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In an attempt to understand the macro picture of money flow, I am more and more convinced that the need for the Government to fund it's ever growing debts are contrary to the success of equity/commodity markets. It is my theory that given the problems with foreign demand, and inherent problems with monetizing debt, that the only reasonable solution left is to create demand for treasuries by collapsing equity/commodity markets. I cannot stop thinking about how people were willing to accept negative interest on treasuries late in 2008 just to gain perceived safety. There is much about what is going on right now that just does not make sense because we do not know what the end game plan is. What we do know is the banks are in no hurry to raise capitol by selling assets, that insiders are selling stock at levels not seen sense late 2007, that we are facing big problems with both commercial and option mortgages, that unemployment is growing and almost certain to gain speed in the coming winter months, and that it will be years before the consumers recover from the debt orgy they have indulged in for the past decade. Could it be that creating a market for Treasuries and supplying the banks with TARP to buy the collapsed assets at rock bottom prices is the end game? Who knows, but it would be a way to grab great amounts of assets.
In an attempt to understand the macro picture of money flow, I am more and more convinced that the need for the Government to fund it's ever growing debts are contrary to the success of equity/commodity markets. It is my theory that given the problems with foreign demand, and inherent problems with monetizing debt, that the only reasonable solution left is to create demand for treasuries by collapsing equity/commodity markets.
The equity and commodity markets are far too big for the government to manipulate long term, or even in the shortish term. Furthermore, government action has been directed to the opposite at least with equities. For example putting restrictions on short-selling (which they are talking about again).
Where else were people suppose to put their money in 2008?
Why do you think unemployment is going to gain speed in the winter?
The equity and commodity markets are far too big for the government to manipulate long term, or even in the shortish term. Furthermore, government action has been directed to the opposite at least with equities. For example putting restrictions on short-selling (which they are talking about again).
Where else were people suppose to put their money in 2008?
Why do you think unemployment is going to gain speed in the winter?
The equity and commodity markets are being manipulated by the government, the green shoots propaganda campaign has been very successful so far and is giving Banks and Wall St. a chance to dump stock at higher prices. If you study the great depression it is similar to what happened in 1930. The problems facing the economy are far worse than what people are being told by the media. Unemployment always increases in winter months due to the impact of weather and seasonal cycles on outdoor industries. Usually this is offset somewhat by holiday shopping which should be dismal this year due to both the economy and the latest news from credit card companies in which they are stating many major banks are experiencing defaults in the 10% range. If that is not enough, even the government is predicting unemployment to rise to 10.5% to 11% by year end, and if you look at a chart that estimate is extremely optimistic.
If we saw deflation on such a magnificent scale, it would likely spark civil unrest. I don't think that kind of deflation is politically acceptable, since we have way too many consumers (constituents) in way too much debt. Servicing debt in a deflationary environment is virtual enslavement. Whatever the end game is (inflation or deflation) it isn't going to be pretty. Real assets are the only ones worth having (land being priciple, with guns to enforce/protect what is rightfully yours).
The equity and commodity markets are being manipulated by the government
How do you determine this? You think talking about "green shoots" is enough to manipulate markets of this size for anything more than a few days?!
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Originally Posted by jimhcom
If you study the great depression it is similar to what happened in 1930.
Yes its similar to the 1930's, but its also similar to just about any recession. Every recession has people calling "bottom" all the way to the down, every bear market has a number of bear rallies, etc. Trying to determine the cause of the bear rallies, etc is nearly impossible.
Quote:
Originally Posted by jimhcom
The problems facing the economy are far worse than what people are being told by the media.
Not really, just a bit ago the media was talking about Great Depression 2. The problem is that the media is bipolar, they either sell hope or gloom. That is what draws people in...
Quote:
Originally Posted by jimhcom
Unemployment always increases in winter months due to the impact of weather and seasonal cycles on outdoor industries.
Its amazing when people make things up and state them as facts. Unemployment does not always increase in the winter, in fact it is more often than not the opposite:
Winter weather if anything will increase employment. After all, clearing the roads, drive ways, fixing the broken pipes, etc all increases ahem....employment. And of course, there are the holidays.
Quote:
Originally Posted by jimhcom
Usually this is offset somewhat by holiday shopping which should be dismal this year due to both the economy and the latest news
My prediction is that the holiday season will be a bit stronger this year. Last winter was all about doom and gloom, which likely restricted the amount people spent.
The boyz on Wall Street can manipulate stock/commodity prices at the flip of a keyboard.
The PPT sometimes kicks in an hour before close so reality is "not so bad".
Plenty of articles out there speculating on what is happening by looking at long/short positions of the major Wall Street players.
Its amazing when people make things up and state them as facts. Unemployment does not always increase in the winter, in fact it is more often than not the opposite:
I should have specified "durring depressions/recessions" ie 2001, 2002, 2008, 2009.
As far as your prediction, we can revisit this topic in 6 mos. and see.
I should have specified "durring depressions/recessions" ie 2001, 2002, 2008, 2009.
Even if you just look at recessions, the job loses are not necessarily more aggressive in the winter than other seasons. It's just a matter of timing of the recession, it has nothing to do with the seasons. In 2001 the most aggressive job loses were in the spring and summer.
Basically because that is what happen last year you think its going to happen this year. But, the reason it happened last year had nothing to do with the season but rather the timing of the underlying events. So are there events that are going to cause a similar result this winter? Over all things are starting to stabilize so I don't think we are going to see any major financial shocks.
Even if you just look at recessions, the job loses are not necessarily more aggressive in the winter than other seasons. It's just a matter of timing of the recession, it has nothing to do with the seasons. In 2001 the most aggressive job loses were in the spring and summer.
Basically because that is what happen last year you think its going to happen this year. But, the reason it happened last year had nothing to do with the season but rather the timing of the underlying events. So are there events that are going to cause a similar result this winter? Over all things are starting to stabilize so I don't think we are going to see any major financial shocks.
You might want to take another look at your chart; the biggest losses in 2001 were between Sept. and Dec. The reasoning behind it could be human emotion, the same thing you measure with technical analysis. Winter time can be more depressing during economic downturns, topics at holiday get togethers, financial problems, disappointments, resolutions, whatever the reason, it happens. As far as things "stabilizing" a dead cat bounce is not stabilization. Stabilization will happen when the excesses of the past have been worked off. We have not done that. Despite their tricks, and deceptions the problems facing the Banks, Wall St, and the State and Federal Governments still exist, and are growing. All the optimism about the ship not sinking quite as fast as it was ignores the fact that it is still sinking, and no one knows how to patch the hole.
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