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"The 'Everything Bubble' Has Popped"
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Dec 9, 2018 10:59:48   #
pafret Loc: Northeast
 
"The 'Everything Bubble' Has Popped"
by Chris Martenson


"Now that the world’s central banking cartel is taking a long-overdue pause from printing money and handing it to the wealthy elite, the collection of asset price bubbles nested within the Everything Bubble are starting to burst. The cartel (especially the ECB and the Fed) is hoping it can gently deflate these bubbles it created, but that's a fantasy. Bubbles always burst badly; it's their nature to do so. Economic suffering and misery always accompany their termination.

It's said that "every bubble is in search of a pin". History certainly shows they always manage to find one. History also shows that after the puncturing, pundits obsess over what precise pin triggered it, as if that matters. It doesn’t, because 'cause’ of a bubble's bursting can be anything. It can be a wayward comment by a finance minister, otherwise innocuous at any other time, that spooks a critical European bond market at exactly the right (wrong?) moment, triggering a runaway cascade.

Or it might be the routine bankruptcy of a small company that unexpectedly exposes an under-hedged counterparty, thereby setting off a chain reaction across the corporate bond market before the contagion quickly spreads into other key elements of the financial system.

Or perhaps it will be the US Justice Department arresting a Chinese technology executive on murky, over-reaching charges to bully an ally into accepting that unilateral US sanctions are to be abided by everyone, regardless of sovereignty.

How was it that the famous Tulip Bulb bubble came to a crashing end back in the 1600’s? No one knows the exact moment or trigger. But we can easily imagine that in some Dutch pub on the fateful night on the Feb 3rd 1637, a bidder on the most-coveted of all bulbs, the Semper Augustus, had an upset stomach and briefly grimaced when hit by a ripping gas pain:

Interpreting this face as distaste for the opening bid price, the assembled crowd may have suddenly realized the absurdity of paying so much (enough to clothe and feed a family for more than half a lifetime) for an ungrown flower. The bids were pulled, and the rest is history.

The point is: it doesn’t really matter what the pin actually is. The fatal trigger is often something completely unexpected and impossible to have predicted. So obsessing over what will end the Everything Bubble is a fool's errand.

Rather than the "pin", what's important to focus on is the "pop" - what the aftermath will be. The duration and height of a bubble is directly correlated with the scope of the destruction its bursting will wreak, as is the number of asset classes that get caught up in the mania. It's much wiser to spend our time focusing on where the damage is going to occur, what path it's most likely to take, and how bad the losses will be -so that we can position ourselves accordingly in advance for safety and, for the more adventurous, profit.
We've never seen anything like the current bubble we're in. Stocks, bonds, real estate, fine art, you name it - nearly everything has been inflated to all-time highs. When this Everything Bubble pops, the pain is going to be epically calamitous. And it's increasingly looking like the "pop" has sounded.

Greed & Fear: Every bubble requires two essential inputs to fuel its rise:
1. a compelling story
2. ample credit

If either is missing, no bubble.

Price bubbles are not financial phenomenon, but rather psychological constructs born and nurtured in the human brain stem. Greed and fear - that’s what drives bubbles. Greed on the way up and then fear on the way down. But neither has much influence without a tempting yarn and a lot of easy credit.

Attempting To Replace The Business Cycle With A Credit Cycle: In their quest for power and glory (and accompanied by a dead-flat learning curve), the world’s central banks are now pursuing their third, largest, and most ill-considered attempt to defeat the business cycle by replacing it with a credit cycle. The fact that the prior two credit cycles blew up spectacularly doesn't seem to be deterring them in the slightest.

A rather minor business cycle slowdown in 1994 was fought with a tidal wave of new credit under Greenspan.That ultimately resulted in the Dot Com Bubble crash of 2000, but the lesson went unlearned. Instead the Fed concluded that the idea was sound, but was simply not taken far enough. The elite cheerleading squad, captained by Paul Krugman, fully supported a doubling down, and the media unquestioningly went along with the program.

So Greenspan and Bernanke created the Housing Bubble 1.0 by offering the world’s credit markets a price of money so low it couldn't be refused. Housing was the story, and the Fed supplied the credit. As predicted by a scant few of us, that all blew up spectacularly in 2008. And no constructive lessons were drawn from that experience, either.

With the political aircover to "save the system" (from the problems that it created!), Bernanke, Yellen, Kuroda and D**ghi then led the most aggressive, coordinated central bank bender in all of human history. $Trillions and $Trillions were printed up, and many times that amount were leveraged and loaned throughout the banking and speculative finance universes:

If you can't clearly see how the above chart explains the massive price inflation over the past years in stocks, bonds and real estate, you'll have no chance of understanding what’s coming next. Best of luck to everyone choosing to avoid paying attention to this critical information; you'll dearly need it.

Paying attention or not, here we all are; stuck together in a world awash with credit. $250 trillion in debt. 4 times that amount in unfunded liabilities. And a mind-bogglingly massive amount of tangled financial derivatives roughly the same size as both those debts and liabilities put together.

The Greed Is Now Gone: All that credit had to go somewhere. And it did. Rare art fetched record-breaking prices. As did top-end trophy properties the world over. Rare cars and large gemstones commanded the highest prices ever seen. Stocks were bid up to ridiculous Price/Earnings multiples. And the Housing Bubble 2.0 returned to many metros around the globe - housing has never been more unaffordable to more people than it is now.

Can you feel it? How greed is now giving way to fear? Sure, you probably know people who are h*****g onto the Wall Street marketing slogans (“Buy the dips…hang on…don’t panic…successful investors don’t sell into weakness, they buy more!”). But the party atmosphere is now over. Just ask anyone who bought a house in Seattle in June (now down 11%). Or FAANG stocks in July (down 20%+). Or cryptocurrencies in January (down 80%+).

We've seen more downside volatility in the financial markets this year than in all of 2012-2017. Until and unless the central banks reverse their current tightening course, everything is headed lower. And I mean everything. How bad will it get? Honestly, pretty damn bad. Worse than 2000 and worse than 2008. The credit cycle is just that much larger this time.

It’s the airgap between the economic value added (EVA) lines below and the spiked tops above that defines the amount off pain involved in the unwinding. This chart clearly shows the reckoning is going to be on a scale we've never experienced before. Which is why our our advice continues to be protect your money, develop all 8 Forms of resilience (especially Emotional), and prepare to be a source of support for shell-shocked neighbors and loved ones.

The "Big One" Is Here: The recent market volatility is just the beginning of the downslide. There will be many starts and stops along the way, but coming soon will be a shock that wakes people up and scares them badly. Perhaps it will be another institutional failure like Lehman Brothers. Or maybe a sovereign default. Or even a central bank failure (yeah, I’m looking at you Swiss National Bank!).

Just "printing less" is causing the major stock indexes to stumble, while plunging the peripheral emerging markets into bear market territory. What's going to happen when the central banking cartel is in net "money withdrawal" mode? Will today's teetering markets be able to withstand that headwind? We won’t have to wait long to find out. We should hit that milestone in the next quarter.

For now, the Fed and ECB lack the political capital to resume printing anytime soon. The Bank of Japan hardly has the muscle to muster anything more than temporary speed bump on its wind-down. And China increasingly has less and less motivation to help the US financial elites by rescuing their markets for them. Besides, the Chinese authorities have their own massive collapsing bubbles to contend with right now.

And to add insult to injury, recession indicators are piling up faster and faster now. 2019 is looking primed to be The Year That Mass Layoffs Returned.Should that be the case, the resultant slowdown in consumer spending is certainly not going to help matters. Against this backdrop, how far could the markets fall from their current prices? Easily 30% to 50%. And that's if we're lucky."
- https://www.peakprosperity.com/

Reply
Dec 9, 2018 11:40:11   #
son of witless
 
pafret wrote:
"The 'Everything Bubble' Has Popped"
by Chris Martenson


"Now that the world’s central banking cartel is taking a long-overdue pause from printing money and handing it to the wealthy elite, the collection of asset price bubbles nested within the Everything Bubble are starting to burst. The cartel (especially the ECB and the Fed) is hoping it can gently deflate these bubbles it created, but that's a fantasy. Bubbles always burst badly; it's their nature to do so. Economic suffering and misery always accompany their termination.

It's said that "every bubble is in search of a pin". History certainly shows they always manage to find one. History also shows that after the puncturing, pundits obsess over what precise pin triggered it, as if that matters. It doesn’t, because 'cause’ of a bubble's bursting can be anything. It can be a wayward comment by a finance minister, otherwise innocuous at any other time, that spooks a critical European bond market at exactly the right (wrong?) moment, triggering a runaway cascade.

Or it might be the routine bankruptcy of a small company that unexpectedly exposes an under-hedged counterparty, thereby setting off a chain reaction across the corporate bond market before the contagion quickly spreads into other key elements of the financial system.

Or perhaps it will be the US Justice Department arresting a Chinese technology executive on murky, over-reaching charges to bully an ally into accepting that unilateral US sanctions are to be abided by everyone, regardless of sovereignty.

How was it that the famous Tulip Bulb bubble came to a crashing end back in the 1600’s? No one knows the exact moment or trigger. But we can easily imagine that in some Dutch pub on the fateful night on the Feb 3rd 1637, a bidder on the most-coveted of all bulbs, the Semper Augustus, had an upset stomach and briefly grimaced when hit by a ripping gas pain:

Interpreting this face as distaste for the opening bid price, the assembled crowd may have suddenly realized the absurdity of paying so much (enough to clothe and feed a family for more than half a lifetime) for an ungrown flower. The bids were pulled, and the rest is history.

The point is: it doesn’t really matter what the pin actually is. The fatal trigger is often something completely unexpected and impossible to have predicted. So obsessing over what will end the Everything Bubble is a fool's errand.

Rather than the "pin", what's important to focus on is the "pop" - what the aftermath will be. The duration and height of a bubble is directly correlated with the scope of the destruction its bursting will wreak, as is the number of asset classes that get caught up in the mania. It's much wiser to spend our time focusing on where the damage is going to occur, what path it's most likely to take, and how bad the losses will be -so that we can position ourselves accordingly in advance for safety and, for the more adventurous, profit.
We've never seen anything like the current bubble we're in. Stocks, bonds, real estate, fine art, you name it - nearly everything has been inflated to all-time highs. When this Everything Bubble pops, the pain is going to be epically calamitous. And it's increasingly looking like the "pop" has sounded.

Greed & Fear: Every bubble requires two essential inputs to fuel its rise:
1. a compelling story
2. ample credit

If either is missing, no bubble.

Price bubbles are not financial phenomenon, but rather psychological constructs born and nurtured in the human brain stem. Greed and fear - that’s what drives bubbles. Greed on the way up and then fear on the way down. But neither has much influence without a tempting yarn and a lot of easy credit.

Attempting To Replace The Business Cycle With A Credit Cycle: In their quest for power and glory (and accompanied by a dead-flat learning curve), the world’s central banks are now pursuing their third, largest, and most ill-considered attempt to defeat the business cycle by replacing it with a credit cycle. The fact that the prior two credit cycles blew up spectacularly doesn't seem to be deterring them in the slightest.

A rather minor business cycle slowdown in 1994 was fought with a tidal wave of new credit under Greenspan.That ultimately resulted in the Dot Com Bubble crash of 2000, but the lesson went unlearned. Instead the Fed concluded that the idea was sound, but was simply not taken far enough. The elite cheerleading squad, captained by Paul Krugman, fully supported a doubling down, and the media unquestioningly went along with the program.

So Greenspan and Bernanke created the Housing Bubble 1.0 by offering the world’s credit markets a price of money so low it couldn't be refused. Housing was the story, and the Fed supplied the credit. As predicted by a scant few of us, that all blew up spectacularly in 2008. And no constructive lessons were drawn from that experience, either.

With the political aircover to "save the system" (from the problems that it created!), Bernanke, Yellen, Kuroda and D**ghi then led the most aggressive, coordinated central bank bender in all of human history. $Trillions and $Trillions were printed up, and many times that amount were leveraged and loaned throughout the banking and speculative finance universes:

If you can't clearly see how the above chart explains the massive price inflation over the past years in stocks, bonds and real estate, you'll have no chance of understanding what’s coming next. Best of luck to everyone choosing to avoid paying attention to this critical information; you'll dearly need it.

Paying attention or not, here we all are; stuck together in a world awash with credit. $250 trillion in debt. 4 times that amount in unfunded liabilities. And a mind-bogglingly massive amount of tangled financial derivatives roughly the same size as both those debts and liabilities put together.

The Greed Is Now Gone: All that credit had to go somewhere. And it did. Rare art fetched record-breaking prices. As did top-end trophy properties the world over. Rare cars and large gemstones commanded the highest prices ever seen. Stocks were bid up to ridiculous Price/Earnings multiples. And the Housing Bubble 2.0 returned to many metros around the globe - housing has never been more unaffordable to more people than it is now.

Can you feel it? How greed is now giving way to fear? Sure, you probably know people who are h*****g onto the Wall Street marketing slogans (“Buy the dips…hang on…don’t panic…successful investors don’t sell into weakness, they buy more!”). But the party atmosphere is now over. Just ask anyone who bought a house in Seattle in June (now down 11%). Or FAANG stocks in July (down 20%+). Or cryptocurrencies in January (down 80%+).

We've seen more downside volatility in the financial markets this year than in all of 2012-2017. Until and unless the central banks reverse their current tightening course, everything is headed lower. And I mean everything. How bad will it get? Honestly, pretty damn bad. Worse than 2000 and worse than 2008. The credit cycle is just that much larger this time.

It’s the airgap between the economic value added (EVA) lines below and the spiked tops above that defines the amount off pain involved in the unwinding. This chart clearly shows the reckoning is going to be on a scale we've never experienced before. Which is why our our advice continues to be protect your money, develop all 8 Forms of resilience (especially Emotional), and prepare to be a source of support for shell-shocked neighbors and loved ones.

The "Big One" Is Here: The recent market volatility is just the beginning of the downslide. There will be many starts and stops along the way, but coming soon will be a shock that wakes people up and scares them badly. Perhaps it will be another institutional failure like Lehman Brothers. Or maybe a sovereign default. Or even a central bank failure (yeah, I’m looking at you Swiss National Bank!).

Just "printing less" is causing the major stock indexes to stumble, while plunging the peripheral emerging markets into bear market territory. What's going to happen when the central banking cartel is in net "money withdrawal" mode? Will today's teetering markets be able to withstand that headwind? We won’t have to wait long to find out. We should hit that milestone in the next quarter.

For now, the Fed and ECB lack the political capital to resume printing anytime soon. The Bank of Japan hardly has the muscle to muster anything more than temporary speed bump on its wind-down. And China increasingly has less and less motivation to help the US financial elites by rescuing their markets for them. Besides, the Chinese authorities have their own massive collapsing bubbles to contend with right now.

And to add insult to injury, recession indicators are piling up faster and faster now. 2019 is looking primed to be The Year That Mass Layoffs Returned.Should that be the case, the resultant slowdown in consumer spending is certainly not going to help matters. Against this backdrop, how far could the markets fall from their current prices? Easily 30% to 50%. And that's if we're lucky."
- https://www.peakprosperity.com/
"The 'Everything Bubble' Has Popped" br ... (show quote)


I disagree. What asset classes are in bubble mode ? Real Estate has cooled. Stocks are in correction. The most speculative assets crypto currencies, are in a down cycle. Right now a lot of people are sitting on a lot of cash. As we hit the 2020 e******n year all of that cash, looking for returns could fuel another bubble, but what asset class that would be is not apparent right now. Since interest rates have edged up in the last year, it is easier to sit in cash than it has for a long time.

Reply
Dec 9, 2018 12:23:53   #
pafret Loc: Northeast
 
son of witless wrote:
I disagree. What asset classes are in bubble mode ? Real Estate has cooled. Stocks are in correction. The most speculative assets crypto currencies, are in a down cycle. Right now a lot of people are sitting on a lot of cash. As we hit the 2020 e******n year all of that cash, looking for returns could fuel another bubble, but what asset class that would be is not apparent right now. Since interest rates have edged up in the last year, it is easier to sit in cash than it has for a long time.


You disagree and then proceed to define which asset classes are in bubble mode and affirm the people are holding on to their cash. What do you disagree with?

Reply
 
 
Dec 9, 2018 12:40:56   #
Sicilianthing
 
pafret wrote:
"The 'Everything Bubble' Has Popped"
by Chris Martenson


"Now that the world’s central banking cartel is taking a long-overdue pause from printing money and handing it to the wealthy elite, the collection of asset price bubbles nested within the Everything Bubble are starting to burst. The cartel (especially the ECB and the Fed) is hoping it can gently deflate these bubbles it created, but that's a fantasy. Bubbles always burst badly; it's their nature to do so. Economic suffering and misery always accompany their termination.

It's said that "every bubble is in search of a pin". History certainly shows they always manage to find one. History also shows that after the puncturing, pundits obsess over what precise pin triggered it, as if that matters. It doesn’t, because 'cause’ of a bubble's bursting can be anything. It can be a wayward comment by a finance minister, otherwise innocuous at any other time, that spooks a critical European bond market at exactly the right (wrong?) moment, triggering a runaway cascade.

Or it might be the routine bankruptcy of a small company that unexpectedly exposes an under-hedged counterparty, thereby setting off a chain reaction across the corporate bond market before the contagion quickly spreads into other key elements of the financial system.

Or perhaps it will be the US Justice Department arresting a Chinese technology executive on murky, over-reaching charges to bully an ally into accepting that unilateral US sanctions are to be abided by everyone, regardless of sovereignty.

How was it that the famous Tulip Bulb bubble came to a crashing end back in the 1600’s? No one knows the exact moment or trigger. But we can easily imagine that in some Dutch pub on the fateful night on the Feb 3rd 1637, a bidder on the most-coveted of all bulbs, the Semper Augustus, had an upset stomach and briefly grimaced when hit by a ripping gas pain:

Interpreting this face as distaste for the opening bid price, the assembled crowd may have suddenly realized the absurdity of paying so much (enough to clothe and feed a family for more than half a lifetime) for an ungrown flower. The bids were pulled, and the rest is history.

The point is: it doesn’t really matter what the pin actually is. The fatal trigger is often something completely unexpected and impossible to have predicted. So obsessing over what will end the Everything Bubble is a fool's errand.

Rather than the "pin", what's important to focus on is the "pop" - what the aftermath will be. The duration and height of a bubble is directly correlated with the scope of the destruction its bursting will wreak, as is the number of asset classes that get caught up in the mania. It's much wiser to spend our time focusing on where the damage is going to occur, what path it's most likely to take, and how bad the losses will be -so that we can position ourselves accordingly in advance for safety and, for the more adventurous, profit.
We've never seen anything like the current bubble we're in. Stocks, bonds, real estate, fine art, you name it - nearly everything has been inflated to all-time highs. When this Everything Bubble pops, the pain is going to be epically calamitous. And it's increasingly looking like the "pop" has sounded.

Greed & Fear: Every bubble requires two essential inputs to fuel its rise:
1. a compelling story
2. ample credit

If either is missing, no bubble.

Price bubbles are not financial phenomenon, but rather psychological constructs born and nurtured in the human brain stem. Greed and fear - that’s what drives bubbles. Greed on the way up and then fear on the way down. But neither has much influence without a tempting yarn and a lot of easy credit.

Attempting To Replace The Business Cycle With A Credit Cycle: In their quest for power and glory (and accompanied by a dead-flat learning curve), the world’s central banks are now pursuing their third, largest, and most ill-considered attempt to defeat the business cycle by replacing it with a credit cycle. The fact that the prior two credit cycles blew up spectacularly doesn't seem to be deterring them in the slightest.

A rather minor business cycle slowdown in 1994 was fought with a tidal wave of new credit under Greenspan.That ultimately resulted in the Dot Com Bubble crash of 2000, but the lesson went unlearned. Instead the Fed concluded that the idea was sound, but was simply not taken far enough. The elite cheerleading squad, captained by Paul Krugman, fully supported a doubling down, and the media unquestioningly went along with the program.

So Greenspan and Bernanke created the Housing Bubble 1.0 by offering the world’s credit markets a price of money so low it couldn't be refused. Housing was the story, and the Fed supplied the credit. As predicted by a scant few of us, that all blew up spectacularly in 2008. And no constructive lessons were drawn from that experience, either.

With the political aircover to "save the system" (from the problems that it created!), Bernanke, Yellen, Kuroda and D**ghi then led the most aggressive, coordinated central bank bender in all of human history. $Trillions and $Trillions were printed up, and many times that amount were leveraged and loaned throughout the banking and speculative finance universes:

If you can't clearly see how the above chart explains the massive price inflation over the past years in stocks, bonds and real estate, you'll have no chance of understanding what’s coming next. Best of luck to everyone choosing to avoid paying attention to this critical information; you'll dearly need it.

Paying attention or not, here we all are; stuck together in a world awash with credit. $250 trillion in debt. 4 times that amount in unfunded liabilities. And a mind-bogglingly massive amount of tangled financial derivatives roughly the same size as both those debts and liabilities put together.

The Greed Is Now Gone: All that credit had to go somewhere. And it did. Rare art fetched record-breaking prices. As did top-end trophy properties the world over. Rare cars and large gemstones commanded the highest prices ever seen. Stocks were bid up to ridiculous Price/Earnings multiples. And the Housing Bubble 2.0 returned to many metros around the globe - housing has never been more unaffordable to more people than it is now.

Can you feel it? How greed is now giving way to fear? Sure, you probably know people who are h*****g onto the Wall Street marketing slogans (“Buy the dips…hang on…don’t panic…successful investors don’t sell into weakness, they buy more!”). But the party atmosphere is now over. Just ask anyone who bought a house in Seattle in June (now down 11%). Or FAANG stocks in July (down 20%+). Or cryptocurrencies in January (down 80%+).

We've seen more downside volatility in the financial markets this year than in all of 2012-2017. Until and unless the central banks reverse their current tightening course, everything is headed lower. And I mean everything. How bad will it get? Honestly, pretty damn bad. Worse than 2000 and worse than 2008. The credit cycle is just that much larger this time.

It’s the airgap between the economic value added (EVA) lines below and the spiked tops above that defines the amount off pain involved in the unwinding. This chart clearly shows the reckoning is going to be on a scale we've never experienced before. Which is why our our advice continues to be protect your money, develop all 8 Forms of resilience (especially Emotional), and prepare to be a source of support for shell-shocked neighbors and loved ones.

The "Big One" Is Here: The recent market volatility is just the beginning of the downslide. There will be many starts and stops along the way, but coming soon will be a shock that wakes people up and scares them badly. Perhaps it will be another institutional failure like Lehman Brothers. Or maybe a sovereign default. Or even a central bank failure (yeah, I’m looking at you Swiss National Bank!).

Just "printing less" is causing the major stock indexes to stumble, while plunging the peripheral emerging markets into bear market territory. What's going to happen when the central banking cartel is in net "money withdrawal" mode? Will today's teetering markets be able to withstand that headwind? We won’t have to wait long to find out. We should hit that milestone in the next quarter.

For now, the Fed and ECB lack the political capital to resume printing anytime soon. The Bank of Japan hardly has the muscle to muster anything more than temporary speed bump on its wind-down. And China increasingly has less and less motivation to help the US financial elites by rescuing their markets for them. Besides, the Chinese authorities have their own massive collapsing bubbles to contend with right now.

And to add insult to injury, recession indicators are piling up faster and faster now. 2019 is looking primed to be The Year That Mass Layoffs Returned.Should that be the case, the resultant slowdown in consumer spending is certainly not going to help matters. Against this backdrop, how far could the markets fall from their current prices? Easily 30% to 50%. And that's if we're lucky."
- https://www.peakprosperity.com/
"The 'Everything Bubble' Has Popped" br ... (show quote)


>>>

Much of this is by design.

Reply
Dec 9, 2018 13:21:33   #
son of witless
 
pafret wrote:
You disagree and then proceed to define which asset classes are in bubble mode and affirm the people are holding on to their cash. What do you disagree with?


I disagree with your premise that people having a lot of cash means there is a bubble. And what are you talking about that I defined asset classes in bubbles ? I agree that conditions are ripe to produce a future bubble, but you are saying we are in a bunch of them and that they have all popped. I am sorry, but I fail to see how what you are saying makes any sense.

A classic bubble starts when investors want to put most of their money to work and they believe that what ever asset they choose will increase in value for the foreseeable future. It is really bad when everyone gets the same idea and chases the same asset. As the bubble grows the greed grows. The bubble only pops when there is no more cash coming in. That only happens when either there is no more cash on the sidelines that can come in, or there is a panic that the underlying values are not what they were thought to be, and the investors money is no longer safe in that investment.

Right now all asset values are well down from their peak valuations. There is a lot of spare cash on the sidelines. The Fed by raising interest levels and threatening to raise them more in the near term has stopped any potential bubbles. In fact I would argue that the Fed has been too aggressive and is in fact in danger of causing a recession. For all of the talk of full employment, and the government statistics support it, that unemployment is super low, I say the government statistics are wrong and real unemployment and under employment are much higher.

We are in more danger from a recession caused by the Fed moving too fast in raising interest levels than we are from an over heated economy and bursting bubbles.

Reply
Dec 9, 2018 15:09:21   #
woodguru
 
son of witless wrote:
I disagree. What asset classes are in bubble mode ? Real Estate has cooled. Stocks are in correction. The most speculative assets crypto currencies, are in a down cycle. Right now a lot of people are sitting on a lot of cash. As we hit the 2020 e******n year all of that cash, looking for returns could fuel another bubble, but what asset class that would be is not apparent right now. Since interest rates have edged up in the last year, it is easier to sit in cash than it has for a long time.


I watch collectible cars on Barrett and Meacham auctions, and watched as cars I want went from where they were to double and triple over a few years. The last couple I've seen muscle cars like the 70 Hurst Olds 442 that was going at around a hundred grand slipping down to around $30k, real estate is sitting on the market longer than it was two or three years ago, and prices are dropping from asking as people are not getting what they thought they would looking at a year or two. Coins are down, I am looking at liquidating Proof 70 investment grade coins and they are falling to where I wouldn't want to sell them if I hadn't bought them when they were down going into 2007/2008.

I am laying my hands on money that's sitting in things like coins and gems like opals and some other things I have because a decimated market is a gold mine if you study what did well after 07/08 and why. A few grand can be turned into hundreds of thousands easily.

Reply
Dec 9, 2018 15:30:58   #
Sicilianthing
 
son of witless wrote:
I disagree with your premise that people having a lot of cash means there is a bubble. And what are you talking about that I defined asset classes in bubbles ? I agree that conditions are ripe to produce a future bubble, but you are saying we are in a bunch of them and that they have all popped. I am sorry, but I fail to see how what you are saying makes any sense.

A classic bubble starts when investors want to put most of their money to work and they believe that what ever asset they choose will increase in value for the foreseeable future. It is really bad when everyone gets the same idea and chases the same asset. As the bubble grows the greed grows. The bubble only pops when there is no more cash coming in. That only happens when either there is no more cash on the sidelines that can come in, or there is a panic that the underlying values are not what they were thought to be, and the investors money is no longer safe in that investment.

Right now all asset values are well down from their peak valuations. There is a lot of spare cash on the sidelines. The Fed by raising interest levels and threatening to raise them more in the near term has stopped any potential bubbles. In fact I would argue that the Fed has been too aggressive and is in fact in danger of causing a recession. For all of the talk of full employment, and the government statistics support it, that unemployment is super low, I say the government statistics are wrong and real unemployment and under employment are much higher.

We are in more danger from a recession caused by the Fed moving too fast in raising interest levels than we are from an over heated economy and bursting bubbles.
I disagree with your premise that people having a ... (show quote)


>>>

Valid points but I see evidence of all the above and now Stagflation so it’s become the perfect storm for the first time in history...

Reply
 
 
Dec 9, 2018 15:34:29   #
Sicilianthing
 
woodguru wrote:
I watch collectible cars on Barrett and Meacham auctions, and watched as cars I want went from where they were to double and triple over a few years. The last couple I've seen muscle cars like the 70 Hurst Olds 442 that was going at around a hundred grand slipping down to around $30k, real estate is sitting on the market longer than it was two or three years ago, and prices are dropping from asking as people are not getting what they thought they would looking at a year or two. Coins are down, I am looking at liquidating Proof 70 investment grade coins and they are falling to where I wouldn't want to sell them if I hadn't bought them when they were down going into 2007/2008.

I am laying my hands on money that's sitting in things like coins and gems like opals and some other things I have because a decimated market is a gold mine if you study what did well after 07/08 and why. A few grand can be turned into hundreds of thousands easily.
I watch collectible cars on Barrett and Meacham au... (show quote)


>>>

I submit the following exhibit A:

The Pool of qualified buyers is shrinking not increasing...
Millenials have k**led off hundreds of business models, markets, products and asset classes no longer attractive or conducive to their budgets and lifestyles amongst a myriad of other factors and changing behaviors.

Reply
Dec 9, 2018 15:42:00   #
pafret Loc: Northeast
 
son of witless wrote:
I disagree with your premise that people having a lot of cash means there is a bubble. And what are you talking about that I defined asset classes in bubbles ? I agree that conditions are ripe to produce a future bubble, but you are saying we are in a bunch of them and that they have all popped. I am sorry, but I fail to see how what you are saying makes any sense.

A classic bubble starts when investors want to put most of their money to work and they believe that what ever asset they choose will increase in value for the foreseeable future. It is really bad when everyone gets the same idea and chases the same asset. As the bubble grows the greed grows. The bubble only pops when there is no more cash coming in. That only happens when either there is no more cash on the sidelines that can come in, or there is a panic that the underlying values are not what they were thought to be, and the investors money is no longer safe in that investment.

Right now all asset values are well down from their peak valuations. There is a lot of spare cash on the sidelines. The Fed by raising interest levels and threatening to raise them more in the near term has stopped any potential bubbles. In fact I would argue that the Fed has been too aggressive and is in fact in danger of causing a recession. For all of the talk of full employment, and the government statistics support it, that unemployment is super low, I say the government statistics are wrong and real unemployment and under employment are much higher.

We are in more danger from a recession caused by the Fed moving too fast in raising interest levels than we are from an over heated economy and bursting bubbles.
I disagree with your premise that people having a ... (show quote)


The author's contention is that this situation has already occurred and he cites housing, automotive and stocks as individual bubbles which have popped. Your contention that there is a lot of cash on the sidelines is consistent with his thesis. Those who have money are not spending it for a variety of reasons, ergo the bubble has popped.

The revaluation of asset classes is also consistent with bubble popping. The buyers are looking for real value, not inflated prices driven by the get rich mentality.

Reply
Dec 9, 2018 15:49:03   #
Sicilianthing
 
pafret wrote:
The author's contention is that this situation has already occurred and he cites housing, automotive and stocks as individual bubbles which have popped. Your contention that there is a lot of cash on the sidelines is consistent with his thesis. Those who have money are not spending it for a variety of reasons, ergo the bubble has popped.

The revaluation of asset classes is also consistent with bubble popping. The buyers are looking for real value, not inflated prices driven by the get rich mentality.
The author's contention is that this situation has... (show quote)


>>>

Intrinsic values with Tangible physical assets and wealth.

Either way, Trump must get rid of the FED, Audit, Abolish them and the IRS
Nationalize the Big Banks and then go after the Treasury and the Crown...

All roads and agencies above lead to the Crown.

What will Trump do next ? Or Not ?

Reply
Dec 9, 2018 16:39:24   #
woodguru
 
pafret wrote:
The author's contention is that this situation has already occurred and he cites housing, automotive and stocks as individual bubbles which have popped. Your contention that there is a lot of cash on the sidelines is consistent with his thesis. Those who have money are not spending it for a variety of reasons, ergo the bubble has popped.

The revaluation of asset classes is also consistent with bubble popping. The buyers are looking for real value, not inflated prices driven by the get rich mentality.
The author's contention is that this situation has... (show quote)


I don't think he's saying they have as much as that they are about to go in a big way.

I've used all of your "hard" asset "investments" and collectibles as indicators for 35 years. Collectible markets are the first to see signs people aren't as loose with money when it's tightening up. People start wanting to sell rather than buy. In a strong market jewelers dealing in diamonds will pay way more for a stone when they know they will easily sell than they will when they feel the market tightening.

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Dec 9, 2018 17:58:32   #
son of witless
 
pafret wrote:
The author's contention is that this situation has already occurred and he cites housing, automotive and stocks as individual bubbles which have popped. Your contention that there is a lot of cash on the sidelines is consistent with his thesis. Those who have money are not spending it for a variety of reasons, ergo the bubble has popped.

The revaluation of asset classes is also consistent with bubble popping. The buyers are looking for real value, not inflated prices driven by the get rich mentality.
The author's contention is that this situation has... (show quote)


Those were not really bubbles. They are more like soap suds. When a real bubble bursts like in 2009 it takes all other assets down with it because speculators playing with borrowed money have to sell all other assets to cover their losses. Even the big boys got burned really bad then. There was no inherent reason for the stock market to crash in 2007-2009 because it was not in a bubble. What happens in a bubble crash is a cash panic. Those toxic little pieces of paper aka Mortgage Backed Securities had so infected the whole system that everyone had to raise cash to cover their obligations. If you are a big institution with a variety of assets, what do you sell ? You can be sitting on the best real estate and the Hope Diamond, but when everybody else needs cash too, those are not very liquid.

Stocks are liquid. Stocks were the only thing that could be turned into quick cash. There weren't enough people sitting on the sidelines with cash back then. The sellers overwhelmed the buyers and the stock market crashed. Only in March of 2009 were all of the sellers finally washed out.

Right now after these recent declines in all asset classes, there is not the panic selling because there was not as much borrowed money chasing profits as there was pre 2007. There are also a lot of buyers sitting on the sidelines now, who can come in quickly with their cash, if assets drop too far.

Reply
Dec 9, 2018 18:28:37   #
Sicilianthing
 
son of witless wrote:
Those were not really bubbles. They are more like soap suds. When a real bubble bursts like in 2009 it takes all other assets down with it because speculators playing with borrowed money have to sell all other assets to cover their losses. Even the big boys got burned really bad then. There was no inherent reason for the stock market to crash in 2007-2009 because it was not in a bubble. What happens in a bubble crash is a cash panic. Those toxic little pieces of paper aka Mortgage Backed Securities had so infected the whole system that everyone had to raise cash to cover their obligations. If you are a big institution with a variety of assets, what do you sell ? You can be sitting on the best real estate and the Hope Diamond, but when everybody else needs cash too, those are not very liquid.

Stocks are liquid. Stocks were the only thing that could be turned into quick cash. There weren't enough people sitting on the sidelines with cash back then. The sellers overwhelmed the buyers and the stock market crashed. Only in March of 2009 were all of the sellers finally washed out.

Right now after these recent declines in all asset classes, there is not the panic selling because there was not as much borrowed money chasing profits as there was pre 2007. There are also a lot of buyers sitting on the sidelines now, who can come in quickly with their cash, if assets drop too far.
Those were not really bubbles. They are more like ... (show quote)


>>>

The same bad lending, Hard money lending, High interest rate-High Credit Risk Loans are happening today and have Been since around 2010 and then it really ramped up in 2012 and 2014...

Huge profit begin made for some investors in Bad Credit Car loans
Bad credit Trucks Loans
Bad Credit Equipment loans
Bad Credit Commercial Loans
Bad Credit Property loans
Bad Credit Equity loans
Bad Credit Everything in one loans... and on and on and on...

The Delinquencies are rising fast... they will Balloon in the first quarter

The next Tsunami of Foreclosures is swelling... has been for 6months or so... no one wants to talk about it...
No one has the income previously for the 5, 7 10 year ARMS...

C’mon man do the math you guys...

*** RED LIGHTS *** and *** WARNING BELLS *** are going off FLASHING on all sides !

Reply
Dec 9, 2018 19:33:18   #
son of witless
 
Sicilianthing wrote:
>>>

The same bad lending, Hard money lending, High interest rate-High Credit Risk Loans are happening today and have Been since around 2010 and then it really ramped up in 2012 and 2014...

Huge profit begin made for some investors in Bad Credit Car loans
Bad credit Trucks Loans
Bad Credit Equipment loans
Bad Credit Commercial Loans
Bad Credit Property loans
Bad Credit Equity loans
Bad Credit Everything in one loans... and on and on and on...

The Delinquencies are rising fast... they will Balloon in the first quarter

The next Tsunami of Foreclosures is swelling... has been for 6months or so... no one wants to talk about it...
No one has the income previously for the 5, 7 10 year ARMS...

C’mon man do the math you guys...

*** RED LIGHTS *** and *** WARNING BELLS *** are going off FLASHING on all sides !
>>> br br The same bad lending, Hard mon... (show quote)


I will concede you could be right. I do not believe so, but the possibility is there. I also see things slowing but not because of a bubble. The Fed is afraid of a bubble and has been tightening credit. The asset declines are from that tightening. If the Fed continues over tightening, and the expected Democratic House makes enough trouble for Trump, the first quarter could continue the slowing. The Fed is walking a tight rope, trying to balance growth and inflation.

Hopefully the slowing data will calm the Fed, to not over react. The drop in oil prices is a good catalyst for continuing improvement. This is so far, a very good Christmas season with the consumer buying. The stores are full. The post Christmas is where we will see which one of us is right.

Reply
Dec 9, 2018 19:41:35   #
Sicilianthing
 
son of witless wrote:
I will concede you could be right. I do not believe so, but the possibility is there. I also see things slowing but not because of a bubble. The Fed is afraid of a bubble and has been tightening credit. The asset declines are from that tightening. If the Fed continues over tightening, and the expected Democratic House makes enough trouble for Trump, the first quarter could continue the slowing. The Fed is walking a tight rope, trying to balance growth and inflation.

Hopefully the slowing data will calm the Fed, to not over react. The drop in oil prices is a good catalyst for continuing improvement. This is so far, a very good Christmas season with the consumer buying. The stores are full. The post Christmas is where we will see which one of us is right.
I will concede you could be right. I do not believ... (show quote)


>>>

Noted and agreed and pay attention to the DOW tomorrow and S&P, Japan is falling Sharp already down -200 and China will open in a couple hours...

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