Archive for the ‘Stock Market Crash Watch’ category

Chronicles Of Depression 2.0: #429: Pre-Splat

November 21, 2008

What’s The Next Big Thing For 2009?

How far the stock market will fall is anyone’s guess, the next support on the charts is roughly around today’s close. So we may expect an engineered Xmas rally by the Plunge Protection Team. But I’m on the lookout for the coming day when both the stock and bond markets head down together. That’s when we know that the Great Bond Collapse of 2009 will be underway. After that I suspect that the 2009 bond collapse will eventually transmogrify into a global fiat currency collapse, given that the only thing backing the world’s currencies is hot air issuing from the collective mouths of the world’s central bankers. From every indication they are going to need to blow a lot more smoke up bondholders skirts to give them a warm feeling about the pile of fiat paper.

Emphasis added by me.

Imagine being in a speeding car with failed brakes heading towards a wall.

Would you continue to steer straight ahead or pull on the wheel and change direction?

Everyone continues to steer straight ahead — to the inevitable smashup.

Change course!

Chronicles Of Depression 2.0: #428: Go Crazy!

November 21, 2008

Over at Nouriel Roubini’s site, there’s this headline that caught my eye:

roubini112108
Red underline by me.

Unfortunately, it’s behind a paywall.

But yes, let’s go crazy: 777 crazy.

The sooner, the better.

Chronicles Of Depression 2.0: #427: 777

November 20, 2008

October 10, 2009: There is an important update to this post at the bottom.

All sink or all swim?

Deuteronomy 15: 1-11

At the end of every seventh year, cancel all debts. This is the procedure: Everyone who has lent money to a neighbor writes it off. You must not press your neighbor or his brother for payment: All-Debts-Are-Canceled—God says so. You may collect payment from foreigners, but whatever you have lent to your fellow Israelite you must write off.

There must be no poor people among you because God is going to bless you lavishly in this land that God, your God, is giving you as an inheritance, your very own land. But only if you listen obediently to the Voice of God, your God, diligently observing every commandment that I command you today. Oh yes—God, your God, will bless you just as he promised. You will lend to many nations but won’t borrow from any; you’ll rule over many nations but none will rule over you.

When you happen on someone who’s in trouble or needs help among your people with whom you live in this land that God, your God, is giving you, don’t look the other way pretending you don’t see him. Don’t keep a tight grip on your purse. No. Look at him, open your purse, lend whatever and as much as he needs. Don’t count the cost. Don’t listen to that selfish voice saying, “It’s almost the seventh year, the year of All-Debts-Are-Canceled,” and turn aside and leave your needy neighbor in the lurch, refusing to help him. He’ll call God’s attention to you and your blatant sin.

Give freely and spontaneously. Don’t have a stingy heart. The way you handle matters like this triggers God, your God’s, blessing in everything you do, all your work and ventures. There are always going to be poor and needy people among you. So I command you: Always be generous, open purse and hands, give to your neighbors in trouble, your poor and hurting neighbors.

This is God telling us: Mortal Capitalism doesn’t work.

Well, look, here are the choices:

1) Global financial collapse, millions starve, millions die, international upheavals. Gotterdammerung.

Or:

2) Wipe out all the debt. National, corporate, consumer. Just erase all of it. The assets still remain. Nothing really becomes zero.

Unemployment will stop growing, financing will begin again, people will shop again.

Tell me what the difference is! Write-downs are happening right now. Bankruptcies are happening right now. Just take one global eraser and wipe it all out.

Replace the fear and misery with jubilation.

Can any of you envision the worldwide happiness that would result?

Once that mess is gone, be ruthlessly honest in future transactions.

Economics is supposed to be about creating value, not cancerous debt.

Imagine what life would be like in just six years from now if this was followed.

The prosperity would be absolutely breathtaking.

UPDATE:

As of October 10, 2009, I disavow this proposed solution. It is simply and entirely wrong.

The fundamental error I made is the one everyone is making: not getting to the root cause.

The root cause is the structure of the entire monetary system itself.

Wiping out all debt will still keep us trapped within that system and continue the boom and bust cycle for the benefit of a select few instead of the well-being of all.

If you are serious about finding a solution, then you will have to do some work of your own. I recommend a book as a starting point: Web of Debt, by Ellen Hodgson Brown. I have no connection to this book other than as someone who was lent a copy to read.

Pay particular attention to this quote by Benjamin Franklin, who was discussing the pre-Revolutionary American Colonies:

There was abundance in the Colonies, and peace was reigning on every border. It was difficult, and even impossible, to find a happier and more prosperous nation on all the surface of the globe. Comfort was prevailing in every home. The people, in general, kept the highest moral standards, and education was widely spread.

All of that was because of the kind of monetary system the Colonies had. They had divorced themselves from the brutal system that dominated English finance.

We can have that system again today. We have a tool — and a weapon — the Colonists lacked: the Internet.

Educate yourself about money — while there is still time to do so.

Don’t fall for “solutions” that will impoverish all of us.

Chronicles Of Depression 2.0: #425: Con Game

November 20, 2008

Pulling The TARP Over The Taxpayer Eyes

Lucky for us Hanky and Benny have deigned not to use any funds to stabilize the real estate market. Nor have they chosen to time bomb the 55 trillion dollar credit default swap time bomb. Their inaction virtually guarantees some combination of worldwide depression, hyperinflation, and eventually a worldwide currency collapse. Thankfully Hanky and Benny have save us from the moral hazard of socialism. Would you like fries with that?

Emphasis added by me.

This is a wonderful post that describes matters as they are — and not as D.C. wants you to believe.

Chronicles Of Depression 2.0: #422: Cow Chips

November 19, 2008

Over 100 U.S. “blue chips” now selling for under $10 a share

No, that’s not Dalmatians but the number of stocks in the U.S. benchmark S&P 500 index now trading for less than $10 a share.

In fact, $10 would get you 10 shares of online broker E*Trade, now the cheapest stock in the index at 98 cents a share. At the other end of this low-ball spectrum you can get a small slice of the garbage business with a share of Allied Waste at $9.90.

In between lies a raft of household names, many formerly held up as blue chips, including Citigroup ($6.40), Alcoa ($8.16), Xerox ($5.58), Motorola ($3.44), Starbucks ($7.97) and Yahoo ($9.14), not to mention beleaguered automakers Ford Motor ($1.26) and General Motors ($2.79).

And:

“This is definitely unusual,” he said. “I think you’d have to go back as far as the 1940s, when $10 was worth more to see a similar number,” he said.

Emphasis added by me.

And:

Twenty-five stocks, or five percent of the index, don’t make the $1 billion mark in market cap, and just 11 exceed the $100 billion level.

In fact, a third of the entire index is not even qualified to be in the index — 186 stocks have market caps under $4 billion, the minimum value for consideration for S&P 500 membership.

Emphasis added by me.

Oh no, there’s no Depression 2.0. Why, no, not at all. This sort of thing happens all the time.

That’s sarcasm, you sleepwalker.

Chronicles Of Depression 2.0: #413: Plan 9+

November 14, 2008

Paulson says additional bank capital needed

WASHINGTON (Reuters) – U.S. Treasury Secretary Henry Paulson said on Friday recapitalizing banks is the most effective use of a $700 billion financial bailout war chest but acknowledged the United States’ reputation has been tarnished as a result of the financial crisis that has spread worldwide.

“We have in many ways humiliated ourselves as a nation with some of the problems that have taken place here,” Paulson said in an interview with CNBC television.

Leaders of major industrial and developing economies are meeting in Washington on Friday and Saturday to discuss how to move forward from a financial crisis that began with the collapse of the U.S. housing market under a load of toxic debt and is now pushing economies around the world into recession.

Paulson won approval from Congress in early October to spend up to $700 billion to calm financial markets and revive lending, but has ruffled feathers by changing the focus to bolstering bank capital from buying mortgages.

The Treasury Secretary defended his decision to switch the focus of the rescue package, the Troubled Asset Relief Program, from buying unsellable mortgage-related assets to injecting capital into banks, saying market conditions had worsened.

“The major purpose of the TARP was to stabilize the financial system, first and foremost, to prevent a collapse … number two, to get lending going. I think the system has been stabilized,” Paulson said.

Emphasis added by me.

There. It’s now official. The Treasury of the Secretary has openly confirmed that the entire economic system could have collapsed.

Do you get it now?

It can still collapse.

Previously here:

Chronicles Of Depression 2.0: #335: Plan 9
Depression: 2009

Chronicles Of Depression 2.0: #395: $5T

November 12, 2008

Washington’s $5 Trillion Tab

For all the fury over Treasury Secretary Henry Paulson’s $700 billion emergency economic relief fund, it seems downright puny when compared to the running total of the government’s response to the credit crisis.

According to CreditSights, a research firm in New York and London, the U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system.

The estimate includes many of the various solutions cooked up by Paulson and his counterparts Ben Bernanke at the Federal Reserve and Sheila Bair at the Federal Deposit Insurance Corp., as the credit crisis continues to plague banks and the broader markets.

Emphasis added by me.

I want all of you sitting there to consider all the times we’ve been told they was no money for:

1) Universal health care
2) Better roads
3) Better schools
4) Better food inspections (recall the e. coli outbreaks!)
5) Extensions of unemployment benefits
6) Rebuilding New Orleans
7) Supplying our troops with body armor

— and more. In short, anything that directly affected the betterment of our lives as ordinary citizens, we were told we were too poor to afford.

Suddenly, all these crooked motherfuckers on Wall Street are given trillions and trillions and trillions of dollars of money.

Yet there was no money for us.

Remember that.

Remember that when your pension fund goes broke.

Remember that when your 401K is wiped out.

Remember that as you frantically put your possessions up on eBay.

Remember that as you’re evicted from your home or apartment.

Remember that when you’re on line for Food Stamps.

Remember that when you’re living in a fucking cardboard box!

The Dimensions Of Our Doom

November 12, 2008

This post has since been updated. There is now a fourth component. If you’ve read this post before, come back to read the final piece.

This post is a permanent sticky. It will remain here even after the completion of this blog on December 31, 2008. Scroll down one for the latest posts.

On January 1, the first day of this blog, I did a post titled And Now A Word About Our Future….

I could see even then things were going to get Bad.

What I didn’t know at all were the total dimensions of our doom. Since then I’ve seen a bigger picture.

That larger picture has caused me to change my blog banner and create this permanent sticky post. Update: The fourth link necessitated yet another blog banner change.

Click to read the rest …

Chronicles Of Depression 2.0: #386: Signs

November 11, 2008

Credit Markets Dip Into Absurdity

To judge from the crystal ball of debt markets, next year will bring some incredible calamity, maybe a depression, maybe worse. Bond prices suggest nearly one in five companies with high-yield debt could slip into bankruptcy with certain loans fetching just 70 cents on the dollar. The differences between corporate bonds and Treasurys now stretch beyond some investors’ beliefs.

“Spreads are more than ridiculous,” said David Kotok, chairman of Cumberland Advisors in Vineland, N.J. “Either we have dysfunctional credit markets evidenced by absurd pricing, or the market pricing is accurately forecasting the Great Depression of 2009, ’10, ’11, ’12 and ’13.”

With three-quarters of high-yield bonds trading at distressed levels, the market implies a one-year default rate of 18.5%, according to Garman Research. That’s worse than most expectations and higher than previous peaks of 13% in 1991 and 11.5% in 2002. Standard & Poor’s forecasts a 7.6% default rate in a year from now. The rating agency’s worst-case scenario has the default rate hitting 9.6% at the end of 2009.

Emphasis added by me.

This is Forbes writing this, for Christ’s sake. Forbes!

Does it sink in yet?

Chronicles Of Depression 2.0: #374: Bankuptcy 1

November 8, 2008

Swiss Finance Guru sees bankruptcy for the U.S

US economists have come to the conclusion from the trends that there will be a US state bankruptcy.

swissinfo: Do you share that view?

M.F.: One hundred per cent. The US government will in future have new debts of at least $1,000 billion (SFr1,165 billion). That’s on top of the current state debt of $10,000 billion. And that doesn’t take into account state programmes to stimulate the economy. The government will have no other choice than to print money, which in the long term will lead to inflation.

Emphasis added by me.

Go read the post itself. He contradicts himself at least once, possibly twice.

Note the title of this post: Bankuptcy 1. Because I expect it to become a series within this series.

To see real-world hyperinflation: Chronicles Of Depression 2.0: #373: Zimbabwe