interest bill of government, this is true but that will further move capital to private investment...ie stock market.